HSBC Bank, USA, brought a foreclosure case against Thomas in Kings County Supreme Court. Thomas submitted an Answer in the foreclosure legal action with affirmative defenses. The affirmative defenses stated HSBC was not the owner of the note and the mortgage at the time the lawsuit was initiated. Therefore, they lacked standing to bring the lawsuit.
Thomas had taken out several mortgages. HSBC, in its summary judgment motion, claimed it had standing as it was assigned Thomas’s mortgage pursuant to an assignment by MERS. It also claimed it was in possession of the note at the time the action was commenced. They claimed since Thomas had not made his payments on the notes which were secured by the mortgage on the property, they had the right to initiate the lawsuit and they should be granted summary judgment. (Summary judgment grants the moving party an order for the relief requested in the complaint without the need for a trial).
Notes Not Assigned
Ms. Thomas, in her opposition to the summary judgment motion, claimed the notes were not assigned. She claimed the notes were not negotiated since there was an allonge (which is an amendment to a note) which did not comply with the Uniform Commercial Code section 3-202(2). This section of the Uniform Commercial Code requires an allonge be firmly attached to the note.
Supreme Court Justice Wayne Saitta agreed with Ms. Thomas’s argument. He found the assignment of the mortgage was insufficient as it only assigned the mortgage and did not include the notes and underlying debt. The judge found HSBC did not establish the note was negotiated prior to the commencement of this action. The negotiation of the note required physical delivery of the note. Judge Saitta ruled HSBC did not have standing to bring the lawsuit and summary judgment motion striking Thomas’s answer and affirmative defenses was denied.
Conclusion
If you are sued, it is important to have a detailed review of all of the facts and circumstances in the case with an experienced foreclosure defense lawyer. There are many defenses available in foreclosure lawsuits. There are numerous statutes, state and federal laws which protect consumers and mortgage holders.
