Aurora Loan Services, LLC, Respondent,v.Monique Taylor,, et al., Appellants, et al., Defendants.

Brief

N.Y.April 30, 2015

To Be Argued By: JEFFREY HERZBERG Time Requested: 30 Minutes APL-2014-00138 Westchester County Clerk’s Index No. 13735/10 Appellate Division, Second Department Docket No. 2012-04138 Court of Appeals STATE OF NEW YORK AURORA LOAN SERVICES, LLC, Plaintiff-Respondent, —against— MONIQUE TAYLOR a/k /a Monique Pujol Taylor, LEONARD TAYLOR, Defendants-Appellants, NEW ROC PARCEL 1A, LLC, JOHN DOE, JOSEPH MALTESE, Defendants. BRIEF FOR DEFENDANTS-APPELLANTS d JEFFREY HERZBERG ZINKER & HERZBERG, LLP 300 Rabro Drive, Suite 114 Hauppauge, New York 11788 Telephone: (631) 265-2133 Facsimile: (631) 265-4233 Attorneys for Defendants-Appellants August 6, 2014 TABLE OF CONTENTS Introduction ............................................................................... 1 BASIS OF APPELLATE JURISDICTION ........................................... 1 STATEMENT OF THE ISSUES ...................................................... 2 STATEMENT OF THE CASE 1. Procedural History ........................................................ 3 11. Underlying Facts .......................................................... 6 LEGAL DISCUSSION .................................................................. 10 POINT I - AURORA DID NOT POSSESS A VALID AND ENFORCEABLE MORTGAGE AS OF THE COMMENCEMENT OF THE MORTGAGE FORECLOSURE ACTION ..................................................................... 11 POINT II - MERS NEVER POSSESSED A VALID AND ENFORCEABLE MORTGAGE LIEN ............................... 15 POINT III - AN AFFIDAVIT CAN NOT SUBSTITUTE FOR THE PRODUCTION AND INSPECTION OF THE ORIGINAL MORTGAGE NOTE ...................................................... 24 Miscellaneous ............................................................................... 31 CONCLUSION ............................................................................. 32 TABLE OF AUTHORITIES Cases Bank of New York Mellon v. Gates, 116 A.D.3d 723, 982 N.Y.S.2d 911,2014 N.Y. App. Div. LEXIS 2339, 2014 NY Slip Op 2402 (2nd Dept., 2014) .................................................................. 13 Bank of New York v. Silverberg, 86 A.D.3d 274,926 N.Y.S.2d 532, 2011 N.Y. App. Div. LEXIS 4899, 2011 NY Slip Op 5002 (2nd Dept., 2011) ............................................................. 18, 21 Barbarito v. Zahavi, 107 A.D.3d 416,968 N.Y.S.2d 422,2013 N.Y. App. Div. LEXIS 422, 2013 NY Slip Op 3952 (1 st Dept., 2013) ........................ 13 Beak v. Walts, 266 A.D. 900,42 N.Y.S.2d 652, 1943 N.Y. App. Div. LEXIS 5085 (4th Dept., 1943) ............................................................ 12 Bravo v. Merscorp., 2013 U.S. Dist. LEXIS 129107 (E.D.N.Y. 2013) ........... 14 Corey v. Collins, 10 A.D.3d 341,782 N.Y.S.2d 51, 2004 N.Y. App. Div. LEXIS 10395 (1 ST Dept., 2004) ........................................................... 12 Deutsche Bank National Trust Company v. Haller, 2012 N.Y. App. Div. LEXIS 7588,2012 NY Slip Op 7619 (2nd Dept., 2012) ............................... 25 Deutsche Bank National Trust Company, as Trustee v. Pietranco, 102 A.D.3d 724,957 N.Y.S.2d 868, 2013 N.Y. App. Div. LEXIS 165,2013 NY Slip Op 171 (2nd Dept., 2013) ..................................................... 11 Deutsche Bank National Trust Company, as Trustee v. Pietranco, 33 Misc.3d 528,928 N.Y.S.2d 818, 2011 N.Y. Misc. LEXIS 3698,2011 NY Slip Op 21261 (Sup.Ct., Suffolk Cty., 2011) aff'd on procedural grounds, 102 A.D.3d 724, 957 N.Y.S.2d 868, 2013 N.Y. App. Div. LEXIS 165,2013 NY Slip Op 171 (2nd Dept., 2013) ............................................... 22 Deutsche Bank National Trust Company v. Spanos, 102 A.D.3d 909,961 N.Y.S.2d 200,2013 N.Y. App. Div. LEXIS 682, 2013 NY Slip Op 451 (2nd Dept., 2013) mot'n to appeal denied 21 N.Y.3d 1068,997 N.E.2d 140,974 N.Y.S.2d 315,2013 N.Y. LEXIS 2505 (2013) ..................... 13 Emigrant Mortgage Company, Inc. v. Persad, 2014 N.Y. App. Div. LEXIS 3151,2014 NY Slip Op 3229 (2nd Dept., 2014) ................................ 10 Flyer v. Sullivan, 284 A.D. 697, 134 N.Y.S.2d 521, 1954 App. Div. LEXIS 3473 (1 st Dept., 1954) ...................................................................... 12 HSBC Bank USA, N.A. v. Valentin, 2014 N.Y. Misc. LEXIS 1347,2014 NY Slip Op 30746(U) (Sup.Ct., Kings Cty., 2014) ....................................... 21 HSH Nordbank AG v. Barclays Bank PLC, 42 Misc.3d 1231(A), 986 N.Y.S.2d 866,2014 N.Y. Misc. LEXIS 845,2014 NY Slip Op 50290(U) (Sup. Ct., NY Cty., 2014) ..................................................................... 22 Homecomings Financial, LLC v. GuIdi, 108 A.D.3d 506, 969 N.Y.S.2d 470, 2013 N.Y. App. Div. LEXIS 4963, 2013 NY Slip Op 5048 (2nd Dept., 2013) .......................................................................... 10, 12 Kliamovich v. Kliamovich, 85 A.D.3d 867, 925 N.Y.S.2d 591, 2011 N.Y. App. Div. LEXIS 5117,2011 NY Slip Op 5233 (2nd Dept., 2011) ........ 25 Kluge v. Fugazy, 145 A.D.2d 537, 536 N.Y.S.2d 92, 1988 N.Y. App. Div. LEXIS 13635 (2nd Dept., 1988) ................................................. 12 Knox v. Countrywide Bank, 2014 U.S. Dist. LEXIS 32229 (E.D.N.Y. 2014) ................................................................... 14 MERSCORP, Inc. v. Romaine, 8 N.Y.3d 90,861 N.E.2d 81,828 N.Y.S.2d 266,2006 N.Y. LEXIS 3699 (2006) ........................................ 16, 17 MLCFC 2007-9 Mixed Astoria, LLC v. 36-02 35th Ave. Development, LLC, 116 A.D.3d 745, 983 N.Y.S.2d 604,2014 N.Y. App. Div. LEXIS 2354, 2014 NY Slip Op 2416 (2nd Dept., 2014) .............................................. 14 Merritt v. Bartholick, 36 N.Y. 44, 1867 NY LEXIS 5 (1867) ....................... 12 Mortgage Electronic Registration Systems, Inc. v. Coakley, 41 A.D.3d 674, 838 N.Y.S.2d 622, 2007 N.Y. App. Div. LEXIS 7703,2007 NY Slip Op 5478 (2nd Dept., 2007) ............................................................. 28 OneWest Bank, FSB v. Mazzone, 2013 N.Y. Misc. LEXIS 4258, 2013 NY Slip Op 32247(U) (Sup.Ct., Albany Cty., 2013) ..................................... 22 Posson v. Przestrzelski, 111 A.D.3d 1235, 976 N.Y.S.2d 298,2013 N.Y. App. Div. LEXIS 7849,2013 NY Slip Op 7919 (3rd Dept., 2013) ................. 