By: Heather S. Nason
The Florida Second District Court of Appeals recently ruled on yet another challenge to a note holder’s standing to foreclose based on lack of ownership of the mortgage. In OneWest Bank, F.S.B. v. Bauer (May 30, 2014), the Florida Second District Court of Appeals held that the holder of a note had standing to foreclose, even without proof of ownership of the loan documents. In the trial court, OneWest Bank clearly established that it held the note but there was conflicting testimony as to whether OneWest Bank owned the loan or merely serviced it, as successor to IndyMac Bank, F.S.B. The trial court held that OneWest Bank lacked standing to foreclose because the evidence presented before the court conflicted with the allegations in OneWest Bank’s complaint, that it was the owner and holder of the note and mortgage.
The Florida Second District Court of Appeals overturned the decision and ordered that the foreclosure be reinstated. The court decided that OneWest Bank had standing to foreclose notwithstanding the lack of clarity on ownership of the note and mortgage. The court explained that because a promissory note is a negotiable instrument (transferrable by delivery of possession) and the mortgage provides security for the note, either the note holder or a non-holder having the rights of a holder will have standing to foreclose. In these cases, proof of ownership of the loan documents is not required. The decision follows clearly established principals under Florida law and is in line with the majority of Florida decisions respecting the standing of holders of promissory notes in foreclosure proceedings.