Foreclosure Law: New York Caselaw: In an unpublished opinion, the Kings County Supreme Court recently held that Wells Fargo could not proceed to foreclose on certain real property, based on the fact that it lacked standing to bring such an action. The Court noted that "a 'foreclosure of a mortgage may not be brought by one who has no title to it and absnet transfer of the debt, the assignment of the mortgage is a nullity.'" In the instant case, Wells Fargo was seeking to foreclose on property based on a mortgage originally entered into by Argent Mortgage Company, LLC. Wells Fargo apparently asserted that Argent had assigned that mortgage to Ameriquest Mortgage Company who then had assigned it to Wells Fargo. The Court determined that these assignments were invalid, and that Wells Fargo therefore had no standing to pursue the foreclosure. This determination was based on a few factors. First, was that the assignments had not been recorded for more than fourteen months, and once recorded, they were recorded at the same time. The Court also noted that the assignments were defective because they failed to include the required corporate resolution. In addition, the Court noted that both assignments listed the same individual as the "agent," but both lacked a power of attorney showing that the individual had been granted the requisite authority to act on the companies' behalfs.
This case emphasizes the importance of adhereing to corporate governance procedures and ensuring that all transactions are properly "papered" in accordance with state law. It also demonstrates a valuable defense to a foreclosure action: we strongly recommend that all of the recorded documents relating to the subject mortgage be scrupulously reviewed to ensure that they properly meet the law's requirements.
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