2005 Florida Code - REAL AND PERSONAL PROPERTY ASSIGNMENT AND CANCELLATION OF MORTGAGESChapter 701
ASSIGNMENT AND CANCELLATION OF MORTGAGES
701.02 Assignment not effectual against creditors unless recorded and indicated in title of document; applicability.
701.04 Cancellation of mortgages, liens, and judgments.
701.041 Title insurer; mortgage release certificate.
701.06 Certain cancellations and satisfactions of mortgages validated.
701.01 Assignment.--Any mortgagee may assign and transfer any mortgage made to her or him, and the person to whom any mortgage may be assigned or transferred may also assign and transfer it, and that person or her or his assigns or subsequent assignees may lawfully have, take and pursue the same means and remedies which the mortgagee may lawfully have, take or pursue for the foreclosure of a mortgage and for the recovery of the money secured thereby.
History.--s. 1, Dec. 11, 1834; RS 1985; GS 2498; RGS 3840; CGL 5743; s. 782, ch. 97-102.
701.02 Assignment not effectual against creditors unless recorded and indicated in title of document; applicability.--
(1) An assignment of a mortgage upon real property or of any interest therein, is not good or effectual in law or equity, against creditors or subsequent purchasers, for a valuable consideration, and without notice, unless the assignment is contained in a document that, in its title, indicates an assignment of mortgage and is recorded according to law.
(2) This section also applies to assignments of mortgages resulting from transfers of all or any part or parts of the debt, note or notes secured by mortgage, and none of same is effectual in law or in equity against creditors or subsequent purchasers for a valuable consideration without notice, unless a duly executed assignment be recorded according to law.
(3) Any assignment of a mortgage, duly executed and recorded according to law, purporting to assign the principal of the mortgage debt or the unpaid balance of such principal, shall, as against subsequent purchasers and creditors for value and without notice, be held and deemed to assign any and all accrued and unpaid interest secured by such mortgage, unless such interest is specifically and affirmatively reserved in such an assignment by the assignor, and a reservation of such interest or any part thereof may not be implied.
(4) Notwithstanding subsections (1), (2), and (3) governing the assignment of mortgages, chapters 670-680 of the Uniform Commercial Code of this state govern the attachment and perfection of a security interest in a mortgage upon real property and in a promissory note or other right to payment or performance secured by that mortgage. The assignment of such a mortgage need not be recorded under this section for purposes of attachment or perfection of a security interest in the mortgage under the Uniform Commercial Code.
(5) Notwithstanding subsection (4), a creditor or subsequent purchaser of real property or any interest therein, for valuable consideration and without notice, is entitled to rely on a full or partial release, discharge, consent, joinder, subordination, satisfaction, or assignment of a mortgage upon such property made by the mortgagee of record, without regard to the filing of any Uniform Commercial Code financing statement that purports to perfect a security interest in the mortgage or in a promissory note or other right to payment or performance secured by the mortgage, and the filing of any such financing statement does not constitute notice for the purposes of this section. For the purposes of this subsection, the term "mortgagee of record" means the person named as the mortgagee in the recorded mortgage or, if an assignment of the mortgage has been recorded in accordance with this section, the term "mortgagee of record" means the assignee named in the recorded assignment.
History.--s. 1, ch. 6909, 1915; RGS 3841; CGL 5744; s. 13, ch. 20954, 1941; s. 2, ch. 89-41; s. 20, ch. 2005-241.
701.03 Cancellation.--Whenever the amount of money due on any mortgage shall be fully paid, the mortgagee or assignee shall within 60 days thereafter cancel the same in the manner provided by law.
History.--RS 1986; GS 2499; RGS 3842; CGL 5745; s. 171, ch. 73-333.
701.04 Cancellation of mortgages, liens, and judgments.--
(1) Within 14 days after receipt of the written request of a mortgagor, the holder of a mortgage shall deliver to the mortgagor at a place designated in the written request an estoppel letter setting forth the unpaid principal balance, interest due, and the per diem rate. Whenever the amount of money due on any mortgage, lien, or judgment shall be fully paid to the person or party entitled to the payment thereof, the mortgagee, creditor, or assignee, or the attorney of record in the case of a judgment, to whom such payment shall have been made, shall execute in writing an instrument acknowledging satisfaction of said mortgage, lien, or judgment and have the same acknowledged, or proven, and duly entered of record in the book provided by law for such purposes in the proper county. Within 60 days of the date of receipt of the full payment of the mortgage, lien, or judgment, the person required to acknowledge satisfaction of the mortgage, lien, or judgment shall send or cause to be sent the recorded satisfaction to the person who has made the full payment. In the case of a civil action arising out of the provisions of this section, the prevailing party shall be entitled to attorney's fees and costs.