25 Schozer v. William Penn Life Insurance Company of New York, 84 N.Y.2d 639,644 N.E.2d 1353,620 N.Y.S.2d 797, 1994 N.Y. LEXIS 4118 (1994) .......................................................................... ,25,26 US Bank National Association v. Eaddy, 109 A.D.3d 908, 971 N.Y.S.2d 336, 2013 N.Y. App. Div. LEXIS 5855,2013 NY Slip Op 5896 (2nd Dept., 2013) ............................................ , ....................... 27 Vaughan v. HSBC Mortgage Corporation, 2013 N.Y. Misc. LEXIS 6499,2013 NY Slip Op 33600(U) (Sup.Ct., Putnam Cty., 2013) .......................... 22 Wells Fargo Bank, N.A. v. Eisler, 118 A.D.3d 982,988 N.Y.S.2d 682, 2014 N.Y. App. Div. 4792, 2014 NY Slip Op 4753 (2nd Dept., 2014) ................... 29 Wilson v. Toussie, 260 F.Supp.2d 530,2003 U.S. Dist. LEXIS 7858, 55 Fed. R. Serv.3d 969, 50 U.C.C. Rep. Serv.2d (Callaghan) ....................... 27,28 Statutes CPLR §3012-b ............................................................................... 27 CPLR §3212(b) .............................................................................. 29 CPLR §4518 ........... ' ...................................................................... 31 CPLR §5713 .................................................................................. 1 DCC §3-804 ................................................................................. 28 Administrative Orders Administrative Order 54811 0, as amended by Administrative Order 431/11 ............................................................................. 26, 27 The Appellants, Monique Pujol a/k/a Monique Pujol Taylor ("Monique") and Leonard Taylor ("Lenny") (Monique and Lenny are referred to in the aggregate as the "Taylors"), by and through their attorneys, Zinker & Herzberg, LLP, files this Appellants' Brief. BASIS OF APPELLATE JURISDICTION This Honorable Court has jurisdiction to determine the issues in this appeal in accordance with the provisions set forth in CPLR §5713. The Decision & Order on Motion to the Supreme Court of the State of New York, Appellate Division, Second Judicial Department (the "Second Department") dated April 29, 2014 provided in pertinent part: "Motion by the appellants for leave to appeal to the Court of Appeals pursuant to CPLR 5602(b)(1) from a decision and order of this Court dated February 5, 2014, which reversed a judgment of foreclosure and sale of the Supreme Court, Westchester County, entered May 14, 2013. Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is ORDERED that the motion is granted, and the following question is certified to the Court of Appeals: Was the decision and order of this Court dated February 5,2014, properly made? Questions of law have arisen, which, in our opinion, ought to be reviewed by the Court of Appeals (see CPLR 5713)." (TR-iv). The Taylors are appealing the Opinion of the Second Department, which: 1 (a) affirmed the Order Granting Summary Judgment, Reference, and Amendment of Caption dated April 13, 2012 of the Honorable Sam D. Walker, one of the judges of the Supreme Court of the State of New York, County of Westchester (the "Supreme Court"), and entered by the Westchester County Clerk on April 16, 2012 (the "Order"); and (b) reversed the issuance of the Judgment of Foreclosure and Sale issued by Judge Walker dated April 29, 2013 and entered by the Westchester County Clerk on May 14, 2013 (referred to in the aggregate as the "Second Department Decision"). This appeal will primarily address the issuance of the Order. The Order granted the Plaintiff- Respondent Aurora Loan Services, LLC' s ("Aurora" or the "Bank") motion for summary judgment, dismissed the Taylors' affirmative defenses, appointed a referee to compute and amended the caption of the complaint. The Order lacked findings of fact and conclusions of law. Aurora never appealed the reversal of the judgment of foreclosure and sale issued by the Supreme Court by the Second Department Opinion. Accordingly, that part of the Second Department Opinion is now final and non-appealable. STATEMENT OF THE ISSUES This Honorable Court must determine the following issues on this appeal: a. Whether a mortgage assigned to Aurora nine (9) months prior and recorded with the County Clerk seven (7) months prior to the delivery of 2 a. the mortgage note is an enforceable mortgage giving Aurora standing to commence and prosecute a mortgage foreclosure action? b. Whether the Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee of First National Bank of Arizona ("First National Bank") or successors had the legal authority to assign the mortgage to Aurora and Aurora causing the recordation of the assignment of the mortgage with the Westchester County Clerk establishes the standing of Aurora, as the assignee, to commence and prosecute a mortgage foreclosure action when MERS never possessed the original mortgage note or an assignment of the original mortgage note? c. Whether the affidavit proffered by Aurora should have been rejected as consisting of conclusive statements and lacking proof of the authenticity of the underlying mortgage note, causing the denial of the standing of Aurora to commence and prosecute a mortgage foreclosure action? STATEMENT OF THE CASE 1. Procedural History Aurora commenced this mortgage foreclosure action by summons and complaint dated May 24,2010 (TR-16). 3 b. After the default in the filing of an answer or other dispositive motion, the Taylors filed a motion to permit the filing of a late filed answer and have the answer deemed to be timely filed dated June 29,2010. By stipulation, the Taylors were permitted and authorized to file a late answer and have the late answer deemed timely filed. c. The Taylors filed the answer dated June 29,2010 (the "Answer") (TR-24). d. By stipulation to release settlement conference as "held" dated October 18,2011, it was agreed to release the settlement conference as "held" and to permit the motion practice related thereto to proceed (TR-46). d. The Taylors filed a notice of motion dated October 20,2011 and affirmation in support of summary judgment dated October 20, 2011 (TR-8). e. Aurora filed its Plaintiffs notice of cross-motion for summary judgment and in opposition to Defendant's motion for summary judgment dated December 13, 2011 (TR-63). A copy of the Affidavit of Sara Holland ("Holland") sworn to on December 12, 4 2011 in support of Aurora's cross-motion for summary judgment is annexed hereto at TR-91. f. The Taylors filed their reply affirmation and affirmation in opposition dated December 23,2011 (TR-405). g. Aurora filed its affirmation in reply to Defendant's opposition to Plaintiffs cross-motion for summary judgment dated December 29, 2011 (TR-425). h. The Defendant, Joseph Maltese ("Maltese"), a judgment creditor against Lenny, filed a verified answer dated June 24, 2010 and an affirmation dated December 1,2011 (TR-47). 