Editor: David Reiss
Brooklyn Law School

January 13, 2014

New York Appellate Court Holds that Plaintiff Bank Did not Have Standing as Mortgage Holder

By Karume James

The New York State Appellate Division, Second Department in Midland Mortg. Co. v. Imtiaz, 110 A.D.3d 773 (2d Dept. 2013), held that the Plaintiff did not have standing to initiate the action because it failed to establish its status as the mortgage-holder in the case.

The Plaintiff, Midland Mortgage Company (“Midland”), filed an action on January 25, 2010, alleging that it was the valid mortgage lien holder for the Defendant Misbah Imtiaz’s (“Imtiaz”) property. On April 26, 2010, Imtiaz moved to dismiss Midland’s claim and alleged that MERS, as nominee for Opteum Financial Services, LLC, was the true mortgage holder and that Midland therefore did not have standing for to initiate the action. Midland later conceded that it did not have standing for the action since it was not the mortgagee, but a servicer of the mortgage, and instead filed a joinder motion to substitute U.S. Bank National Association (“U.S. Bank”) as the plaintiff, claiming that MERS had sold the mortgage to U.S. Bank. Although Imtiaz opposed the substitution, the trial court granted Midland’s motion and allowed the substitution of U.S. Bank as the plaintiff. Imtiaz appealed the decision.

The Second Department reversed the trial court’s decision and held that neither Midland nor U.S. Bank had standing to maintain the action. The Second Department found that Midland failed to show that U.S. Bank was the actual mortgage holder because Midland did not provide sufficient evidence of the alleged assignment from MERS to U.S. Bank to prove its status as the valid mortgage holder. The Court also found that the Plaintiffs failed to show that U.S. Bank, as a potential intervenor in the action as a substitute plaintiff, had a “real and substantial interest in the outcome of the proceedings” pursuant to CPLR 1012(a)(3).

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