I recently opposed a lender’s motion for Summary Judgment on the grounds that it lacked standing. Here is an excerpt from that brief.
The Plaintiff has not established documentary evidence to show that it has standing. The Plaintiff must prove it has possession of the original note and guarantees. Citimortgage, Inc. v. Rosenthal, 88 A.D.3d 759 (2d Dept. 2011); Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 279 (2d Dept. 2011). The law is clear on this point: “standing to sue requires an interest in the claim at issue.” Deutsche Bank Nat. Trust Co. v. Castellanos, 15 Misc.3d 1134, (Sup. Ct. Kings Co., 2007) (citing, Caprer v. Nussbaum, 36 A.D.3d 176, 181 (2d Dept. 2006).
When an original note is not in the possession of the lender, and the lender nonetheless seeks recovery on the note, there is a risk to the borrower and guarantors that one day in the future, a holder in due course will appear and seek recovery on the same note. The potential for making a payment to the wrong party is a real risk and one that is easily eliminated, merely by having the lender meet its burden of proving that it has possession of the original note and guaranty.
In the mortgage foreclosure context, the Court of Appeals has recently held that a lender may satisfy this burden by an affidavit from a legal liaison with personal knowledge who has examined the note. Aurora Loan Services, LLC v. Taylor, 25 N.Y.3d 355, 366 (2015); see also, 71 Clinton St. Apts. LLC v. 71 Clinton Inc., 114 A.D.3d 583, 584 (1st Dept. 2014) (plaintiff produced the guaranty).
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