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I'm Eric Lanigan with Lanigan and Lanigan, a law firm in Winter Park, Florida, which
is in the greater Orlando area. I want to talk for a minute about cases where the bank
claims in the foreclosure action that they don't have the original note because it was
lost. I've read articles written where people try to make a big deal out of the fact that
well, the note really wasn't lost, it was destroyed throughout the securitization process.
And the reality is it doesn't really matter if it was destroyed because under the Florida
statute that deals with establishing the validity of a lost instrument, the note can either
be destroyed it can be a situation where the whereabouts are just unknown. It can be a
situation where the whereabouts are unknown but in the the possession of someone who shouldn't
have it and refuses to relingquish it. So you can have anyone of those situations and
it falls under the lost note statute. So you have to prove one of those things to begin
with.
The second thing that the bank has to prove is that the note was not transferred by the
person who last had lawful possession to somebody else. And this is especially significant when
the copy of the note, which theoretically the lender does have in a foreclosure action,
they just can't produce the original. Shows that it was a blank endorsement. In other
words the endorsement just says pay to the order of and then, it's a blank and then the
original lender has signed it.
So basically when you have that blanket endorsement and the bank's will argue that anyone who's
in possession of the original note is the holder in due course and has the right to
enforce it. So if you have a note that's so called lost and it's endorsed in blank, this
is when you need to be especially concerned.
Now the third thing that the bank must establish, and that and it's a multi-part third element,
is that what are the terms of the note? In other words, how much is it for? What's the
interest rate, what's the payment schedule? All those things you see written in the note,
well, they have to establish what those terms are verbally since they don't have the original.
The other is that they have the right to enforce the note. In other words, one of those other
things has not occurred. That there wasn't a lawful transfer of the note by someone in
possession before it allegedly was supposed to be transferred to the bank now seeking
to enforce it.
Now they have to prove all of these things, all three of those elements, by proving competent
evidence. By competent evidence I mean through documents and testimony that comply with the
rules of evidence. The rules are a lot different than just a backyard conversation. A lot of
things that just go on in conversation, as you well know, never get into a courtroom.
things like hearsay is a good example of a rule of evidence that can be applied.
And that's why it's critical that if you're in a situation for instance in a lost note
case that you be represented by an attorney who's experienced in trial procedures and
who understands the rules of evidence. Because that's what it's going to get down to. It's
going to get down to, can, through the rules of evidence, your attorney make sure that
no incompetent evidence is admitted into court.
And remember, it's not the judge who's going to invoke objections to the testimony, if
you or your lawyer don't object, then it's going to come in no matter how incompetent
that evidence may be. And in a foreclosure case, when you get to trial, the plaintiff
the lender, typically shows up with one witness who's going to do everything. And almost invariably,
if that witness is properly attacked and cross examined on this lost evidence, they're not
going to be able to come establish those elements. Because that person is not going to havve
any personal knowledge as to when the note was lost.
And their complaint is probably going to say they don't know when it was lost and so he's
also going to say, "I don't know who had it when it was lost."
Then he's going to say, "since I don't know when it was lost obviously I don't know who
had it when it was lost because the note has changed hands over time. Well if I don't know
over which one of these stops it got lost, then I certainly can't say who had it. And
if I never know who had it then I certainly can't say whether that unknown person actually
ever made a lawful transfer to someone else.
So if they come in with this one witness thing and they're properly attacked on cross examination
then they're not going to be able to establish this lost note. And if they can't establish
the lost note, then they can't establish their case.
So this is a situation if you get served with foreclosure papers or you've got a pending
foreclosure and there's a count in there to establish a lost note, you need to get to
someone who's competent in the rules of evidence and how to cross examine people in court.
Again, I'm Eric Lanigan, an attorney with Lanigan and Lanigan, a law firm in Winter
Park, which is a suburb of Orlando, Florida.