KABOOM | NY Appellate Division | Bank of NY v Silverberg – MERS Does NOT Have The Right to Foreclose on a Mortgage in Default or Assign That Right to Anyone Else

Appeals Court Clarifies MERS Role in Foreclosures

The ubiquitous Mortgage Electronic Registration Systems, nominal holder of millions of mortgages, does not have the right to foreclose on a mortgage in default or assign that right to anyone else if it does not hold the underlying promissory note, the Appellate Division, Second Department, ruled Friday. “This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation,” Justice John M. Leventhal wrote for a unanimous panel in Bank of New York v. Silverberg, 17464/08. “Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property.” The opinion noted that MERS is involved in about 60 percent of the mortgages originated in the United States.

From the ruling…

(Emphasis added by 4F)

Decided on June 7, 2011


(Index No. 17464-08)

[*1]Bank of New York, etc., respondent,
Stephen Silverberg, et al., appellants, et al., defendants.

LEVENTHAL, J.This matter involves the enforcement of the rules that govern real property and whether such rules should be bent to accommodate a system that has taken on a life of its own. The issue presented on this appeal is whether a party has standing to commence a foreclosure action when that party’s assignor—in this case, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS) —was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee of the underlying notes. We answer this question in the negative.

On appeal, the defendants argue that the plaintiff lacks standing to sue because it did not own the notes and mortgages at the time it commenced the foreclosure action. Specifically, the defendants contend that neither MERS nor Countrywide ever transferred or endorsed the notes described in the consolidation agreement to the plaintiff, as required by the Uniform Commercial Code. Moreover, the defendants assert that the mortgages were never properly assigned to the plaintiff because MERS, as nominee for Countrywide, did not have the authority to effectuate an assignment of the mortgages. The defendants further assert that the mortgages and notes were bifurcated, rendering the mortgages unenforceable and foreclosure impossible, and that because of such bifurcation, MERS never had an assignable interest in the notes. The defendants also contend [*3]that the Supreme Court erred in considering the corrected assignment of mortgage because it was not authenticated by someone with personal knowledge of how and when it was created, and was improperly submitted in opposition to the motion.

Here, the consolidation agreement purported to merge the two prior notes and mortgages into one loan obligation. Countrywide, as noted above, was not a party to the consolidation agreement. ” Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident'”

Therefore, assuming that the consolidation agreement transformed MERS into a mortgagee for the purpose of recording—even though it never loaned any money, never had a right to receive payment of the loan, and never had a right to foreclose on the property upon a default in payment—the consolidation agreement did not give MERS title to the note, nor does the record show that the note was physically delivered to MERS. Indeed, the consolidation agreement defines “Note Holder,” rather than the mortgagee, as the “Lender or anyone who succeeds to Lender’s right under the Agreement and who is entitled to receive the payments under the Agreement.” Hence, the plaintiff, which merely stepped into the shoes of MERS, its assignor, and gained only that to which its assignor was entitled (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126; see also UCC 3-201 [“(t)ransfer of an instrument vests in the transferee such rights as the transferor has therein”]), did not acquire the power to foreclose by way of the corrected assignment.

In sum, because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose. MERS purportedly holds approximately 60 million mortgage loans (see Michael Powell & Gretchen Morgenson, MERS? It May Have Swallowed Your Loan, New York Times, March 5, 2011), and is involved in the origination of approximately 60% of all mortgage loans in the United States (see Peterson at 1362; Kate Berry, Foreclosures Turn Up Heat on MERS, Am. [*6]Banker, July 10, 2007, at 1). This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property. Accordingly, the Supreme Court should have granted the defendants’ motion pursuant to CPLR 3211(a) (3) to dismiss the complaint insofar as asserted against them for lack of standing. Thus, the order is reversed, on the law, and the motion of the defendants Stephen Silverberg and Fredrica Silverberg pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them for lack of standing is granted.

FLORIO, J.P., DICKERSON, and BELEN, JJ., concur.

