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Pennington v. Ocwen Loan Servicing, LLC
Factual and Procedural Background
In April 2007, Mark Pennington executed a promissory note and mortgage on his condominium, payable to E.Q. Financial, Inc., the original lender. The note was endorsed by an allonge making it payable to Countrywide Home Loans, Inc., requiring both possession and a valid indorsement for negotiation. In January 2009, Mortgage Electronic Registrations Systems, Inc. (MERS) purported to transfer the mortgage and note to Ocwen Loan Servicing, LLC ("Ocwen"), without Countrywide's involvement. Pennington defaulted on payments, prompting Ocwen to initiate foreclosure proceedings in May 2009. Subsequently, Ocwen assigned the note and mortgage to Freddie Mac, who later reassigned them back to Ocwen; however, this final reassignment failed to transfer the note. Pennington asserted an affirmative defense of lack of standing, contesting Ocwen's entitlement to enforce the note. The trial court entered judgment in favor of Ocwen, which Pennington appealed.
Legal Issues Presented
- Whether Ocwen Loan Servicing, LLC had standing to foreclose on the mortgage and enforce the promissory note.
- Whether Ocwen sufficiently established standing at both the initiation of the foreclosure action and at the time of final judgment.
- Whether the absence of valid indorsement or assignment from Countrywide to Ocwen invalidated Ocwen's standing.
- Whether the final reassignment of the mortgage and note from Freddie Mac to Ocwen affected Ocwen's standing to foreclose.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Lacombe v. Deutsche Bank Nat'l Trust Co., 149 So.3d 152 (Fla. 1st DCA 2014) | Standard for reviewing sufficiency of evidence to prove standing in foreclosure actions (de novo review). | Guided the court’s de novo review of Ocwen's evidence regarding standing. |
| Focht v. Wells Fargo Bank, N.A., 124 So.3d 308 (Fla. 2d DCA 2013) | Methods for establishing standing to foreclose, including possession of note with indorsement or assignment, or affidavit proving holder status. | Used to evaluate whether Ocwen met the evidentiary requirements to establish standing at filing and judgment. |
| Mazine v. M & I Bank, 67 So.3d 1129 (Fla. 1st DCA 2011) | Requirement that plaintiff must hold the note and mortgage to establish standing to foreclose. | Supported the conclusion that Ocwen failed to prove possession and ownership of the note and mortgage. |
| Boumarate v. HSBC Bank USA, N.A., 109 So.3d 1239 (Fla. 5th DCA 2013) | Standing to foreclose must exist at the time final judgment is entered. | Reinforced that Ocwen’s standing must be established not only at suit commencement but also at judgment. |
| Beaumont v. Bank of New York Mellon, 81 So.3d 553 (Fla. 5th DCA 2012) | Standing requirements at time of final judgment in foreclosure cases. | Supported the court’s analysis regarding standing at entry of final judgment. |
| McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170 (Fla. 4th DCA 2012) | An affidavit executed before filing can establish standing if it alleges ownership and holder status of the note. | Considered but found insufficient because Ocwen lacked proper indorsement despite filing a lost note affidavit. |
| Lindsey v. Wells Fargo Bank, N.A., 139 So.3d 903 (Fla. 1st DCA 2013) | Loss of standing occurs if the party is no longer legally entitled to own or enforce the note. | Applied to Ocwen’s failure to prove standing after the final assignment only transferred the mortgage, not the note. |
Court's Reasoning and Analysis
The court conducted a de novo review of the evidence regarding Ocwen's standing to foreclose. It analyzed the negotiation and transfer requirements of the promissory note under Florida Statutes sections 673.1091 and 673.2051(1), emphasizing that the note was payable to order and required both possession and a valid indorsement by Countrywide to Ocwen. Ocwen failed to produce a valid indorsement or assignment from Countrywide, and the purported assignment letter was insufficient without the actual assignment document. Although Ocwen submitted an affidavit of lost note claiming ownership, the court found it a nullity because mere possession without proper indorsement does not establish standing.
Furthermore, Ocwen’s standing was undermined by the final assignment from Freddie Mac, which transferred only the mortgage, not the note, as admitted by Ocwen’s records custodian. The court recognized that standing must exist both at the time of filing and at the time of final judgment, and Ocwen failed to meet these requirements under Florida law and relevant case precedents. Consequently, the trial court erred in entering judgment for Ocwen instead of granting Pennington’s motion for involuntary dismissal based on lack of standing.
Holding and Implications
REVERSED with direction.
The court reversed the final judgment of foreclosure and directed the trial court to enter judgment in favor of Pennington due to Ocwen’s failure to establish standing to foreclose. The decision directly affects the parties by vacating the foreclosure judgment, but it does not establish new precedent beyond affirming existing legal standards for standing in foreclosure actions under Florida law.
PER CURIAM.
Reversed with direction.
George Gingo and James E. Orth, Jr. of Gingo & Orth, P.A., Titusville, for Appellant. Curtis A. Wilson of McCalla Raymer, LLC, Tampa for Ocwen Loan Servicing, LLC, David D. Rottmann, Jacksonville, for Windsor Falls Condominium Association, Inc., Colleen Colton of Shapiro & Fishman, Boca Raton, Colin Paul–Anthony Blackwood of McGlinchey St, for Appellees.
