A CASE OF FORECLOSURE FRAUD IN WEST PALM BEACH

An instructive case of what appears to be foreclosure fraud was recently heard by the Florida 4th District Court of Appeals (West Palm Beach) in Pino v. Bank of New York Mellon. I have personally defended similar cases many times.

BNY Mellon filed an action to foreclose a mortgage against the defendant. The mortgage attached to the complaint named another entity, Silver State Financial Systems, as lender and still another, Mortgage Electronic Registration Systems (the infamous MERS), as mortgagee. The complaint alleged that BNY Mellon owned and held the note and mortgage by assignment, but failed to attach a copy of any document of assignment. At the same time, it alleged the original promissory note itself had been “lost, destroyed or stolen.”

The defendant filed a motion to dismiss the complaint arguing that since the plaintiff had lost the note and mortgage, it would at least have to produce the assignment to support its claim of ownership. BNY Mellon, in response filed an amended complaint and attached a new unrecorded assignment, which it had suddenly found and which happened to be dated just before the original complaint was filed.

In response to this amendment, defendant alleged that the newly produced document of assignment was false and had been fraudulently made, pointing to the fact that the person executing the assignment was employed by the attorney representing the mortgagee, and the commission date on notary stamp showed that the document could not have been notarized on the date in the document. The defendant argued that the plaintiff was attempting fraud on the court and that the court should enter sanctions, such as dismissal of the foreclosure with prejudice (which would prevent plaintiff from filing a new complaint). The defendant scheduled depositions of the person who signed the assignment, the notary, and the witnesses named on the document—all employees of Florida counsel for BNY Mellon

Before the scheduled depositions, BNY Mellon filed a notice of voluntary dismissal of the action. Apparently, the risk of exposure of fraud outweighed the benefits of foreclosure.

Pino is an example of aggressive foreclosure defense forcing a lender to dismiss a foreclosure action. A defendant in a foreclosure case should always take the position that there has been some misconduct by the lender/Plaintiff; fraud or misconduct can be raised either by way of motion to dismiss or affirmative defense, or both. See my blog post, Foreclosure Defense and the Value of Time for more insights.