HSBC Bank USA, National Association v. Veronica Sanchez
Attorneys and Parties
Brief Summary
Mortgage foreclosure—evidentiary requirements to confirm a referee’s report and enter a judgment of foreclosure and sale, including admissible business records to prove the amount due.
Confirmed the referee’s report and entered an order and judgment of foreclosure and sale directing the property’s sale.
Confirmation of the referee’s report and the judgment of foreclosure and sale.
The referee’s computations relied on unidentified and unproduced business records and an affidavit that constituted inadmissible hearsay; no affidavit of merit or payment records were attached, and the referee failed to identify the documents underlying her findings, so the report was not substantially supported by the record. The court also held that the lack of a noticed hearing did not, by itself, warrant denial because the defendant had the opportunity to submit evidence to the court.
Background
HSBC commenced a foreclosure action in March 2013 against Veronica Sanchez concerning property in Staten Island. After a supplemental summons and amended complaint, Sanchez answered. On March 14, 2019, the Supreme Court granted summary judgment against Sanchez and issued an order of reference appointing a referee to compute the amount due, authorizing the referee, if required, to take testimony pursuant to Real Property Actions and Proceedings Law (RPAPL) § 1321 [authorizes appointment of a referee to compute amount due in mortgage foreclosure and, if required, take testimony]. The referee issued a report; HSBC moved to confirm and for a judgment of foreclosure and sale; Sanchez opposed.
Lower Court Decision
By order and judgment dated October 30, 2020 (Supreme Court, Richmond County, Desmond A. Green, J.), the court granted HSBC’s motion to confirm the referee’s report, entered a judgment of foreclosure and sale, and directed the sale of the property.
Appellate Division Reversal
Reversed insofar as appealed from, with costs. The Appellate Division denied the branches of HSBC’s motion to confirm the referee’s report and for a judgment of foreclosure and sale, rejected the referee’s report, and remitted for a new report computing the amount due and the entry thereafter of an appropriate amended judgment. The court held that although a hearing on notice was not required where the defendant could submit evidence to the court, the referee’s findings were not substantially supported because they relied on unauthenticated, unproduced business records and an affidavit lacking attached records, and the referee failed to identify the sources for her computations, including as to whether the property could be sold in one parcel.
Legal Significance
Confirms that in New York mortgage foreclosures, a referee’s report must be supported by admissible evidence—typically business records properly produced or attached—and an affiant’s reliance on records without producing them is hearsay lacking probative value. A failure to hold a noticed hearing is not reversible error absent prejudice where the defendant can submit evidence directly to the court on a motion to confirm.
To confirm a referee’s report and obtain a judgment of foreclosure and sale, lenders must submit the actual business records supporting the amount due and ensure the referee identifies the documents relied upon; otherwise, the report will be rejected even if no hearing was held.