The Florida Banking Law Blog has stressed that Florida courts are quick to render judgments in favor of borrowers in foreclosure actions based on lenders’ lack of standing. The Florida’s Fourth District Court of Appeals has proven particularly active in finding that lenders failed to properly establish that they held their respective notes at the time of filing foreclosure lawsuits. A recent opinion published by the Fourth DCA once again drives home the need for a lender, when receiving an assignment of a note, to ensure that the note is properly endorsed to establish the lender as the rightful holder prior to instituting a foreclosure action.
HSBC Bank USA filed a foreclosure action and attached a copy of the note to its complaint. The note was payable to an entity other than HSBC and lacked an endorsement in favor of the bank. HSBC subsequently filed an amended complaint, attaching a new copy of the note that now contained an endorsement in favor of the bank. The endorsement was not dated, however, but HSBC also attached a copy of the assignment of the note that was backdated to a point prior to the date HSBC filed its foreclosure action. The borrower raised lack of standing as a defense, claiming that the lack of a date on the endorsement, coupled with execution of the assignment of note after HSBC filed its action (a claim disputed by HSBC), warranted judgment in favor of the borrower.
In Harris v. HSBC Bank USA, the Fourth DCA agreed that HSBC lacked standing for three reasons:
- The endorsement was not dated;
- Backdating the assignment was insufficient by itself to establish that the note was assigned prior to the date HSBC filed its lawsuit; and
- HSBC’s witness lacked knowledge as to the date HSBC received the assignment of note.
The Fourth DCA did not state whether any one of the justifications for holding in favor of the borrower was dispositive, but as we have stressed before, prior to filing a foreclosure action, lenders should ensure the note is properly endorsed or payable to the plaintiff. Ensuring the note is properly endorsed at the outset can play a significant role in avoiding delays and unnecessary expenses through the litigation process.
