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DEFENDANT DID NOT MAKE A PRIMA FACIE SHOWING THAT PLAINTIFF BANK DID NOT HAVE STANDING IN THIS FORECLOSURE ACTION BY MERELY POINTING OUT ALLEGED GAPS IN PLAINTIFF’S CASE, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, THEREFORE, SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that defendant did not make a prima facie showing that plaintiff bank lacked standing in this foreclosure action, as opposed to pointing to alleged gaps in plaintiff’s case. Therefore defendant’s motion for summary judgment should not have been granted:

“On a motion for summary judgment, the burden is on the moving defendant to establish, prima facie, the plaintiff’s lack of standing, rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied'” … . “To defeat a defendant’s motion, the plaintiff has no burden of establishing its standing as a matter of law” … . Here, the defendant merely pointed to alleged gaps in the plaintiff’s case and failed to meet her burden of establishing, prima facie, the plaintiff’s lack of standing as a matter of law … . Cenlar FSB v Lanzbom, 2019 NY Slip Op 00092, Second Dept 1-9-19

 

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BANK’S PROOF OF THE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 INSUFFICIENT, BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s (Nationstar’s) motion for summary judgment in this foreclosure action should not have been granted. Defendant alleged in her answer that plaintiff did not comply with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1304. Therefore, in moving for summary judgment, the band was required to demonstrate compliance with RPAPL 1304 and its evidence of compliance was insufficient because it did not meet the requirements of the business records exception to the hearsay rule:

“Generally, in moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default” … . However, where, as here, a defendant raises the issue of compliance with RPAPL 1304 as an affirmative defense, the moving party is also required to make a prima facie showing of strict compliance with RPAPL 1304 … . * * *

Here, Nationstar relied on the affidavit of its employee, Michael Woods, who averred, in relevant part, that “the 90-day notices required by statute were mailed to [d]efendant by regular and certified mail to the last known mailing address and to the property address on January 3, 2013,” and that the letters “were sent in separate envelopes from any other mailing or notice.” However, the record contains a single 90-day notice, bearing the plaintiff’s letterhead and addressed to the defendant at the subject property, with no clear indication as to whether the mailing was made by registered or certified mail, or by first-class mail. Moreover, Woods—who is not an employee of the plaintiff—did not aver in his affidavit to having any familiarity with the plaintiff’s mailing practices and procedures. Bank of Am., N.A. v Bittle, 2019 NY Slip Op 00086, Second Dept 1-9-19

Similar issue and result in Bank of Am., N.A. v Kljajic, 2019 NY Slip Op 00087, Second Dept 1-9-19

 

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BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF THE MORTGAGE IN THIS FORECLOSURE PROCEEDING, THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that the plaintiff bank did not demonstrate compliance with the notice provisions of the mortgage in this foreclosure proceeding. Therefore plaintiff’s motion for summary judgment should not have been granted:

… [T]hose branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against [defendant], to strike his answer, and for the appointment of a referee to ascertain and compute the amount due should have been denied. The statements in the affidavit of the plaintiff’s employee that was submitted in support of the motion failed to establish, prima facie, that the affiant mailed the required notice of default to [defendant] by first-class mail on any particular date, or actually delivered such notice to the designated address if sent by other means, which was required by the terms of the mortgage as a condition precedent to foreclosure … . Wells Fargo Bank, N.A. v Sakizada, 2019 NY Slip Op 00162, Second Dept 1-9-19

 

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JUDGE WAS NOT PRESENTED WITH ANY EXTRAORDINARY CIRCUMSTANCES JUSTIFYING, SUA SPONTE, DISMISSAL OF THE COMPLAINT IN THIS FORECLOSURE ACTION (SECOND DEPT)

The Second Department, reversing Supreme Court, determined there was no basis for the judge’s, sua sponte, dismissal of the complaint in this foreclosure action:

“A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal” … .

Administrative Order 548/10, issued by the Chief Administrative Judge on October 20, 2010, and amended by Administrative Order 431-11 [requiring confirmation of the accuracy of the execution and notarization of an affidavit of merit] … , was not in effect at the time the order of reference and the judgment of foreclosure and sale were issued …  . In this case, no substantial right of the defendant would have been affected by the substitution of a new affidavit of merit … . Accordingly, the Supreme Court was not presented with any extraordinary circumstances warranting sua sponte dismissal of the complaint … . LaSalle Bank N.A. v Lopez, 2019 NY Slip Op 00104, Second Dept 1-9-19

 

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DOCUMENTS SUBMITTED BY FANNIE MAE IN THIS FORECLOSURE ACTION DID NOT MEET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE, FANNIE MAE’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the evidence submitted by the plaintiff (Fannie Mae) in this foreclosure action did not meet the requirements of the business records exception to the hearsay rule and, therefore, plaintiff’s motion for summary judgment should not have been granted:

