A recent New York Appellate Court ruling may mean that the majority of home mortgages in New York State are “unforeclosable,” and that homeowners may keep their homes without making mortgage payments.
In the majority of New York foreclosure cases, the infamous electronic mortgage registry known as Mortgage Electronic Registration Systems, Inc. (MERS) executes an “assignment” document that supposedly transfers ownership of the mortgage to the foreclosing bank shortly before the bank starts the foreclosure.
However, in the foreclosure case of Bank of New York v. Silverberg (2d Dept. 2011), a New York appellate court dismissed the case on the basis that the alleged “assignment” of the mortgage by MERS was invalid. The court ruled that MERS had no right to assign The Silverbergs’ mortgage because MERS did not hold (own) the promissory note for the underlying mortgage loan.
The appellate court’s ruling was based upon the fundamental rules of property law that: (1) a mortgage cannot be assigned unless the underlying promissory note is also assigned; and (2) only the holder of the promissory note may assign it to another party.
MERS does not own or possess the promissory notes for any of the mortgage loans that it purportedly ”assigns” to banks in preparation for foreclosures.
The benefits of the Silverberg case to homeowners facing foreclosure can hardly be overstated. Under the Silverberg decision, practically all foreclosure cases involving faulty ”assignments” of mortgages by MERS are required to be dismissed for lack of standing.
The Silverberg case is THE law governing foreclosures of homes located in the following New York counties: Kings (Brooklyn), Queens, Nassau, Suffolk, Richmond (Staten Island), Westchester, Rockland, Orange, Putnam and Dutchess.
Although the Silverberg case is only required to be followed by courts in these counties, its sound reasoning may persuade judges elsewhere to grant motions to dismiss for lack of standing when an invalid MERS “assignment” is involved. To quote the court in Silverberg (see Page 9 of the attached decision):
MERS purportedly holds approximately 60 million mortgage loans . . . and is involved in the origination of approximately 60% of all mortgage loans in the United States . . . This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property.
Contact the LeNoir Law Firm to find out whether your home mortgage may be “unforeclosable.”
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