DEUTSCHE BANK NATIONAL TRUST COMPANY AS
TRUSTEE FOR THE REGISTERED HOLDERS OF
MORGAN STANLEY ABS CAPITAL I INC. TRUST
2007-HE7 MORTGAGE PASS- THROUGH CERTIFICATES,
SERIES 2007- HE7
NELSON VASQUEZ, EDIS VASQUEZ, PETRO, INC.,
COMMISSIONERS OF THE STATE INSURACE FUN,
“JOHN DOE #1” through “JOHN DOE #12” et al,
Through a series of motion practice, The attorney spent over an entire year fighting to demonstrate to the court the pervasive and blatant fraud being perpetrated by the Plaintiff Trustee.
I am proud to report that Justice Thomas A. Adams of the New York State Supreme Court for the County of Nassau, finally agreed. In a nine page decision on a motion to Reargue, Judge Adams reversed his own prior decision, acknowledged that he misapprehended the controlling principles of law, and found in favor of the homeowner. The decision is well written and provides a very great explanation of New York case law. It also foreshadows the defendant’s inevitable win.
From the opinion…
Defendants defaulted in timely answering the complaint, and on the prior application sought leave to vacate their default and serve a late answer. By order dated September 7, 2011 this court denied the motion holding that defendants failed to establish a reasonable excuse for the default and failed to offer a meritorious defense. They now seek reargument.
The motion for reargument is designed to afford a part “an opportunity to establish that the court overlooked or misapprehended relevant facts or misapplied (a) controllng principle oflaw (Foley v. Roche 68 AD2d 558 567 (Ist Dept 1979)).
As this court has overlooked a principle of law, which is discussed below, the motion for reargument is granted and the merits of the prior motion are examined.
When moving to extend the time to answer or to compel the acceptance of an untimely answer, defendants must establish a reasonable excuse for the default and demonstrate a meritorious defense to the action (Maspeth Federal Sav. and Loan Assoc. v. McGown AD3d 890, 891 (2d Dept 2010)). On the prior motion defendants asserted “law office failure to excuse the delay in serving an answer, and as a proposed meritorious defense, asserted interalia that plaintiff lacked standing to bring this action, as the Trust was not an assignee or a holder of the Mortgage Note at the time this action was commenced.
DISCUSSION – STANDING
It is well established that “foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer ofthe debt, the assignment ofthe mortgage is a nullty” (Kluge v. Fugazy, 145 AD2d 537, 538 (2d Dept 1988)). In answer to defendants’ prior motion , the plaintiff Trust for the first time produced a copy of the Adjustable Rate Note dated December 2006 by which defendants Nelson and Edis Vasquez promised to pay $435 100.00 “to the order” of the New Century Mortgage Corporation, the Lender. Plaintiff produced only a copy the Note which is not indorsed, either to plaintiff or in blank, and thus has not been negotiated. Negotiation is necessary to render plaintiff a “holder” as defined by the Uniform Commercial Code.
At the outset, it us useful to review the governing statutes for the rules of transfer regarding negotiable instruments. Pursuant to UCC 9 3-202 negotiation is defined as the “the transfer of an instrument in such form that the transferee becomes a holder . If the instrument is payable “to order , as is the Note here, it is negotiated “by delivery with any necessary indorsement”. Only a “bearer” instrument can be negotiated by delivery without an indorsement (UCC 9 3-202).
The types of indorsements are governed by UCC 9 3-204, and include “special” indorsements and “blan” indorsements. A special indorsement specifies the person “to whom or to whose order” the instrument is payable (UCC 93-204(1)). In contrast, an indorsement in blank “specifies no particular indorsee and may consist of a mere signature” (UCC 93-204(2)).
The Note offered in support by plaintiff was payable “to the order” of New Century and was not indorsed, neither specially nor in blank. Accordingly it does not evidence the requisite negotiation by the lender and thus does not establish a prima facie showing that the plaintiff Trust is a “holder” of the Note.
Inadequate documentation raises serious issues of public policy and it has been said that it is “ofthe utmost importance that the attorneys practicing before (the) Court maintain integrity in preparing the documentation of. . . mortgage obligations” as doing otherwise “causes risk that’ (t )he debtor and his/her family may lose their home , and the debtor and other creditors may lose significant equity in foreclosure.
Full Opinion below…