Susan Chana Lask Beats NY Foreclosure Based on Bank's Defective Documents and Assignment Delays


Susan Chana Lask Beats NY Foreclosure Based on Bank’s Defective Documents and Assignment Delays

Susan Chana Lask Beats NY Foreclosure Based on Bank’s Defective Documents and Assignment Delays

In BLB Trading, Inc. v. Ledgister, Westchester County Supreme Court, Index 15407/11, Susan Chana Lask, Esq. won her argument for a NY homeowner that a bank cannot foreclose based on defective documents.  The decision holds that a one and half year gap in the transfer of the mortgage and note are reasons to deny summary judgment to the Bank. Also, the court accepted Ms. Lask’s argument that UCC §3-804 mandates that a lost note affidavit must be factually specific regarding the events surrounding the loss, including when the note was lost.   Finally, Ms. Lask brought forth other issues regarding whether employees executing affidavits were actually employees of the bank or other entities that raised suspicion as to the authenticity of the Bank’s  alonge alleged to be attached to the note to even support a foreclosure.  The court refused to grant a foreclosure by summary judgment to the bank.



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Index No. 15407/2011 Motion Sequence 1




Defendant contends that there is no explanation for the two year delay in the assignment of the mortgage and the note from MERS to Evestmac; that the lost note affidavit is invalid because it does not provide details of how and when the note was lost and whether the affiant ever reviewed the original note and compared it to the copy; that the March 9, 2011 allonge states that Mortgage Lenders ceased operations on June 9, 2009, but three months after, on September 25, 2009, Mortgage Lenders via MERS assigned the mortgage without the note, to Evestmac; that the Vice President, Keith Douglas who executed the mortgage assignment, is not an officer of Mortgage Lenders, but was an employee of Acqura Loan Services, the mortgage servicing company for the loan; that MERS did not have authority as nominee to assign anything and the purported 2010 assignment alleged in the complaint is void; that the allonge violates UCC 3-202 and UCC 3-104 by not being affixed to the note; that the affidavit of merit omits any proof of possession of the note; that an affidavit by a person with personal knowledge was not submitted; that there was no proof that plaintiff had possession of the note when this action was commenced; that the motion fails to provide evidence in admissible form; that the out of state notaries on the assignments are invalid; that discovery is needed and that dismissal of the affirmative defenses and counterclaims should be denied.

The mortgage was assigned on September 25, 2009 by MERS as nominee for Mortgage Lenders to Evestmac. However, as per the allonge, submitted to show transfer of the note, Mortgage Lenders ceased operations on June 9, 2009. This particular issue would be moot, since the mortgage passes with the debt as an inseparable incident,’! [U.S. Bank, N.A. v. Collymore, 68 A.D.3d at 754, 890 N.Y.S.2d 578; HSBC Bank US’A v. Hernandez, 92 A.D.3d 843, 939i N.Y.S.2d 120], if not for the one and a half year gap in the transfer of the mortgage and the transfer of the note. The allonge states that the note was not transferred to Evestmac until March 9, 2011. This discrepancy creates a question of fact.

Further, Elonna Ashuroua, a managing member of BLB avers in the lost note affidavit that the original note was misplaced during a transfer of the collateral file from Mortgage Lenders to Evestmac. Due to the time lag between the transfer of the mortgage and the transfer of the note. the Court is unclear if this lost of the note occurred in 2009 or in 2011.

UCC § 3-804 states that, “the owner of an instrument which is lost, whether by destruction, theft or otherwise, may maintain an action in his own name and recover from any party liable thereon upon due proof of his ownership, the facts which prevent his I production of the instrument and its terms”. UCC § 3-804. To meet the requirements of the UCC, the lost note affidavit does not state enough facts pertaining to the loss, such as the approximate time period, especially in light of the gap between the transfer of the mortgage and the transfer of the note.

The Court is also unclear as to the role of Elonna Ashuroua. She signed the lost note affidavit as managing member of BLB, but also signed the allonge to the promissory note transferring the note from Evestmac to BLB. Is this person an employee of both BLB and Evestmac.

Another issue that creates a question of fact is the allonges submitted transferring the note. UCC § 3-202 states that “[a]n indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof”. Since the original note was lost, and the Court cannot determine exactly when it was lost, the attachment or lack thereof of the allonge to the note, is also a question of fact to be determined.


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