631 F. App'x 13
2d Cir.2015Background
- Eastern Savings Bank filed a foreclosure action in March 2012 on a mortgage loan; Eastern possessed the original promissory note indorsed in blank when suit began.
- The loan’s origination/servicing history involved Home123 (original holder), GMAC (servicer/assignee), UBS (intermediate transferee), and ultimately Eastern; a written assignment from Home123 to GMAC initially had a defect that was later re-executed with a retroactive effective date.
- Defendants challenged Eastern’s standing, arguing Eastern failed to prove a valid chain of title/assignment and therefore lacked authority to foreclose.
- The district court found Eastern made a prima facie case as to the note and mortgage but granted summary judgment to defendants for lack of standing, relying on perceived defects in the Home123→GMAC assignment and requiring physical-delivery proof of that transfer.
- Eastern appealed, contending physical possession of the blank-indorsed note at filing was sufficient to establish standing and the district court erred in demanding additional chain-of-custody proof.
- The Second Circuit reviewed de novo and found no genuine dispute that Eastern possessed the original note indorsed in blank before suit and that defendants did not show Eastern lost possession.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing: Is physical possession of an original note indorsed in blank sufficient to establish standing at commencement of foreclosure? | Eastern: Yes — possession of the original note indorsed in blank at filing confers holder status and standing. | Defendants: No — Eastern must prove valid written assignments/chain of title (physical delivery from Home123→GMAC) because of defects/backdating. | Court: Held for Eastern — physical possession of an original note indorsed in blank before suit establishes standing; district court erred requiring additional proof of the Home123→GMAC delivery. |
| Effect of a defective/backdated written assignment on standing | Eastern: A backdated re-executed assignment does not defeat standing where Eastern possessed the blank-indorsed note by delivery. | Defendants: The backdated/defective assignment undermines chain of title and requires proof of physical delivery to validate Eastern’s standing. | Court: Rejected defendants’ reliance on Lasalle; where plaintiff has physical delivery of a blank-indorsed note, written-assignment defects do not negate standing. |
| Whether the district court should have entered summary judgment for Eastern on the merits after correcting standing error | Eastern: Requests reversal and entry of summary judgment for itself. | Defendants: Oppose immediate reversal and judgment for Eastern. | Court: Declined to decide merits on appeal; remanded for the district court to consider Eastern’s summary judgment motion on the merits. |
Key Cases Cited
- U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752 (2d Dep’t 2009) (physical delivery or written assignment can transfer the obligation; mortgage follows the debt)
- Aurora Loan Servs. v. Taylor, 25 N.Y.3d 355 (N.Y. 2015) (delivery of the note can confer standing; assignment of mortgage without the note does not give the debt)
- Bank of N.Y. v. Silverberg, 86 A.D.3d 274 (2d Dep’t 2011) (note delivery confers standing even if mortgage assignment is absent)
- Deutsche Bank Nat’l Tr. Co. v. Monica, 131 A.D.3d 737 (3d Dep’t 2015) (to assert standing via possession, plaintiff must show possession of a note indorsed in blank or specially indorsed and receipt by physical delivery)
- Mortgage Elec. Registration Sys. v. Coakley, 41 A.D.3d 674 (2d Dep’t 2007) (holder status may be shown by possession of the indorsed note)
- Lasalle Bank Nat’l Ass’n v. Ahearn, 59 A.D.3d 911 (3d Dep’t 2009) (distinguished — involved standing based on written assignment rather than physical delivery)