484 B.R. 284
Bankr. S.D.N.Y.2013Background
- In this chapter 7 case, U.S. Bank moves to lift the automatic stay to foreclose the Debtor’s primary residence.
- The Debtor intends to keep the Property, and no party objected to the Motion.
- The Property’s mortgage arrears amount to $145,703.92 with total due of $639,365.25; the appraisal values the Property at $430,000.
- The Note bears two endorsements and an alleged allonge; MERS is named as mortgagee of record but not clearly shown to own the Note.
- U.S. Bank failed to prove it owns or can enforce the Note; the allonge was not submitted, and the record lacks evidence of a valid transfer of the Note.
- The Court denies the Motion to lift the stay, without prejudice to renew if standing is established.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to obtain stay relief | Bank asserts ownership via note transfer/allonge. | Debtor/Trustee do not challenge standing; focus on record facts. | Bank lacks standing to foreclose; motion denied. |
| Creditor status under 362(d)(1) | Bank is a creditor with right to payment. | No demonstrable right to payment or state-law remedies without ownership of note. | Bank not a creditor entitled to relief; motion denied. |
| Ownership of the Note and transfer evidence | Note transferred by allonge; Bank has authority to proceed. | Allonge not in evidence; delivery/endorsement proof insufficient. | Insufficient evidence of proper transfer; standing not shown. |
| New York property-right rules for foreclosure | Record supports foreclosing on note/mortgage. | Standing required to foreclose; MERS/note chain questionable. | Under state law, lacking proof of ownership defeats foreclosure rights. |
Key Cases Cited
- In re Mims, 438 B.R. 52 (S.D.N.Y.2010) (creditor must show right to payment and ownership to seek stay relief)
- In re Lippold, 457 B.R. 293 (S.D.N.Y.2011) (MERS authority limited; note ownership required for standing)
- Bank of N.Y. v. Silverberg, 86 A.D.3d 274 (2d Dep't.2011) (foreclosure standing depends on ownership of note and mortgage)
- In re Escobar, 457 B.R. 229 (Bankr.E.D.N.Y.2011) (note transfer and mortgage rights cannot be asserted by non-owner)
- Agard, 444 B.R. 231 (Bankr.E.D.N.Y.2011) (servicer standing depends on lender’s standing; MERS authority questioned)