Third District Court of Appeal

State of Florida

Opinion filed April 27, 2016.

Not final until disposition of timely filed motion for rehearing.

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No. 3D15-1822

Lower Tribunal No. 12-1444-K

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Federal National Mortgage Association,

Appellant,

vs.

Victoria A. McFadyen, et al.,

Appellees.

An Appeal from the Circuit Court for Monroe County, Timothy J. Koenig,

Judge.

Kahane & Associates and H. Michael Muñiz, (Plantation), for appellant.

Robert B. Goldman, (Key West), for appellee, Victoria A. McFadyen;

Victoria A. McFadyen, in proper person.

Before WELLS, EMAS and LOGUE, JJ.

WELLS, Judge.
In this action to enforce a lost promissory note and to foreclose a mortgage

on real property, Federal National Mortgage Association (“Fannie Mae”) appeals

from an order granting rehearing, vacating a final judgment of foreclosure entered

in its favor, and entering a final judgment in the borrower’s favor. The trial court

granted rehearing and entered judgment in the borrower’s favor, purportedly

because the record failed to demonstrate that Fannie Mae had standing to bring the

underlying action. We disagree and reverse with instructions to reinstate the final

judgment of foreclosure. Sosa v. Safeway Premium Fin. Co., 73 So. 3d 91, 116

(Fla. 2011) (“A trial court’s decision as to whether a party has satisfied the

standing requirement is reviewed de novo.”).

The promissory note at issue here was signed by borrower Stephen Probert

on December 14, 2006. The original lender was Lehman Brothers Bank, FSB. 

Victoria McFadyen co-signed a mortgage with Probert to secure the loan. 

 On December 27, 2012, Fannie Mae filed a verified complaint against

McFadyen to enforce a lost, destroyed or stolen promissory note (count I) and to

foreclose the mortgage McFadyen co-signed with Probert (count II). In that sworn

complaint, Fannie Mae alleged that it was the “owner and holder of [a] note and

mortgage,” which it claimed to have been lost or stolen. A copy of the note was

attached to the verified complaint, the last page of which clearly bears not only

borrower Probert’s signature but also two indorsements, one from the original

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lender, Lehman Brothers Bank, FSB, specifically indorsing the note to Lehman

Brothers Holdings, Inc., the other an indorsement in blank by Lehman Brothers

Holdings, Inc.

After initially defaulting, McFadyen was allowed to answer and in summary

form raised four defenses: lack of subject matter jurisdiction, failure to join an

indispensable party, lack of standing, and fraudulent assignment of mortgage:

FIRST DEFENSE

The Court lacks jurisdiction over the subject matter of this action

because the original note was not attached to the complaint.

SECOND DEFENSE

The complaint fails to state a cause of action because Plaintiff failed

to join an indispensable party—the estate of Stephen K. Probert who

was the maker of the note who died in January of 2009.

THIRD DEFENSE

Plaintiff [Fannie Mae] lacks standing to foreclose the note and

mortgage in this action.

FOURTH DEFENSE

Upon information and belief, MER’S [sic] assignment of mortgage to

Aurora and Aurora’s assignment to [Fannie Mae] were fraudulent.

This matter was tried on April 6, 2015, and a final judgment of foreclosure

in Fannie Mae’s favor was entered. Citing to the Fourth District Court of Appeal’s

decision in Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122 (Fla. 4th

DCA 2015), McFadyen moved for rehearing. The motion was granted with the

trial court finding that Fannie Mae “did not satisfy the requirements of Fla. Stat.

673.3091 to enforce the lost, destroyed or stolen Note.” The final judgment was

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vacated and a final judgment in McFadyen’s favor was entered. Fannie Mae

appeals from that final judgment; we reverse.

The law with regard to enforcement of promissory notes is relatively straight

forward. Promissory notes are, by definition, negotiable instruments which, by

law, may be enforced by a holder, a nonholder in possession who has the rights of

the holder, or a person not in possession who nevertheless is entitled to enforce the

note:

The “person entitled to enforce” an instrument means:

(1)The holder of the instrument;

(2) A nonholder in possession of the instrument who has the rights of a

holder; or

(3) A person not in possession of the instrument who is entitled to

enforce the instrument pursuant to s. 673.3091 or s. 673.4181(4).

A person may be a person entitled to enforce the instrument even

though the person is not the owner of the instrument or is in wrongful

possession of the instrument.

§ 673.3011, Fla. Stat. (2015). 

