We reviewed every Appellate Division case in the first eleven months of 2012. In raw count, the lenders beat the borrowers by a rough margin of 2:1, but that number does not necessarily reflect a swing in sensitivities. The appellate division decisions in 2012 showed strict application of the laws and notable lack of sympathy for borrowers evidenced by recent years’ legislative enactments, issuing decisions that were decidedly pro-lender. One trend continuing in 2012 is that the Second Department has the lion’s share of the reported cases and is therefore the most fruitful source of stare decisis.
Standing, Basic Principles
The 2012 cases adhered to the principle that mere servicers who cannot account for the whereabouts of the promissory note lack standing to bring a foreclosure action.1 Practitioners in the field refer to these as “where’s the note?” defenses and see them in any case where the servicer is other than the originator of the mortgage. Since the borrower has no way of knowing if the note actually traveled with the mortgage, savvy defense counsel always interpose the defense and hope for the best. In CSFB 2004C3 Bronx Apts v. Sinckler,2 the record seems to imply that the mortgagor assumed that a “where’s the note” defense would be available and was simply disappointed when it turned out that the mortgagee actually had it. The Appellate Division’s uncharacteristic rapid reversal (four months!) of the trial court probably indicates the appellate panel’s impatience with trial court decisions based on mercy rather than law. Something similar happened in Deutsche Bank Trust Americas v. Codio,3 where the plaintiff was able to produce an allonge (a document showing the actual chain of assignment with original signatures at each endorsement) showing it to have been the proper assignee of the mortgage. Clearly such matters can be a question of fact.4 However, other cases have stated that there are methods for foreclosing without actually possessing the promissory note.5
