Consolidated Note And Standing – Don’t Need Earlier Notes


15 June, 2024


Mortgage Lender and Servicer Alerts

This is another subject which may sound academic, but it does indeed have significance in the real world, notably given borrowers’ incessant penchant to attack anything possible in the effort to slow up or defeat a foreclosure.

Here is how the issue arises:  There are a series of notes and mortgages, often assigned, usually consolidated, arriving in the end at one overall consolidated (and restated) note and consolidated mortgage. Observing that notes over the years (perhaps particularly when assigned) can be lost, is it necessary for the foreclosing party to plead and prove loans made through the chain of notes prior to the restated note?

Case law helpfully advises that the answer is “no”.  [Urbanamerica, L.P. v. Carl Williams Group, LLC, 95 A.D.3d 642, 945 N.Y.S.2d 233 (1st Dept. 2012)]  An attorney’s sense of symmetry and attention to detail urges that the entire chain of notes and mortgages should be pleaded with particularity.  Indeed that is the prevailing approach. But that may be questioned if some of the original notes may have been lost or misplaced.  Even without such a perceived infirmity, economy of pleading leads to the underlying question.

The reality is that a restated note will (unless woefully drafted) recite the chain of notes and affirm that all are consolidated or in any event form one single debt in a stated sum.  Consequently, there is no necessity to prove that sums loaned under the original note or earlier notes were in actuality disbursed.  The compelling reason is that the mortgage holder is suing on the amended and restated note rather than the original note.

 At the same time, when a plaintiff sues upon a restated note, funding on the original note is irrelevant.  [Cammeby’s Equity Holdings, LLC v. Mariner Health Care, Inc., 2013 WL 3791014 (N.Y. Sup.).]  In any event, plaintiff establishes a prima facie case through introduction of the operative signed promissory notes and documents. [Schron v. Gruenstein, 36 Misc.3d 1238(A), 2012 WL 3887665 (N.Y. Sup.), citing, inter alia, Citibank, N.A. v. Silverman, 84 A.D.3d 425, 425, 922 N.Y.S.2d 56 (1st Dept. 2011).]

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2024), is a partner with Berkman, Henoch, Peterson & Peddy, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.