The Continuing Peril Of Courts Dismissing Foreclosure On Their Own


1 June, 2019


Mortgage Lender and Servicer Alerts

The Latin term for this as recited in legal papers is “sua sponte”.  These alerts are not designed to be so obscure as to concentrate upon Latin phrases, but such is not for its own sake. Sua sponte means essentially in this context “of its own accord”.  What has happened with alarming frequency in recent years, and continues to occur, is that courts sometimes, simply on their own, will dismiss a foreclosure action for some reason that does not go to the heart of the case.  And this is typically done without an opportunity for the plaintiff to be heard.  It would seem that such events would be unlikely in the halls of justice, but the actual fact is that it does happen in scores of cases, something we have commented upon from time to time in the past.  And a new case confirms such an occurrence yet again. [Aurora Loan Services, LLC v. Moreno, 166 A.D.3d 933, 89 N.Y.S.3d 222 (2d Dept. 2108)].

The facts of the case are a bit intertwined, but we will winnow them down to their understandable essentials. Moreno was the borrower, a mortgage default ensued, a foreclosure was begun citing Moreno as the original obligor on the note and that defendant Dual Properties was now the record owner.  (This would hardly be such an unusual event.)  Upon default, the action proceeded to order of reference when Moreno moved to vacate on the grounds that he was never served.

In making that motion, he claimed too that he was the record owner of the mortgaged property.  The facts revealed that the place of service was an address at which Moreno never resided and so after a hearing, Moreno’s motion was granted – hardly unusual.

In addition however, the court, on its own, directed dismissal of the complaint as asserted against the remaining defendants, finding uncontested that Moreno was the fee owner of the property and was therefore a necessary party.

It is one thing to find that a defendant was not served (which seemed correct here), but quite another to declare that such defendant was the owner of the property when the plaintiff had no opportunity to introduce evidence that someone else was the property owner.

Given these circumstances, on appeal the court found that the lack of notice and opportunity to be heard denies fundamental fairness which is the basis of due process.  It found that the record did not support the conclusion that Moreno’s ownership of the property was uncontested.  In any event, the foreclosing plaintiff was never afforded the opportunity to present evidence refuting the courts “sua sponte” determination.

While the dismissal of the action against Moreno was affirmed on appeal, dismissal of the entire action was reversed so that it remained alive to be litigated.

The end result is not completely the point, save that the appeals court did the right thing and rescued a lender from an unfair and untenable situation.  The ultimate problem is that these things occur with disturbing frequency; not every day, but often enough to be alarming.   It seems that that the appeals courts always get it right and reverses these things, but lenders are nevertheless subjected to the time and expense of an appeal to be vindicated.  The necessity for that is certainly unfortunate.


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.