1. The Supreme Court issued the Order (TR-3). J. Taylor appealed the entry of the Order to the Second Department (TR-2). k. Aurora continued with the foreclosure action and caused a referee's computation report to be issued without proper notification to the Taylors notwithstanding that the Taylors had requested that a referee's computation hearing be conducted in the Answer. The Supreme Court issued the Judgment of Foreclosure and Sale dated April 29, 2013 and entered with the Westchester County Clerk on May 14, 2013, notwithstanding: (a) the failure of Aurora to cause a referee's 5 computation hearing to be conducted; and (b) its failure to consider the arguments made in the Taylors' affirmation in opposition as stated in the Second Department Opinion, as discussed hereafter. 1. The Taylors appealed the issuance of the Judgment of Foreclosure and Sale to the Second Department. m. The Second Department issued the Second Department Opinion dated February 5,2014 (TR-vii-xii). n. Notwithstanding the vacatur of the judgment of foreclosure and sale issued by the Supreme Court by virtue of the Second Department Opinion dated February 5,2014, Aurora has still not re-scheduled a referee's computation hearing to permit and allow Aurora to move for the issuance of a new judgment of foreclosure and sale, and, thereafter, a re-foreclosure sale of the Property. ii. Underlying Facts a. The purported copy of the Adjustable Rate Note dated July 5,2006 (the "Purported Note") was delivered to First National Bank of Arizona by Monique (Lenny was never a signatory on the Purported Note) to evidence a borrowing in the sum of Six Hundred Thousand and xxiI 00 Dollars ($600,000.00). The Allonge to Note reflected that the Purported Note was purportedly assigned "without recourse" by First National Bank of Arizona to First National Bank of 6 Nevada. The Purported Note was then purportedly assigned "without recourse" by First National Bank of Nevada to Residential Funding Company, LLC ("Residential Funding"). Thereafter, Residential Funding purportedly assigned the Purported Note "without recourse" to Deutsche Bank Trust Company Americas as Trustee. There is no evidence as to the dates that the Purported Note was assigned to the various assignees. Nor is there any documentary evidence that the Purported Note was ever assigned to Aurora. b. There are additional documents pertaining to the Purported Note, namely the Addendum to Note, which was only executed by Monique and the Adjustable Rate Rider that was executed by both Monique and Lenny; the date of the execution of the Adjustable Rate Rider was July 5,2006, the same date as the execution of the Purported Note. c. The purported $600,000.00 borrowing was secured by a mortgage granted and delivered to the Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee, on the real property known as (the "Property"). The mortgage appeared to be signed by both Monique and Lenny, however, the signatures appear on different columns of the last page of the document. The mortgage was duly recorded with the Clerk of Westchester County on September 25,2006. d. Paragraph (C) on page 1 of the mortgage stated: 7 "'MERS' is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is organized and existing under the laws of Delaware, and has an address and telephone number of FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD." Thereafter, page 3 of the Mortgage under the section entitled "DESCRIPTION OF THE PROPERTY" stated in pertinent part: "I give MERS (solely as nominee for Lender and Lender's successors in interest) rights in the Property described in (A) through (G) below: ... " The Lender was the First National Bank of Arizona. e. There is a Corporate Assignment of Mortgage from MERS to Aurora dated August 13,2009, which assignment was duly recorded with the Westchester County Clerk on October 29,2009. The mortgage was never assigned by MERS, as nominee of First National Bank of Arizona, to: (a) First National Bank of Nevada; (b) Residential Funding; and/or (c) Deutsche Bank Trust Company Americas as Trustee. Rather, the corporate assignment of mortgage reflected that the mortgage was assigned by MERS, as nominee of First National Bank of Arizona, to Aurora, notwithstanding that Aurora was not an assignee of the purported mortgage note as of the date of the assignment of the mortgage. f. The mortgage was delivered and assigned by MERS, as nominee, to Aurora approximately nine (9) months prior to Aurora's possession of the Purported Note and further, the assignment of the mortgage was recorded with the 8 Westchester County Clerk approximately seven (7) months prior to its receipt of the Purported Note. Specifically, the third paragraph of the second page of the Affidavit in Support of Summary Judgment by Sara Holland, the legal liaison of Aurora, Bank, FSB, Subservicer for Aurora Loan Services, LLC sworn to on December 12,2012 (the "Holland Affidavit") stated: "That the original Note has been in the custody of Plaintiff Aurora Loan Services, LLC and in its present condition since May 20,2010." May 20,2010 was one (1) day prior to the date of the summons, which was May 21,2010, and four (4) days prior to the commencement of the action with the Westchester County Clerk. Accordingly, the assignment of the mortgage was received by Aurora approximately nine (9) months prior to its physical possession of the Purported Note (there was no evidence proffered of an earlier assignment of the Purported Note to Aurora) and Aurora caused the assignment of the mortgage to be recorded with the Westchester County Clerk approximately seven (7) months before it had physical possession of the Purported Note. g. Aurora also annexed the Standard Terms of Pooling and Servicing Agreement dated as of March 1,2006 between Residential Accredit Loans, Inc., Company, Residential Funding Corporation, Master Servicer and Deutsche Bank Trust Company Americas, Trustee. 