No End To Delay – Allowing Borrower To Amend Answer


1 March, 2014


Mortgage Lender and Servicer Alerts

The word “dismayed” is too often associated with the word foreclosure in the New York lexicon.  We frequently address the derailments because they are the reality in foreclosure practice in the Empire State – something mortgage holders just need to know.

A new case highlights yet another area where borrowers can, if not wreck havoc, add to the level of delay – the ability to resurrect a waived defense through court permission to amend an answer. [HSBC Bank v. Picarelli, 110 A.D.3d 1031, 974 N.Y.S.2d 90 (2d Dept. 2013).]  This might sound academic, but it is not; it is quite real.

The issue here happened to be standing, which servicers will recognize as an incessant hot button issue.  Borrowers always want to claim that the foreclosing party does not have standing and so it is a typical affirmative defense in an answer.  Critically, though, standing is one of the defenses which, if not asserted in an answer, is waived.  (This is pursuant to New York’s practice statute, CPLR §3211(e) and extensive case law in support.)

While this is a well-accepted principle, there is a counterveiling maxim that the defense can nonetheless be interposed with leave of court [CPLR §3025(b)] so long as the proposed amendment does not cause the other party prejudice or surprise resulting directly from the delay.1

In presenting those two possibly competing rules, the court observed the usual standard that leave to amend the pleading – here an answer – is to be freely given so long as the amendment is not palpably insufficient as a matter of law, does not prejudice or surprise the opposing party and is not patently devoid of merit.2

So this decision as to these standards is to allow an amendment is left almost entirely to the discretion of the trial court, the judge listening to the motion.3

Still further, merely being late does not impede allowing the amendment.  Rather, it must be lateness together with significant prejudice to the other side.4

These are the applicable rules and are standard and their invocation allowed the court to conclude that the amendment of the answer – designed to allege lack of standing – would not result in prejudice or surprise to the foreclosing plaintiff, was not palpably insufficient or patently devoid of merit.  Accordingly, the trial judge on appeal was found to have been within his authority to grant the motion.

How it was that a standing defense was found to be reasonable in the circumstances of the cited case was unstated.  Most often (but of course not always) the foreclosing party does indeed have standing as the owner of the note and mortgage to bring the action.

It is burdensome enough when defaulting borrowers choose to present the “standing” defense in so many actions; even more so when they waive the defense, but are then later given the opportunity to present it nevertheless.  This case confirms that danger as yet another item of delay and resultant lender dismay.


The court cited these cases in support of that proposition:

  1. U.S. Bank, N.A. v. Sharif, 89 A.D.3d at 724, 933 N.Y.S.2d 293; Ricchezza v. Metropolitan Transp. Auth., 79 A.D.3d 998, 914 N.YS.2d 903; Complete Mgt., Inc. v. Rubenstein, 74 A.D.3d 722, 723, 903 N.Y.S.2d 439; Nunez v. Mousouras, 21 A.D.3d 355, 356, 800 N.Y.S.2d 185; Endicott Johnson Corp. v. Konik Indus.,  249 A.D.2d 744, 671 N.Y.S.2d 557).
  2. Spodek v. Neiss, 104 A.D.3d 758, 961 N.Y.S.2d 251; PADIN V. City of New York, 103 A.D.3d 614, 615, 959 N.Y.S.2d 274; Nisari v. Ramjohn, 85 A.D.3d987, 990, 927 N.Y.S.2d 358; Consolidated Payroll Servs., Inc. v. Berk, 18 A.D.3d 415, 794 N.Y.S.2d 410.
  3. Murray v. City of New York, 43 N.Y.2d 400, 405, 401, N.Y.S.2d 773, 372 N.E.2d 560; Edenwald Constr. Co. v. New York, 60 N.Y.2d 957, 959, 471 N.Y.S.2d 55, 459 N.E.2d 164; Aronov v. Regency Gardens Apt. Corp., 15 A.D.3d 513, 514, 789 N.Y.S.2d 684.
  4.  Edenwald Constr. Co. v. New York, 60 N.Y.2d at 959, 471 N.Y.S.2d 55, 459 N.E.2d 164; Aurora Loan Servs., C v. Dimura, 104 A.D.3d 796, 796, 962 N.Y.S.2d 304; U.S. Bank N.A. v. Sharif, 89 A.D.3d 723, 724, 933 N.Y.S.2d 293; Rodriguez v. Panjo, 81 A.D.3d 805, 806, 916 N.Y.S.2d 239).

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), 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.