Make Sure Your Ducks Are In A Row Before You Foreclose

I read an interesting article on Sirote .com about a homeowner who fought a foreclosure in Florida, and its eerily similar to a situation we find ourselves in. The homeowner was foreclosed on, and she was successful in showing the bank did not have standing to foreclose because they were not the holder or owner of the mortgage & note. The court agreed because there was no AOM (Assignment of Mortgage), or any other document evidencing it was transferred to the bank before it foreclosed.

The court also found that there was never any actual delivery of the note to the bank by the notes payee. So it appears they not only did not have the mortgage assigned to them and recorded, the note was not endorsed to them with the proper Allonges.

An Allonge is an endorsement when its sold to a new owner, like when you sign over a check to someone else, and must be attached to the note. Each subsequent sale of the note requires another endorsement, and if they have been sold many times, there needs to be either an Allonge for each sale, or a Lost Allonge affidavit created to substitute for it.

After getting the foreclosure dismissed, the homeowner tried to claim attorney fees under Florida statue §57.105(7) when a party was required to take an action to enforce a contract, the court allows reasonable attorney fees. The bank objected to this and the court overruled them. When the bank appealed because if it was show it did not have a case, there was no contract, and thus the request for attorneys fees by homeowner was denied.

We own a Non-Performing 2nd lien mortgage in Deltona, FL, and the senior lien beat us to foreclosure before we could file. The homeowner has fought the foreclosure tooth and nail, and we have been watching how it plays out. Yesterday, she filed a Motion to Dismiss Mortgage Foreclosure Complaint against the Senior lien because the bank did not properly verify the complaint, and have standing to foreclose. The mortgage company did verify the complaint as Attorney-in-Fact, and she argues under Florida Statue § 709.2105, an agent acting under a power of attorney must be a natural person, or a financial institution with trust powers, has a place of business in this state, and is authorized to conduct business in the state. They go on to complain the mortgage company is not a natural person, financial institution, and is a service corporation, therefore they do not have the capacity to act as Attorney-in-Fact.

We will let you know how the Motion to Dismiss plays out.

A couple lessons learned;

1. You better have your chain of title complete, and all AOM’s recorded, and the Allonge’s to the note in the same sequence BEFORE you file a foreclosure. Failure to have your chain of title complete and perfect before you start foreclosure can lead to it being dismissed as you did not have standing or owned it.

2. If a foreclosure is dismissed for lack of standing to enforce the note & mortgage against the borrower, then there is no contract, and the borrower can’t invoke the reciprocity of claiming they are owed attorney fees.