9 LEGAL DISCUSSION As an introduction to the three (3) points of law addressed by the Taylors would be useful. It is rudimentary that for a mortgagee to have standing to commence and prosecute a mortgage foreclosure action, the mortgagee must be both the holder of the original mortgage note or the assignee of the original mortgage note and also the holder or assignee of the mortgage. Emigrant Mortgage Company, Inc. v. Persad, 2014 N.Y. App. Div. LEXIS 3151, 2014 NY Slip Op 3229 (2nd Dept., 2014) stated at 2014 N.Y. App. Div. LEXIS 3151 at *2: "A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that, when the action was commenced, it was both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note." (Citations Omitted). And Homecomings Financial, LLC v. GuIdi, 108 A.D.3d 506, 969 N.Y.S.2d 470,2013 N.Y. App. Div. LEXIS 4963, 2013 NY Slip Op 5048 (2nd Dept., 2013) stated at 108 A.D.3d at 507-508: '''In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced' (Bank ofN Y. v Silverberg, 86 AD3d 274,279, 926 NYS2d 532 [2011]; see US Bank NA. v Cange, 96 AD3d 825,826,947 NYS2d 522 [2012]; Us. Bank, NA. v Collymore, 68 AD3d 752, 753-754, 890 NYS2d 578 [2009]; Countrywide Home Loans, Inc. v Gress, 68 AD3d 709, 888 NYS2d 914 [2009]). 'Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to 10 transfer the obligation, and the mortgage passes with the debt as an inseparable incident' (US. Bank, NA. v Collymore, 68 AD3d at 754; see HSBC Bank USA v Hernandez, 92 AD3d 843,939 NYS2d 120 [2012]). However, 'a transfer or assignment of only the mortgage without the debt is a nullity and no interest is acquired by it,' since a mortgage is merely security for a debt and cannot exist independently of it (US. Bank N.A. v Dellarmo, 94 AD3d 746, 748, 942 NYS2d 122 [2012]; see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636,931 NYS2d 630 [2011])." Further, if the mortgagor does not assert "standing" as an affirmative defense in the answer or in a motion to dismiss in accordance with the provisions set forth in CPLR §3211, the standing defense is waived. Please see Deutsche Bank National Trust Company, as Trustee v. Pietranco, 102 A.D.3d 724, 957 N.Y.S.2d 868, 2013 N.Y. App. Div. LEXIS 165,2013 NY Slip Op 171 (2nd Dept., 2013). Herein, the Taylors asserted standing as an affirmative defense in the Answer. Accordingly, the Taylors did not waive the standing defense to the commencement and prosecution of this mortgage foreclosure action. POINT I AURORA DID NOT POSSESS A VALID AND ENFORCEABLE MORTGAGE AS OF THE COMMENCEMENT OF THE MORTGAGE FORECLOSURE ACTION As stated previously, the assignment of the mortgage from MERS, as nominee, to Aurora was dated August 13, 2009 and was recorded with the Westchester County Clerk on October 29,2009. However, as set forth in the Holland Affidavit, Aurora did not possess the assignment of the note or the original note until May 20,2010. Accordingly, the assignment ofthe.mortgage 11 was: (a) delivered to Aurora approximately nine (9) months prior to the delivery of the Purported Note; and (b) recorded with the Westchester County Clerk approximately seven (7) months prior to the delivery of the Purported Note. And during this seven (7) month interlude between the recordation of the assignment of the mortgage and the physical receipt of the mortgage note, the Taylors owed no moneys to Aurora, the recorded mortgagee. As was stated in the last sentence of Homecomings Financial, LLC v. GuIdi, a transfer of the mortgage without the note is a "nullity". Merritt v. Bartholick, 36 N.Y. 44, 1867 NY LEXIS 5 (1867) stated at 36 N.Y. at 45: "As a mortgage is but an incident to the debt which it is intended to secure, the logical conclusion is that a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it. The security cannot be separated from the debt and exist independently of it." (Citations Omitted). Please see also Kluge v. Fugazy, 145 A.D.2d 537, 538, 536 N.Y.S.2d 92, 1988 N.Y. App. Div. LEXIS 13635 (2nd Dept., 1988), Beak v. Walts, 266 A.D. 900,42 N.Y.S.2d 652, 1943 N.Y. App. Div. LEXIS 5085 (4th Dept., 1943). In fact, Flyer v. Sullivan, 284 A.D. 697, 134 N.Y.S.2d 521, 1954 N.Y. App. Div. LEXIS 3473 (1 stDept., 1954) stated at 284 A.D. 698: "The mortgage is a mere incident of the bond or collateral security for the debt. The assignment by a mortgagee of the mortgage lien in the land, without an assignment of the debt, is considered in law as a nullity." (Citations Omitted). Corey v. Collins, 10 A.D.3d 341, 782 N.Y.S.2d 51, 2004 N.Y. App. Div. LEXIS 10395 (1 st Dept., 2004) stated at 10 A.D. 3d at 343: 12 "In support, they argue that '[a] mortgage is merely security for a debt or other obligation and cannot exist independently of the debt or obligation'. However, while the separation of a mortgage and a debt may invalidate the security interest, i.e., the mortgage, it does not affect the primary debt, namely defendants' obligations under the B-Bonds. This is so because '[t]he note represents the primary personal obligation of the mortgagor, and the mortgage is merely the securityfor such obligation.' (Copp v Sands Point Mar., 17 N.Y.2d 291,293,217 N.E.2d 654, 270 N.Y.S.2d 599 [1966])." (Citation Omitted). Bank of New York Mellon v. Gales, 116 A.D.3d 723,982 N.Y.S.2d 911,2014 N.Y. App. Div. LEXIS 2339, 2014 NY Slip Op 2402 (2nd Dept., 2014) stated at 116 A.D.3d at 912: "'Where a mortgage is represented by a bond or other instrument, an assignment of the mortgage without assignment of the underlying note or bond is a nullity. '" (Citations Omitted). Barbarito v. Zahavi, 107 A.D.3d 416, 968 N.Y.S.2d 422,2013 N.Y. App. Div. LEXIS 3866, 2013 NY Slip Op 3952 (1 st Dept., 2013), stated at 107 A.D.3d at 425: "As to the June 18, 2010 assignment of the pledge agreement, the pledge agreement was merely an incident to the note it was intended to secure. However, the record contains no indication that TLM assigned the underlying note to Zahavi, and the transfer of the pledge agreement without the note is a legal nullity, leaving the transferee without standing to enforce the pledge [a security