ORDERED that the order is reversed, on the law, with costs, and the motion of the defendants Stephen Silverberg and Fredrica Silverberg pursuant to CPLR 3211(a)(3) to dismiss the complaint insofar as asserted against them for lack of standing is granted.

Full opinion below…

It is well worth the read…




Bank of NY v Silverberg

41 Responses to “KABOOM | NY Appellate Division | Bank of NY v Silverberg – MERS Does NOT Have The Right to Foreclose on a Mortgage in Default or Assign That Right to Anyone Else”
  1. Cindy says:

    Bank of America Info you can use. I inherited a house with a $300,000. HELOC. I paid the payments and the insurance and taxes for 6 years. The house fell in value to less than 1/2 of the HELOC. I found myself unable to pay the taxes. After two years it was going to TAX DEED auction. I begged Bank of America to pay the $3000.00 tax bill. Yes THREE THOUSAND DOLLARS. They Refused. I continued to plead with them to pay the taxes. The house was sold at the Tax Deed Auction for $40,000. According to the Tax Collectors Office who I have been in constant contact with since last March. Bank of America is not paying the taxes in Florida. What we now now and never ever thought…they did not pay them nor show up at the auction. The Tax Collectors said we can pretty much count on them not contesting the Quiet Claim and that the surplus $37,000.00 will likely come directly to me in about 90 days? Can this be? Mind you I was only 2 months behind payments and there was no foreclosure pending. Bank of America walked on a their interest for $3000.00. These are he decision makers holding us hostage. Will let you know if I see the money. I have heard also that one should file for a quiet title to see if your Bank can produce the note. What does anyone know about this ?

  2. Annie Bade says:

    So what the hell does this mean to me….. the lay person who is paying for a house that is no longer worth what the mortgage hold? Can’t refi, can’t sell.
    plse inform.

    • mymisstake says:

      it means you can decide if you want to keep on paying for a house for 15 years or so before you get equity in it or you can hope the value goes up again, of course if you walk away you ruin your credit and they come after you so you gotta file bankruptcy, all sorts of scenarios, you could try to get a home modification but i think getting one of those where they reduce the principle due is next to zero.

      • Readdocs says:

        Even considering a modification to the loan is ludicrous. The servicer cannot do modifications
        to any mortgage unless they have specific authority from the lender. Ask yourself, what investor/lender
        is going to cut his profits?

      • Tim Bryant says:

        I agree with Readdocs.

  3. mymisstake says:

    I have learned to never assume anything in the world as it is now. In “the old world” all these crooks would be in prison and they wouldn’t have been allowed to take people’s homes illegally with fraudulent/forged documents.

    But THIS is not that same world, somewhere along the line the normal rules that govern got left behind. So i would not be too quick to celebrate, things that don’t make sense (sort of like Alice in Wonderland) exist in this new world anyway and no one seems to notice.

    Bank of America should not be viewed as a sacrificial lamb, its more like a wolf in sheep’s clothing imo.

  4. Ali Pavesich says:

    No wonder for the last three weeks BOA want to modify our mortgege after almost 3 yr.’s !!!!!!!!

    • Readdocs says:

      Before you accept or talk to them about modification, find out if they are your real lender.
      If they are not, then they’re just stringing you along until they can put you into foreclosure.
      Otherwise you’re just assuming the real lender is going to take a pay cut on the money owed
      in via the mortgage. And assumptions can be fatal.

  5. sam says:

    help please? if MERS is listed as a mortgage holder on my deed, that’s the rub? B of A holds my mortgage.

    • SAM (and others)

      *This information is accurate for consumers in judicial foreclosures states only.

      Most readers here are regular consumers who do not clearly understand the important difference between the mortgage and the note. They are separate documents; both important to purchase and transferring of loans.

      What this lawsuit means to you is that while MERS may be named as your mortgage holder–THEY DO NOT HOLD YOUR NOTE.

