Upstate NY Judge Emphasizes Importance Scrutinizing Foreclosing Lenders For Proper Standing In Cases Involving Unrepresented Homeowners

In a recent court ruling in Allegany County, New York involving a foreclosure action that was dismissed without prejudice (ie. with a right to refile), and which involved "the usual suspects" (ie. sloppy lender, foreclosure mill law firm, homeowner unrepresented by legal counsel - there was no indication that the homeowner even appeared in the case), Justice Timothy J. Walker discussess the significance of standing and real party in interest in foreclosure litigation and analyzes the applicable law in New York in connection thereto.

He closes with the following excerpt which deserves noting, in which he emphasizes the importance of judges exhibiting the necessary initiative to scrutinize the status of the plaintiffs bringing these foreclosure actions in cases involving homeowners unrepresented by legal counsel:

• Today, with multiple and (and often unrecorded) assignments of mortgage obligations and multiple securitizations often related to the same debt, the courts should carefully scrutinize the status of parties who claim the right to enforce these mortgage obligations.

• For the unrepresented homeowner, the issues of standing and real party in interest status of the foreclosing party are never considered. Without such scrutiny, there is a risk that the courts will give the judicial "seal of approval" to foreclosures against unrepresented homeowners who have little, if any, understanding of these issues, much less the legal significance thereof. To quote my colleague in Kings County, "[a]llowing this case to proceed on behalf of a plaintiff without standing at the commencement of the action would [also] open the door to potential fraud and place in jeopardy the integrity of title to the property to be foreclosed." [my emhasis added; not in original] [Citigroup Global Markets Realty Corp. v. Bowling, 25 Misc 3d 1244; 2009 NY Slip OP 52567U (Kings County, December 18, 2009)].(1)(2)

For the court ruling, see Deutsche Bank Natl. Trust Co. v McRae, 2010 NY Slip Op 20020 [Allegany County, January 25, 2010].

Thanks to both "LL" and to mortgage servicing fraud watchdog Mike Dillon over at GetDShirtz.com for the combined heads-up on this court ruling.

(1) In Citigroup Global Markets Realty Corp. v. Bowling, Kings County (Brooklyn), NY Supreme Court Justice Carolyn E. Demarest dismissed a foreclosure action, without prejudice, where the foreclosing lender screw-ups involved both:

• a failure to properly serve the homeowner (ie. "sewer service" - process server was found to have improperly utilized "nail & mail" method of service), and
• a "standing-lacking" foreclosing entity that initiated the legal action.

(2) An example of "the integrity of title to the property to be foreclosed" being "place[d] in jeopardy" when the foreclosing entity lacks proper authority to foreclose is the mess currently going on in Massachusetts involving the apparently faulty titles to homes that have been foreclosed over the last several years throughout the entire state due to the screw-ups of the foreclosing lenders and their attorneys in the foreclosure process. See:

• Massachusetts Court Ruling Gums Up Resales Of Foreclosed Homes Across State; Title Insurance Unavailable For Clouded Ownership Due To Faulty Paperwork;
• Lenders' Problem "Entirely Of Their Own Making" Says Judge In Affirming Earlier Ruling That Puts Title To Foreclosed Massachusetts Homes Into Question,
• Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership.

In addition, in the following excerpt from a June 24, 2009 story in the South Florida Daily Business Review (see Judge grapples with her discovery of 15,000 unserved foreclosure cases), Miami-Dade Judge Jennifer D. Bailey similarly alluded to possible future title problems to homes going through the foreclosure process when the screw-ups relate to the failure to properly serve the homeowners with the foreclosure lawsuit (ie. the summons and complaint) when the foreclosing entity initiates the legal action:

• “It all starts with service. If people don’t get served, all we’re doing is buying ourselves a bunch of title cases in six years,” the judge said [my emphasis added; not in the original].