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Another N.Y. court refuses to grant a foreclosure when the bank failed to follow strict procedures to prove it owned the note

March 24th, 2010 by Joseph William Singer

Another judge has refused to grant a foreclosure when  the bank could not prove that it validly acquired the mortgage by assignment from the original mortgagee. Deutsche Bank Nat. Trust Co. v. McRae, 894 N.Y.S.2d 720 (Sup. Ct. 2010). The court emphasized that foreclosure actions can only be brought by those who have title when the action is commenced and that mortgages can be assigned in two ways—by delivery of the note and mortgage by the assignor to the assignee with the intent to assign or by a written instrument of  assignment. The written assignment in this case was insufficient because it assigned the mortgage but not the note (the underlying contractual obligation). The plaintiff sought to introduce evidence of a note that was endorsed by the assignor with notice of assignment. However, the assignment was not dated and conflicted with the unsigned note attached to the plaintiff’s foreclosure  complaint, leading the judge to believe the endorsement had been made after the court’s order that the plaintiff prove assignment of the note. Because there was no proof of the assignment at the time the action was filed the foreclosure claim was dismissed.

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