(Sorry, you’re going to have to slog through a long post here before you get to the real article down at the bottom)Mainstream press and the rest of America is starting to pick up on one of the biggest problems that exist now within our entire finance and court systems….the binding body of law know officially as the Uniform Commercial Code. The code governs just about every commercial transaction and especially mortgage finance….not the actual mortgage, that’s covered by our ancient real property laws, but the note which is (theoretically at least) tied inextricably to the mortgage. Now here’s the problem.
For years, experienced defense practitioners have been arguing that the Plaintiffs in these cases lack the standing to pursue foreclosure…(especially important when the plaintiff does not come to court with the original note). The banking industry told the Florida Supreme Court:
The reason “many firms file lost note counts as a standard alternative pleading in the complaint” is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. (full doc here)
But no one really knows what happened to many of these notes. I’m sure some were destroyed, but others are floating around, in the stream of commerce, being pledged and securitized and stolen.
The most disturbing fact (not an allegation, a truly disturbing documentation of a systemic problem) is detailed in a recent appellate case that was released by Florida’s Fourth District Court of Appeals, Johnston v. Hudlett. This case is most disturbing because what it details is a pattern and practice where the court actually releases the note back to the Plaintiff after a foreclosure judgment is granted:
We are, however, concerned of what appears to b e a practice in
Broward County of the clerk’s office returning exhibits immediately after
the end of a trial, to the attorneys for the parties who introduced such
exhibits. We do not know if this is at the direction of the judges or
simply a practice of the clerk’s office. Nevertheless, it is in violation of
Rule of Judicial Administration 2.430(f)(2) which requires that the clerk
retain all exhibits until 90 days after the judgment becomes final, which
means after a final judgment is entered and the time for appeal has
expired or an appeal has been taken and disposed of. The clerk has no
authority to release exhibits to the parties prior to that time. Otherwise,
should an appeal be filed the appellate court would not have access to
Now why oh why are our friends the bankers asking for the courts to return “their” (standing=who knows who really owns is) original notes? I’m sure they’ve got a perfectly innocent and reasonable explanation for this….but this is a real problem. I’ve previously written about the ancient Supreme Court case Scott v. Taylor and the current authority for the proposition that a Plaintiff must be in possession of the original promissory note to enforce it. Our friends tried to get around this with the practice of submitting lost note affidavits, but given what we know about the document mills and the foreclosure mills, these affidavits should be treated as inherently unreliable and rejected.
In fact, the vast majority of these so called, “lost note affidavits” fail the basic, black and white requirement of the affidavit because they are not signed by the person or entity that actually lost the note. Here’s the deal, for a lost note affidavit to even past the “hmm, maybe this affidavit has some element of reliability test”, the person signing the affidavit must be the one who actually has first hand knowledge of the fact sworn to in the affidavit…..but that’s not what these affidavits say. The Uniform Commercial Code specifies that the affiant must state:
“The note was in my care, control and custody and now it’s lost. I made a diligent search to find it including looking for it where I last left it, but it ain’t there, I lost it. I’ll make a deal with you…because I know I lost it if anyone pops up later and says they found it, I will defend you against their claim”
Instead, virtually every affidavit says, more or less,
“I have no idea whether a note actually existed or what in the world happened to it but someone put this affidavit in front of me (along with 5,000 others I’ve got to sign today) and it says my company had this note and someone, somewhere in this company actually looked for it, but we cannot find it, so it’s lost. I’m pretty sure you can trust my word and this affidavit because someone printed this form up and told me to sign it and they cut my paycheck pretty regularly so you can trust them.”
But back to the whole note and lost note thing. I’m sure there’s no problem here. It was just a paperwork glitch (that’s been going on for years now) and our friends at the banks will be able to ‘splain to us where these original notes are and who actually “owns and/or holds and/or has the rights to enforce the note” (love all that mishmash of contradictions)….
I’m sure this will all be alright. We should just trust the banks. And while we’re all busy trusting the banks, let’s start going after all those nutty foreclosure defense lawyers who are busy filing all those frivolous pleadings and defenses and wasting the court’s time with questions like standing and capacity and authentication.
Yep, that’s what we should do.
Zombie Note Post