Reading reported decisions each week in foreclosure cases confirms that the defense of standing is omnipresent. It is certainly the riposte du jour and has been for a number of years. And it is obvious that it will continue. One reason it is asserted is that there is room for confusion and, for any borrower bent on delaying a case, this can be a fertile methodology. Worse, though, is the actuality that the assignment of notes and mortgages is sometimes not attended to with the required meticulousness, resulting in infirmities. That is to say, sometimes, there is a question – maybe a dipositive one – as to whether the foreclosing plaintiff was the holder of the note (and the mortgage travels with the note) at the inception of the action.
The fact patterns on this are numerous and the intention here is not to go through all of them, particularly because we comment upon them with some frequency. Rather, it is to expose yet another lender miscue which can lead to denial of a motion for summary judgment. This in turn suggests renewed attention to a special level of care when a party accepts an assignment of a note and mortgage.
In the recent case making this point [JPMorgan Chase Bank, NA v. Degennaro, 163 A.D.3d 539, 80 N.Y.S.3d 404 (2d Dept. 2018)], when a note is a negotiable instrument (which is typically the case), that note must either be endorsed to the holder, endorsed in blank, or endorsed via allonge firmly affixed to the note. In the cited case, although there was an endorsement on the note, in actuality there were two such endorsements. One was crossed out with an undated “X”. The court found this to be equivocal as to whether the plaintiff was the holder of the note at the time the action was commenced.
While one could argue that the court’s analysis was trivial and should not have changed the actuality as to the holder of the note, nonetheless it underscores the exacting analysis brought to these cases by the courts; there is little or no room for anything but perfect, clear compliance.
Dare any foreclosing lender take a chance in this hypercritical arena? The answer is assuredly no and the ultimate lesson, as noted, is that a foreclosing party must be exceptionally careful in examining whether the note has been assigned. If there is any question about it, danger lurks in prosecution of any foreclosure action.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2019), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, 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.