      Just as a point of information–


      * Never held anybody’s note
      * Cannot legally foreclose on ANYBODY
      * Cannot transfer something which they never had (your note)
      * Is simply a huge database created by the banks and assorted associates to make the process work better for them and avoid paying recording fees while speeding up the process of moving the mortgage from one investor to another at break neck speed
      * Has never been established as LEGAL
      * Is actually a blessing in disguise if they are the holder of your MORTGAGE because that means you
      can feel pretty confident that nobody can really prove a clear, continual chain of title (A had your loan–sold it to B—B sold it to C, C sold it to D) and so forth

      The most crucial thing you want from your lender or the servicer is NOT to know who is holding your mortgage. I know that is what is stated in newstories and many blogs across the country. What you really want to know is who is holding your NOTE–and can they prove when they got it, whom they got it from, was it recorded at the time of the transfer.

      The person who can foreclose is the person who holds your NOTE. (Judicial foreclosures).
      The investor who bought a share of your mortgage cannot foreclose–unless they have the note.

      Do some research on mortgage and note as documents and the powers which they each have or can convey.

      Hope this helps.

      Mildred (317) 507-5105


  6. RobertB says:

    Great news for all those who do not wish to honor their agreement.
    It was an agreement wasn’t it, before prices went down?

    • Paul R says:

      Buyers fulfilled their agreement by paying sellers. Banks engaged in fraudulent lending. It’s a matter of law that their foreclosure actions are illegal. Banks have no honor; why should sellers?

    • Tim Bryant says:

      The bank was paid for the agreement when they sold the mortgage. There is no agreement between the borrower and investors. That agreement is between the seller, issuer, guarantor, trustee, and investors….now go home.

    • Enzo says:

      Prices just didn’t go down. Do you think it is normal that my house dropped by $500k in value in 2 years? Really? What happened was just like this: I went to a diamond store, the appraiser said yep, nice diamond. The jeweler said, nice diamond dude and then the Gem Institute of America said yep, flawless worth at least $20k. Then 2 years later, I find out it was really cubic zirconium and it is worth $100. I decide not to pay anymore for this crap, but now the jewelry store wants the $19,900 difference and their cubic zirconium back. The real estate industry colluded, lied, cheated and stole in collusion with the banks who then placed bets on our mortgages in a casino like scheme and THEY crashed the housing market, not me. Screw them. They should be in jail.

  7. mymisstake says:

    Bank of America – Let me count the ways the most maddening, useless, purposely unhelpful worthless bank in business.

  8. josephbc69 says:

    Friends, this is a HUGE decision and will have nation-breaking consequences:


    In the immense Ponzi scheme concocted by the banksters and the Fed Res Bunco –I mean, Banko!– the mortgages are likely the single largest item they manipulated to the moon and back, several times over. But now it appears their game is “OVER!” and busted, big time. Next will be the silver shorts, caught w/their raggedy-assed pants down on delivery.

    If the to-date-spineless Supreme Sluts who shit –I mean sit– on the highest Court are Constitutionally-minded as they claim to be, then they will have to rule against the banksters and in favour of Mr & Mrs John Beaver, Minyanville.

    Now understand what this will mean:

    THE FOUR LARGEST US MEGA-banks –those guardians of Mammon and Satan– will collapse now, as they should have done in the first blow-up. But the Obamamama, ever-mindful of which boots and hands to lick as a “Thank you, Massa, for getting me to be da Prez!” will no doubt huddle w/Timmy Geithner and other scumballs –no, wrong word, they haven’t any– scumbags!– and announce the final flat-out printing of paper $ to “save” the nation and by inference, the planet. With leaders like these, who needs external enemies?

    Got gold? Got silver? If not, there’s still time to get US & Canada silver dollars [not numismatic crapola, just survival silver rounds and bullion coins], load your pantries w/preserved foods and hunker down. She’s a’coming now, I can hear her breathing hard!!

    Cheers n beers,
    J & the wonder dogs, Ted E Bear and Kota Bear

  9. Pamela says:

    Great post and good news .Seems like people are finally starting to get the idea that MERS is only a human generated computer program.It has absolutely no standing and no legal rights and recourse because it is an inanimate object.People are too willing to let a machine do the job of a human.Another great example of how our jobs are being out sourced and not kept where they need to be.

