On Sept. 9, 2020, the Superior Court handed down a noteworthy decision concerning a lost note in the context of mortgage foreclosure litigation. The court was confronted with the following central issues: whether a lost note affidavit complied with the requirements of enforcement of a lost, stolen or destroyed instrument, 13 Pa.C.S. Section 3309, and assuming compliance, did a lack of transfer of any interest in the note and lost note affidavit result in the assignee plaintiff bank’s lack of standing to proceed in the foreclosure action.

As the decision, MB Financial Bank v. Rao, No. 2564 EDA 2019 is rather fact intensive, a careful review of these facts is useful. The appellant, Lawrence J. Rao, owns a mortgaged property in Philadelphia County, on South Darien Street. On Feb. 9, 2006, Rao executed a note in favor of the original lender, Sun Trust Mortgage, Inc. (Sun Trust) in the amount of $228,000. He also executed a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for Sun Trust. In March 2011 the borrower Rao defaulted on the note. On April 22, 2013, Sun Trust learned that the note in question was missing from its vault, prompting a bank officer to execute a lost note affidavit.