New Century Mtge. Corp. v Durden

[*1] New Century Mtge. Corp. v Durden 2009 NY Slip Op 50175(U) [22 Misc 3d 1118(A)] Decided on February 2, 2009 Supreme Court, Kings County Demarest, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on February 2, 2009
Supreme Court, Kings County

New Century Mortgage Corporation, Plaintiff,

against

Shari N. Durden; Cordial Realty Group; "John Doe" and "Jane Doe" said names being fictitious, it being the intention of Plaintiff to designate any and all occupants of premises being foreclosed herein, Defendants.



7967/07



Attorney for Plaintiff:

Mark K. Broyles, Esq.

Fein, Such & Crane, LLP

28 East Main Street, Suite 1800

Rochester, NY 14614

No Appearance by Defendants

Carolyn E. Demarest, J.

Plaintiff moves for default judgment and an order of reference for a referee to ascertain and compute the amount due to the plaintiff in this action to foreclose a mortgage, signed on October 11, 2006, for real property situated in the County of Kings, State of New York, at 518 Thomas Boyland St, Brooklyn, NY 11212 ("Mortgage"). On November 14, 2007, this court previously denied plaintiff's motion for an order of reference and noted the following:

Prior to filing the instant motion, the subject mortgage was assigned "in the secondary market" to DLJ Mortgage Capital, Inc. Accordingly, plaintiff no longer possesses any right, title or interest in the mortgage sought to be foreclosed and the affidavit of a Vice President of New Century is not competent in the circumstances. Any future application to foreclose on this mortgage should contain a copy of the mortgage application as it appears that no payment was ever made by the mortgagor. Upon the renewed motion for an order of reference, plaintiff submitted an affidavit by Mordy Flam, Vice President for MAR Group, LLC ("MAR"), and a copy of the defendant's mortgage application. [*2]

Based on the documentation submitted by plaintiff in support of it's motion, the Mortgage has been assigned numerous times, apparently as a mortgage backed security. On October 11, 2006, New Century Mortgage Corporation ("New Century") entered the note ("Note") and the Mortgage as the "lender." The Mortgage listed Mortgage Electronic Registration Systems, Inc. ("MERS") as the "mortgagee of record." On March 7, 2007, New Century filed the complaint in this action. On April 30, 2007, MERS assigned the mortgage to DLJ Mortgage Capital, Inc. ("DLJ"). On May 11, 2007, in an "Assignment of Mortgage," MERS purportedly assigned the Mortgage to New Century that included the phrase, "Date of Transfer: March 5, 2007." On January 15, 2008, after this court signed the order which denied New Century's previous motion for an order of reference, DLJ assigned the Mortgage to MAR. On February 8, 2008, in a "Gap Assignment of Mortgage," New Century purportedly assigned the Mortgage to "Mortgage Electronic Registration Systems, Inc. as nominee for New Century Mortgage Corp.". This "gap assignment" included the following provision:

THIS GAP ASSIGNMENT OF MORTGAGE is to be effective as of April 5, 2007. The intention of this GAP Assignment of Mortgage is to assign the above referenced mortgage from New Century Mortgage Corp. to Mortgage Electronic Registration Systems, Inc. as nominee for New Century Mortgage Corp, thus completing the intended chain of title.

It is critical for a plaintiff seeking judicial redress to have standing before this court. "If standing is denied, the pathway to the courthouse is blocked" (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 812 [2003], cert denied 540 US 1017 [2003]). "Standing to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant's request" (Caprer v Nussbaum, 36 AD3d 176, 181 [2d Dept 2006]).

According to the documents submitted in support of plaintiff's motion, the plaintiff's action is predicated upon rights it presumed to acquire by virtue of an assignment from MERS as Nominee for New Century Mortgage Corporation on May 11, 2007. This action was commenced by the filing of a summons and complaint on March 7, 2007, prior to the date of the written assignment from MERS. However, a plaintiff may not foreclose on a mortgage where the plaintiff does not have title to the mortgage (Kluge v Fugazy, 145 AD2d 537, 538 [2d Dept 1988]). The written assignment in the present matter from MERS states that the date of transfer is March 5, 2007. "The crucial issue then is whether the written assignment, dated after the commencement of the action but stated to be effective on a date before the commencement, was effective to give plaintiff the requisite interest in the mortgage and thus standing to commence an action to foreclose" (Deutsche Bank Trust Co. Ams. v Peabody, 20 Misc 3d 1108A [Sup Ct, Saratoga County 2008]).

