Federal National Mortgage Association v. McFadyen
194 So. 3d 418
| Fla. Dist. Ct. App. | 2016Background
- Borrower Stephen Probert signed the promissory note in 2006; Victoria McFadyen co-signed the mortgage. Probert died in 2009.
- Fannie Mae filed a verified complaint in 2012 to enforce a lost/stolen promissory note and to foreclose McFadyen’s mortgage; a copy of the note attached bore Probert’s signature and two indorsements (one to Lehman Brothers Holdings, Inc., and a blank indorsement).
- Evidence showed Aurora Loan Services received the original note indorsed in blank and scanned it on June 29, 2009, then sent the original to the Law Offices of David J. Stern with a bailee letter; the original was not returned and later could not be located.
- Servicing later transferred to Seterus, which “boarded” Aurora’s records; Seterus’s witness (Jeff Andersen) testified Fannie Mae was the owner/holder of the note on June 29, 2009.
- McFadyen raised defenses including lack of subject-matter jurisdiction, failure to join Probert’s estate, lack of standing, and fraudulent assignments. Trial resulted in a final judgment of foreclosure for Fannie Mae; the trial court granted rehearing and vacated that judgment, finding Fannie Mae failed to satisfy Fla. Stat. § 673.3091.
- The district court reversed, holding Fannie Mae had constructive possession and therefore standing under sections 673.3011 and 673.3091 to enforce the lost, indorsed-in-blank note.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fannie Mae had standing to enforce a lost promissory note not in its physical possession | Fannie Mae was entitled to enforce the note because it owned/held the note when it was lost and had constructive possession via its servicers; it met § 673.3091 requirements | McFadyen argued Fannie Mae lacked standing because the original note was not attached, indorsements/timing were not proven, and ownership/possession were not established | Held: Fannie Mae had standing — uncontroverted evidence showed Fannie Mae owned the note when it was lost and had constructive possession of an indorsed-in-blank (bearer) instrument, satisfying §§ 673.3011 and 673.3091 |
| Whether evidence of servicer records and successor servicer testimony can establish possession/ownership | Fannie Mae relied on certified business records from Aurora and testimony from Seterus confirming boarding and accuracy of predecessor records | McFadyen challenged trustworthiness and timing of indorsements and asserted the earlier complaint’s attached note lacked indorsements | Held: Admitted business records and Seterus testimony were sufficient to prove constructive possession and ownership for standing; successor servicer testimony can validate predecessor records |
| Whether Seffar controls to defeat standing | Fannie Mae distinguished Seffar because Seffar involved an allonge produced after suit and lack of proof it was part of the note | McFadyen relied on Seffar to argue proof here was likewise insufficient | Held: Seffar is distinguishable; this case involved indorsements on the same page as the signature and timely evidence of ownership/possession |
| Whether adequate protection exists to guard against competing claims to the lost note | Fannie Mae offered to indemnify McFadyen if the original is found and a competing claim arises | McFadyen asserted uncertainty without original physical note | Held: Fannie Mae’s representations and proof satisfied § 673.3091’s requirement that the payor be adequately protected against loss by another claimant |
Key Cases Cited
- Sosa v. Safeway Premium Fin. Co., 73 So. 3d 91 (Fla. 2011) (standing review standard and enforceability principles for negotiable instruments)
- Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122 (Fla. 4th DCA 2015) (distinguishable precedent where post‑filing allonge failed to establish holder status)
- Fiorito v. JP Morgan Chase Bank, Nat’l Ass’n, 174 So. 3d 519 (Fla. 4th DCA 2015) (bank employee testimony can establish ownership before suit)
- St. Clair v. U.S. Bank Nat’l Ass’n, 173 So. 3d 1045 (Fla. 2d DCA 2015) (definition of holder and possession under UCC for standing)
- Am. Home Mortg. Servicing, Inc. v. Bednarek, 132 So. 3d 1222 (Fla. 2d DCA 2014) (note endorsed in blank and possession establish standing to foreclose)