534 B.R. 479
Bankr. E.D.N.Y.2015Background
- Debtor Eric H. Richmond objected to SPS’s proof of claim for U.S. Bank, trustee of a securitized trust, as servicing agent; the court held U.S. Bank has standing to file the claim based on the Note and Mortgage under applicable state law.
- The Note and Mortgage were executed in 2005 by the Debtor in favor of New Century Mortgage Corporation; SPS later acted as attorney-in-fact for New Century to assign the Mortgage to U.S. Bank, on which the claim is based.
- New Century filed a Delaware bankruptcy; powers of attorney were created, approved, and later bound to the Liquidating Trustee by the First and Second New Century Confirmation Orders.
- U.S. Bank produced the original Note at hearing, confirming it is the holder and entitled to enforce the Note; the Note is indorsed in blank, making it a negotiable instrument.
- The dispute includes whether the assignment of the Mortgage via SPS was authorized and whether the pooling and servicing agreement (PSA) affects standing; the court found those concerns do not defeat standing.
- The court applied Maine and New York law to determine standing, ultimately holding that U.S. Bank has standing to enforce both Note and Mortgage and to file the Proof of Claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether U.S. Bank has standing to file the Proof of Claim. | Richmond contends Bank lacks standing to enforce the Note and Mortgage. | U.S. Bank argues it holds the Note and Mortgage or is properly assigned to do so, giving standing. | Yes; Bank has standing to enforce Note and Mortgage under the applicable state laws. |
| Which law governs standing and the interpretation of the assignment. | Richmond relies on Maine law to challenge ownership/assignment. | The court should apply New York or Maine law; in either, standing exists. | Either Maine or New York law supports standing. |
| Validity of the indorsement on the Note. | Richmond challenges the indorsement as stamped instead of handwritten and mislocated. | Indorsement validity under Maine and New York U.C.C. does not require handwriting or placement. | Indorsement valid; Bank is holder and can enforce the Note. |
| Authority of SPS as attorney-in-fact to assign Mortgage post-confirmation. | Power of Attorney granted pre-dissolution bound the Liquidating Trustee; assignment valid. | Assignment valid; Power of Attorney binds the Liquidating Trustee, supporting the assignment to U.S. Bank. | |
| Whether non-party challenges to the PSA affect standing to enforce the Note/Mortgage. | Richmond asserts PSA noncompliance voids transfer. | Non-parties lack standing to challenge securitization documents; transfer remains valid. | No; PSA noncompliance defense fails to defeat standing. |
Key Cases Cited
- Deutsche Bank Trust Co. Americas v. Vitellas, 131 A.D.3d 52 (2d Dep’t 2015) (standing to foreclose requires possession of both note and mortgage; note transfer passes with debt)
- U.S. Bank, N.A. v. Adrian Collymore, 68 A.D.3d 752 (2d Dep’t 2009) (mortgage follows the note; standing can be shown by assignment or delivery of the note)
- Rajamin v. Deutsche Bank Nat. Trust Co., 757 F.3d 79 (2d Cir. 2014) (non-party standing to enforce trust’s notes/PSA claims is limited; beneficiaries only may enforce)