Note Endorsements

Florida 2nd DCA Upholds An Argument That Incomplete Note Endorsements Are Not Valid Endorsements!

Note EndorsementsMFI-Miami has been making the argument for years that incomplete note endorsements are invalid. Unfortunately, getting a Florida Circuit Court judge to agree with you is a crap shoot. Most Circuit Court judges want to maintain the status quo and stick to their prejudice that the homeowner is a deadbeat. They also know most clients don’t have the money to appeal to the DCA.

The Florida DCA requires homeowners put up a bond of up to one-third of the judgment amount to appeal. So, judges see siding with a lender as a safe bet because most homeowners don’t have this kind of cash. As a result, the homeowner will have the lawyer negotiate a loan modification or a Cash-For-Keys deal.

Incomplete note endorsements usually happen when the note is transferred to an MBS Trust. The endorsement contains the name of the entity acting as the Trustee for the MBS Trust but nothing else. Most of these are loans held by MBS Trusts with Deutsche Bank entity is acting as the Trustee. 

MFI-Miami has worked on cases where the endorsement says, “Deutsche Bank National Trust Company as Trustee.”

Nothing else. 

Incomplete Note Endorsements Arguments Can Nuke A Foreclosure Claim

Note EndorsementsHere’s the problem. Deutsche Bank executives have argued multiple times in court that 1) Deutsche Bank as a Trustee doesn’t own anything and 2) The Trustee has no power to enforce the terms of the mortgage.

Also, Deutsche Bank National Trust Company and Deutsche Bank National Trust Americas act as Trustees on tens of thousands of MBS Trusts. Think of it this way. When someone asks an Englishman where he lives and he says, “The UK.” 

It’s kind of vague. 

The 2nd Florida DCA finally agreed with the logic of this argument in Johnson v. Deutsche Bank National Trust Americas As Trustee For RALI 2007 QS1 (see below).

The court ruled that the vague note endorsement saying,Deutsche Bank National Trust Americas As Trustee” is insufficient to show RALI 2007 QS1’s standing to enforce the note. 

RALI’s lawyers attempted to argue they had proper standing because they could show a proper chain of mortgage assignments. However, the court rejected this argument based on Houk v. Pennymac. In Houk, the court ruled a lender does not acquire standing to foreclose based on an assignment of only the mortgage.

Johnson v Deutsche Bank

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