Fannie Mae’s claim below was that it was entitled to enforce the Probert

promissory note although not in possession of it. It therefore had to satisfy the

requirements detailed in section 673.3091 of the Florida Statutes to prevail. See §

673.3011(3), Fla. Stat. (2015). In pertinent part, that provision requires a party

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seeking to enforce an instrument not in its possession to show that it was entitled to

enforce the instrument at the time it was lost:

(1) A person not in possession of an instrument is entitled to enforce

the instrument if:

(a) The person seeking to enforce the instrument was entitled to

enforce the instrument when loss of possession occurred, or has

directly or indirectly acquired ownership of the instrument from a

person who was entitled to enforce the instrument when loss of

possession occurred;

(b) The loss of possession was not the result of a transfer by the

person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the instrument

because the instrument was destroyed, its whereabouts cannot be

determined, or it is in the wrongful possession of an unknown person

or a person that cannot be found or is not amenable to service of

process.

(2) A person seeking enforcement of an instrument under subsection

(1) must prove the terms of the instrument and the person’s right to

enforce the instrument. If that proof is made, s. 673.3081 applies to

the case as if the person seeking enforcement had produced the

instrument. The court may not enter judgment in favor of the person

seeking enforcement unless it finds that the person required to pay the

instrument is adequately protected against loss that might occur by

reason of a claim by another person to enforce the instrument.

Adequate protection may be provided by any reasonable means.

§ 673.3091, Fla. Stat. (2015). 

Fannie Mae was, therefore, required to demonstrate at trial that at the time

the note was lost, it had the right to enforce it. The record confirms that Fannie

Mae satisfied this burden.

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Documents introduced without objection into evidence at trial1 established

1 The documents were admitted under section 90.803(6)(c) of the Florida Statutes

which in pertinent part provides:

The provision of s. 90.802 [governing hearsay] to the contrary

notwithstanding, the following are not inadmissible as evidence, even

though the declarant is available as a witness:

. . . .

(6) Records of regularly conducted business activity. –

(a) A memorandum, report, record, or data compilation, in any form,

of acts, events, conditions, opinion, or diagnosis, made at or near the

time by, or from information transmitted by, a person with

knowledge, if kept in the course of a regularly conducted business

activity and if it was the regular practice of that business activity to

make such memorandum, report, record, or data compilation, all as

shown by the testimony of the custodian or other qualified witness, or

as shown by a certification or declaration that complies with

paragraph (c) and s. 90.902(11), unless the sources of information or

other circumstances show lack of trustworthiness. . . .

. . . .

(c) A party intending to offer evidence under paragraph (a) by means

of a certification or declaration shall serve reasonable written notice of

that intention upon every other party and shall make the evidence

available for inspection sufficiently in advance of its offer in evidence

to provide to any other party a fair opportunity to challenge the

admissibility of the evidence. . . . A motion opposing the

admissibility of such evidence must be made by the opposing party

and determined by the court before trial. A party’s failure to file such

a motion before trial constitutes a waiver of objection to the evidence,

but the court for good cause shown may grant relief from the waiver.

§ 90.803(6)(a), (c), Fla. Stat. (2015).

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that Aurora Loan Services, Inc., an entity which services loans for various lenders,

received the Probert promissory note indorsed in blank and scanned it into

Aurora’s computer database on June 29, 2009.2 Two days later, the original note

and mortgage were sent to the Law Offices of David J. Stern, P.A., along with a

bailee letter instructing the firm to institute foreclosure proceedings.3 The

subsequently filed foreclosure action, while inaccurately representing that Aurora

was the owner and holder of the note, ultimately was dismissed and a new

servicing agent, Seterus, Inc., was retained to service this loan for Fannie Mae. By

this time, however, the original note and mortgage could not be located.

In addition to this documentary evidence, Fannie Mae called Jeff Andersen,

a foreclosure litigation corporate officer for Seterus, as a witness at trial. Mr.

Andersen testified that Seterus was the current loan servicing agency for the

2 Prior to trial, on March 6, 2015, Fannie Mae filed a “Certification of Business

Records Pursuant to § 90.803(6)(c), Florida Statutes,” which included the loan

documents associated with this action and the sworn affidavit of Laura McCann, an

Aurora vice president. McCann’s affidavit attested, among other things, that

Aurora was the prior servicing agent for the subject mortgage; that when Probert

defaulted on the subject loan, Aurora sent Probert a demand letter noticing its

intent to accelerate on March 23, 2009; that the original promissory note—bearing

two stamped indorsements on the page signed by Probert, one of which was an

indorsement in blank from Lehman Brothers Holdings, Inc.—had been scanned

into Aurora’s computer system on June 29, 2009; that on July 1, 2009, the original

note and mortgage were sent to the Law Offices of David J. Stern, P.A. along with

a bailee letter instructing the law firm to institute foreclosure proceedings; and that

servicing of the subject mortgage loan transferred from Aurora to Seterus, Inc. on

August 2, 2010.

