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To establish standing by merger in a foreclosure action, the surviving entity must prove that it acquired all of the absorbed entity’s assets, including the note and mortgage by virtue of the merger. On February 2, 2018, the Fifth District Court of Appeal released the opinion of *Fielding v. PNC Bank Nat'l Ass'n, No. 5D16-440, 2018 WL 663820, (Fla. Dist. Ct. App. Feb. 2, 2018), which held that the “banks must establish and explain the relationship between the entities in the entire chain of mergers in order to establish standing.”. In this instant case, the borrower executed a note and mortgage agreement with Fidelity Federal Bank and Trust (“Original Lender”), and then the original lender converted to a national bank, assumed the name Fidelity Bank, National Association, and then merged into National City Bank (“NCB”). Thereafter, National City Mortgage “(NCM”) filed a foreclosure complaint. Id. National City Bank merged with PNC Bank National Association, in which National City Mortgage (Plaintiff) moved to substitute PNC Bank National Association as Plaintiff by virtue of the merger.
At trial the lower court entered judgment in favor of PNC Bank, National Association, however upon review, the Fifth District Court of Appeal held that as PNC Bank, National Association, left out how National City Mortgage (original Plaintiff) was in the chain of the mergers, they failed to establish standing, and ordered that the lower court judgment be reversed and remanded for instructions for the trial court to enter an involuntary dismissal. In reaching this holding, the Court held that “to establish standing by merger in a foreclosure action, the surviving entity must prove that it acquired all of the absorbed entity’s assets, including the note and mortgage by virtue of the merger. “ Id.
A clear and sequential chain of assignments of mortgage, coupled with competent and admissible testimony is sufficient to establish standing when the original note is lost. On February 21, 2018, the Third District Court of Appeal released the opinion of Hines v. New Urban Pine Rd. LLC, No. 3D16-1168, 2018 WL 988205, (Fla. Dist. Ct. App. Feb. 21, 2018), in which the Court held that “an unbroken chain of assignments, coupled with competent and substantial testimony was sufficient to meet the requirements that Plaintiff had standing to bring to re-establish the lost note.”
At trial, the Plaintiff presented competent and substantial evidence of an unbroken chain of assignments from the original lender to Plaintiff, in which the trial Court found to establish standing. It is important to note that after review of the filed Assignment of Mortgages, the first Assignment of Mortgage did not assign the note, however, all other assignments did.
Standing established by unrefuted evidence that the original note continued to be held by the original lender despite the name change and merger. On March 2, 2018, the Second District Court of Appeal released the opinion of Heyward v. Wells Fargo Bank, N.A., No. 2D16-339, 2018 WL 1123831, (Fla. Dist. Ct. App. Mar. 2, 2018), in which the Court held, “standing arguments based on notion that the note changed hands in some fashion after it was delivered to original lender were refuted by record evidence establishing that note continued to be held by original lender despite name change and merger.”
The facts surrounding this decision were that the borrowers executed and delivered a note and mortgage to World Savings Bank, F.S.B. World Savings Bank, F.S.B., thereafter amended its charter and bylaws to change its name to Wachovia Mortgage, F.S.B. Borrower defaulted, in which Wachovia Mortgage, F.S.B., sued to foreclose. Laster that year, Wachovia converted into a national bank with the name Wells Fargo Bank Southwest, National Association, which then merged simultaneously into Wells Fargo Bank, N.A. Wachovia Mortgage, F.S.B. (Plaintiff) then moved to substitute Wells Fargo as the Plaintiff, in which Wells Fargo then alleged it was the holder of the note by virtue of a merger or chain of mergers with and/or name change of original lender.
At trial, Wells Fargo introduced a copy of the original note and mortgage of the originals that were previously filed with the court, and had a loan verification analyst from Wells Fargo testify and introduced certifications from the Office of the Comptroller of the Currency certifying that World Bank had changed its name to Wachovia, and that Wachovia merged into Wells Fargo. The note bore no endorsements nor were any assignments attached to the note.
The Appellants argued that the Wells Fargo was required to prove its entitlement to enforce the note under the lost note statute. The trial court held that there was no evidence to suggest that the note was lost, destroyed or stolen, rather there was just a merger, and that as a result of the merger, and Wells Fargo became Wachovia’s successor and the owner and holder of the note by operation of law. In reaching this conclusion, the trial court cited to 12 U.S.C. 215a(e) (2012) (providing that when national bank merges with another banking entity , “the receiving association shall be deemed to be the same corporation as each bank or banking association participating in the merger and that all rights, franchises, and interest of the individual merging banks or banking associations in and to every type of property and choses in action shall be transferred to and vested in the receiving association by virtue of such merger without any deed or other transfer.”
Need to show proof of how an alleged successor entity had authority to assign the note. On March 2, 2018, the Second District Court of Appeal also released Arcuri v. HSBC Bank USA, Nat'l Ass'n for SG Mortg. Sec. Tr. 2006-FREI, Asset Backed Certificates, Series FREI, No. 2D16-4201, 2018 WL 1123827, (Fla. Dist. Ct. App. Mar. 2, 2018), in which the Court held that because the bank failed to offer any proof of how an alleged successor entity had authority to assign the note, the bank failed to establish standing.
The facts surrounding this holding were that HSBC Bank USA, N.A., filed a complaint alleging that it was the holder in possession. At trial, the note and mortgage were admitted into evidence. The note reflected that the originating lender was Fremont Investment and Loan, and had an allonge affixed to it, that purported to transfer it to HSBC Bank from SGGH, LLC, successor in interest to Fremont Reorganizing Corporation f/k/a Fremont Investment and Loan. At trial, the Appellee called a witness from Wells Fargo Bank, N.A. (servicer of the loan). The Appellant conducted a voir dire wherein the witness testified that she had no documentation showing that Fremont Reorganization Corporation was formerly known as Fremont Investment and Loan or that SGGH was the successor in interest to Fremont Reorganization Corporation. Accordingly, as the witness had no personal knowledge of the merger, and testified as to same, the Second District Court of Appeal reversed the final judgment previously entered in favor of the Bank.
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