Foreclosure Mavericks: B’klyn Judge Slams Brakes On Another Foreclosure As “Standing-Lacking” Lender Fails To Prove Ownership Of Note, Right To Sue

In Brooklyn, New York, the New York Post reports:

  • Aquila Rose got a $475,000 mortgage from Fremont Investment & Loan for her Flatbush home in January 2007 and made exactly one payment before defaulting. When Fremont started a foreclosure action on Oct. 15 that year, it seemed like a slam dunk – like Rose would soon be forced from her East 35th Street home.
  • But Rose has not been foreclosed upon, according to court papers. Her case in Brooklyn state court is assigned to Justice Arthur M. Schack, one of a growing number of judges in the country creating a new front in the foreclosure epidemic by forcing banks and mortgage-service agents to prove they own the mortgage.
  • In Rose’s case, as in most mortgages, the lender, Fremont, sold the loan and, when pressed by Schack, couldn’t prove it owned the mortgage – therefore didn’t have the right to sue.(1) So Schack stopped the proceedings in its tracks.(2)

For the story, see HOW B’KLYN WOMAN KEPT HER HOME.

For Justice Shack’s decision, see Fremont Inv. & Loan v Rose, 2008 NY Slip Op 52409 [21 Misc 3d 1137 (December 2, 2008).

Justice Schack received an “honorable mention” in this recent New York Post article.

Go here for other posts referencing Justice Arthur M. Schack.

(1) According to the story, Fremont claimed, according to court papers, that it sold the loan to GRP Loan. But Schack wanted to know why Fremont and GRP share the same White Plains office. The judge was also curious why the GRP lawyer also represents Fremont in the transfer of ownership – and threatened to sanction the lawyer for an apparent conflict of interest. Schack gave GRP until Feb. 2 to come back to court and prove that it owned the mortgage. They never showed. Meanwhile, Rose continues to live in her house.

Apparently, Fremont and GRP have a similar office-sharing arrangement that Justice Schack uncovered and referred to in another foreclosure action involving a different lender. In his written decision in HSBC Bank USA, N.A. v Charlevagne, 2008 NY Slip Op 51652 [20 Misc 3d 1128]; (August 4, 2008), he found it curious that, according to court documents filed in a number of cases he has presided over, the financial behemoths HSBC Bank USA, N.A., Ocwen Loan Servicing, LLC, Mortgage Electronic Registration Systems, Inc., Deutsche Bank and Goldman Sachs all share the same office space at “the ever popular Suite 100” at 1661 Worthington Road, West Palm Beach, Florida 33409.

(2) For a list of links to over thirty of Justice Schack’s decisions denying foreclosure to foreclosing lenders who lacked standing to initiate the legal action, see Brooklyn Trial Judge Nixes “Rubber Stamp Method” Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced. ThetaMi

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