457 B.R. 293
Bankr. S.D.N.Y.2011Background
- Debtor Mark R. Lippold filed Chapter 7 petition on May 16, 2011 with assets of $352,617 and liabilities of $708,238 and no equity in 3171 Fairmont Ave.
- Property is encumbered by two mortgages totaling about $461,616; Debtor intends to pursue a loan modification.
- U.S. Bank seeks relief from automatic stay to foreclose the residence under 11 U.S.C. § 362(d)(2).
- MERS is listed as nominee for Aegis on the Mortgage; note rights and transfer to U.S. Bank are contested.
- Assignment purports to transfer mortgage and note to U.S. Bank, but record shows no evidence U.S. Bank owns the note.
- Court denies relief from stay due to lack of standing; no objection from Debtor or trustee, but burden on movant remains.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to obtain stay relief | U.S. Bank is a creditor seeking relief. | Bank lacks right to payment without valid note ownership. | Bank did not establish creditor status/standing. |
| Standing to foreclose under New York law | Bank is holder of note and mortgage via assignment. | Note was not transferred; mortgage assignment without note is insufficient. | Bank lacks standing to foreclose. |
| Authority to transfer the note via MERS | MERS assignment conveys rights to note and mortgage. | MERS had authority only over the mortgage, not the note. | Assignment of note beyond MERS's authority; no proof of note ownership. |
Key Cases Cited
- In re Mims, 438 B.R. 52 (Bankr.S.D.N.Y.2010) (creditor standing requires right to payment via note/foreclosure)
- Agard, 444 B.R. 231 (Bankr.E.D.N.Y.2011) (MERS authority and note ownership determine standing)
- Bank of N.Y. v. Silverberg, 86 A.D.3d 274 (2d Dept.2011) (note and mortgage must be held by same proper party; MERS authority limited)
- In re Veal, 450 B.R. 897 (9th Cir. BAP 2011) (colorable claim to enforce rights against property requires note ownership or enforceable interest)