Fourth DCA Finds an Agency Relationship Between Servicer and Noteholder without PSA or MLS
On Wednesday the Fourth District Court of Appeal reversed an order of involuntary dismissal finding that the Bank of New York Mellon had standing to initiate the foreclosure action even when a different party, the mortgage servicer, was in possession of the note and the Plaintiff failed to introduce either the Pooling and Servicing Agreement of the trust that allegedly owned the loan or an MLS evidencing the loan was a part of that trust. The decision is the most recent in a line of cases starting with Caraccia v. U.S. Bank, Nat’l Ass’n, 185 So. 3d 1277, 1279 (Fla. 4th DCA 2016), that hold a plaintiff can demonstrate their standing to foreclose when they are merely in constructive possession of the negotiable instrument they are seeking to enforce.
This latest case demonstrates just how little proof a servicer is required to show in order to demonstrate an agency relationship and constructive possession. The opinion notes Bank of New York Mellon could not introduce either the Pooling and Servicing Agreement or the Mortgage Loan Schedule to show that the servicer in actual possession of the note was in anyway related to the promissory note Bank of New York sought to enforce. The only evidence submitted to demonstrate the agency relationship necessary for constructive possession was one limited power of attorney that listed the servicer as authorized to initiate foreclosure actions on behalf of the bank. This scant evidence, combined with the presumption established through Ortiz and Clarke was sufficient evidence to demonstrate Bank of New York Mellon’s standing.
It’s worth mentioning that the limited power of attorney specifically mentions the pooling and servicing agreement that wasn’t admitted into evidence, and that the reason the PSA wasn’t admitted is because the plaintiff prevented the defendant from questioning the bank’s witness about the contents of the PSA during her deposition.
Without having the opportunity to shed light on this secret agency relationship it will prove very difficult to rebut all the presumptions building into this area of law. While this reversal was at the involuntarily dismissal stage, and not on the weight of the evidence it could set a dangerous precedent which would require defendants to affirmatively prove that there was not an agency relationship between the plaintiff and the servicer in actual possession of the note. In situations such as this, where the Plaintiff prevented the Defendant from asking questions about the PSA which may have uncovered that there was not such an agency relationship, proving this fact could be particularly difficult.
But I suppose that’s why lawyers exists.
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