(2) Whenever a writ of execution has been issued, docketed, and indexed with a sheriff and the judgment upon which it was issued has been fully paid, it shall be the responsibility of the party receiving payment to request, in writing, addressed to the sheriff, return of the writ of execution as fully satisfied.
History.--s. 1, ch. 4138, 1893; s. 1, ch. 4918, 1901; GS 2500; RGS 3843; CGL 5746; s. 1, ch. 80-17; s. 15, ch. 93-250; s. 12, ch. 94-170.
701.041 Title insurer; mortgage release certificate.--
(1) DEFINITIONS.--For purposes of this section:
(a) "Mortgage" means a mortgage or mortgage lien on an interest in real property in this state, including any modifications thereof, given to secure a loan in the principal amount of $500,000 or less, other than a mortgage securing an open-end or revolving credit agreement.
(b) "Mortgagee" means:
1. The grantee of a mortgage; or
2. If a mortgage has been assigned of record, the last person to whom the mortgage has been assigned of record.
(c) "Mortgage servicer" means the last person to whom a mortgagor or the mortgagor's successor in interest has been instructed by a mortgagee to send payments on a loan secured by a mortgage. A person transmitting a payoff statement is the mortgage servicer for the mortgage described in the payment statement.
(d) "Mortgagor" means the grantor of a mortgage.
(e) "Payoff statement" means a statement of the amount of:
1. The unpaid balance of a loan secured by a mortgage, including principal, interest, and any other charges properly due under or secured by the mortgage.
2. Interest on a per-day basis for the unpaid balance.
(f) "Record" means to record with the clerk of the circuit court or the comptroller in the county or counties in which the real property securing the mortgage is located.
(g) "Title insurer" means a corporation or other business entity authorized and licensed to transact the business of insuring titles to interests in real property in this state under chapter 624.
(2) CERTIFICATE OF RELEASE.--An officer or duly appointed agent of a title insurer may, on behalf of a mortgagor or a person who acquired from the mortgagor title to all or a part of the property described in a mortgage, execute a certificate of release that complies with the requirements of this section and record the certificate of release in the real property records of each county in which the mortgage is recorded if a satisfaction or release of the mortgage has not been executed and recorded after the date payment in full of the loan secured by the mortgage was made in accordance with a payoff statement furnished by the mortgagee or the mortgage servicer.
(3) CONTENTS.--A certificate of release executed under this section must contain:
(a) The name of the mortgagor, the name of the original mortgagee, and, if applicable, the mortgage servicer; the date of the mortgage; the date of recording; and the volume and page or document number in the real property records in which the mortgage is recorded, together with similar information for the last recorded assignment of the mortgage.
(b) A statement that the mortgage, including any modifications thereof, was in the principal amount of $500,000 or less.
(c) The name of the title insurer filing the certificate of release, a statement that the person executing the certificate of release is an officer or a duly appointed agent of the title insurer, a statement that the title insurer is authorized and licensed to transact the business of insuring titles to interests in real property in this state under chapter 624 or chapter 626, and, if executed by a duly appointed agent, shall further provide the recording information of the appointment of such agent as required by subsection (4).
(d) A statement that the certificate of release is made on behalf of the mortgagor or a person who acquired title from the mortgagor to all or a part of the property described in the mortgage.
(e) A statement that the mortgagee or mortgage servicer provided a payoff statement which was used to make payment in full of the unpaid balance of the loan secured by the mortgage.
(f) A statement that payment in full of the unpaid balance of the loan secured by the mortgage was made in accordance with the payoff statement and that a copy of the certificate of release was sent to the mortgagee or mortgage servicer that provided the payoff statement.
(a) A certificate of release authorized by subsection (2) must be duly executed, sworn to or affirmed under penalty of perjury before a notary public, and recorded and may be executed by an officer of a title insurer or by a duly appointed agent of a title insurer. Such delegation to an agent by a title insurer shall not relieve the title insurer of any liability for damages caused by the agent for the execution or recordation of a certificate of release.
