Effective Dec. 23, 2019, a new statute—RPAPL §1302-a—eliminates waiver of the standing defense in a home loan foreclosure action even though not raised in an answer or pre-answer motion. Not only does this expose foreclosing lenders to assaults on their foreclosure actions for elusive durations, it raises questions as to the marketability and insurability of titles devolving through foreclosures. With an increased risk of litigation and the resulting inclusion of a title policy exception for challenges to the foreclosure based on lack of standing, foreclosure titles will likely be devalued.
Prior to the amendment, if a borrower were to raise lack of standing as a defense, under RPAPL § 1302 (1)(a), it needed to be made at the time the defendant answered the complaint, otherwise the defense was deemed waived. Another ground upon which a pre-answer motion to dismiss may be made is CPLR § 3211a(3): “the party asserting the cause of action has not legal capacity to sue” (i.e., standing). In this regard, subsection (e) provides that a motion based upon such ground is waived unless raised either by a motion to dismiss or in a responsive pleading. Therefore, as a matter of statue, the defense of standing is waivable. This axiom is supported by a remarkable abundance of case law. (US Bank N.A. v. Nelson, 169 A.D.3d 110, 93 N.Y.S.3d 138 (2d Dept. 2019); Wells Fargo Bank v. Halberstam, 166 A.D.3d 710, 87 N.Y.S.3d 328 (2d Dept. 2018). For much more extensive citation see 2 Bergman On New York Mortgage Foreclosures §19.07 , LexisNexis Matthew Bender (rev. 2019)).
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