In support of those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendants and for an order of reference, Fannie Mae submitted affidavits of foreclosure specialists employed by Seterus, Inc., its loan servicer. The foreclosure specialists attested that they were personally familiar with the record-keeping practices and procedures of Seterus, Inc., but failed to lay a proper foundation for the admission of records concerning the defendants’ payment history and default. Accordingly, Fannie Mae failed to demonstrate that the records relied upon in the affidavits were admissible under the business records exception to the hearsay rule (see CPLR 4518[a] … ). Since Fannie Mae’s motion was based on evidence that was not in admissible form … , Fannie Mae failed to establish its prima facie entitlement to judgment as a matter of law, and those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendants and for an order of reference should have been denied, regardless of the sufficiency of the defendants’ papers in opposition … . Federal Natl. Mtge. Assn. v Marlin, 2019 NY Slip Op 00095, Second Dept 1-9-19

 

BANK’S POSSESSION OF THE NOTES CONSOLIDATED BY A CONSOLIDATION, EXTENSION AND MODIFICATION AGREEMENT (CEMA) CONFERRED STANDING TO BRING THE FORECLOSURE ACTION, POSSESSION OF THE ORIGINAL NOTES WAS NOT REQUIRED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Tom, over a two-justice dissent. determined that defendants’ excuse for their default and their argument plaintiff bank (Wells Fargo) did not have standing were properly rejected by Supreme Court. The two dissenting justices agreed with defendants’ arguments. Defendants alleged in their motion to vacate the default that their attorney received the summary judgment motion, filed for bankruptcy and never responded to the motion. On the standing issue defendants argued that possession of the original 2005 and 2008 notes issued by a nonparty, not the subsequent Consolidation, Extension and Modification Agreement (CEMA) note, which consolidated the 2005 and 2008 notes, was required to confer standing:

… [T]he CEMA makes clear that the consolidated note superseded the original notes and is the operative document in this case. As did the plaintiff in Weiss v Phillips (157 AD3d 1 [1st Dept 2017]), Wells Fargo seeks foreclosure based on the CEMA and consolidated note. As we held the plaintiff did in Weiss, Wells Fargo established its entitlement to relief by submitting the CEMA, consolidated note, unchallenged evidence that it is the holder of the consolidated note, and nonpayment of the loan by the borrowers. As we also held in Weiss, “In this case, because of the CEMA, standing is not an issue” and any absence of the underlying notes in this action is likewise accounted for by the CEMA … . In other words, “there is no legitimate question that [Wells Fargo] is the party entitled to enforce under the [consolidated] note, as evinced by . . . the CEMA” … . Wells Fargo Bank N.A. v Ho-Shing, 2019 NY Slip Op 00080, First Dept 1-8-19

 

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PLAINTIFF BANK WAS PROPERLY ALLOWED TO RECOMMENCE THE FORECLOSURE ACTION AFTER IT WAS DISMISSED AS ABANDONED PURSUANT TO CPLR 3215, HOWEVER PLAINTIFF DID NOT DEMONSTRATE IT HAD STANDING AND ITS SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that plaintiff bank did not demonstrate it had standing to bring this foreclosure action. Therefore plaintiff’s summary judgment motion should not have been granted. The court noted that Supreme Court properly allowed plaintiff an additional six months to commence another action (CPLR 205 (a))  after the first was dismissed as abandoned pursuant to CPLR 3215 (c):

… [P]laintiff failed to demonstrate that it has standing as the assignee of the mortgage from MERS. By its express terms, the initial written assignment from MERS only assigns the mortgage, not the note, and no proof was submitted establishing that MERS was ever conferred with the requisite authority to assign the note… . Moreover, contrary to Supreme Court’s holding, this Court has held that merely attaching the note with a blank indorsement to the complaint is not sufficient for plaintiff to meet its prima facie burden on the issue of standing or to prove plaintiff’s possessory interest in the note; proof of actual possession is required … ….

Plaintiff similarly failed to establish its standing by demonstrating that it had physical possession of the note at the time of the commencement of the action. In support of its motion for summary judgment, plaintiff submitted, among other things, a copy of its complaint, the mortgage, the unpaid note (indorsed in blank), the relevant assignments of the mortgage and proof of defendants’ default. Plaintiff also tendered the affidavit of the authorized officer for Caliber Home Loans, Inc., the mortgage loan servicing agent and attorney-in-fact for plaintiff … . The affidavit of the authorized officer indicates the source of her knowledge to be her “review of the electronic records of Caliber Home Loans, Inc.” regarding defendants’ delinquent account, which includes, among other things, “electronic images of the note and electronic records maintained by Caliber Home Loans, Inc.” Other than alleging that she reviewed these electronic records, the authorized officer’s affidavit fails to provide any indication that she actually examined the original note, nor did it provide any details with regard to whether plaintiff ever obtained possession thereof and, if so, how and when it came into its possession … . Moreover, the complaint is equivocal and alleges in the alternative that plaintiff is “the current owner and holder of the subject mortgage and note, or has been delegated the authority to institute a mortgage foreclosure action by the owner and holder of the subject mortgage and note.” Such language is insufficient to establish that plaintiff had physical possession of the note at the time it commenced this action … . U.S. Bank Trust, N.A. v Moomey-Stevens, 2019 NY Slip Op 00016, Third Dept 1-3-19

