MTGLQ Investors, L.P. v Cong. Chemdath Tora V' Chesed A Religious Corporation
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Attorneys and Parties
Brief Summary
Mortgage foreclosure standing and proof of borrower default.
The Supreme Court, Kings County, granted the plaintiff summary judgment on the complaint, struck the defendant's answer, issued an order of reference, confirmed the referee's report, and entered a judgment of foreclosure and sale.
The Appellate Division reversed the order and judgment of foreclosure and sale insofar as appealed from, denied the branches of the plaintiff's motion for summary judgment, to strike the answer, for an order of reference, to confirm the referee's report, and for a judgment of foreclosure and sale, and modified the prior orders accordingly.
The plaintiff failed to make a prima facie showing of standing because its affidavit did not establish when it acquired the note, and it failed to prove default because it did not submit records evidencing the defendant's default.
Background
This was an action to foreclose a mortgage. Before this appeal, the defendant had appealed from the November 28, 2022 order, but that earlier appeal was deemed dismissed under 22 NYCRR 1250.10(a) [rule providing that an appeal may be deemed dismissed for failure to perfect]. Although the plaintiff argued that review was barred under Bray v Cox, the Appellate Division exercised its discretion to reach the merits because the defendant had vigorously litigated the action from its inception.
Lower Court Decision
The Supreme Court determined that the plaintiff was entitled to foreclosure relief, granted summary judgment on the complaint, struck the defendant's answer, appointed a referee through an order of reference, later confirmed the referee's report, and directed the sale of the subject property in a judgment of foreclosure and sale dated May 2, 2024.
Appellate Division Reversal
The Appellate Division held that the plaintiff did not establish its standing to commence the foreclosure action because the supporting affidavit failed to show when the plaintiff acquired the note. The court also held that the plaintiff failed to prove the defendant's default because it did not submit records showing the default. For those reasons, the plaintiff was not entitled to summary judgment, an order of reference, confirmation of the referee's report, or a judgment of foreclosure and sale.
Legal Significance
The decision reinforces that in New York mortgage foreclosure actions, a plaintiff must submit competent evidence showing both standing at the time the action was commenced and the borrower's default. An affidavit that does not establish when the note was acquired, and the absence of business records or other records proving default, is insufficient to support foreclosure relief.
A foreclosure plaintiff cannot obtain summary judgment or a foreclosure sale judgment without proving that it held or was assigned the note before filing suit and without submitting admissible records establishing the borrower's default.