New Standing Foreclosure Case

Posted by kevin on August 21, 2011 under Foreclosure Blog | Comments are off for this article

The second shoe fell on August 9 when the Appellate Division case of Deutsche Bank, as Trustee v. Mitchell was published.  This involved a mortgage foreclosure rescue scam but the decision rested on standing issues.  The appellate panel followed Ford and Raftogianis and found that DB did not have standing.  DB filed the complaint on May 13, 2008 in which it asserted that it was the owner of the note and mortgage but it was not until May 14, 2008 that WAMU assigned the mortgage to DB.  DB then filed an amended complaint which listed the assignment.

Looking at Ford, and Raftogianis, the appellate panel stated that to show standing the plaintiff had to demonstrate ownership or control of the underlying debt; that is, the note.  The Court did an analysis of 12A: 3-301 and concluded that DB was neither a holder or a non-holder in possession with the rights of a holder.  Ergo, no standing.  This led to the dismissal of the case without prejudice.

What was of interest in this opinion is that after the court found that there was not standing, it weighed in on the proofs provided by the plaintiff.  Although this is probably dicta, it is enlightening especially in light of the reduced level of proof now required in uncontested foreclosures.  The Court blasted the supporting certification of counsel out of the water but stating that attorneys in particular should not certify to facts within the primary knowledge of their clients citing the Higgins case (which I cite in many of my papers).  DB also provided a certification from the servicer which concluded that DB is the holder of the note.  The Court said that conclusory statements with no backup does not equal proof.  Moreover, arguments made by counsel to the court do not constitute proof.

The next battlefield will not be standing or FFA violations.  It will be whether the trial judges are going to allow the relaxed standards of proof allowed in uncontested foreclosures, or are they going to demand the more rigorous proofs that our courts have demanded for years.