Samantha Joseph, Daily Business Review
April 5, 2016
A purchase and assumption agreement was not enough to prove JPMorgan Chase Bank N.A.’s legal standing in a foreclosure case before the Fourth District Court of Appeal.
The bank filed suit as successor to defunct Washington Mutual Bank against homeowners Ottoniel and Luz Cruz, alleging it was the owner of a real estate debt that changed hands at least five times.
JPMorgan Chase purchased the debt in September 2008 from the Federal Deposit Insurance Corp. when WAMU was in receivership, but that deal was one in a string of transfers.
The original borrower executed a mortgage and note with WAMU and later quitclaimed the property to the Cruzes, who defaulted in December 2008.
By the time JPMorgan Chase filed a foreclosure lawsuit in April 2009, it appeared to have lost track of the note. Its complaint included a copy of the mortgage with a count to reestablish a lost note, alleging the bank owned the debt but couldn’t locate the paperwork to prove it.
In October 2009, JPMorgan Chase dropped the lost-note count but moved to reintroduce it years later after yet another transfer — this time to PennyMac Corp. in 2014.
“Because they didn’t have possession of the note, they had to rely on the purchase and assumption agreement, which the Fourth DCA found insufficient,” said defense attorney Ricardo M. Corona Jr. of the Corona Law Firm in Miami.
At a nonjury trial, the bank presented a copy of the note endorsed in blank but not the original. It also called a PennyMac Loan Services foreclosure operations supervisor as a witness to establish its standing.
That proved to be a misstep after the witness testified JPMorgan Chase was the previous servicer and PennyMac Loan serviced the loan on behalf of the current owner, PennyMac Corp.
“The number of entities through which the note and mortgage traveled complicates the facts,” Judge Melanie May wrote in the March 23 unanimous decision. “The bottom line, however, is JPMorgan Chase Bank National Association’s failure to prove standing requires a reversal of the final judgment of foreclosure.”
District Judge Alan Forst and Palm Beach Circuit Judge Rosemarie Scher, sitting by special designation, concurred.
Akerman attorneys Nancy Wallace, William Heller and Kathryn Hoeck represented JPMorgan Chase on appeal. They did not respond to requests for comment by deadline.
“The main issue is that they make these transfers electronically and come into court with nothing to show,” said Ricardo Corona Sr., who teamed with his son and Coral Gables attorney Paul Bravo to represent the Cruzes. “When the court requires them to show proof, they can’t or they won’t.”