Wednesday's round of appellate decisions at first appeared to contain good news for defense attorneys, who've long lamented the lack of opinions on foreclosure and lender standing from the Third District Court of Appeal.
Legal standing is a sticking point in many foreclosure disputes in the wake of the housing market collapse. It became a prickly issue when the downturn led to bulk sales of millions of troubled mortgages to investors in the secondary debt market. The high volume created a boon for defense attorneys because it meant lenders sometimes lacked adequate documentation to trace each loan assignment to prove debt ownership and the right to foreclose.
For years, attorneys arguing before the Miami-Dade County-based state appellate court watched as its Palm Beach counterpart, the Fourth District Court of Appeal, issued dozens of opinions that spelled out its reasoning, while the Third DCA issued single-line per curiam affirmances, or PCAs.
In 2015, for instance, the Third DCA, which hears appeals from Miami-Dade and Monroe counties, issued PCAs in about 81 percent of foreclosure cases. From 2013 to the first week of March when the first large wave of appeals stemming from the housing collapse hit their dockets, the Third DCA wrote four opinions addressing lender standing, compared with 76 opinions on the same subject from the Fourth DCA, according to a count by Davie attorney Michael Wrubel.
Among the 12 opinions it issued this week, there was some promise in a case by a loan servicer claiming legal standing or authority to enforce a promissory note by bringing suit against a Miami homeowner. But the opinion contained 89 words none of which was "standing." In fact, the issue that prompted the ruling was procedural: whether the plaintiff had properly served court papers on the homeowner.
The litigation pitted pro se appellant Claudia Merino against loan servicer PennyMac Corp., which moved to regain control of a condominium at the Village of Kings Creek in Miami. Merino had signed a promissory note from lender Bank of America N.A. in 2006, but defaulted with an unpaid principal of about $163,337, according to court documents.
PennyMac filed suit as servicer for a successor lender claiming to have standing to initiate the foreclosure. Before the court could reach that issue, Merino claimed the plaintiff had failed to properly notify her of the lawsuit, and moved to quash service of process.
Miami-Dade Circuit Judge Peter Lopez denied the request, prompting the appeal to the Third DCA. Meanwhile a notice of voluntary dismissal without prejudice by PennyMac on July 7 showed the parties settled through a loan modification, and the lender released its lis pendens on the condo.