February 6, 2015
by William R. Dziedzic
Bendett & McHugh, P.C. – USFN Member (Connecticut, Maine, Vermont)
The Connecticut Appellate Court recently affirmed a trial court’s entry of judgment of strict foreclosure. The decision is noteworthy because, in the appeal, the defendant challenged the trial court’s jurisdiction to enter judgment, claiming that the plaintiff was not the actual owner or holder of the note and, therefore, lacked standing. [BAC Home Loans Servicing, LP v. Farina, 154 Conn. App. 265 (2014)].
When confronted with this type of jurisdictional challenge previously, Connecticut’s Supreme Court and Appellate Court relied on a rebuttable presumption that the holder of a promissory note, endorsed in blank, is presumed to be the owner of the note. This rebuttable presumption of ownership complicated the analysis of standing when a plaintiff in a foreclosure case relied only on being a holder of the note as evidence of its authority to collect the debt and, thus, its evidence of standing.
In Farina, the Appellate Court was able to dispose of the challenge to the plaintiff’s standing by finding that the “plaintiff’s possession of the note endorsed in blank was sufficient to establish standing.” The court held that, “[B]ecause the plaintiff possessed the note, endorsed in blank, it was entitled to enforce the note.” There was no reference to a rebuttable presumption of ownership, only that the plaintiff, as holder of the note, was entitled to enforce the note.
From a practitioner’s point of view, this divergence from the rebuttable presumption of ownership analysis may shed light on the Appellate Court’s interpretation of the law of standing in a foreclosure case. It may also indicate how the Appellate Court will rule in the future when a loan servicer’s standing is challenged because it is servicing a loan on behalf of an investor, relying on its status as a holder of the note as its evidence of standing, and not on any allegation of ownership.
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