LI Judge "Extends Invite" To RoboSigning Duo To Appear At F'closure Settlement Meeting While Hammering Lender's Lawyer In Failed 'Bamboozle' Attempt

In Riverhead, New York, a recent ruling in a foreclosure action presided over by Suffolk County Supreme Court Justice Peter H. Mayer merits a quick note here.

In his ruling denying, without prejudice, a motion for an Order of Reference,(1) Justice Mayer sounds like someone who believes he may have just nabbed a couple of multiple corporate hat-wearing robosigners, along with the attorney representing the foreclosing lender, attempting to bamboozle him with the various documents that they submitted in court in their effort to force a sale of the home securing the loan purportedly owned by the plaintiff.(2)

Those interested in the facts should read the ruling; it suffices to say here the lender's attorney took a bit of a hammering, and that robosigners Sherry Hall (possibly also known as "Sherri D. Hall") and Nikole Shelton have been ordered to appear at the Foreclosure Settlement Conference scheduled in this case for November 17, 2010.(3)

For the ruling, see Deutsche Bank Trust Ams. v McCoy, 2010 NY Slip Op 51664(U) (NY Sup. Ct. Suffolk County, September 21, 2010).

(1) Justice Mayer set forth the following legal basis under New York law for denying the lender's request to move forward with the foreclosure:

• Only where the plaintiff is the assignee of the mortgage and the underlying note at the time the foreclosure action was commenced does the plaintiff have standing to maintain the action (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009]; Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 755 NYS2d 730 [2d Dept 2003]; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 887 NYS2d 615 [2d Dept 2009]; First Trust Natl. Assn. v Meisels, 234 AD2d 414, 651 NYS2d 121 [2d Dept 1996]).

• An assignment executed after the commencement of an action, which states that it is effective as of a date preceding the commencement date, is valid where the defaulting defendant appears but fails to interpose an answer or file a timely pre-answer motion that asserts the defense of standing, thereby waiving such defense pursuant to CPLR 3211[e] (see, HSBC Bank, USA v Dammond, 59 AD3d 679, 875 NYS2d 490 1445 [2d Dept 2009]).

• It remains settled, however, that foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009]; Kluge v Fugazy, 145 AD2d 537, 536 NYS2d 92 [2d Dept 1988]).

• Indeed, a plaintiff has no foundation in law or fact to foreclose upon a mortgage in which the plaintiff has no legal or equitable interest (Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 887 NYS2d 615 [2d Dept 2009]; Katz v East-Ville Realty Co., 249 AD2d 243, 672 NYS2d 308 [1st Dept 1998]).

• Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident (U.S. Bank, N.A. v Collymore, 68 AD3d 752, 890 NYS2d 578 [2d Dept 2009]).

• Although the February 28, 2008 assignment states it is "effective January 19, 2008," such attempt at retroactivity is ineffectual. If an assignment is in writing, the execution date is generally controlling and a written assignment claiming an earlier effective date is deficient, unless it is accompanied by proof that the physical delivery of the note and mortgage was, in fact, previously effectuated (see, Bankers Trust Co. v Hoovis, 263 AD2d 937, 938, 694 NYS2d 245 [1999]).

• A retroactive assignment cannot be used to confer standing upon the assignee in a foreclosure action commenced prior to the execution of the assignment (Countrywide Home Loans, Inc. v Gress, 68 AD3d 709, 888 NYS2d 914 [2d Dept 2009]; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 887 NYS2d 615 [2d Dept 2009]). Plaintiff's failure to submit proper proof, including an affidavit from one with personal knowledge, that the plaintiff was the holder of the note and mortgage at the time the action was commenced, requires denial of the plaintiff's application for an order of reference.

(2) A similar paperwork gambit used in another New York case (Deutsche Bank Natl. Trust Co. v Maraj, 18 Misc 3d 1123, 2008 NY Slip Op 50176; January 31, 2008, Schack, J.) left one Brooklyn trial judge scratching his head wondering if he was the target of a "corporate 'Kansas City Shuffle' - a complex confidence game" (a reference to the 2006 film, Lucky Number Slevin, in which the term is explained by a hitman played by Bruce Willis). See also Brooklyn Judge Presides Over A Corporate "Kansas City Shuffle" In Foreclosure Action?

(3) Justice Mayer expresses some of his "dismay" towards the foreclosing lender's attorney in this unaltered excerpt:

• Counsel also submits an Affirmation of Compliance with CPLR 3408, which states that "[w]e have determined that this loan is not subprime," and that the defendants "are not entitled to a court conference" (emphasis in original).

• Despite counsel's assertions, the plaintiff's own affidavit of merit states that "[w]e have determined that this loan is subprime" and that "the defendants are entitled to court conference" (emphasis added).

• The direct contradiction between counsel's "belief" and the assessment of one whose affidavit states, as in this case, that she has "first-hand knowledge of the facts and circumstances surrounding this action," validates this Court's approach in refusing to accept counsel's assertions as fact in any given foreclosure action.

• The mistaken "belief" of an attorney who has no personal knowledge of the facts, yet opines in court documents that a homeowner-defendant is not entitled to a statutorily required court conference, may prejudice the homeowner's rights while subjecting the attorney to otherwise avoidable court sanctions.