 

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MOTION TO VACATE DEFAULT JUDGMENT OF FORECLOSURE WAS SUPPORTED BY A SWORN DENIAL OF SERVICE AND SPECIFIC FACTS WHICH REBUTTED THE PRESUMPTION OF PROPER SERVICE, MATTER SENT BACK FOR A HEARING (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that defendant’s motion to vacate his default in this foreclosure action should not have been denied without a hearing to determine whether he was served. Defendant’s motion was supported by a sworn denial of service and specific facts, which was sufficient to rebut the presumption of proper service:

“Ordinarily, a process server’s affidavit of service establishes a prima facie case as to the method of service and, therefore, gives rise to a presumption of proper service” … . To be entitled to vacatur of a default judgment under CPLR 5015(a)(4), a defendant must overcome the presumption raised by the process server’s affidavit of service … . “Although bare and unsubstantiated denials are insufficient to rebut the presumption of service, a sworn denial of service containing specific facts generally rebuts the presumption of proper service established by the affidavit of service and necessitates a hearing” … . A determination as to whether service was properly made pursuant to CPLR 308(1), as here, turns on issues of credibility, which should be determined by a hearing … . Federal Natl. Mtge. Assn. v Alverado, 2018 NY Slip Op 08918, Second Dept 12-26-18

 

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PLAINTIFF BANK DID NOT DEMONSTRATE STANDING TO FORECLOSE ON THE REVERSE MORTGAGE WITH EVIDENCE ADMISSIBLE UNDER THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that plaintiff bank did not demonstrate standing to foreclose on the reverse mortgage. The evidence submitted did not meet the requirements of the business records exception to the hearsay rule:

… [T]he plaintiff submitted, among other things, the affidavit of Stephen Craycroft, an assistant secretary of Nationstar Mortgage, LLC, who attested that the plaintiff was in possession of the note at the time of the commencement of this action. However, the plaintiff failed to demonstrate the admissibility of the records relied upon by Craycroft under the business records exception to the hearsay rule (see CPLR 4518[a]), since Craycroft did not clearly attest that he was personally familiar with the plaintiff’s record-keeping practices and procedures … . Inasmuch as the plaintiff’s cross motion was based on evidence that was not in admissible form, the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law … .

Contrary to the plaintiff’s contention, the copy of the note annexed to the summons and complaint was insufficient to demonstrate, prima facie, its standing to commence the action, since the note bore a specific endorsement to an entity other than the plaintiff … . Nationstar HECM Acquisition Trust 2015-2 v Andrews, 2018 NY Slip Op 08944, Second Dept 12-26-18

 

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DEFENDANT’S ALLEGATION THAT SHE DOES NOT LIVE AT THE ADDRESS WHERE HER BROTHER WAS SERVED IN THIS FORECLOSURE ACTION NECESSITATED A TRAVERSE HEARING (FIRST DEPT).

The First Department, reversing Supreme Court, found that a traverse hearing should have been held to determine whether defendant was properly served with the summons, complaint and Real Property Actions and Proceedings Law (RPAPL) 1303 notice:

In this foreclosure matter commenced in 2009, plaintiff’s affidavit of service indicated that service of the summons, complaint and RPAPL 1303 notice was effectuated upon defendant Nicola McCallum pursuant to CPLR 308(2) by serving an individual, who allegedly identified himself as her brother, at her “dwelling place,” and mailing the same documents to that address.

In response, defendant averred that she was never served with the summons and complaint, that she does not reside at the address where service was made, and that her primary residence has always been at the property that is the subject of this foreclosure action.

“While a proper affidavit of a process server attesting to personal delivery upon a defendant constitutes prima facie evidence of proper service, a sworn non-conclusory denial of service by a defendant is sufficient to dispute the veracity or content of the affidavit, requiring a traverse hearing”… . The competing averments concerning plaintiff’s residence at the time of service raise a factual issue concerning whether the service address was her “dwelling place or usual place of abode” at the time of service (CPLR 308[2]) warranting a traverse hearing concerning whether defendant was properly served with the summons, complaint and RPAPL 1303 notice … . Nationstar Mtge. LLC v McCallum, 2018 NY Slip Op 08755, First Dept 12-20-18

 

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