Comment on Florida Supreme Court
Task Force on Residential Mortgage Foreclosure Cases
The Florida Supreme Court’s report (“THE REPORT”) touches most of the bases of the Florida
foreclosure problem but it misses one critical development--these foreclosure cases are not the
cases they were ten years ago. The “old style” foreclosures (local bank lends money to someone
and retains the promissory note in a safe until the day of summary judgment) are hard to defend
and generally involve far less litigation as a consequence. Today, most of the cases I am dealing
with involve a Plaintiff which is a trust for mortgage backed security ("MBS") or a MERS
nominee of some kind.
Moreover, MERS has wreaked havoc on the old system of foreclosure jurisprudence because
it allowed transferees of mortgages to believe they had taken title to a loan without validating
that the original documents followed that electronic transfer. The combination of MERS and the
necessity of multiple transfers of the promissory note for a mortgage to enter an MBS is the root
of all these problems.
In every MERS and MBS case I have dealt over the last two years the transfer of the critical
documents to the Trust and the proper endorsement of the Note to that entity appears to have
failed to varying degrees—this is so, irrespective of whether the plaintiff finally secures
possession of the original note or not.
As an attorney it simply staggers me that ANY defenses are available where a major bank
is involved (and one reads the vast documents that govern what SHOULD have occurred
regarding promissory note transfer and storage).
In most MBS cases, clients borrowed the money and did not pay it back (the defense of
payment is rarely used!), but such was the shoddy and rushed way these loans were sold and
packaged and transferred (in the 2004 through 2007 period) that in nearly every case a couple of
hours examination by a good defense lawyer reveals an array of errors (and legal defenses).
Moreover, these defenses are substantial and, in my view, if properly prosecuted can survive all
the way to a full trial and, may, at that point result in a win for the defendant.
The mortgage backed security cases (and MERS cases) involve substantial litigation not just
because of the “multiple transfer” problem, but because such transfers appear rarely to have
occurred in a manner that was proper under the terms of the mortgage back security trust. In
short, if plaintiffs had secured the proper paperwork when they made these loans, they would
have easy cases now. They didn’t and so they don’t!
If the concern of THE REPORT is to reduce the litigation load upon Florida Courts then
a standing order requiring Plaintiffs’ attorneys to verify that the foreclosure complaint package
is complete would seem to be the bare minimum requirement. THE REPORT recommends this
option but THE REPORT does not go far enough because it does not address what a “complete”
package should consist of. In my view, THE REPORT makes its recommendations based on the
“old style” theory of loan and will not, in my view, have much impact of the volume of litigation
concerning the new forms of mortgage back security and MERS cases. I think more care needs
to be taken in the wording concerning this foreclosure complaint “package.” Yes, it should be
verified but what needs to be “verified” is a chain of ownership from the originating lender to the
plaintiff trust (or plaintiff MERS nominee bringing the case). If this were a requirement,
plaintiffs' attorneys would face ethical violations for not doing the preparation necessary to bring
the case in a proper manner. It would stop the rush to the court room, (but it would also preclude
In THE REPORT, Plaintiff's firms suggest that they cannot get the original note and
mortgage in time to bring the case to court. I believe that this statement is highly disingenuous.
Plaintiffs ARE filing notes and mortgages. Plaintiffs are filing copies of promissory notes and
mortgages which invariably show a different party in interest than the plaintiff. Plaintiffs
attorneys are then “suggesting” to the Court that they have the original properly endorsed note
when they have never seen them. Despite the claims in THE REPORT it is my experience that
such properly endorsed notes almost never find their way to a judge prior to a foreclosure sale.
What is briefly drawn under the nose of the judge in the five minutes or so it takes to secure a
summary judgment in an undefended case, may be original but it is rarely properly endorsed.
Most, of the time it is not even an original document but merely a copy of a copy of an
inadequately endorsed note.
