In the law, there is a principle called “standing.” What this means is that a Plaintiff (the party who files the suit) bears the burden of proving, as a threshold matter, that they have a sufficient stake in the outcome of the litigation to have legal standing to bring the case.
Let me give you an example. Let’s say Linda’s neighbor Bob has a big, scary dog and he bites Linda. Linda tells her other neighbor, Phil, about the incident. Phil gets so mad at Bob that he sues Bob. Phil’s suit is likely to be dismissed for lack of standing. Phil has not suffered any concrete injury and cannot try to “step into the shoes” of Linda and file the suit on her behalf. As the party actually injured, Linda would need to bring the suit.
Now let’s apply this long-standing legal concept to the foreclosure context. When a bank sues for foreclosure, the bank must prove that it has standing to foreclose. This means the bank must prove that it has the legal right to enforce your note and mortgage.
Let’s say your original lender was Lender A. Lender A sells your note and mortgage to Lender B. Lender B files a foreclosure case. Lender B will need to show an endorsement, an assignment, or some other concrete evidence of its standing to foreclose on the note and mortgage.
If Lender B cannot do that, the lender may lose the foreclosure case for lack of standing.
A recent argument lenders have been making is that if the bank loses the foreclosure case due to lack of standing, the lender should not be responsible for the homeowner’s reasonable attorney’s fees. The logic (albeit flawed) that the banks have been trying to advance is that if the homeowner wins the foreclosure case because the bank failed to prove standing to foreclose, then the homeowner should not be able to turn around and latch onto the mortgage’s attorney’s fees clause to get attorney’s fees from the bank.
After these cases worked their way through the courts, the Florida Supreme Court ultimately resolved this dispute in favor of our homeowners.
In Page v. Deutsche Bank Trust Company Americas (Fla. 2000), the Florida Supreme Court found that a homeowner can collect their attorney’s fees from the bank even if the bank failed to prove standing to foreclose on the note and mortgage. This is a big win for our homeowners who defend foreclosure actions filed against them.