cannot be separated from debt and exist independently of debt])." (Citations Omitted). And Deutsche Bank National Trust Company v. Spanos, 102 A.D.3d 909, 961 N.Y.S.2d 200,2013 N.Y. App. Div. LEXIS 682,2013 NY Slip Op 451 (2nd Dept., 2013), mot'n to appeal denied 21 N.Y.3d 1068,997 N.E.2d 140,974 N.Y.S.2d 315, 2013 N.Y. LEXIS 2505 (2013) stated at 102 A.D.3d at 911-912: 13 "A mortgage 'is merely security for a debt or other obligation and cannot exist independently of the debt or obligation' Consequently, where a note is transferred, a mortgage securing the debt passes as an incident to the note. By contrast, an assignment of a mortgage without assignment of the underlying note or bond is a nullity." (Citations Omitted). Please see also MLCFC 2007-9 Mixed Astoria, LLC v. 36-02 35 th Ave. Development, LLC, 116 A.D.3d 745, 746, 983 N.Y.S.2d 604,2014 N.Y. App. Div. LEXIS 2354, 2014 NY Slip Op 2416 (2nd Dept., 2014). Assuming arguendo that the Court follows the maxim that "a note follows the mortgage", Knox v. Countrywide Bank, 2014 U.S. Dist LEXIS 32229 at *13- *14 (E.D.N.Y. 2014), the result would be the same - Aurora did not possess a valid and enforceable mortgage assignment. In fact, Bravo v. Merscorp, 2013 U.S. Dist. LEXIS 129107 (E.D.N.Y. 2013) stated at *6-*7: "While it is true that, in New York, a mortgage instrument can not be separated from the note evidencing the corresponding debt, it is 'the mortgage [that] passes as an incident to the note. The reverse is not true. The note evidencing the loan does not follow the assignment of the mortgage instrument. If anything then, the disparity between Exhibits G and H calls into question the validity of the transfer of the mortgage instrument to BANA. ('a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it' ')." (Citations Omitted). The Purported Note remained in possession with Deutsche Bank Trust Company Americas as Trustee, the prior holder of the Purported Note, while the mortgage was now in the possession of Aurora, who was not the holder or assignee 14 of the Purported Note; the lack of the assignment is reflected on the Purported Note. Accordingly, the mortgage was void ab initio. Accordingly, when MERS, as nominee, assigned the mortgage, without the Purported Note, to Aurora on August 13,2009, which was recorded with the Westchester County Clerk on October 29,2009, Aurora acquired a void mortgage or security interest, as the Purported Note was not previously or simultaneously assigned with the assignment of the mortgage. Black's Law Dictionary, 4th Ed., defines the term "void" as "null, ineffectual; nugatory; having no legal force or binding effect; unable, in law, to support the purpose for which it was intended." Therefore, the recorded mortgage was void ab initio. And a void or null mortgage can not be revived by Aurora's purported subsequent physical possession of the Purported Note. In short, a divergence from the note and mortgage occurred that can not be revived without the delivery and granting of a new assignment of mortgage, which was not done herein. POINT II MERS NEVER POSSESSED A V ALID.AND ENFORCEABLE MORTGAGE LIEN As the assignment of the mortgage from MERS, as nominee, to Aurora, was void ab initio, the next issue is whether MERS, as nominee, ever possessed a valid and enforceable mortgage against the Property to enforce the purported obligation due and owing. As stated above, the Adjustable Rate Note dated July 5,2006 was 15 granted and delivered to First National Bank of Arizona by Monique (Lenny was never a signatory on the Purported Note) to purportedly evidence a borrowing in the sum of Six Hundred Thousand and xx/100 Dollars ($600,000.00). The $600,000.00 borrowing was secured by a mortgage on the Property granted and delivered to MERS, as nominee. The mortgage was duly recorded with the Clerk of Westchester County on September 25,2006. Specifically, Paragraph (C) on page 1 of the mortgage: "'MERS' is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is organized and existing under the laws ofDe1aware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888-679-MERS. FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD." MERSCORP, INC. v. Romaine, 8 N.Y.3d 90,861 N.E.2d 81,828 N.Y.S.2d 266, 2006 N.Y. LEXIS 3699 (2006) stated at 8 N.Y.3d at 96: "In 1993, the MERS system was created by several large participants in the real estate mortgage industry to track the ownership interests in residential mortgages. Mortgage lenders and other entities known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of the mortgage. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system. The initial MERS mortgage is recorded in the County Clerk's office with 'Mortgage Electronic Registration Systems, Inc.' named as the lender's nominee or mortgagee of record on the instrument. During the lifetime of the mortgage, the beneficial ownership interest or servicing rights may be transferred among MERS members (MERS assignments), but these assignments are not publicly recorded; instead they are tracked electronically 16 in MERS' s private system. In the MERS system, the mortgagor is notified of transfers of servicing rights pursuant to the Truth in Lending Act, but not necessarily of assignments of the beneficial interest in the mortgage." (Footnotes omitted). In MERSCORP, INC. v. Romaine, this Honorable Court merely held that the county clerk must accept for recordation any document that appears to comply with the provisions ofRPL §§ 291 and 3l6-a, namely a proper attestation and payment of the appropriate filing fees. 8 N.Y.3d at 97. MERSCORP, INC. v. Romaine never addressed the validity and enforceability of a MERS mortgage. In the concurrence at 8 N.Y.3d at 99-100, the Honorable Justice Carmen Ciparick stated: "I am constrained to agree with the result reached by the majority opinion. However, I write independently to highlight the narrow breadth of this holding and to point out that this issue may be ripe for legislative consideration. I concur with the majority that the Clerk's role is merely ministerial in nature and that since the documents sought to be recorded appear, for the most part, to comply with the recording statutes, MERS is entitled to an order directing.the Clerk to accept and record the subject documents. I wish to