(b) The appointment of an agent must be duly executed, acknowledged, and recorded by an officer of a title insurer and must state:
1. The title insurer as the principal.
2. The identity of the person, partnership, or corporation authorized to act as agent to execute and record certificates of release provided for in this section on behalf of the title insurer.
3. That the agent has the full authority to execute and record certificates of release provided for in this section on behalf of the title insurer.
(c) A separate appointment of agent shall not be necessary for each certificate of release provided that at least one such appointment is recorded in the county in which the mortgaged property is located. The appointment of agent must be rerecorded where necessary to establish authority of the agent, but such authority shall continue until a revocation of appointment is recorded in the office of the county recorder in which the appointment of agent was recorded.
(d) After recordation of a title insurer's revocation of appointment in the office of the county recorder in which the appointment was recorded, the agent whose appointment is revoked in such county shall have no further authority to execute or record certificates of release as provided in this section on behalf of that title insurer with respect to any mortgages recorded in that county, and no such certificate of release thereafter executed or recorded by that agent on behalf of that title insurer shall be effective to release any mortgage recorded in that county.
(5) EFFECT.--For purposes of releasing the mortgage, a certificate of release containing the information and statements provided for in subsection (3) and executed as provided in subsection (4) is entitled to be recorded with the county recorder and operates as a release of the mortgage described in the certificate of release. The county recorder shall rely upon the certificate to release the mortgage. Recording of a certificate of release by a title insurer or its agent shall not relieve the mortgagor, or the mortgagor's successors or assigns, from any personal liability on the loan or other obligations secured by the mortgage. A certificate of release recorded pursuant to this section fulfills any other obligation of the mortgagee or mortgage servicer to file a satisfaction or release of the mortgage.
(6) LIABILITY OF TITLE INSURER.--
(a) In addition to any other remedy provided by law, a title insurer recording a certificate of release under this section shall be liable to the holder of the obligation secured by the mortgage for actual damage sustained due to the recording of the certificate of release. Reasonable costs and attorneys' fees shall be awarded to the prevailing party.
(b) The title insurer named in a certificate of release filed by a duly appointed agent shall be liable pursuant to this subsection without regard to whether the title insurer authorized the specific certificate of release recorded by the agent.
(c) The title insurer shall have no liability under this subsection if the title insurer shows that payment in full of the unpaid balance of the loan secured by the mortgage was made in accordance with the payoff statement furnished by the mortgagee or the mortgage servicer.
(d) Liability of a title insurer pursuant to this section shall be considered to be a title insurance claim on real property in this state pursuant to s. 627.7865.
(7) RECORDING.--If a mortgage is recorded in more than one county and a certificate of release is recorded in one of such counties, a certified copy of the certificate of release may be recorded in another of such counties with the same effect as the original. In all cases, the certificate of release shall be entered and indexed as satisfactions of mortgage are entered and indexed.
(8) APPLICATION.--This section applies only to a mortgage, including any modifications of such mortgage, in the principal amount of $500,000 or less.
(9) PREMIUM.--The Financial Services Commission shall adopt rules establishing an actuarially sound premium charge to be made for each certificate of release recorded pursuant to this section.
History.--s. 1, ch. 2005-122.
701.06 Certain cancellations and satisfactions of mortgages validated.--All cancellations or satisfactions of mortgages made prior to the enactment of chapter 4138, Acts of 1893, by the mortgagee or assignee of record of such mortgage entering same on the margin of the record of such mortgage in the presence of the custodian of such record and attested by the said custodian and signed by said mortgagee or assignee of record of such mortgage, shall be valid and effectual for every purpose as if the same had been done subsequent to the enactment of chapter 4138, Acts of 1893.
History.--s. 1, ch. 14763, 1931; CGL 1936 Supp. 5746(1).
