Deutsche Bank National Trust Co. v. Johnson, Kings County Supreme Court, Index 24867/2011

Standing continues to trip-up foreclosing lenders.  In this residential mortgage foreclosure case, a pro se defendant successfully cross-moved for summary judgment dismissing a mortgage foreclosure complaint based upon the plaintiff’s inability to demonstrate standing.  The original lender on the loan was New Century Mortgage Corporation.  Because the loan was to be securitized, the mortgagee on the loan was the Mortgage Electronic Registration System (“MERS”).

The court first determined that there was no evidence that the note, as opposed to the mortgage, had ever been assigned to MERS and therefore, MERS had no ability to assign the note to the plaintiff. Faced with this difficulty, the plaintiff argued that it was in physical possession of the note prior to the commencement of the action.  The court found, however, that there was insufficient evidence that the plaintiff possessed the note as of the date that the action was commenced.  Thus, the court held that “[b]ecause plaintiff did not submit a ‘written assignment of the note’ or any ‘evidence to establish physical delivery of the note’ defendant’s motion must be granted.”

The lesson of Deutsche Bank National Trust v. Johnson is that lenders must be sure they can demonstrate through admissible evidence that they own the note and mortgage before commencing a mortgage foreclosure action.