note, however, that to the extent that the County and the various amici argue that MERS has violated the clear prohibition against separating a lien from its debt and that MERS does not have standing to bring foreclosure actions, those issues remain for another day." (Citations Omitted). And the Honorable Justice Judith S. Kaye in the dissent in MERSCORP, INC. v. Romaine stated at 8 N.Y.3d at 104: "The MERS system raises additional concerns that should not go unnoticed. The benefits of the system to MERS members are not insubstantial. Through use ofMERS as nominee, lenders are relieved of the costs of 17 recording each mortgage assignment with the County Clerk, instead of paying minimal yearly membership fees to MERS. Transfers of mortgage instruments are faster, allowing for efficient trading in the secondary mortgage market; a mortgage changes hands at least five times on average. Although creating efficiencies for its members, there is little evidence that the MERS system provides equivalent benefits to home buyers and borrowers - and, in fact, some evidence that it may create substantial disadvantages. While MERS necessarily opted for a system that tracks both the beneficial owner of the loan and the servicer of the loan, its 800 number and Web site allow a borrower to access information regarding only his or her loan servicer, not the underlying lender. The lack of disclosure may create substantial difficulty when a homeowner wishes to negotiate the terms of his or her mortgage or enforce a legal right against the mortgagee and is unable to learn the mortgagee's identity. Public records will no longer contain this information as, if it achieves the success it envisions, the MERS system will render the public record useless by masking beneficial ownership of mortgages and eliminating records of assignments altogether. Not only will this information deficit detract from the amount of public data accessible for research and monitoring of industry trends, but it may also function, perhaps unintentionally, to insulate a noteholder from liability, mask lender error and hide predatory lending practices. The county clerks, of course, are concerned about the depletion of their revenues - allegedly over one million dollars a year in Suffolk County alone." Bank of New York v. Silverberg, 86 A.D.3d 274,926 N.Y.S.2d 532, 2011 N.Y. App. Div. LEXIS 4899, 2011 NY Slip Op 5002 (2nd Dept., 2011), stated at 86 A.D.3d at 279: "The principal issue ripe for determination by this Court, and which was left unaddressed by the majority in Matter ofMERSCORP (id.), is whether MERS, as nominee, and mortgagee for purposes of recording, can assign the right to foreclose upon a mortgage to a plaintiff in a foreclosure action absent MERS' s right to, or possession of, the actual underlying promissory note." Bank of Silverberg v. Silverberg further stated at 86 A.D.3d at 281-282: 18 "Here, the consolidation agreement purported to merge the two prior notes and mortgages into one loan obligation. Countrywide, as noted above, was not a party to the consolidation agreement. 'Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident' , (US Bank NA. v Madero, 80 AD3d at 753, quoting u.s. Bank. NA. v Collymore, 68 AD3d at 754; see LaSalle Bank Natl. Assn. v Ahearn, 59 AD3d at 912). The plaintiff relies upon the language in the consolidation agreement, which provides that MERS was 'acting solely as a nominee for [Countrywide] and [Countrywide's] successors and assigns ... For purposes of recording this agreement, MERS is the mortgagee of record.' However, as 'nominee,' MERS's authority was limited to only those powers which were specifically conferred to it and authorized by the lender (see Black's Law Dictionary 1076 [8th ed 2004] [defining a nominee as '(a) person designated to act in place of another, (usually) in a very limited way']). Hence, although the consolidation agreement gave MERS the right to assign the mortgages themselves, it did not specifically give MERS the right to assign the underlying notes, and the assignment of the notes was thus beyond MERS's authority as nominee or agent of the lender (see Aurora Loan Servs .. LLC v Weisblum, 85 AD3d 95,108,923 NYS2d 609 [2011]; HSBC Bank USA v Squitieri, 29 Misc 3d 1225[A], 918 NYS2d 398, 2010 NY Slip Op 52000[U] [2010]; LNV Corp. v Madison Real Estate. LLC, 2010 NY Slip Op 33376[U] [2010]; LPP Mtge. Ltd. v Sabine Props .. LLC, 2010 NY Slip Op 32367[U] [20 1 O]Bank ofN Y. v Mulligan, 28 Misc 3d 1226[A], 2010 NY Slip Op 51509[U] [2010]; One West Bank. FS.B. v Drayton, 29 Misc 3d 1021, 910 NYS2d 857 [2010]; Bank of NY. v Alderazi, 28 Misc 3d 376,379-380, 900 NYS2d 821 [2010] [the 'party who claims to be the agent of another bears the burden of proving the agency relationship by a preponderance of the evidence']; HSBC Bank USA, NA. v Yeasmin, 27 Misc 3d 1227[A], 911 NYS2d 693,2010 NY Slip Op 50927[U] [2010]; HSBC Bank USA, NA. v Vasquez, 24 Misc 3d 1239[A], 901 NYS2d 899, 2009 NY Slip Op 51814[U] [2009]; Bank of NY. v Trezza, 14 Misc 3d 1201[A], 831 NYS2d 358, 2006 NY Slip Op 52367[U] [2006]; LaSalle Bank Natl. Assn. v Lamy, 12 Misc 3d 1191[A], 824 NYS2d 769 [2006]; In re Agard, 444 BR 231 [2011]; but see US Bank NA. v Flynn, 27 Misc 3d 802, 897 NYS2d 855 [2010]). Therefore, assuming that the consolidation agreement transformed MERS into a mortgagee for the purpose ofrecording--even though it never loaned any money, never had a right to receive payment of the loan, and never had a 19 right to foreclose on the property upon a default in payment--the consolidation agreement did not give MERS title to the note, nor does the record show that the note was physically delivered to MERS. Indeed, the consolidation agreement defines 'Note Holder,' rather than the mortgagee, as the 'Lender or anyone who succeeds to Lender's right under the Agreement and who is entitled to receive the payments under the Agreement.' Hence, the plaintiff, which merely stepped into the shoes of MERS, its assignor, and gained only that to which its assignor was entitled (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126,325 NE2d 137,365 NYS2d 808 [1975]; see also DCC 3-201 ['(t)ransfer of an instrument vests in the transferee such rights as the transferor has therein']), did not acquire the power to foreclose