Foreclosure Proceeding Can Be Brought by Party Who Did Not Provide Consideration; Tenants By the Entirety Can Mortgage Their Interest in Property

In a mortgage foreclosure action, the Second Department explained that it was not necessary that the foreclosing party have provided the consideration and that, with respect to a tenancy by the entirety, each tenant can sell, mortgage or otherwise encumber his or her rights in the property, subject to the continuing rights of the other:

“[T]he validity of the mortgage usually depends indirectly upon consideration, not for the mortgage itself, but for the obligation upon which it depends”…. It is not necessary, however, that the party seeking to foreclose provided the consideration. A mortgage may be valid as long as proper consideration exists for the underlying obligation; once a party has lawfully obtained both the mortgage and the underlying promissory note, that party has standing to foreclose on the mortgage in the event of the default on the borrower’s obligation. * * *

“As tenants by the entirety, both spouses enjoy an equal right to possession of and profits yielded by the property” …. However, “there is nothing in New York law that prevents one of the co-owners from mortgaging or making an effective conveyance of his or her own interest in the tenancy. To the contrary, each tenant may sell, mortgage or otherwise encumber his or her rights in the property, subject to the continuing rights of the other”…. Nevertheless, “a conveyance by one tenant, to which the other has not consented, cannot bind the entire fee”… .  Rose v Levine, 2013 NY Slip Op 04788, 2nd Dept 6-26-13