Where there is no evidence that plaintiff, prior to commencing the foreclosure action, was the holder of the mortgage and note, took physical delivery of the mortgage and note, or was conveyed the mortgage and note by written assignment, an assignment's language purporting to give it retroactive effect prior to the date of the commencement of the action is insufficient to establish the plaintiff's requisite standing (see Deutsche Bank,20 Misc 3d at 1108A (dismissing foreclosure action as plaintiff did not have an interest in the mortgage on the date of the action's commencement, and thus lacked standing to initiate the action, despite a retroactive effective date in the assignment of a mortgage); Countrywide Home Loans, Inc. v Taylor, 17 Misc 3d 595 [*3][Sup Ct, Suffolk County 2007] (denying motion for order of reference due to plaintiff's lack of standing as retroactive date in assignment of mortgage to plaintiff was insufficient to establish plaintiff's ownership interest at the time the action was commenced); Countrywide Home Loans, Inc. v Hovanec, 15 Misc 3d 1115A [Sup Ct, Suffolk County 2007] (denying motion for order of reference as retroactive date in assignment was insufficient to establish plaintiff's ownership interest in the mortgage at the time the action was commenced and thus the court was unable to accept the affidavit in support of the motion by an officer of the plaintiff as a proper party affidavit pursuant to CPLR 3215(f)); Bankers Trust Co. v Hoovis, 263 AD2d 937 [3d Dept 1999] (rejecting "defendant's contention that plaintiff lacked standing based on the allegation that plaintiff did not obtain the assignment of mortgage until after the commencement of the action" where defendant did not contradict plaintiff's documentation that the note and mortgage were physically delivered to the plaintiff prior to the initiation of the action); Fremont Inv. & Loan v Laroc, 2008 NY Slip Op 52166U, *3-4 [Sup Ct, New York County 2008] (holding that plaintiff had standing to bring the foreclosure action where the equitable interest was transferred to the plaintiff by the physical delivery of the note and mortgage prior to the initiation of the action and it was undisputed that plaintiff was the holder of the mortgage and note from the outset despite the plaintiff's written assignment to itself after the commencement of the action "to avoid any objection to the standing of MERS as a nominee for the lender to bring a foreclosure action")).

The court recognizes, as explained by the Court of Appeals, that ownership interest in a mortgage may be transferred among MERS members without being publicly recorded (see Merscorp, Inc. v Romaine, 8 NY3d 90, 96 [2006]). However, unlike in Fremont, the relationship between the assignors and assignees is not clear in this matter and thus the plaintiff failed to demonstrate that it was the holder of the Mortgage and Note from the outset. Therefore the plaintiff failed to establish that it had standing to commence the present foreclosure action and the motion for an order of reference must be denied (see Fremont Inv. & Loan, 2008 NY Slip Op 52166U at *4; Countrywide Home Loans, Inc., 15 Misc 3d at 1115A).

Furthermore, the assignments of May 11, 2007 and February 8, 2008, are apparently invalid as the assignors did not have a present interest in the Mortgage at the time of the assignments. "It is well settled that [n]o particular words are necessary to effect an assignment; it is only required that there be a perfected transaction between the assignor and assignee, intended by those parties to vest in the assignee a present right in the things assigned.' In order for an assignment to be valid, the assignor must be divested of all control over the thing assigned.'" (In re Stralem, 303 AD2d 120, 122-123 [2d Dept 2003], internal citations omitted).

Regardless of the purported "date of transfer" listed in the May 11, 2007 assignment, MERS had previously assigned the Mortgage to DLJ and therefore MERS did not have a present interest in the mortgage on May 11, 2007. Therefore, MERS could not vest New Century with an interest in the Mortgage on May 11, 2007 (see id.). As a result of this invalid assignment, New Century did not receive the Mortgage through the May 11, 2007 assignment and did not have a present interest in the Mortgage to assign to MERS on February 8, 2008 regardless of the purported "effective" date (see id.). Accordingly, the May 11, 2007 assignment by MERS and the February 8, 2008 assignment by New Century are invalid.

While the parties may have successfully taken physical delivery of the Mortgage and Note in the chronology suggested by MERS and New Century's assignments, or actually assigned the [*4]Mortgage and Note through other means, the inclusion of retroactive dates in assignments, absent any evidence that the transfers actually occurred on those dates, is insufficient to demonstrate that New Century was the holder of the Mortgage and Note prior to commencing this foreclosure action (see Deutsche Bank,20 Misc 3d at 1108A; Countrywide Home Loans, Inc., 17 Misc 3d at 595; Countrywide Home Loans, Inc., 15 Misc 3d at 1115A; Bankers Trust Co., 263 AD2d at 937; Fremont Inv. & Loan, 2008 NY Slip Op 52166U at *3-4).

Accordingly, New Century's motion for default judgment and an order of reference is denied without prejudice and the action is dismissed due to New Century's lack of standing (Saratoga County Chamber of Commerce, Inc., 100 NY2d at 812). Furthermore, according to a search of the New York City Department of Finance Automated City Register Information System, after New Century commenced this action, the defendant transferred the deed to Celeste Ann Henry. Should the current holder of the Mortgage commence a new foreclosure action, "all parties having an interest, including persons holding title to the subject premises, must be made a party defendant to the action'" (Home Sav. of Am., F.A. v Gkanios, 233 AD2d 422 [2d Dept 1996]).In addition, the Mortgage holder's complaint must comply with the recently enacted Real Property Actions and Proceedings Law § 1304.

The foregoing constitutes the decision and order of the court.

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J.S.C.