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NY Appeals Court Reversed “Aurora failed to produce evidence of MERS’ authority to assign” | AURORA LOAN SERVS v. WEISBLUM

NY Appeals Court Reversed “Aurora failed to produce evidence of MERS’ authority to assign” | AURORA LOAN SERVS v. WEISBLUM


Decided on May 17, 2011

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT

MARK C. DILLON, J.P.
DANIEL D. ANGIOLILLO
ARIEL E. BELEN
SHERI S. ROMAN, JJ.
2010-03065
2010-05864
(Index No. 6174/09)

Aurora Loan Services, LLC, respondent,

v

Steven Weisblum, et al., appellants, et al., defendants.

Excerpt:

In order to commence a foreclosure action, the plaintiff must have a legal or equitable interest in the mortgage (see Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 207). A plaintiff [*7]has standing where it is both (1) the holder or assignee of the subject mortgage and (2) the holder or assignee of the underlying note, either by physical delivery or execution of a written assignment prior to the commencement of the action with the filing of the complaint (see Wells Fargo Bank, N.A. v Marchione, 69 AD3d at 207-209; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754). Thus, as long as the plaintiff can establish its lawful status as assignee, either by written assignment or physical delivery, prior to the filing of the complaint, the recording of a written assignment after the commencement of the action does not defeat standing (see U.S. Bank, N.A. v Collymore, 68 AD3d at 754). We find that Aurora has failed to make this showing.

Here, the note and mortgage at issue were originally comprised of a first and second note and mortgage, which were consolidated into a single note in the amount of $704,000 and the single lien reflected in the CEMA. The document submitted by Aurora in support of its motion for summary judgment and in opposition to the Weisblums’ cross motion purports to be an assignment of only the first note and mortgage in the amount of $672,000 to Aurora by MERS, as nominee for Lehman Brothers. However, Aurora failed to produce evidence of MERS’ authority to assign the first note. On its motion for summary judgment, Aurora failed to provide a copy of the first note but submitted a copy of the original first mortgage and a series of assignments culminating in the purported assignment of the first note and mortgage to Aurora. The first mortgage was originally held by MERS, as nominee for Credit Suisse; the mortgage document recites that the lender on the first note is Credit Suisse, but there is nothing in this document to establish the authority of MERS to assign the first note. MERS later assigned the first mortgage “together with” the underlying note, and thereafter, successive assignees assigned the first mortgage “together with” the underlying note. While, in some circumstances, the assignment of a note may effect the transfer of the mortgage as an inseparable incident of the debt (see U.S. Bank, N.A. v Collymore, 68 AD3d at 754), here the assignment instruments purport to do the opposite, without any evidence that MERS initially physically possessed the note or had the authority from the lender to assign it (see LPP Mtge. Ltd. v Sabine Props, LLC, 2010 NY Slip Op 32367[U]; OneWest Bank, F.S.B. v Drayton, 29 Misc 3d 1021, 1038-1041; Bank of N.Y. v Alderazi, 28 Misc 3d 376; cf. Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674, 674-675).

Moreover, Aurora produced no documents indicating an assignment to it of the second note and mortgage or of the entire consolidated note and CEMA in the amount of $704,000. Although Aurora’s vice president averred in conclusory fashion that Aurora became holder of the mortgage which is the subject of the action “by delivery without a written assignment,” the affiant failed to give any factual detail of a physical delivery of both the consolidated note and the CEMA to Aurora prior to the commencement of the action. Thus, Aurora failed to establish its standing to commence the action.

Accordingly, the appeal from the order dated February 25, 2010, is dismissed, as that order was superseded by the order dated May 19, 2010, made upon renewal. The order dated May 19, 2010, is reversed insofar as appealed from, on the law and, upon renewal, the order dated February 25, 2010, is vacated, the plaintiff’s motions for summary judgment on the complaint and for an order of reference are denied, and the Weisblums’ cross motion for summary judgment dismissing the complaint insofar as asserted against them is granted.
DILLON, J.P., BELEN and ROMAN, JJ., concur.

ORDERED that the appeal from the order dated February 25, 2010, is dismissed, as that order was superseded by the order dated May 19, 2010, made upon renewal; and it is further,

ORDERED that the order dated May 19, 2010, is reversed insofar as appealed from, on the law, and, upon renewal, the order dated February 25, 2010, is vacated, the plaintiff’s motions for summary judgment on the complaint and for an order of reference are denied, and the cross motion of the defendants Steven Weisblum and Patti Weisblum for summary judgment dismissing the complaint insofar as asserted against them is granted; and it is further,

ORDERED that one bill of costs is awarded to the defendants Steven Weisblum and Patti Weisblum.

ENTER:

Matthew G. Kiernan

Clerk of the Court

Footnotes

Footnote 1:1 Former RPAPL 1304(5)(c) and (d), defined “subprime home loan” as a home loan consummated between January 1, 2003, and September 1, 2008, in which, for a first lien mortgage loan, the annual percentage rate exceeded three percentage points over the yield on treasury securities, or for a subordinate mortgage lien, the annual percentage rate exceeded five percentage points over the yield on treasury securities. The parties here do not dispute that the consolidated loan at issue falls within the definition of subprime.

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