If this is your first visit to my website, welcome! My name is Christine Springer and I'm the founder of Desert Edge Legal Services and the author of the content on this site.
Disclaimer: I’m a paralegal, not an attorney and cannot give you legal advice. This is not meant to be legal advice, and there is no guarantee that the information in this post will work for your individual situation. Please consult with an attorney if you have questions about your individual situation.
One of the ways I monitor case law on foreclosure defense is through Google Alerts. This case came up in one of my alerts recently. I have done quite a few property analyses for Florida homeowners. This case is interesting to me because it's based on a mortgage pool from 2005, which tells me that there are still cases like this one being litigated from the foreclosure crisis.
The case is Nationstar Mortgage LLC and U.S. Bank National Association, as trustee for the benefit of Harborview 2005-2 Trust Fund, Appellants/Cross-Appellees, v. Farshadi Faramarz, Appellee/Cross-Appellant.
The mortgage pool in this litigation is the Harborview 2005-2 Trust. The link will take you to the mortgage pool's prospectus, which was the first document filed with the SEC. The prospectus, and later the Pooling and Servicing Agreement, discuss the details of what was supposed to have been done when transferring the loans into the mortgage pool.
The loans that were bundled together in this pool were made in February, 2005. This was two years before subprime crashed, and was just a few years after Wall Street began packaging up home loans into these securitized mortgage pools and selling them as securities.
Like many foreclosure cases, a bank claimed that it was the holder of the note, and used that to initiate a foreclosure proceeding. There was also a MERS assignment, which as we now know was a database set up to track all the various transfers of these loans during the securitization process. The discussion of MERS would take up volumes of blog posts, and I'm not going to go there today either.
The Court actually has a very good factual description, so I'll just use theirs. From the Remand:
"U.S. Bank filed a foreclosure complaint against Faramarz. The bank alleged it was the holder of the note. Faramarz moved to dismiss, arguing the bank “never had standing to initiate this lawsuit.” The trial court denied the motion to dismiss. Faramarz then filed an answer and raised several affirmative defenses, including failure to comply with conditions precedent, breach of contract, and lack of standing to initiate the lawsuit. He also asserted entitlement to prevailing party attorney’s fees and costs pursuant to the reciprocity provision of section 57.105(7), Florida Statutes (which renders a unilateral contract clause for prevailing party fees—such as that contained in the mortgage—bilateral).
Before trial, Nationstar was substituted for U.S. Bank as the plaintiff. At trial, the parties stipulated to the introduction of the note and mortgage (executed by Faramarz), the assignment of mortgage (from MERS, as nominee for the original lender, to U.S. Bank), and the power of attorney (from U.S. Bank to Nationstar).
After Nationstar presented its case, Faramarz moved for involuntary dismissal based on standing. He argued there was “no testimony that . . . at the time the complaint was filed. . . that the trust or the purported Plaintiff, whoever the Plaintiff is, possessed the note, and you have to do that . . .even with a blank endorsement, you have to say that there was possession of the note at the time that the pleadings, that the complaint was filed.” [Emphasis is Christine's]
The trial court granted Faramarz’s motion for involuntary dismissal, finding that the plaintiff lacked standing at the inception of the lawsuit. The court further ruled that, “if[Faramarz] pled for attorneys’ fees and he has got an involuntary dismissal, he has the right to attorneys’ fees. I don’t know any argument against that.”
The trial court subsequently entered a written order dismissing the case without prejudice, awarding attorney’s fees and costs to Faramarz, and reserving jurisdiction to determine the amount of fees and costs. Nationstar unsuccessfully moved for rehearing and did not appeal from the dismissal order. Faramarz filed a motion to determine the amount of prevailing party attorney’s fees and costs.
After a hearing, the trial court awarded Faramarz attorney’s fees totaling $96,100.00 (having applied a multiplier of 2.0).The court also awarded $5,000.00 for the fee expert, and$3,600.00 in taxable costs (the majority of which was for the fee expert’s deposition and deposition preparation). The fees and costs judgment totaled $104,700.00. This appeal and cross-appeal followed.
Nationstar Mortg. LLC, 275 So. 3d at 669–70. We add only that the note introduced at trial was the original note, containing an endorsement in blank."
This fact pattern is how most of them start out – there's a MERS assignment and a Note presented with a blank endorsement.
Then the Plaintiff was substituted by a different bank and neither of them testified that they were actually in possession of the note at the time the case filed, which is a requirement under Florida law. The Defendant moved to dismiss, and the trial court agreed with the Defendant.
Follow the link to read the District Court's Remand from the Florida Supreme Court, with an extensive legal analysis of the appeal issues, including the standing issue.
Disclaimer: This case is specific to Florida, and does not apply in any other state!
The homeowner's lawyer stands to receive about $400,000 in attorneys fees, a sweet victory that was probably many years in the making.