  10. AliceN.Wunderland says:

    This is absolutely beautiful. Thank you Justice Leventhal. A good, honest Justice who has retained his honor and integrity. All those that know him personally should be proud to call him a friend. He is a hero and may this ruling enlighten other courts about the true facts regarding Mers, the company that has destroyed this nation.

  11. Readdocs says:

    All of the trusts ( holding securitized mortgages) is either in New York (80%), or in Delaware (20%).
    Now is the time to see ALL securitized mortgage trusts opened and investigated. Let’s see how many
    hundreds/thousands trusts are empty, under populated (300) investors, inactive, or just doesn’t exist.
    Now there is a huge explosion for you.
    Eventually this is going to come to a painful stop, and no one is going to be able to hide it.

  12. Fury says:

    this is a Godsend to all who are fighting illegal foreclosure and eviction, especially in new york state.

    i want to thank this judge and the battle-scarred, silverberg.

    this precedent helps all who have been derfrauded by MERS (the shell game).

  13. mymisstake says:

    Please do update, thanks!

  14. mymisstake says:

    I keep seeing instances where New York seems to be at the Vanguard of consumer protection whether its unlawful/fraudulent foreclosures or debt collectors using fraudulent robo-signed affidavits. New York should be a shining example for all states of how to do it right, imo. New York does more than stand by and watch the economy collapse and suck the middle class down with it. They have started providing free attorney representation to people being sued by junk debt buyers as well.

    WAY TO GO NEW YORK! Now, if the state I live in (Missouri) and the worthless sellout state legislators would take note and follow suit that would be great but I ain’t holding my breath.

  15. What does this do for those who have MERS mortgages and are paying them? Does this cloud title? Should such mortgagees turn around and file a defensive suit?

    • Tim Bryant says:

      If your mortgage was recorded in the county records with MERS as mortgagee, the mortgage is unenforceable (estoppel), unless and until, MERS becomes a bank and can hold and transfer notes. However, given the wording of the MERS docs, if they became a bank, the mortgage docs would create another estoppel.

      • l vent says:

        I read somewhere that MERS was just supposed to be used as a pass through vehicle (bankruptcy remote) for the “lender” so to securitize the mortgages which they never did. . MERS was never supposed to be holder of a mortgage. The mortgages were supposed to go in and out of MERS and instead they just hung out in MERS and had a huge party buying and selling off of alot of unsecured debt.. They should all go to prison.

    • As a foreclosure defense attorney in a judicial foreclosure state, I say YES to going on the offense with illegal mortgages and notes, e.g. all MERS assignments, all Countrywide mortgages, and those oh-so-famous predatory loans, like negative amortization loans. Timing of the loans for the best possible success is for refi’s or purchase loans made between 2002 and 2008. Hire a property attorney to file a quiet title suit for loans that meet these parameters, following the victories that have been obtained in other states, specifically Utah. (Not surprisingly, many of these were quieted by default judgment, since the parties appearing on your county records don’t have any interest in the property- it’s long since been assigned into the black hole of securitization). We need to go on the offense, not just sit back and let the banksters take our homes. They cared not a whit whether homeowners could pay or not, and their greed insured that the big boys would still make tons of money even if the borrower never paid a dime towards the loan. Default credit swaps were the hedges betting against the borrower, and they made institutional investors like Goldman-Sachs and Lehman bros very rich. We were all unwitting pawns in their huge scheme created by a bunch of criminals, and now it’s time to fight back while we still have that chance, before they buy off enough politicians to plug that particular remedy. We know for sure, the criminals will probably never pay for their acts.

  16. YES, YES , YES, GOOD JOB NEW YORK! It is over for MERS! Other states will follow as it is the state of NEW YORK and DELAWARE that holds the trusts. Could this mean WE WON! The ruling appears very CLEAR, CUT AND DRY!
    This is a high court ruling in the NEW YORK SUPREME COURT.. Could they APPEAL to the UNITED STATES SUPEME COURTS.? Goodbye BANKSTERS!