3 David J. Stern has since been disbarred by the Florida Bar.

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Probert loan and that it had assumed that role from Aurora. According to Mr.

Andersen, when Seterus took over servicing this loan, it “boarded” Aurora’s

records, that is, it made Aurora’s records part of its own, after confirming by

independent investigation that Aurora’s records were accurate.4 Those records, as

Mr. Andersen testified, confirmed that: when Aurora received the original Probert

promissory note in June of 2009, it bore only two indorsements, an indorsement

from the original holder to Lehman Brothers Holdings, Inc. and an indorsement in

blank from Lehman Brothers Holdings, Inc.; within days of Aurora’s receipt of the

original note and mortgage, they were scanned into Aurora’s system and then

forwarded to the Law Offices of David J Stern, P.A.; and that these originals never

4 As already stated, Aurora’s loan documents associated with this action were

admitted without objection as a certified business record pursuant to section

90.803(6)(c). Aurora’s business records also were admissible through Mr.

Andersen’s testimony, which established that the records were reviewed for

accuracy during the boarding process with which he was sufficiently familiar. See

Channell v. Deutsche Bank Nat’l Trust Co., 173 So. 3d 1017, 1020 (Fla. 2d DCA

2015) (finding that a successor mortgage servicer may establish the admissibility

of a prior mortgage servicer’s loan records “by testimony that the successor

servicer had independently confirmed the accuracy of the predecessor’s records” or

“by offering evidence that the records were reviewed for accuracy prior to being

integrated into the successor servicer’s records system”); Bank of New York v.

Calloway, 157 So. 3d 1064, 1072 (Fla. 4th DCA 2015) (stating that the successor

mortgage servicer “itself may establish trustworthiness by independently

confirming the accuracy of the third-party’s business records upon receipt”); see

also Nationstar Mortg. v. Berdecia, 169 So. 3d 209, 216 (Fla. 5th DCA 2015)

(finding that the successor servicer’s witness need not have personally participated

in the boarding process to ensure the accuracy of the records acquired from the

prior servicer of the subject loan; rather, the witness need only “demonstrat[e] a

sufficient familiarity with the ‘boarding’ process to testify about it”).

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were returned from Stern’s office to Aurora before the loan was transferred to

Seterus for servicing.

Significantly, Mr. Andersen, by virtue of a power of attorney from Fannie

Mae, also testified on behalf of Fannie Mae and without objection confirmed that

Fannie Mae was the owner of and holder of the Probert promissory note on June

29, 2009, when it was sent to Aurora, its servicer, and scanned into Aurora’s

computer database. See Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951 (Fla.

4th DCA 2014) (recognizing that a bank witness’s trial testimony “can serve the

same purpose as an affidavit” in establishing that the bank was the owner of the

note and mortgage before the suit was filed); see also Fiorito v. JP Morgan Chase

Bank, Nat’l Ass’n, 174 So. 3d 519, 521 (Fla. 4th DCA 2015) (“A bank employee’s

trial testimony that the plaintiff bank owned the note before the inception of the

lawsuit is sufficient to resolve the issue of standing.”).

This evidence confirms that Fannie Mae had standing to enforce the Probert

promissory note when this action was brought. Because the note was indorsed in

blank,5 Fannie Mae only had to have possession of it to be a “holder” to have

standing to enforce it:

5 A promissory note indorsed in blank is a bearer instrument enforceable by “a

person in possession” of that instrument. See § 671.201(5), Fla. Stat. (2015)

(“‘Bearer’ means . . . a person in possession of a negotiable instrument . . . that is

payable to bearer or indorsed in blank.”); § 673.1091(1)(b)-(c) (“A promise or

order is ‘payable to bearer’ if it: . . . [d]oes not state a payee . . . or otherwise

indicates that it is not payable to an identified person.”); § 673.1091(3), Fla. Stat.

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The requirement of holding a note as proof of standing derives from

the Florida Uniform Commercial Code. See § 673.3011(1), Fla. Stat.

(2008) (“The term ‘person entitled to enforce’ an instrument means: 

the holder of the instrument[.])” To hold a note under the Uniform

Commercial Code ordinarily connotes possession of the document

itself. See § 671.201(21)(a), Fla. Stat. (2008) (“‘Holder’ means: The

person in possession of a negotiable instrument that is payable either

to bearer or to an identified person that is the person in

possession[.]”); St. Clair v. U.S. Bank Nat’l Ass’n, 173 So. 3d 1045,

1046 (Fla. 2d DCA 2015).

