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WHEN THE BALANCES OF FIRST MORTGAGES ARE INCREASED WITH SECOND MORTGAGE LOANS AND A CONSOLIDATION, EXTENSION, AND MODIFICATION AGREEMENT (CEMA) IS ENTERED CONSOLIDATING THE MORTGAGES INTO SINGLE LIENS, THE FIRST NOTES AND MORTGAGES STILL EXIST; WHEN A MORTGAGE IS ERRONEOUSLY DISCHARGED WITHOUT A SATISFACTION OF THE DEBT, THE MORTGAGE MAY BE REINSTATED IF THERE HAS BEEN NO DETRIMENTAL RELIANCE ON THE ERRONEOUS DISCHARGE (SECOND DEPT).

The Second Department noted that where balances of first mortgage loans are increased with second mortgage loans and a Consolidation, Extension, and Modification Agreement (CEMA) is entered consolidating the mortgages into single liens, the first notes and mortgages still exist. And where, as here, there has been an erroneous discharge of mortgage without a satisfaction of the mortgage debt, the mortgage may be reinstated where there has been no detrimental reliance on erroneous discharge:

… [T]he plaintiff demonstrated … that MERS [Mortgage Electronic Registration Systems, Inc] erred in executing and filing the satisfaction of mortgage dated October 31, 2005, which certified that the first mortgage in the principal sum of $600,000 was paid. … [T]he satisfaction references the second mortgage, dated April 12, 2005, in the sum of $8,421.28, and acknowledges that the two mortgages were combined and consolidated to form a “single first lien.” Accordingly, the defendants failed to raise a triable issue of fact or support their contention that no mortgage existed upon which the plaintiff can foreclose. Bank of Am., N.A. v Schwartz, 2021 NY Slip Op 06602, Second Dept 11-24-21

 

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