    • Alina Virani says:


      The New York supreme Court is actually a lower court – meaning it’s the trial court of general jurisdiction. This decision is from the 2nd Appellate Division meaning that it is appellate decision. This case can be appealed to the New York Appeals Court which is the highest court in the state of New York.

      New York courts are set up differently than courts in the rest of country and it is always confusing because their lowest trial court is named the Supreme Court.

      • Wow! Bummer! Thanks for the info Alina. New Jersey goes Superior Court, Appellate Court, and then Supreme Court, I do know that in New Jersey it is nearly impossible to overturn the lower courts.judges. This ruling will have to go to the top as their are no laws that govern MERS. It’s still GOOD NEWS.

      • l vent says:


      • Tim Bryant says:

        I vent,

        I honestly believe that the US will dismantle BofA, as the “sacrificial lamb”. With all the major investigations started within the last week concerning them, I think the feds are building a case for it to systematically be unwound. They are the easiest, since they have been the most outrageous.

      • l vent says:

        Tim, BofA is the biggest and probably has the most complaints but there are soo many culprits here. Gretchen Morgensen and Josh Rosner were on Kudlow last night (believe it or not), talking about their new book Reckless Endangerment (#1 on Amazon last weekend, Hooray!) about how FANNIE AND FREDDIE are the 500 pound gorilla in the room. BofA being punished would set a precedent though they and all of the banksters/servicers were really just the perps for FOREIGN IMF OWNED FANNIE and FREDDIE. Gretchen and Josh’s book names names such as Jim Johnson CEO from Fannie and many others. We need many more complaints from WE THE PEOPLE about all of them, so justice can be served. I look at the ORIGINATION FRAUD, it was Fannie and Freddie from Origination to Fraudclosure. I am not saying the banksters/servicers did not commit fraud. The mother and the father who gave birth to the Ponzi Scheme and nurtured the whole Ponzi Scheme were Fannie and Freddie.

  17. Tim Bryant says:

    This is HUGE. Most Trusts are setup under NY law. Many PSAs call for MERS to “hold” the title. This nullifies are large amount of securitizations NATIONWIDE, not just in NY.

    • l vent says:

      But with or without MERS, they never securitized properly, that is what kills the contracts. MERS was just meant to be a pass-through bankrupcy remote vehicle that the mortgages had to pass through on the road to securitization. The truth is they never left MERS They just hung out there buying and selling off of paid off notes. MERS was the holder of the poker chips, our signatures were the collateral, the homes were paid for, they had to be in order for them to participate in the Ponzi Scheme..I read in Mandleman that the trusts are empty and the only securitization was the money flow..They never delivered the notes to the trusts. Why? they were destroyed because the homes are paid for and have been since the second bankster came along and sold us our mortgage for a a buck. MERS was a giant ruse, a distraction from what they were really doing. Alot of gambling.

      • l vent says:

        and alot of speculating. Have you ever seen the movie Rat Race? It is kinda like that. A bunch of rich aholes gambling off of people. Remember the U.N. declared we are all human capital in the 70’s.They are all sick and demented as hell.We are all their poker chips for their casino. It all starts with the birth certificate so I have heard.

      • l vent says:

        Blago might have put it like this, “They had this thing and it was bleeping golden.” It was our signatures. They made hundreds of trillions of dollars off of our signatures..

  18. karen says:

    According to the NY Supreme Court, MERS lacks standing to foreclose?!?!?

    I’m not a lawyer, but is this not the end or securitization as we know it and does this not pretty much cloud title to any property that has had a MERS run loan on it at some point in the last decaded?

    Given similar ruling in other state supreme courts, is there any chance SCOTUS could overturn?

    And isn’t BofA, with its Countrywide portfolio, the worst impacted by this.

    • l vent says:

      They never used MERS for what it’s true intentions were. a pass-through bankrupcy remote vehicle on the road to securitization. MERS was never meant to hold anything of value. It is not a bank and was never supposed to be used as a bank or holder of a note. The fraudsters used it as their holding place for our signatures, A/K/A their poker chips, their collateral for their PONZI SCHEME.

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