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Bank Did Not Demonstrate It Had Possession of the Note Prior to Commencing Foreclosure Action—Bank Did Not Have Standing to Bring the Action

The Second Department determined plaintiff-bank did not demonstrate it had possession of the note at the time the action was commenced, and therefore the bank did not have standing to bring the foreclosure action:

In a mortgage foreclosure action, where, as here, the plaintiff’s standing to commence the action is placed in issue by a defendant, “the plaintiff must prove its standing in order to be entitled to relief” … . “[A] plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced” … . “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” … .

Here, the plaintiff failed to establish, prima facie, that it had standing to commence this action. The relevant affidavits the plaintiff submitted contained conclusory statements regarding the plaintiff’s possession of the note, without any factual details of a physical delivery and, thus, failed to establish that the plaintiff had physical possession of the note prior to commencing the action … . The copy of the note the plaintiff submitted in support of its motion included an indorsement to the plaintiff but, because the indorsement was undated, it is not clear whether the indorsement was effectuated prior to the commencement of this action … . Although the written assignment of the mortgage that the plaintiff submitted was dated and recorded prior to the date this action was commenced, that assignment only transferred the mortgage. The plaintiff failed to show that the note also was assigned at that time … . Flagstar Bank, FSB v Anderson, 2015 NY Slip Op 04606, 2nd Dept 6-3-15

Similar issue and result in Bank of Am., N.A. v Kyle, 2015 NY Slip Op 04705, 3rd Dept 6-4-15

 

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