by way of the corrected assignment. Notwithstanding the foregoing, the plaintiff contends that case law supports its position that MERS has the power to foreclose, where, as here, MERS is identified in a mortgage as nominee and mortgagee for the purpose of recording. In this regard, the plaintiff relies upon Mortgage Elec. Registration Sys .. Inc. v Coakley (41 AD3d 674, 838 NYS2d 622 [2007]), wherein this Court held that MERS had standing to foreclose a mortgage. In that case, unlike in the current case, the lender had transferred and tendered the promissory note to MERS before the commencement of the foreclosure action Cid. at 674). Therefore, we held that MERS had standing to bring the foreclosure action because it 'was the lawful holder of the promissory note, and of the mortgage, which passed as an incident to the promissory note' (id. at 674 [citations omitted]). Although that determination was a sufficient basis upon which to conclude that MERS had standing, we elaborated, stating, 'further support for MERS's standing to commence the action may be found on the face of the mortgage instrument itself. Pursuant to the clear and unequivocal terms of the mortgage instrument, [the mortgagor] expressly agreed without qualification that MERS had the right to foreclose upon the premises in the event of a default' Cid. at 675). According to the plaintiff, Coakley indicates that this Court has determined that such broad provisions in mortgages, such as the initial mortgage and second mortgage here, standing alone, grant MERS, as nominee and mortgagee for the purpose of recording, the power to foreclose. On the 20 contrary, the Coakley decision does not stand for that proposition. This Court's holding in Coakley was dependent upon the fact that MERS held the note before commencing the foreclosure action. In the absence of that crucial fact, the language in the mortgage instrument would not have provided 'further support' for the proposition that MERS had the power to foreclose in that case. Furthermore, the language in the initial mortgage and the second mortgage in this case, purportedly granting MERS the right to foreclose, was superseded by the consolidation agreement. Moreover, as discussed above, the broad language relied upon by the plaintiff cannot overcome the requirement that the foreclosing party be both the holder or assignee of the subj ect mortgage, and the holder or assignee of the underlying note, at the time the action is commenced. In sum, because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose." Following Bank of New York v. Silverberg, there has been much controversy and dispute as to whether an assignee of a MERS, as nominee, mortgage has the standing to commence and prosecute a mortgage foreclosure action. HSBC Bank USA, N.A. v. Valentin, 2014 N.Y. Misc. LEXIS 1347,2014 NY Slip Op 30746(U) (Sup.Ct., Kings Cty., 2014) stated at 2014 N.Y. Misc. LEXIS 1347 at *6-*7: "In the instant action, even ifMERS had authority to transfer the subject mortgage, DELTA is the note holder. Therefore, MERS cannot transfer something it never possessed. A "foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity." (Citations Omitted). HSH Nordbank AG v. Barclays Bank PLC, 42 Misc.3d 1231(A), 986 N.Y.S.2d 866, 2014 N.Y. Misc. LEXIS 845,2014 NY Slip Op 50290(U) (Sup.Ct., NY Cty., 2014) stated at 2014 N.Y. Misc. LEXIS 845 at *47: 21 "If the plaintiff in a foreclosure action is an assignee of MERS and the mortgage has been registered with MERS but the note has not been transferred to MERS or to the plaintiff, the plaintiff will be unable to establish its standing, ifit is challenged. (Compare id. at 275 [holding that trustee bank lacked standing to foreclose where its assignor, MERS 'was listed in the underlying mortgage instruments as a nominee and mortgagee for the purposes of recording, but was never the actual holder or assignee of the underlying notes'] with Mortgage Elec. Registration Sys., Inc. v. Coakley, 41 AD3d 674, 674, 838 N.Y.S.2d 622 [2d Dept 2007] [holding that MERS had standing to the [sic] maintain foreclosure action where the promissory note was transferred to MERS, and MERS was the holder of the note at the time of commencement of the action].)" Please see also OneWest Bank, FSB v. Mazzone, 2013 N.Y. Misc. LEXIS 4258 at *4-*5,2013 NY Slip Op 32247(U) (Sup.Ct., Albany Cty., 2013). Contra, Vaughan v. HSBC Mortgage Corporation, 2013 N.Y. Misc. LEXIS 6499 at *5-*6, 2013 NY Slip Op 33600(U) (Sup.Ct., Putnam Cty., 2013), Deutsche Bank National Trust Company, as Trustee v. Pietranco, 33 Misc.3d 528,928 N.Y.S.2d 818, 2011 N.Y. Misc. LEXIS 3698,2011 NY Slip Op 21261 (Sup.Ct., Suffolk Cty., 2011) affd on procedural grounds, 102 A.D.3d 724, 957 N.Y.S.2d 868, 2013 N.Y. App. Div. LEXIS 165,2013 NY Slip Op 171 (2nd Dept., 2013). In the current matter, MERS, as nominee, never possessed the Purported Note. Nor, was there any admissible evidence that MERS was granted the authority to assign the Purported Note. In fact, the assignments of the Purported Note took place without any evidence that the prior lenders, inclusive of Deutsche Bank Trust Company Americas as Trustee, granted MERS the authority to assign the mortgage and/or the Purported Note to Aurora. 22 As MERS never possessed the Purported Note, MERS failed to ever possess an enforceable and valid mortgage to secure the repayment of the moneys evidenced by the Purported Note executed by Monique, especially considering the maxim "that the mortgage follows the note." Accordingly, as the mortgage assignment to Aurora was a nullity as it was delivered and recorded months prior to the delivery of the Purported Note as discussed under Point I and the mortgage given to MERS, as nominee, was also invalid and unenforceable, Aurora, as the assignee of the mortgage, did not have a valid and enforceable mortgage to foreclose. And as stated previously, to have standing to foreclose a mortgage, the mortgagee must be both the holder and possessor of the mortgage note and also the holder of the mortgage, which presumes a validly recorded mortgage. Herein, Aurora lacked standing to commence and prosecute this mortgage foreclosure action against the Property. Please note that nothing stated previously has any effect on the enforceability of the Purported