The housing crisis brought it a lot of foreclosure filings. These foreclosure findings revealed and continue to reveal a lot of misconduct and mistakes on the lending side. A lot of the misconduct related to the systemization of the processing and servicing of the loans where the emphasis was on more loans and higher value loans. This emphasis caused many lenders and servicers to overlook important details like reviewing paperwork to ensure its accuracy or completing all the necessary paperwork when ownership of a loan is transferred.
Additional regulations and the public spotlight have helped improve the current mortgage lending system, but it is far from “fixed” and there remain many residual issues from years of misconduct and mistakes. Sometimes, the misconduct or simply mistakes on the lending side can provide a defense for homeowners, whether they occurred during the processing and servicing of the mortgage or when the same failure to adhere to detail occurs during the litigation. The recent case of Sanchez v. Suntrust Bank out of the 4th District Court of Appeal (“4th DCA”) falls into this latter category.
The Evidence Foreclosure Defense in Action
In Sanchez, the homeowners, the Sanchez’s executed a promissory note and mortgage with Suntrust Mortgage (“Suntrust Mortgage”). As you may remember from prior Florida foreclosure blogs, the note is the promise to pay and the mortgage is the security in the home. Suntrust Mortgage is a wholly owned subsidiary of Suntrust Bank (“Suntrus Bankt”), the party involved in the case. Suntrust Bank eventually filed the original note with the court; it contained an undated, blank endorsement from Suntrust Mortgage.
This case came down to evidence. The Sanchez’s contended that the trial court should not have allowed certain evidence into the case and should not have considered that evidence. The specific evidence they alleged was objectionable included: “a screenshot of a computerized record keeping system; the payment history; two default letters; the collection notes; and a payoff calculation.” This evidence was used to establish two necessary facts in the case: (1) that Suntrust Bank had standing to sue because Suntrust Mortgage transferred the note to it; and (2) the amount outstanding on the note. Thus, if the evidence was not admissible, Suntrust Bank would not have been able to prove its case.
The 4th DCA’s opinion focused on screenshots of the company system. These screenshots allegedly demonstrated that the note was endorsed in blank three days after the note and mortgage were executed. The court held that the proper foundation was not laid for the screenshot in order to establish that it fell within a business records exception that would have allowed it to be introduced. That exception requires, among other things, that “the record was made at or near the time of the event.” At trial, there was no questioning or testimony regarding whether the records was made at or near the time of the event and accordingly, it should not have been admitted.
The 4th DCA further held that the witness who testified regarding the records probably was not qualified (i.e. not the proper person with necessary knowledge) to testify regarding the record. The witness must have either had personal knowledge of the documents being introduced (the screenshot) OR have familiarity with how records are kept in the ordinary course of business. The witness in the Sanchez case established neither and in fact, admitted that he did not know about how the screenshot and data contained therein was created.
Finally, the 4th DCA noted that even if the witness had avoided the mistakes above, the records still would not have carried the case because the witness did not testify that the endorsement in blank occurred prior to the institution of the case, a requirement for Suntrust Bank to have had standing to bring the suit.
As always, if you have questions about the evidence foreclosure defense and or other possible defenses or ways to avoid foreclosure, the attorneys at the Adam Law Group, P.A. are here for you.