In JPMorgan Chase Bank, N.A. v Caliguri, 36 N.Y.3d 953 (2020), the Court of Appeals recently clarified how a lender establishes standing in a foreclosure action. Prior to this recent pronouncement, the standard set by that Court had been that a plaintiff evidences standing to foreclose by demonstrating that it possessed the original note agreement at commencement of the foreclosure action. Aurora Loan Servs., LLC. v. Taylor, 25 N.Y.3d 355 (2015). In Aurora, the lender demonstrated standing by averring, in an affidavit in support of a summary judgment motion, that it possessed the original note since prior to commencement, while attaching accompanying business records supporting such testimony, including the loan servicing agreement and records demonstrating that the note had been transferred to the plaintiff. Id., at 356. The Court in Aurora further held that a plaintiff need not demonstrate possession of the original mortgage at the time of commencement as the mortgage follows the note. Nor was it necessary for a foreclosing plaintiff to detail how it came into possession of the original note, only to demonstrate possession of such at the time of commencement.
After Aurora, the standard for establishing standing in the Second Department – the appellate department that hears the majority of foreclosure cases – had evolved, including through the Second Department’s holding that a lender may also establish standing merely by annexing a copy of the properly endorsed note to the foreclosure complaint to demonstrate possession of the original note at the time of commencement. See e.g. Deutsche Bank Natl. Trust Co. v. Logan, 146 A.D.3d 861, 862-63 (2d Dept. 2017) (holding that “the plaintiff established, prima facie, that it had standing [to foreclose] by demonstrating that it had physical possession of the note prior to the commencement of the action, as evidenced by its attachment of the note to the summons and complaint at the time this action was commenced”).
However, where a copy of the note is not attached to the foreclosure complaint, the Second Department had required that an affiant not only state that the foreclosing lender had possession of the note prior to commencement of the foreclosure, but also to attach properly supported business records evidencing such pre-foreclosure commencement possession. Wells Fargo Bank, NA v. Apt, 179 A.D.3d 1145, 1147 (2d Dept. 2020) (granting summary judgment where lender averred to its possession of the Note based on annexing business records to an affidavit); accord HSBC Bank National Association v. Safiya Nelson, 2021 NY Slip Op 00302 (2d Dept. 2021) (affirming judgment where loan servicer averred to possession of the original note and annexed business records supporting same); Bank Nat. Tr. Co. v. Naughton, 137 A.D.3d 1199, 1200 (2d Dept. 2016).
More recently, as noted above, the Court of Appeals has seemingly clarified the requirements for establishing standing in the December 2020 Caliguri decision, first noting that “there is no ‘checklist’ of required proof to establish standing.” Caliguri, 36 N.Y.3d at 954. The Court of Appeals then held that the plaintiff, JPMorgan Chase Bank, N.A., satisfied its burden through evidence including “a copy of the original note endorsed in blank, and other supporting material, including an affidavit of possession based on an employee’s review of plaintiff’s business records.” Notably, the Second Department had found standing below, based on the attachment of the original note to the complaint. The summary judgment motion affidavits in Caliguri have language regarding review of the books and records, possession of the original note by the custodian prior to commencement, and attach a copy of the endorsed in blank Note, but do not attach anything actually evidencing possession of the original note at the time of commencement. Indeed, the affiant relied upon her review of internal screenshots not attached to the affidavit to verify possession of the note since prior to commencement. Based on the affiant’s statements – without specific reference to the attachment of the note to the complaint, which was the Second Department’s grounds for finding standing – the Court found standing had been demonstrated in Caliguri. See Caliguri, 36 N.Y.3d at 953 (citing Nationstar Mtge., LLC v. LaPorte, 162 A.D.3d 784 (2d Dept. 2018)).
The wording of this decision as to how standing is demonstrated is, therefore, seemingly less restrictive than recent Second Department standing cases in the situation where the note is not attached to the Complaint, which, as discussed, had required that the lender annex the books and records it relied upon that actually demonstrated timely, pre-foreclosure possession of the note. See e.g. JP Morgan Chase Bank, N.A. v. Weinberger, 142 A.D.3d 643 (2d Dept. 2016).
The Second Department has already issued a decision in accord with and citing Caliguri. In HSBC Bank v. Nelson, 2021 NY Slip Op 00302 (2d Dept. 2021), the Second Department held that standing was established by a lender’s submission of an affidavit in support of summary judgment attesting to timely possession, along with a copy of the original note and the assignment of mortgage to the foreclosing lender annexed thereto. In so holding, the Second Department cited to and seemingly interpreted Caliguri as setting a somewhat less restrictive new evidentiary requirement than the Second Department had been previously applying in cases where a copy of the note had not been attached to the complaint