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We introduce this subject with a riddle: What entity is not a bank but claims to hold title to approximately half of all the mortgaged homes in the country? The answer is MERS. –Circuit Judge Bruce Seyla in Culhane v. Aurora Loan Servicing of Nebraska,
For the second time in a week, the U.S. Court of Appeals for the First Circuit has issued a major foreclosure opinion, this one in Culhane v. Aurora Loan Servicing of Nebraska, No. 12-1285 (click to download opinion and embedded below). Writing for a distinguished panel which included retired U.S. Supreme Court Justice David Souter, Circuit Judge Bruce Seyla held that the MERS system passes legal muster, but — overruling numerous lower court decisions to the contrary — gave borrowers the right to challenge mortgage assignments in the wrongful foreclosure setting. In my opinion, the net effect of this decision will put to rest the ubiquitous challenges to the MERS regime in Massachusetts, yet could result in a slight uptick in foreclosure challenges by blessing borrowers with much sought after legal standing to challenge faulty mortgage assignments.
This opinion is a must read. Judge Seyla is well known for his linguistic talents. Make sure you get out your dictionaries — Judge Seyla likes big words.
MERS — Mortgage Electronic Registration System, Inc.
For those who have not read our prior posts on MERS, it is an electronic registry of mortgages created by lenders in the 1990′s in order to facilitate the securitization and sale of mortgage back securities on Wall Street. Basically, when mortgages are bought and sold by various investors and lenders, MERS documents the transfers in its electronic database. However, historically the MERS-assisted transfers were not recorded through mortgage assignments in the state registries of deeds, a practice subject to much criticism. As for who “owns” the actual mortgage — another issue subject to much criticism and litigation — MERS claims that it acts solely as a “nominee” for the actual lender and holds only bare legal title to the mortgage as the mortgage holder of record.
When a loan go into default status and into foreclosure, MERS would, as in the Culhane case, facilitate the execution of a mortgage assignment to the current loan servicer, Aurora Servicing in this case. In another much criticized practice, one person wearing “two hats” would often execute these mortgage assignments. For the Culhane loan, an Aurora employee who was also a MERS “certifying officer” executed the assignment transferring the mortgage from MERS to Aurora. Ms. Culhane challenged this practice in her lawsuit seeking to void the foreclosure conducted by Aurora.
Borrower Has Legal Standing To Challenge Mortgage Assignments In Certain Cases
In a question of first impression in the First Circuit, the court considered whether borrowers have standing to challenge a MERS-initiated mortgage assignment even though a borrower is not a party to it. Overruling a significant number of cases around the country, the panel held that borrowers do have legal standing to challenge assignments as “invalid, ineffective, or void (if, say, the assignor had nothing to assign or had no authority to make an assignment to a particular assignee).” Judge Seyla adopted some common-sense reasoning, noting that under Massachusetts’ non-judicial foreclosure system, borrowers would be effectively left without a remedy to challenge a faulty foreclosure without giving them standing to contest a defective mortgage assignment.
MERS System Is Legal And Borrower Ultimately Loses
Ms. Culhane’s victory as this point unfortunately became Pyrrhic. Although the court held that borrowers could challenge mortgage assignments going forward, it did Ms. Culhane no good because she could not muster an adequate challenge to the MERS-Aurora mortgage assignment in her case. The court rejected Culhane’s argument that MERS did not legally hold the mortgage so it could not assign it, reasoning that nothing in Massachusetts mortgage law prohibited splitting the note and mortgage as the MERS system does. The court also found no legal problem with the same person signing on behalf of both MERS and Aurora.
Not The Last Word…
Culhane, however, may not be the last word on MERS and foreclosures in Massachusetts, as the Supreme Judicial Court always has the last and final say on these matters. Coincidentally, this week the SJC announced that it was soliciting friend-of-the-court briefs in Galiastro v. MERS,on whether MERS “has standing to pursue a foreclosure in its own right as a named ‘mortgagee’ with ability to act limited solely as a ‘nominee’ and without any ownership interest or rights in the promissory note associated with the mortgage; whether the prospective mandate of Eaton v. Federal National Mortgage Association, 462 Mass. 569 (2012), applies to cases that were pending on appeal at the time that case was decided.” The Galiastro case is scheduled for argument in April 2013.
As always, I’ll be on top of the latest developments in this ever-fluid area of law. Now, it’s time to eat those bagels and lox I’ve been waiting for.
Richard D. Vetstein, Esq. is a Massachusetts real estate attorney who writes frequently about new foreclosure issues concerning the real estate industry. He can be reached at email@example.com.
Culhane v. Aurora Loan Servicing (1st Cir. Feb. 15. 2013) by