Phan v. Deutsche Bank Nat’l Tr. Co., 41 Fla. L. Weekly D516, D516 (Fla. 2d

DCA Feb. 26, 2016) (footnote omitted); see also Am. Home Mortg. Servicing, Inc.

v. Bednarek, 132 So. 3d 1222, 1223 (Fla. 2d DCA 2014) (finding that “because the

note at issue is endorsed in blank, and because [mortgagee] possessed the original

note, its standing to foreclose is established”).

While there is no evidence that Fannie Mae had direct or actual possession

of the note either after it was received by Aurora, its servicing agent; when the

original was sent to attorney David Stern to file suit to enforce it; when the

servicing agreement was assumed by Seterus; or later when this suit was filed, the

uncontradicted evidence was that at all times material herein, Fannie Mae was in

constructive possession of the note and thus had standing to file suit to enforce it. 

(2015) (“An instrument payable to an identified person may become payable to

bearer if it is indorsed in blank pursuant to s. 673.2051(2).”); § 673.2051(2), Fla.

Stat. (2015) (“If an indorsement is made by the holder of an instrument and it is not

a special indorsement, it is a ‘blank indorsement.’ When indorsed in blank, an

instrument becomes payable to bearer and may be negotiated by transfer of

possession alone until specially indorsed.”).

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See Phan, 41 Fla. L. Weekly at D517 (confirming that “where an agent holds a

mortgage note on behalf of its principal, the principal has constructive possession

of the note and standing to file a complaint for foreclosure as a holder under

section 673.3011(1).”); Caraccia v. U.S. Bank, Nat’l Ass’n, 41 Fla. L. Weekly

D476, D477 (Fla. 4th DCA Feb. 24, 2016) (confirming that the element of

possession necessary for standing to bring an action on a note may be met “through

actual or constructive possession”).

Because Fannie Mae adduced uncontradicted evidence to establish that all

times material it was in constructive possession of the bearer note at issue here,

and thus was a the holder with the right to enforce the note at the time the original

was lost, it satisfied all of the requirements of section 673.3011 and section

673.3091 and had standing to enforce the Probert note when the instant foreclosure

action was filed.6

In reaching this determination, we reject the trial court’s reliance on the

Fourth District’s decision in Seffar to reach a different result. That case turned on

a plaintiff’s inability to prove that it was the holder of the note at issue under

section 673.3011(1) of the Florida Statutes because there was no proof that a blank

allonge, produced some nine months after the complaint was filed, was ever

6 We also note that Fannie Mae represented on the record that it will indemnify and

hold McFadyen harmless from further claims on the Probert note and the mortgage

securing it should the original note and mortgage ever be found.

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affixed to or made part of the promissory note so as to establish that the plaintiff

was entitled to enforce the note as is required. Seffar, 160 So. 3d at 125.7 The

plaintiff there also alternatively failed to establish standing under section

673.3011(2) as a nonholder in possession of the instrument with the rights of a

holder. Id. By contrast, as already set forth herein, this matter concerns

application of section 673.3011(3) and involves indorsements affixed to the same

page of the promissory note which bears the borrower’s signature. Thus, here,

unlike in Seffar, the alleged owner and holder of a lost note adduced sufficient

evidence to prove its standing.8

Finding that Fannie Mae sufficiently demonstrated that it had standing to

bring the instant foreclosure action, we vacate the order granting McFadyen’s

7 “An allonge is a piece of paper annexed to a negotiable instrument or promissory

note, on which to write endorsements for which there is no room on the instrument

itself. Such must be so firmly affixed thereto as to become a part thereof.” Id.

(quoting Booker v. Sarasota, Inc., 707 So. 2d 886, 887 n.* (Fla. 1st DCA 1998)

(quoting Black’s Law Dictionary 76 (6th ed. 1990))).

8 McFadyen makes much of the fact that the note attached to the complaint in the

2009 foreclosure action contained no indorsements and that Fannie Mae presented

no evidence as to precisely when, and in what manner, the subject indorsements

were made or as to how Fannie Mae acquired the note. We are unpersuaded by

these arguments where Fannie Mae presented unrebutted evidence that the subject

indorsements were made prior to the filing of the original foreclosure action and

that Fannie Mae was the bearer of the note at that time. See 6 Fla. Jur. 2d Bills and

Notes § 63 (2016) (“The term ‘bearer’ means the person in possession of a

negotiable instrument . . . . An instrument payable to an identified person may

become payable to bearer if it is indorsed in blank pursuant to statute. In that

event, the instrument may be negotiated by transfer of possession alone until

specially indorsed.”) (footnotes omitted).

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motion for rehearing and entering final judgment in her favor and remand this

cause to the lower court with instructions that it reinstate the final judgment of

foreclosure in Fannie Mae’s favor.

Reversed and remanded with instructions.

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