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Foreclosure Standing and the Pooling and Servicing Agreement

In light of the wealth of current case law on this issue, it should no longer be a surprise to a foreclosure plaintiff that it must prove that it had standing to foreclose on the date the original complaint was filed. However, foreclosure Plaintiffs have recently begun to rely more heavily upon the Pooling and Servicing Agreement (PSA) to satisfy the standing requirement when it comes to securitized loans. While standing can be demonstrated through a Pooling and Servicing Agreement, it does not due so automatically without further additional corroborating evidence to demonstrate that the note was part of the pooling and servicing agreement on the day that the foreclosure complaint was initiated. The bank must still provide competent substantial evidence that it held the note on the date that the foreclosure case was filed.

While the initial case law concerning Pooling and Servicing Agreements seemed to give foreclosure Plaintiffs extraordinary latitude when it comes to standing, it appears that the trial courts are now narrowing that prior leniency. In Deutsche Bank Nat’l Tr. Co. v. Marciano, 190 So. 3d 166, 167 (Fla. 5th DCA 2016), the Fifth District Court of Appeal held that when the PSA evidenced a closing date which pre-dated the filing of the instant complaint, the PSA could provide standing where the PSA contained a loan schedule showing that all loans were in the pool or trust prior to the closing date. In other words, as long as the PSA seemed to indicate that the loan in question was part of the PSA and the closing date preceded the date of filing the complaint, the foreclosure plaintiff established standing. However, since the Marciano decision was released appellate courts have expanded upon this decision and established stricter requirements for foreclosure plaintiffs. In Friedle v. Bank of N.Y. Mellon, 42 Fla. L. Weekly D1163 (Fla. 4th DCA May 24, 2017), the Fourth District Court of Appeal held that even if the PSA was “admissible, it does not assist in proving standing…[because the] bank did not admit into evidence any certification with respect to this mortgage that the Trustee had checked the file and that all the loan documents were present. Therefore, even if admissible, the PSA does not provide evidence that this mortgage note was within the possession of the Bank as Trustee.” Id. The Friedle case indicates that the banks must actually provide evidence that the mortgage in question was apart of the PSA or trust on the closing date. Failing to do so, fails to prove standing.

Ultimately, the burden is on the party seeking foreclosure to prove by substantial competent evidence that it has standing. Elsman v. HSBC Bank USA, 182 So. 3d 770, 771 (Fla. 5th DCA 2015). Whether this is sought to be done through a Pooling and Servicing Agreement or through some other means, it will always be the Plaintiff’s burden to provide competent substantial evidence that it maintained standing at the inception of the lawsuit. Utilizing a pooling and servicing agreement does not circumvent this standing requirement. While many foreclosure Plaintiffs will argue that the closing date in the PSA establishes standing, this is not true unless there is further corroborating evidence.