PER CURIAM.
We grant Appellant's Motion for Clarification, withdraw our previous opinion filed on September 16, 2014, and substitute the following opinion in its place.
Appellant, Mark Pennington (“Pennington”), appeals the final judgment of foreclosure against him and in favor of Appellee, Ocwen Loan Servicing, LLP (“Ocwen”). Because Ocwen failed to establish its standing to foreclose, or to refute Pennington's affirmative defense contesting standing, we reverse and remand for the trial court to enter judgment in favor of Pennington.
In April 2007, Pennington executed a promissory note and mortgage on his condominium. The note was “payable to order” under section 673.1091, Florida Statutes, because it specifically named E.Q. Financial, Inc., the lender, as payee. § 673.1091, Fla. Stat. (“A promise or order that is payable to order is payable to the identified person.”). Mortgage Electronic Registrations Systems, Inc. (MERS) acted as nominee on behalf of E.Q. Financial. The note did not have any indorsements, but attached to the note was an allonge, which made the note payable to Countrywide Home Loans, Inc. The allonge was a special indorsement because it named a specific payee: Countrywide. See § 673.2051(1), Fla. Stat. As such, negotiation of the note required both possession and an indorsement by Countrywide. Id. (A specially indorsed negotiable instrument “becomes payable to the identical person and may be negotiated only by the indorsement of that person.”).
In January 2009, MERS purported to transfer the mortgage and note to Ocwen. Countywide was not involved. When Pennington failed to make payments, Ocwen filed a May 4, 2009 complaint, initiating foreclosure proceedings against him. After the filing of the complaint, Ocwen assigned the note and mortgage to Federal Home Loan Mortgage Corporation (Freddie Mac), who eventually assigned it back to Ocwen. This final re-assignment back to Ocwen failed to transfer the note.
Throughout his pleadings, as well as at trial, Pennington asserted the affirmative defense of lack of standing, arguing that Ocwen was not entitled to enforce the note. Ultimately, however, the trial court entered the instant order in favor of Ocwen.
We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo. Lacombe v. Deutsche Bank Nat'l Trust Co., 149 So.3d 152, (Fla. 1st DCA Oct. 14, 2014). A plaintiff who is not the original lender may establish standing to foreclose by submitting a note with a blank or special indorsement, an assignment of the note, or an affidavit otherwise proving his status as holder of the note. Focht v. Wells Fargo Bank, N.A., 124 So.3d 308, 310 (Fla. 2d DCA 2013); see also Mazine v. M & I Bank, 67 So.3d 1129, 1132 (Fla. 1st DCA 2011) (“To establish standing to foreclose, it must be demonstrated that the plaintiff holds the note and mortgage in question.”). Standing must be established at the time of the filing of the foreclosure action. Focht, 124 So.3d at 310. Additionally, a bank must also have standing at the time final judgment is entered. See Boumarate v. HSBC Bank USA, N.A., 109 So.3d 1239, 1239 (Fla. 5th DCA 2013); Beaumont v. Bank of New York Mellon, 81 So.3d 553, 555 (Fla. 5th DCA 2012).
In this case, Ocwen failed to demonstrate it had standing to enforce the note. Its exhibits did not qualify as an indorsement from Countrywide to Ocwen or as an assignment from Countrywide to Ocwen (while Ocwen submitted a copy of a letter it had written to Pennington informing him of an assignment from Countrywide to Ocwen, the actual assignment itself was never produced). And while Ocwen filed an affidavit of lost note alleging it was the lawful owner of the note so as to establish standing at the time the lawsuit was filed, see McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170, 174 (Fla. 4th DCA 2012) (“[I[f the affidavit itself is executed before the lawsuit is filed, the allegation that the plaintiff is the ‘owner and holder of the note’ is sufficient to establish the plaintiff's standing at the inception of the lawsuit[ ]”), that affidavit was a nullity since negotiation of the note required not only possession, but an indorsement from Countywide to Ocwen. See § 673.2051(1), Fla. Stat. But such was lacking here. Likewise, the record contains no proof by Ocwen that it had standing under any of the means established by section 673.3011, Florida Statutes. See Mazine, 67 So.3d at 1130. Because Ocwen failed to establish standing either at the time of filing the suit or at the time of judgment, the trial court should have granted Pennington's motion for involuntary dismissal for lack of standing.
While this issue is dispositive, we also note that Ocwen's problems were further compounded when the final assignment from Freddie Mac to Ocwen was only for the mortgage; Ocwen's own records custodian admitted this below. Notwithstanding the lack of evidence to prove the Countrywide assignment, even if Ocwen had standing at the commencement of the suit, it would have lost such standing when it was no longer legally entitled to own or enforce the note. See Lindsey v. Wells Fargo Bank, N.A., 139 So.3d 903 (Fla. 1st DCA 2013).
Accordingly, we REVERSE the judgment below, and direct the trial court to enter final judgment for Pennington.
REVERSED. THOMAS, ROWE, and MAKAR, JJ., concur.
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