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THE BANK DID NOT DEMONSTRATE STANDING TO BRING THE FORECLOSURE ACTION AND DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE-OF-DEFAULT PROVISION IN THE MORTGAGE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank in this foreclosure action did not demonstrate standing to bring the action and did not demonstrate it complied with the notice-of-default requirement in the mortgage:

… [T]he plaintiff failed to establish … that it had standing to commence this action. Although the plaintiff attached to the complaint copies of the note and three undated purported allonges, one of which was endorsed in blank, the plaintiff did not demonstrate that the purported allonges, which were each on a piece of paper completely separate from the note and the other allonges, were “so firmly affixed” to the note “as to become a part thereof,” as required by UCC 3-202(2) … .

Additionally, the plaintiff failed to establish its status as the holder of the note at the time of the commencement of the action. In her affidavit, a representative employed by the plaintiff’s loan servicer did not attest that she was personally familiar with the plaintiff’s record-keeping practices and procedures, and therefore, the plaintiff failed to demonstrate that the records relied upon by the affiant were admissible under the business records exception to the hearsay rule … .

The plaintiff also failed to establish, prima facie, that it complied with the condition precedent contained in the mortgage agreement, which required that it provide the defendant with a notice of default prior to demanding payment of the loan in full. The evidence submitted by the plaintiff did not establish that a notice of default was mailed by first-class mail or actually delivered to the defendant’s “notice address” if sent by other means, as required by the terms of the mortgage agreement … . U.S. Bank N.A. v Yoel, 2023 NY Slip Op 04682, Second Dept 9-20-23

Practice Point: If the defendant in a foreclosure action alleges the bank lacks standing to bring the action, the bank must demonstrate it was the holder of the note at the time the action was brought. In addition, the UCC requires that allonges endorsed in blank be “firmly affixed” to the note.

 

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