Bank of New York v. Silverberg
86 A.D.3d 274
| N.Y. App. Div. | 2011Background
- MERS listed as nominee/mortgagee for recording, but never holder or assignee of the underlying notes.
- October 2006: Silverbergs borrow $450,000 from Countrywide; initial mortgage names MERS for recording and notes payable to Countrywide.
- April 2007: a second mortgage to MERS as nominee accompanies a note to Countrywide; consolidation agreement later merged two loans into one, with MERS cited as nominee for Countrywide.
- June 2007: consolidation recorded; Countrywide not a party to consolidation; notes allegedly merged but notes not clearly transferred to plaintiff.
- April 30, 2008: MERS, as Countrywide’s nominee, assigns consolidation to plaintiff; May 6, 2008: plaintiff files foreclosure action.
- Defendants move to dismiss for lack of standing; Supreme Court initially denies; issue on appeal is whether plaintiff has standing to foreclose where MERS never held the note.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff had standing to foreclose | plaintiff succeeded to MERS’s rights via corrected assignment | plaintiff did not own the note or mortgage at filing; MERS lacked authority | No standing; plaintiff failed to prove ownership of note |
| Effect of consolidation agreement on transfer of note | consolidation merged notes into one, transferring rights | Countrywide not a party; consolidation did not grant plaintiff authority to foreclose | Consolidation did not transfer the note to plaintiff; foreclosure lacking authority |
| Authority of MERS as nominee to assign the note | MERS’s recording role implied broader power to foreclose | nominee authority limited to recording; lacked power to assign the note | MERS’s authority to assign the note was not proven; assignment void |
| Effect of Coakley on MERS standing | Coakley supports MERS standing when note transferred to MERS before action | Coakley distinguished; relied on note held by MERS before action | Coakley did not control when note not held by MERS; not dispositive |
| Impact of bifurcation of mortgage and note | no argument on bifurcation ownership issues required | bifurcation prevents enforceability if note not transferred | Bifurcation did not validate standing; no ownership of note shown |
Key Cases Cited
- Matter of MERSCORP, Inc. v Romaine, 8 NY3d 90 (2006) (recognizes MERS recording, but standing unresolved)
- U.S. Bank N.A. v Collymore, 68 AD3d 752 (2009) (standing requires holder of note and mortgage at filing)
- LaSalle Bank Natl. Assn. v Ahearn, 59 AD3d 911 (2009) (an assignment of the note transfers the mortgage as incident)
- US Bank, N.A. v Madero, 80 AD3d 751 (2011) (note transfer evidence transfers mortgage as incident)
- Merrill v Bartholick, 36 NY 44 (1867) (mortgage cannot exist independently of debt)