Loan Modification Agreement is not a negotiable instrument and a duplicate, if properly authenticated is admissible.
On July 5, 2018, the Third District Court of Appeal in Bank of New York Mellon v. Garcia, Case No, 3D17-2041, 43 Fla. L. Weekly D1534b (Fla. 3d DCA July 5, 2018) held that “a loan modification agreement is not a negotiable instrument and a duplicate, if properly authenticated, is admissible to the same extent as the original and without need for an explanation as to why the original was unavailable.” citing Liukkonen v. Bayview Loan Servicing, 43 Fla. L. Weekly, D663 *2 (Fla. 4th DCA March 28, 2018). The background of this case is that at trial the Bank sought to introduce a duplicate of the loan modification executed by the parties, and Garcia objected asserting that under the Best Evidence Rule (Fla. Stat. 90.252) that an original was required. Garcia further argued that Fla. Stat. 90.953 was inapplicable because the loan modification agreement is a negotiable instrument. The trial court sustained the objection and denied admission of the loan modification agreement duplicate. When Garcia moved for an involuntary dismissal, the trial court granted same based on the failure to introduce the original loan modification agreement and that the initial default alleged in the Complaint was more than five years old.
The Third District Court of Appeal held that the trial court erred in entering a final judgment of dismissal in favor of Garcia. As a loan modification is not a negotiable instrument, and as the subject Complaint pled the initial default and all subsequent payments. Accordingly, the final judgment is reversed and remanded for a new trial.
"Original Note with a blank endorsement previously filed by prior Plaintiff with the Court, and released by the Substituted Plaintiff prior to trial, so that the Substituted Plaintiff had physical possession of the note at the time of trial, was sufficient to establish standing.” On June 29, 2018, the Second District Court of Appeal in Nationstar Mortgage, LLC as successor in interest to Wells Fargo Bank, v. Johnson, Case No. 2D17-2398, 43 Fla. L. Weekly D1509a, (2ndDCA June 29, 2018) held that the “trial court erred by dismissing the foreclosure action for lack of standing, as the substituted Plaintiff had physical possession of the note endorsed in blank at the time of trial.” The background of this case is that Wells Fargo Bank, N.A., filed a complaint with a copy of a note endorsed in blank, and filed the original note with the Court shortly afterwards. Thereafter, Wells Fargo filed a motion to substitute party plaintiff asserting that the mortgage had been transferred to Nationstar. With the motion to substitute party plaintiff pending, Wells Fargo the day before trial, moved for the release of the originals that had been filed previously, and requested a continuance so that Nationstar could enter an appearance and request the return of the originals. The Motion to Substitute Party Plaintiff was granted at trial, and Nationstar made an oral request to release the original note and mortgage into Nationstar’s custody “for use at trial.” During the trial, Nationstar then introduced the original note into evidence. No objection was made as to the admission of the original note and mortgage. Relying on Geweye v. Ventures Trust 2013-I-H-R, 189 So. 3d 231 (Fla. 2d DCA 2016), and Creadon v. U.S. Bank, N.A., 166 So. 3d 952 (Fla. 2d DCA 2015), the Johnsons moved for an involuntary dismissal at the conclusion of Nationstar's case, arguing that Nationstar lacked standing at trial. The trial court agreed and granted the motion.
"Is a condition precedent, not an affirmative defense. Bank bore the burden of proving it had met the condition precedent pursuant to section 203.604.” On June 28, 2018, the First District Court of Appeal, in Chrzuszcz v. Wells Fargo Bank, Case No. 1D16-3239, 43 Fla. L. Weekly D1486a (1st DCA June 28, 2016), held that the “trial court erred in denying a motion for involuntary dismissal where Plaintiff failed to comply with HUD regulation requiring that the bank either have face-to face interview with borrower or make reasonable attempt to do so prior to initiating foreclosure action.” At trial the Bank offered no testimony regarding whether the Bank complied with the face-to-face counseling requirement, after the Borrower argued that the Bank failed to comply with same. The Bank argued that compliance with HUD regulations are an affirmative defense, as opposed to a condition precedent, and that the Borrower had failed to plead noncompliance. Relying on Palma v. JPMorgan Chase Bank, 208 So. 3d 771 (Fla. 5th DCA 2016) the First District Court of Appeal held that face-to-face counseling requirement is not an affirmative defense, but rather a condition precedent, similar to that of paragraph 22 requirement in the mortgage, and that the Bank bears the burden of proving same.
Third Party Purchaser from HOA Foreclosure purchased the property subject to a superior interest. Third Party Purchaser should not have been permitted to participate as though it were a party to the note and mortgage.
On June 8, 2018, the Second District Court of Appeal, in The Bank of New York Mellon v. HOA Rescue Fund, LLC, Case No. 2d17-3291, 43 Fla. L. Weekly D1312b, held that “HOA Rescue should not have been permitted to intervene in the case. A purchaser of property that is the subject of a pending foreclosure action in which a lis pendens has been previously been recorded is not entitled to intervene in that foreclosure action.” Additionally, the Second District Court of Appeal went onto hold that, “ HOA Rescue should not have been permitted to participate as though it were a party to the note and mortgage.” citing Wells Fargo Bank, N.A. v. Rutledge, 230 So. 3d 550, 552 (Fla. 2d DCA 2017); cf. Pealer v. Wilmington Tr. Nat'l Ass'n, 212 So. 3d 1137, 1139 (Fla. 2d DCA 2017) (Sleet, J., Concurring) (stating that indispensable third-party purchasers “may participate in the bank's foreclosure proceedings only to the extent that they plan to exercise their statutory right of redemption and prevent the forced sale of the property”).