PATRICIA SALMON, APPELLANT,
v.
FORECLOSED ASSET SALES AND TRANSFER PARTNERSHIP, SUBSTITUTED FOR U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF6 MRA REO TRUST, APPELLEE
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In a mortgage foreclosure case, the Fourth District Court of Appeal reversed a summary final judgment of foreclosure, holding that a genuine question of fact existed regarding whether the trustee bank had standing to file the foreclosure complaint when the note had allegedly been sold to another party just twenty days before suit was filed.
The court held that there was a genuine question of fact as to whether U.S. Bank Trust, N.A. had standing to file suit on August 29, 2012, when the note may have been sold twenty days earlier. The court reaffirmed the longstanding rule that a plaintiff in mortgage foreclosure must demonstrate standing at the time the lawsuit is filed and cannot acquire standing after filing.
[1] A plaintiff in a mortgage foreclosure action must demonstrate standing at the time the lawsuit was filed.
[2] A plaintiff cannot acquire standing to bring a mortgage foreclosure action after the lawsuit has been filed.
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Join FLexlaw to unlock all legal intelligence“the plaintiff in a mortgage foreclosure demonstrate standing at the time the lawsuit was filed and that a plaintiff cannot acquire standing after filing”
Establishes the fundamental rule that standing must exist when the complaint is filed, not after
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Join FLexlaw to unlock all legal intelligenceA home mortgage note was securitized and passed through multiple holders before ending up with U.S. Bank Trust, N.A., which filed a foreclosure compla…
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In the film It’s a Wonderful Life, local banker George Bailey makes loans to his neighbors in Bedford Falls. No doubt, he took the notes and mortgages and put them in the safe in the back room, where the only risk was Uncle Billy and his failing memory. When George faces a monetary crisis, his neighbors step up with Christmas Eve donations to save George and his building and loan.
Those days are long gone.
This case involves a home mortgage. After the borrower signed the loan paperwork, the note was bundled, securitized, and indorsed to a series of holders with inscrutable acronyms like LSF6 Mercury REO Investments Trust Series 2008-1 or LSF6 MRA REO Trust until the note ended up with U.S. Bank Trust, N.A., which filed a foreclosure complaint on August 29, 2012 as trustee for LSF6 MRA REO Trust.
After the lawsuit was filed Foreclosed Asset Sales and Transfer Partnership (“FASTP”), was substituted as a party-plaintiff on February 14, 2013. An affidavit executed by the president of FASTP’s servicer stated that FASTP had been assigned all rights to the note and mortgage by Federal Trust Bank as part of a bulk sale. An August 9, 2012 assignment of mortgage was attached; it indicated that the transfer was from U.S. Bank Trust, N.A., not Federal Trust Bank. This assignment also states that it assigns the mortgage, “together with certain note(s) described therein with all interests, all liens, and any rights due or to become due thereon.”
The law on mortgage foreclosures developed at a time when mortgages generally remained with the same financial institution that made the loan, like George Bailey’s building and loan. Two of these longstanding rules are that the plaintiff in a mortgage foreclosure demonstrate standing at the time the lawsuit was filed and that a plaintiff cannot acquire standing after filing.
This was a summary final judgment of foreclosure. In the light most favorable to the borrower, U.S. Bank Trust, N.A. sold the note on August 9, 2012, twenty days before it filed suit, without any record explanation of its authority to file suit on behalf of FASTP. On this record, there is a question of fact as to whether U.S. Bank Trust, N.A. had standing to file suit on August 29, 2012.
The summary final judgment is reversed.'
WARNER and FORST, JJ., concur.