The “Holder” of a Note
The term “holder,” and the phrase “holder of a Note,” has been used many thousands of times in foreclosure lawsuits throughout Florida. Banks routinely argue they’re the “holder,” so they have the right to foreclose. But what does it mean to be a “holder”?
Florida Statute 671.201(21) sets forth the definition. Essentially, there are two requirements to be a holder: (1) the foreclosure plaintiff have possession of the original Note; and (2) the Note contain an endorsement, either in blank or in the name of that plaintiff.
I think the statute is quite clear, and I’ve cited it on countless occasions, yet there are precious few Florida cases which explain what it means to be a “holder.” That’s why I was pleased to see this decision from Florida’s Fourth District Court of Appeal, which reversed a final judgment of foreclosure because:
Whether the [bank] is entitled to enforce the promissory note remains a disputed issue of material fact. In Harvey v. Deutsche Bank Nat’l Trust Co., 69 So. 3d 300, 303 (Fla. 4th DCA 2011), we explained that the person entitled to enforce a negotiable instrument such as a note is the “holder of the instrument.” (quoting 673.3011, Fla. Stat.) A “holder” is the person in possession of the instrument that is payable to bearer or to an identified person in possession. 671.201(21)(a), Fla. Stat. “Bearer” means “a person in possession of a negotiable instrument … that is payable to bearer or indorsed in blank.” 671.201(5), Fla. Stat. The note presented in these proceedings does not appear to have an endorsement in blank. Instead, the endorsement is to a specific entity, Wells Fargo, which is not the plaintiff in this case.
This is a huge, huge issue in foreclosure defense. If the Plaintiff does not have possession of the original Note, with an endorsement (either in blank or to it), then Plaintiff is not the holder as a matter of law. Plaintiff may have some other basis in which to bring a foreclosure, see Fla. Stat. 673.3011, but the traditional and most common allegation is that it is the “holder” of the Note and Mortgage.
If you’re defending a foreclosure, don’t take plaintiff’s word for it that it’s the holder. Make sure they produce the original Note and that the Note has an endorsement payable to it or in blank. If not, then the plaintiff will have to establish some other basis for a foreclosure (typically with an assignment of mortgage).
Mark Stopa
www.stayinmyhome.com
Posted in Main | 18 Comments »
And that they can pony up the trail of evidence that they obtained the legal instrument in a proper, legal manner. For example, if the “note” was supposed to be housed in the Trust Collateral File, yet the note travels to the “holder” or servicer via a different route, like say, from JPMorgan Chase, this is suspect.
I believe that in foreclosure cases ,which are adjudicated in combined Courts of Chancery (Equity) and of Law, should only be held in Courts of Law as they are effectively complaints for “Breach of Contract”, and the equities must be split/viewed equally. Of course, this can’t be the case when Circuit Courts initially refer to defendants as “borrowers” long before any defensive pleadings are filed. If I were to find a blank indorsed note on the sidewalk, does that make me the “holder” under Florida’s Statutory Laws? Most promissory notes contain language which states “The Lender or anyone who takes this Note by transer and who is entitled to receive payments under this Note is called the ‘Note Holder’.”, and I would think that it would be necessary, if challenged, for the foreclosing party to show through documentary evidence that it is the “Note Holder” in accordance with the Note which is subject to the action. How can a Defendant be shown in default (breach of contract) unless the foreclosing Plaintiff can show that it is “entitled to receive payments”? Equity be damned; what we need are Courts of Law and judges to uphold those laws. Example: “Objection, the Plaintiff has filed fraudulent documents and committed fraud on this Court.”, Judge – “Overruled, the equities are with the Plaintiff.” In other words, “I’d rather see the collateral property go to a non-party in interest than to give a deadbeat a free house.” I guess a judges personal (social and economic) views trump the law. The quotes in this comments are not drawn from transcript, but from my vast personal experience as a pro se litigant, and court observer, in Florida’s circuit courts.
Mark, but this ruling does not cover the rampant robo- stamping that is going on in america right now. we need a ruling in florida against robo-stamping. I have many copies of my robo-stamper sent to me via email from all over the country?? There is a case right now in court up in Ohio , wells fargo plaintiff. This person has the same robo- stamper as i do. They went to SJ last week and the judge needed more time to rule. This past monday the judge decided not to rule but to give the defendent more time to prove his case.
we need some ruling against these robo-stampers to stop the homes from being stolen. any entity can stamp a note in blank and claim they are the owner.
the judge wants the “original”note have never heard of the robot that robo signs??
I hear you, Sara. I posted about this recently.
Here’s the link.
http://www.stayinmyhome.com/blog/2012/07/im-getting-rich-banker-style/
Thank you Mark!!!! that is a great you are on the homeowners side on this issue. i was just informed about another issue from someone who is a foreclosure attourney in sumter county. he told me to look at #22 in my fnm mortgage document. # 22 states “lender” has to send acceleration notice. Now with all this robo stamping, robo signing, investors who is actually conseidered the “lender” , when we figure out who the atual lender is. this guy said all cases must be dissmissed???
I just posted a blog about paragraph 22. Happy reading!
What if a bank claims to be the “owner of the note” and their complaint mentions nothing about being the holder? No assignment or note was filed with the complaint. They did claim lost note in their filing.
Based on the current status of Florida law, I’d file a motion to dismiss.
Can a thief of the note endorsed in blank be “person in possession of the instrument that is payable to bearer” and therefore be entitled to foreclose on real property in Florida? You’ve asked this question more than once.
And while it seems the Court is SOMETIMES concerned about foreclosing plaintiffs status as “lawful” holders, until the courts recognize that UCC-9 is implicated, there is no mechanism to EVER determine the “lawful” status of note “holder” in foreclosures unless and until “holder” = “owner.”
UCC-3011 as cited by foreclosing plaintiffs for “standing” has been a disaster for homeowners in the state of Florida.
I hear you, triumphant.
I think most judges would agree that a thief can’t foreclose, but the way many of Florida’s appellate decisions are worded, they don’t disallow it.
Frustrating.
On these appeals I have a question. By the time a case goes to the DCA is it already too little too late to save a home? Can the sale be postponed until the DCA reviews the case? Thank you
Yes, it’s possible to cancel a foreclosure sale while appealing … the process is to request a stay pending appeal. If the appeal looks like it has merit, many trial judges will grant it, and if they don’t, it’s possible to seek the same stay in the appellate court.
Thank you for the information Mark. We are going pro se right now seeking some remedies, but it may get to the point where we need a good patriotic attorney like yourself or Weidner.
I’ll be here, Barefoot.
Do you work in Citrus?
Yes.
Regarding the blank endorsement… When I was doing research, I found quite a few notes endorsed by the same person (on a single note) for different companies.
Example: Susie Smith, Funder for bank #1 signs the first endorsement. Then Susie signs the second endorsement, in blank, as funder for bank #2.
As I looked deeper, I found that the funder had never worked for one of the banks.
As the courts overlook the shady endorsements and signatures, I think the banks are getting bolder.
I agree, Just Looking. And that’s why we need to challenge the endorsements. When we do, I suspect we’ll find one fraudulent endorsement after another – or, at worst, one endorsement done without authority after another.
Mark