Chapter 13-4 Proof of Elements at Trial
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13-4 Proof of Elements at Trial
Each element of a foreclosure action must be established at trial by competent testimony and evidence. The elements that must be proven in a Florida foreclosure trial are: 1) an agreement, 2) a default of that agreement, 3) acceleration of the amounts due and owing, and 4) the amount due.39 The trial judge has broad discretion to admit or exclude evidence, but that discretion is limited by the rules of evidence.40 Relevant evidence is that which tends to prove or disprove a material fact.41 As a breach of contract action, a mortgage foreclosure trial requires the introduction of certain exhibits which establish a valid contract, a material breach, and damages.42 Florida Courts also recognize satisfaction of conditions precedent as an essential element to be proven at trial.43 Below is a list of the most commonly utilized documents in a foreclosure trial. A summary of the evidentiary basis for the admission of the documents is included in Appendix A, 1-012.
a. Original note
b. Original/certified copy of the mortgage
c. Original/certified copy of the assignment(s) of mortgage
d. Loan payment history (including the date of default)
e. Demand/Acceleration letter
f. Proof of mailing demand/acceleration letter (return receipt card or letter log)
g. Judgment figures (amounts due and owing which must correlate to the Loan payment history)
h. Power of attorney (reflecting authority of the servicer to act on behalf of the named plaintiff or owner of the loan)44
i. Pooling and servicing agreement and mortgage loan schedule
j. Certified copy of association declarations (if an association has been named as a defendant and is contesting lien priority)
k. Merger documents (if any prior lenders/holders have merged into or otherwise been acquired by another entity who subsequently sought to enforce or otherwise transfer/sell the loan)
13-4:1 The Contract: Mortgage and Note
The subject mortgage contract, along with the promissory note reflecting the debt secured by the mortgage, is the contract which must be introduced at a foreclosure trial. Florida courts have ruled that promissory notes are not hearsay.45If the original note is available, it may be admitted as self-authenticating commercial paper.46 If the original note has been filed with the clerk of court and is contained within the court file, the trial judge may not want to disturb the file by having the original removed. In this instance, the trial judge may take judicial notice of the original document being housed within the court file.47 The original mortgage, if available, may accepted into evidence as self-authenticating as well.48 If a copy of the mortgage is presented, its authenticity need not be separately proven as long as the copy is certified by the recorder's office responsible for maintaining the document.49
13-4:1.1 Lost Note
In order to obtain a final judgment at trial, the original note must be produced to the trial court or a satisfactory explanation must be given as to why the note cannot be produced.50 If the note is missing at the time of trial, witness testimony and competent evidence may be used to re-establish the note, permitting the trial court to consider a copy of the note as the original. Enforcement of a lost note requires the plaintiff to prove that it was entitled to enforce the note at the time the instrument was lost, or that the plaintiff acquired ownership of the note from a person or entity who was entitled to enforce the instrument at the time of loss.51
A copy of the note, properly authenticated, may assist the plaintiff in providing proof of the terms of the instrument.52 The plaintiff seeking to enforce a lost note at trial must also ensure adequate protection for the party the note is enforced against, in the event that a subsequent party later comes forward with the original and seeks to enforce it.53
13-4:1.2 Right to Enforce Contract ("Standing")
Standing to foreclose means that the plaintiff is entitled to enforce the note and mortgage obligation.54 Every foreclosing plaintiff has the obligation to prove that it has standing to foreclose at the time the complaint is filed.55 If a plaintiff is substituted into the case after it is filed, but before trial, the substituted plaintiff must prove that its predecessor had standing as it will only acquire the standing of the prior plaintiff.56 In addition, the newly substituted in plaintiff must also prove that it has standing at the time of trial.57 The most straightforward way to demonstrate standing to foreclose (if the plaintiff is not the original mortgagee) is by attaching a true and correct copy of the note, bearing a blank indorsement, to the complaint.58 In cases where plaintiff is asserting standing based upon its status as a "person entitled to enforce" because it is the holder of the instrument, proof who owns the note is not necessary or even relevant to the issue of standing.59
13-4:1.3 Additional Evidence of Standing
When a plaintiff does not have the benefit of possession of an endorsed note at the time the complaint is filed, standing to foreclose may be established through an assignment of the note.60 Mortgage loans which are pooled as part of a securitized trust are subject to servicing agreements which may provide adequate foundation for a plaintiff to prove standing.61 In these instances, copies of the pooling and servicing agreement (PSA), together with the mortgage loan schedule (MLS), that identifies that this particular loan was part of the trust, should be introduced to establish that the original plaintiff had standing at inception.62 Standing may also be demonstrated by establishing that the foreclosing plaintiff's agent held physical possession of the note on the plaintiff's behalf, as long as the plaintiff retained the power to exercise control over the note.63 For a complete discussion of standing, see Chapter 4: Standing to Foreclose.
13-4:2 Breach of Contract
Once the existence of a mortgage and note (and standing to enforce the same) are established, the plaintiff at a foreclosure trial must demonstrate that the contract was breached. This is perhaps the easiest element to demonstrate, because it can be accomplished by showing a default, or non-payment, of the mortgage obligation.64Most plaintiffs do so through the introduction of a loan payment history which reflects the last payment made (and consequently, the absence of required payments). Such records may be considered hearsay, but proper testimony may qualify them as a hearsay exception.65 In order to demonstrate non-payment, however, the payment history must first be established as a record of regularly conducted business activity.66 All of the business record testimony offered by a foreclosure plaintiff must be presented by a custodian or other qualified witness, unless it is otherwise certified.67 Further, if the current plaintiff or servicer is not the original lender or if there was subsequent service transfers of the loan, the qualified trial witness should be able to fully explain how the prior servicer's loan was 'boarded' into their system.68
13-4:3 Conditions Precedent
While there is no statutory requirement in Florida that notice be sent to a borrower advising of the lender's intent to foreclose, standard mortgages require notice, and the contract provision is enforceable as a condition precedent.69 The standard Fannie Mae/Freddie Mac Uniform Instrument, which reflects the majority of Florida mortgages, includes as paragraph 22 the requirement that the lender provide notice to the borrower prior to acceleration.70 Testimony supporting the notice provided must generally meet the requirements of the business record exception to the hearsay rule, similar to the payment history.71 The notice of intended acceleration should be offered into evidence as a business record, but entry into evidence alone is not enough. The mortgage requires that the witness also confirm that the letter was sent via first class mail or actually delivered (if sent by other means).72 For a comprehensive discussion of this condition precedent to mortgage foreclosure, see Chapter 2: Default and Acceleration. A copy of the standard Fannie Mae/Freddie Mac mortgage is also included in Appendix A, 1-018.
As an additional condition precedent, if the loan is an FHA-insured loan, plaintiff may be required to prove that it engages in the face-to-face meeting required by 24 C.F.R. § 203.604 (2012) prior to filing the foreclosure lawsuit.73
13-4:4 Damages
While the payment history may be utilized to demonstrate some damages in a foreclosure trial, practitioners must be diligent in establishing all additional damages incurred by the plaintiff.74 These may include taxes and...
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