(Who Cares About) Entering The Foreclosure Judgment


15 March, 2012


Mortgage Lender and Servicer Alerts

This is another one of those subjects which sounds like it is solely for the attorneys.  It is, but as a practical matter the issue can impact upon the progress of a foreclosure case or the legitimacy of a foreclosure sale, and then it certainly matters to all.  Unfortunately, there is a clash of cases which makes the subject somewhat uncertain, a further problem.

As most servicers should recall, in New York, the judgment of foreclosure and sale (let=s just call it the judgment) is the last paper which issues from the court in the course of a foreclosure and it is the document which finally authorizes that a foreclosure sale can be conducted.  Sometimes it takes many months to obtain (as in New York City) but once the judge signs it, the case is almost on its way.  First, though, the clerk of the court must enter it, which means officially log it in and file it.  Although that act is itself simple and ministerial, not infrequently it takes days or weeks to be done.  Sometimes the court even loses the judgment and then the problem is much worse than just wondering when it will be entered.

In any event, a copy of the judgment is usually not available to counsel until after it is entered and a sale cannot be scheduled until at least a copy of the judgment is received.  In much of upstate New York, though, the court makes the judgment available to the attorney with responsibility then upon counsel to convey it to the clerk for entry.  So, mundane, yes, unimportant, no.  It is conceivable that an unentered judgment can be obtained (counsel pushes for that which pleases servicers) and the foreclosure action could proceed even though there was no entry.  While moving the case along is desirable, the lack of entry would still be a defect.  Could borrowers — especially those crafty ones bent on delay as a lifetime ambition — pounce on that as a fatal error?

One case says yes, two others say no, not an issue.

The two helpful cases are:  Chase Home Mort. Corporation v. Marti, 279 A.D.2d 270, 719 N.Y.S.2d 14 (1st Dept. 2001); Matrix Capital Bank v. Maniar, 2A.D.3d 182, 769 N.Y.S.2d 516 (1st Dept. 2003).  In the first, under what the court referred to as Aunique circumstances@ (although it wasn=t clear what those were) failure to enter the judgment was ruled a correctable defect because the borrower suffered no cognizable prejudice.  This really is heartening. Ministerial glitches like this are inevitable from time to time. And it is hard to imagine that a defendant could be damaged by failure to perform this mechanical task. That being so, the courts do not want to vacate a foreclosure for what in the end is a mistake without consequence.

Three years later in the second cited case, the ruling was that failure to enter the judgment was correctable dating back to its signing because the only infirmity was the ministerial act of having the clerk stamp it.

The unfortunate case was one which vacated a foreclosure sale for the very reason that the judgment was not entered. [Korakis v. Carlton Boiler Repair, N.Y.L.J., June 23, 2004, at 18, col. 1, (Sup. Ct., N.Y. Co., Goodman, J.].  The theory was that prejudice did result because the sale then extinguished the borrower=s right to redeem.  Yes, all foreclosure sales do that, and there are a number of other procedural reasons why we think the court was wrong (although we won=t burden this discussion with such minutae.)

In the end here is the dilemma faced by servicers.  If a judgment is obtained before it is entered, must the servicer wait to set a sale?  Days and weeks count, so there is a desire to go forward and not wait for entry.  If that understandable path is chosen, and in the unlikely event the sale is attacked if the judgment was not entered by the time of the sale, will the sale survive?  Analysis of the cases suggests that the answer is “yes”.  The one case which said “no” was at the lower trial court level and did not mention that the higher Appellate Division had previously ruled that neglect to enter the judgment was not fatal.  And later another department of the Appellate Division confirmed that neglect to enter a judgment did not effect the validity of a foreclosure sale.

None of this is to say that some disgruntled party might not attack a sale for want of entry of the judgment, but case law advises that they would be wrong.

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.