Under discovery obligations (and motions to compel and sometimes contempt orders)
plaintiffs will file an “assignment” showing some kind of a transfer to the Plaintiff from the
original lender. This transfer occurs generally a few days prior to the case being brought. Such a
transfer is nearly always impossible under the rules governing a mortgage backed security trust
and is, in my view, very close to a fraud on the court. Such an assignment will be signed by a
“vice president of MERS” or “vice president” of the Plaintiff when the signer is not a vice
president of anything, may not work for either plaintiff or MERS, and, generally, only saw the
assignment document for a few moments before they signed it. Defense lawyers who
occasionally set depositions of such “vice presidents” are finding that these "vice president"
positions are nominally created positions (i.e., not registered with the state division of
corporations) designed solely to get over the “standing” hurdles of foreclosure defense lawyers
(and to hide the problematic transfer that underlies the original loan).
Now, very few defendants in foreclosure can afford to take depositions of such people but
unless the Florida Rules of Civil Procedure are substantially modified to preclude vague,
ambiguous or deliberately misleading complaints being filed in the first place, then these
defenses require depositions and the courts will continue to be clogged with such litigation.
Indeed, such practices invite litigation.
The practices Ihave just described appears to be the norm rather than the exception and if
the courts are being clogged up with litigation on these matters it could all be stopped by
requiring, via the Florida Rules of Civil Procedure, that the proper documents and a clear chain
of title (via endorsements on the note) be included in the foreclosure complaint “package.”
Plaintiffs should not have to produce the original note BUT should be required a certified copy
of the properly endorsed original note that was signed in ink by the Defendant.
If plaintiff’s cannot produce these documents then they still may have a “lost note” count
under FS 693.3071, but plaintiffs will be precluded from bringing a “possession of note” count
because, in fact, they do not possess the note but merely “appear to.”
Regarding these “lost note” counts, plaintiffs are producing interesting affidavits here as
well. Affidavits are being submitted to the Court by people who are not records custodians, who
may be described as “attorney’s in fact” (and work for plaintiff’s law firm) or who are, yet again,
ubiquitously described as “vice presidents” when they are assistants and secretaries. The shame
of these approaches is that they are undefended 95% of the time. But the bigger shame is that
plaintiffs lawyers are not being rebuked for using such tactics. Zealous advocacy seems to have
overwhelmed plaintiff’s ethical duties to the court in this regard. Should plaintiff’s attorneys
know prior to a summary judgment hearing that the affidavit is made by someone who has never
seen the original note and was not the records custodian of the plaintiff? Of course they should!
THUS, while I fully support the changes recommended in THE REPORT to the Florida
Rule of Civil Procedure 1.110 (and Rule 1.130) such that verification of the complaint be
required and that attachments of the promissory note and the mortgage be submitted at the
pleading stage, I would add the words “properly endorsed” and “showing a clear chain of title
from the original lender to the trust representing the mortgage backed security where plaintiff is
a trustee of a mortgage backed security.” I would also suggest that a “certified copy of the
properly endorsed original note and mortgage signed in ink by defendant” be required at the
pleading stage. If MERS or MERS nominee is the plaintiff rukles of pleading should require a
clear statement as to ownership of the note in question with the same chain of tiotle
While recognizing that the Supreme Court cannot advocate "stacking the deck" against
one side or the other, THE REPORT ignores some of the egregious ethical problems emerging in
the foreclosure of MBS and MERS mortgages cases and has missed an obvious way to unclog
the courts. I believe my suggestions would force plaintiffs to prepare their case fully prior to
putting it before that case to a court and it would remove most of the defenses that a good
defendant’s counsel could muster when he or she first reviews the Complaint.
Plaintiffs should easily be able to prepare these cases and preclude complex litigation. In
my view anything less else invites sloppiness (at best) or fraud on the Court (at worst).
Kevin Hoyes, Esq.
Key West, Florida
Kevin M. Hoyes, Esq.
1026 Thomas Street, Key West, FL 33040
Phone 305 731 3349
Fax 305 295 0123