Real Estate Law

Bergman on Foreclosure: No Need to Substitute Plaintiff Upon Mortgage Assignment


[Originally published 1/05/12]

By:  Bruce J. Bergman

Member, Berkman, Henoch, Peterson, Peddy & Fenchel, P.C.;

Author, Bergman on New York Mortgage Foreclosures, 3 vols, LexisNexis Matthew Bender (rev. 2011)

This question arises all the time.  During the course of a mortgage foreclosure action, the note and mortgage (or whatever the more extensive mortgage documents may be) are assigned by the foreclosing plaintiff.  Is there a mandate to make a motion to change the caption of the action to reflect the name of the new mortgage holder as the plaintiff?

The answer is no, as a matter of New York statute (CPLR §1018) and case law, confirmed as recently as October, 2011 [Citimortgage, Inc. v. Rosenthal, 88 A.D.3d 759, 931 N.Y.S.2d 638 (2d Dept. 2011). [enhanced version available to subscribers].  For those who may want to delve more deeply into case law and nuances on this subject, see 2 Bergman on New York Mortgage Foreclosures §23.46, LexisNexis Matthew Bender (rev. 2011).

Why this is particularly relevant as a practical matter is highlighted by the mentioned new case.  The borrower delivered a mortgage in 1988 to A, immediately assigned to B.  In 1994, B assigned to C.  In early 2008, C assigned to Citibank which, upon encountering a default, began a foreclosure in July, 2008.

On July 1, 2009 the judgment of foreclosure and sale was signed.  Thereafter, and as is not uncommon, in May, 2010, Citibank assigned the mortgage to PennyMac.  A sale was scheduled for July, 2010, intercepted by the borrower's order to show cause alleging lack of standing (to be addressed in a separate alert) and, relevant to this review, the charge that the foreclosure could not proceed because PennyMac (plaintiff Citibank's assignee) had not been formally substituted as plaintiff. 

Not so ruled the court (based upon established case law and the noted practice statute) - although the ultimate real life mischief was that while the foreclosing plaintiff won on this point in the trial court, the borrower appealed.  The mortgage holder won there too, but victory came fifteen months after the originally scheduled sale date.

So, it helps to be right on the law - and servicers and practitioners should be familiar with this principle - but being correct didn't stave off time and expense. subscribers can search Bergman on New York Mortgage Foreclosures. Non-subscribers can purchase Bergman on New York Mortgage Foreclosures at the LexisNexis Bookstore.

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Bruce J. Bergman is the author of Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2011). He is a graduate of Cornell University and Fordham Law School and admitted to practice in New York and Washington, D.C. He is a partner in the Garden City, New York law firm of Berkman, Henoch, Peterson, Peddy, & Fenchel PC where he concentrates in the areas of real estate litigation and mortgage foreclosure. In addition to his law practice, he serves as a consultant to the New York Times on mortgage law, is an Adjunct Associate Professor of Real Estate at New York University's Real Estate Institute where he has taught the mortgage foreclosure course, is a special lecturer on law at Hofstra Law School and has authored more than 380 articles on the subjects of mortgage foreclosure, real estate and construction law which have appeared in scholarly journals and professional publications throughout the country.

Widely recognized for his regular columns on mortgage foreclosure in both the New York Law Journal and the New York Real Property Law Journal and as a lecturer in his field for judge's groups, the New York State Bar Association, New York County Lawyers Association, the Nassau Academy of Law, Consumer Bankers Association, New York State Land Title Association, Professional Education Systems, Suffolk Academy of Law and the National Business Institute among many others, Mr. Bergman is both a past Director and four-term Chairman of the Real Property Law Committee of the Nassau County Bar Association as well as a former Associate Dean of the Nassau Academy of Law. Among his memberships are the American College of Real Estate Lawyers, American College of Mortgage Attorney, Scribes the American Society of Writers on Legal Subjects, the American and New York State Bar Associations, and the New York Land Title Association. He was a City Councilman in Long Beach, New York, from 1980 through 1988.

Information referenced herein is provided for educational purposes only. For legal advice applicable to the facts of your particular situation, you should obtain the services of a qualified attorney licensed to practice law in your state.

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