A mortgage assignee commenced a foreclosure action after the assignment of a mortgage that was already in default. The Supreme Court, Kings County, New York in Wells Fargo Bank, N.A. v. Saint Aubin, 22 Misc.3d 1120(A) (Feb. 2009) dismissed its application to foreclose. The court said the required affidavit of merit and amount due was insufficient because the supporting limited power of attorney was not an original and the Plaintiff’s counsel failed to certify that the power of attorney had been compared with the original document and found to be a true and complete copy. Also, it found that even though the application contained a verified complaint an attorney’s verification is insufficient to meet the requirements for a default judgment. The court was most disturbed, however, by the fact that the assignee took the assignment of this toxic loan 102 days after the alleged default of defendant. The court said it needs to know (for what reason it didn’t say) whether the assignee performed due diligence in purchasing this nonperforming loan or whether this was a device for the originator to shift its loss to the bondholders of plaintiff’s mortgage loan trust. The court’s legal source was Nobel Laureate Paul Krugman’s, July 2, 2007-New York Times column, Just Say AAA where he describes the collateralized debt obligations market as just a way of passing the risk of bad loans to the bond holders. So if the assignee is going to re-file the action, the court ordered it to provide an explanation from an officer of plaintiff [ ] explaining why, in the midst of our national subprime mortgage financial crisis, plaintiff [ ] purchased from MERS . . . a nonperforming loan.
Author
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Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
