COURT FINDS LOAN MODIFICATION NOT A NEGOTIABLE INSTRUMENT AND CLARIFIES EVIDENTIARY REQUIREMENTS
The Fourth DCA recently held that a loan modification “is not a negotiable instrument” and therefore concluded the bank was not required to proffer the original modification at trial to support entry of judgment. Liukkonen v. Bayview Loan Servicing, No. 4D16-4193, 2018 Fla. App. LEXIS 4342 (Fla. 4th DCA Mar. 28, 2018). In Liukkonen, the Defendant appealed a final judgment of foreclosure arguing that the bank “violated the best evidence rule when it introduced mere copies of the loan modifications” instead of the originals. The Fourth DCA disagreed, first on the basis that Liukkonen failed to raise a contemporaneous objection when the bank proffered copies of the loan modification, but also because a “modification to a note…is not, itself, a negotiable instrument.”
The Court reasoned that a note is the “source of the obligation, not just the terms,” and “surrender removes a note from the stream of commerce,” preventing someone else from wrongly enforcing it a second time. The Court noted these characteristics of a note distinguished it from a loan modification agreement, which, like a mortgage, may “be proved by using a properly authenticated duplicate.” The borrower moved for rehearing on April 12, 2018, so this opinion will not be final until disposition of the motion for rehearing. However, the opinion is well reasoned and consistent with Florida law.