336 P.3d 443
N.M. Ct. App.2014Background
- Homeowner (Suzanne Lopes) borrowed $140,000 from Countrywide and executed a promissory note payable to Countrywide and a mortgage recorded with MERS as nominee for Countrywide.
- MERS assigned the mortgage to The Bank of New York Mellon (the Bank) on July 6, 2011.
- The Bank filed a foreclosure complaint on August 4, 2011, alleging it was owner of the mortgage and a holder in due course of the note; the complaint attached the mortgage and the MERS assignment but did not attach a note establishing the Bank’s possession or endorsement at filing.
- Homeowner, pro se, challenged standing, arguing the Bank must own both the mortgage and the promissory note when suit is filed.
- The Bank later produced a copy of the note (with an undated, stamped blank indorsement) as an exhibit on September 22, 2011 and at summary judgment, but offered no evidence showing when or how it obtained the physical note.
- The district court granted the Bank summary judgment and entered a foreclosure decree; the Court of Appeals reversed for lack of standing because the Bank failed to establish its right to enforce the note at the time the complaint was filed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the Bank have standing to foreclose? | The Bank claimed it owned the mortgage and was a holder (or holder in due course) of the note; the MERS mortgage assignment effectively transferred enforcement rights and the Bank later produced the note with a blank indorsement. | Lopes argued the Bank lacked standing because it did not own the note or show it had the right to enforce the note when the complaint was filed. | Bank lacked standing: the right to enforce the note must exist at filing; MERS’s mortgage assignment did not transfer note enforcement rights; producing an undated blank-indorsed note after filing did not cure the defect. |
Key Cases Cited
- Bank of New York v. Romero, 320 P.3d 1 (N.M. 2014) (standing is jurisdictional; a foreclosing party must establish ownership/right to enforce the note and mortgage at commencement of suit)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing is determined as of commencement of suit)
- Cadle Co., Inc. v. Wallach Concrete, Inc., 897 P.2d 1104 (N.M. 1995) (explains holder in due course concept and defenses available against holders)