Mortgage Note Need Not Be Inspected For Plaintiff To Prove Standing

Even had it not been a regular subject of our alerts, lenders, servicers and their counsel are well aware that a defense of standing is commonplace in mortgage foreclosure actions – likely the most oft-seen defense interposed by defaulting mortgagors.  It is also recognized that this is a thorny arena and it can sometimes spell trouble for lenders.

In this regard, it is not often that New York’s highest court, the Court of Appeals, comments upon foreclosure standing issues, but in a new case they did, making a particularly critically point worthy of attention.  [JPMorgan Chase Bank, National Association v. Caliguri, 36 N.Y.3d 953, 136 N.Y.S.3d 225, 160 N.E.3d 693 (Ct.App. 2020)]

Here are the critical points found in the Court of Appeals order. 

 For a foreclosing plaintiff to be entitled to summary judgment dismissing a defense of lack of standing, the burden is upon the plaintiff to demonstrate as a matter of law that it does indeed have standing to foreclose.  However, there is no “checklist” of required proof to establish standing.  In the noted case, the plaintiff was found to satisfy that burden through evidence that it possessed the note when it commenced the action, including a copy of the original note endorsed in blank and other supporting material, inclusive of an affidavit of possession by an employee who reviewed the plaintiff’s business records.  In response to this, the borrower was unable to raise a factual issue as to plaintiff’s standing.

Given the foregoing, the highest court found that it was proper to deny the borrower’s request to inspect the original note.  Rather, it held that there is no per se rule requiring the court to grant a request for inspection of the original note as a condition of awarding summary judgment to a plaintiff in a mortgage foreclosure action.

The court went further to rule that to the extent cases in the past have held or suggested otherwise, they can no longer be followed.

When arguing that the mortgage note may not somehow be in proper form to support standing (issues as to the endorsement and the affixation of the endorsement or allonge to the note for example), borrowers not infrequently demand to actually see the original note.  Some courts may have been inclined to allow this and there have been rulings to that affect.  No longer.  The Court of Appeals has in this decision changed that and it is meaningful for mortgage holders.

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.