In so ruling, the Appellate Court held that: (1) the mortgagee’s failure to attach a copy of the note with the indorsement in blank to the complaint did not deprive it of standing; and (2) an affidavit by an employee of the current holder of the debt was admissible in a foreclosure proceeding even though some of the business records were created by a prior entity.
A copy of the opinion is available at: Link to Opinion.
As described in more detail below, the borrower challenged both the original plaintiff’s standing and the sufficiency of a later substituted plaintiff’s summary judgment affidavit. The trial court rejected these challenges, and granted summary judgment of foreclosure to the mortgagee that was substituted in as the party plaintiff.
On appeal, the borrowers claimed the original plaintiff did not have standing to file the complaint. The original plaintiff was not the named mortgagee. The borrower focused on the copy of the note attached to the complaint, as it was not initially payable to the original plaintiff, nor was there any indorsement.
The original plaintiff mortgagee argued that it had made a prima facie showing that it was a person entitled to enforce the note by presenting the original note in open court. Later in the case, the substituted plaintiff mortgagee produced a copy of the note with an indorsement in blank.
The Appellate Court began its analysis by noting that “[t]he attachment of a copy of the note to a foreclosure complaint is prima facie evidence that the plaintiff owns the note.” The Court held that the original plaintiff mortgagee’s possession of the note was therefore prima facie evidence of ownership, even if the note did not contain the indorsement in blank.
In the words of the Appellate Court, “[t]he fact that [the original plaintiff mortgagee] did not attach the note with the indorsement to its original complaint, nor attach it to the initial motion to strike, was not evidence that [the original plaintiff mortgagee] did not hold the mortgage and note at the time the complaint was filed in 2011. … Absent some evidence … that showed that the assignment actually took place after the complaint was filed, the [borrowers] have failed to meet their burden of showing that the indorsement was not made before the complaint was filed.”
Burden Shifts to Borrowers
The Appellate Court also held that, because of this prima facie showing, the burden shifted to the borrowers to show that the original plaintiff mortgage did not have standing.
Attempting to meet this burden, the borrowers pointed to the original plaintiff mortgagee’s failure to attach a copy of the note containing the indorsement to the original complaint or a motion to strike. The borrowers also alleged there were inconsistencies in the indorsement.
The Appellate Court rejected these arguments, finding that the original plaintiff mortgagee’s failure to attach the indorsement to the complaint did not rebut the presumption of ownership. The Court also held that the borrowers’ attempt to use testimony of a deponent from another proceeding did not affect the authenticity of the indorsement here.
To meet their burden, the Appellate Court held the borrowers needed to present affirmative evidence showing the transfer of the note actually took place after the original plaintiff mortgagee filed the foreclosure action. The borrowers did not do so.
The borrowers also challenged the adequacy of the substituted plaintiff mortgagee’s affidavit as to the amounts due and owing. The borrowers argued that it was insufficient because it was not based on the affiant’s personal knowledge, but instead was based in large part on the prior mortgagee’s records.
The Appellate Court rejected this argument. It held that the affiant “attested that she was familiar with the business process and the records were made in the regular course of business, so the affidavit was admissible and supported the judgment,” and that this was sufficient.
Accordingly, the judgment of the lower court was affirmed.