Show Me The Note!
Abstract
News outlets and foreclosure defense blogs have focused attention on the defense commonly referred to as “show me the note.” This defense seeks to forestall or prevent foreclosure by requiring the foreclosing party to produce the mortgage and the associated promissory note as proof of its right to initiate foreclosure.
The defense arose in two recent state supreme-court cases and is also being raised in lower courts throughout the country. It is not only important to individuals facing foreclosure but also for the mortgage industry and investors in mortgage-backed securities. In the aggregate, the body of law that develops as a result of the foreclosure epidemic will probably shape mortgage law for a long time to come. Courts across the country seemingly interpret the validity of the “show me the note” defense incongruously. Indeed, states appear to be divided on its application. However, an analysis of the situations in which this defense is raised provides a framework that can help consumers and the mortgage industry to better predict how individual states will rule on this issue and can help courts as they continue to grapple with this matter.
Suggested Citation
William K. Akina, David J. Reiss, and Bradley T. Borden. “Show Me The Note!” Westlaw Journal Bank & Lender Liability 19.1 (2013): 3-8.
Available at: http://works.bepress.com/david_reiss/63
image: The film Jerry Maguire.
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hmmmm… Common-law, eh?
The courts below agreed that the plaintiffs’ claims under General Business Law § 349 (h) are “to recover upon a liability * * * created or imposed by statute” (CPLR 214 [2]) and, therefore, are governed by the three-year Statute of Limitations provided in that section. CPLR 214 (2) does not automatically apply to all causes of action in which a statutory remedy is sought, but only where liability “would not exist but for a statute” (Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 174). Thus, CPLR 214 (2) “does not apply to liabilities existing at common law which have been recognized or implemented by statute” (id.). When this is the case, the Statute of Limitations for the statutory claim is that for the common-law cause of action which the statute codified or implemented (see, State of New York v Cortelle Corp., 38 NY2d 83, 86-87).