Note against Monique. Nor is anything stated herein to be deemed a waiver of any and all defenses that Monique may have to the enforcement of the Purported Note. However, there is simply no security available for the enforcement of the outstanding balance represented by the Purported Note. POINT III 23 AN AFFIDAVIT CAN NOT SUBSTITUTE FOR THE PRODUCTION AND INSPECTION OF THE ORIGINAL MORTGAGE NOTE OR THE ASSIGNMENT OF THE ORIGINAL MORTGAGE NOTE In the prior sections, the Taylors have concentrated on the validity and enforceability of the mortgage instrument and/or the assignment of the mortgage. In this section of the appellants' brief, the Taylors will concentrate on the documentation necessary for the mortgagee or the assignee of the mortgage to demonstrate that it actually possessed the original mortgage note or an assignment of the original mortgage note as of the date of the commencement of the mortgage foreclosure action. As stated previously, to establish the standing to commence and prosecute a mortgage foreclosure action, the mortgagee must establish that it had possession of the original mortgage note or the assignment of the original mortgage note and also possession of the original mortgage or the assignment of the mortgage as of the commencement of the action. Further, there can not have been a separation of the mortgage from the mortgage note; in other words, the mortgage note and the mortgage can not have traveled on divergent paths. Deutsche Bank National Trust Company v. Haller, 2012 N.Y. App. Div. LEXIS 7588,2012 NY Slip Op 7619 (2nd Dept., 2012) stated in pertinent part at 2012 N.Y. App. Div. LEXIS 7588 at *4: "Where, as here, standing is put into issue by the defendant, the plaintiff must prove its standing in order to be entitled to relief. In a mortgage foreclosure action, '[a] plaintiff has standing where it is the holder or assignee of both the subject mortgage and of the underlying note at the time 24 the action is commenced.' Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation'. Here, the evidence submitted by the plaintiff in support of its motion did not demonstrate that the note was physically delivered to it prior to the commencement of the action. 'The affidavit from the plaintiff s servicing agent did not give any factual details of a physical delivery of the note and, thus, failed to establish that the plaintiff had physical possession of the note prior to commencing this action'." Pursuant to the Best Evidence Rule, the original mortgage note must be produced for examination whenever there is any doubt as to its existence or its authenticity. Schozer v. William Penn Life Insurance Company of New York, 84 N.Y.2d 639, 643-644,644 N.E.2d 1353, 620 N.Y.S.2d 797, 1994 N.Y. LEXIS 4118 (1994), Kliamovich v. Kliamovich, 85 A.D.3d 867, 869, 925 N.Y.S.2d 591, 2011 N.Y. App. Div. LEXIS 5117,2011 NY Slip Op 5233 (2nd Dept., 2011). And Posson v. Przestrzelski, 111 A.D.3d 1235, 976 N.Y.S.2d 298,2013 N.Y. App. Div. LEXIS 7849,2013 NY Slip Op 7919 (3rd Dept., 2013), citing Schozer v. William Penn Life Insurance Company of New York, stated at 111 A.D.3d at 1236: "Although the best evidence rule 'requires the production of an original writing where its contents are in dispute and sought to be proven', secondary evidence of the contents of an unproduced original document may be admitted where the court finds a sufficient explanation for the absence of the original, that the proponent 'has not procured its loss or destruction in bad faith,' and that the secondary evidence accurately reflects the original." (Citations Omitted). Herein, there has been no allegation that the Purported Note was lost, stolen or otherwise destroyed. Accordingly, there should be no excuse for the actual production of the Purported Note to reflect that Aurora was actually 25 in possession of the Purported Note, and not in possession of a mere copy thereof, as of the commencement of the mortgage foreclosure action. The production of the original mortgage note is extremely important for at least two (2) specific reasons; they are as follows: 1. there was a multitude of "robo-signing" of mortgage instruments, assignments of mortgages, assignments of mortgage notes, and rote filings by certain attorneys in the State of New York that has already adversely affected the system of mortgage foreclosures in the State of New York, which necessitated among other things, the then Chief Administrative Judge Ann T. Pfau to promulgate Administrative Order 54811 0, as amended by Administrative Order 431111. These administrative orders required: "that the plaintiff s counsel in a residential mortgage foreclosure action file an affirmation confirming that he or she communicated with a representative of the plaintiff, who informed counsel that he or she: ' (a) has personally reviewed [the] plaintiffs documents and records relating to the case; (b) has reviewed the [s ]ummons and [c ]omplaint, and all other papers filed in this matter in support of foreclosure; and (c) has confirmed both the factual accuracy of these court filings and the accuracy of the notarizations contained therein." U.S. Bank National Association v. Eaddy, 109 A.D.3d 908,909, 971 N.Y.S.2d 336, 2013 N.Y. App. Div. LEXIS 5855,2013 NY Slip Op 5896 (2nd Dept., 2013). Currently, the provisions set forth in CPLR §3012-b 26 entitled "Certificate of merit in certain residential foreclosure actions" which was enacted as of August 30, 2013, are also applicable. Please note that the current mortgage foreclosure action was commenced prior to the enactments ofCPLR §3012-b and AO 548110, as amended by AO 431111; and 2. that the mortgage note is now considered a negotiable instrument, which leads to other legal consequences. Wilson v. Toussie, 260 F.Supp.2d 530, 2003 U.S. Dist. LEXIS 7858, 55 Fed. R. Serv.3d 969, 50 U.C.C. Rep. Serv.2d (Callaghan) 838 (E.D.N.Y. 2003) stated at 260 F.Supp.2d at 542: "Plaintiffs refer the Court to series of cases for the proposition that, under New York law, 'a note given in connection with a mortgage generally is not a negotiable instrument.' P & K Marble. Inc. v. LaPaglia. 147 A.D.2d 804, 537 N.Y.S.2d 682, 683 (3d Dep't 1989); United States v. Bowman Poultry Farms, Inc., 1994 U.S. Dist. LEXIS 14911, No. 92-CV-80S, 1994 WL 577524, at *7 n. 1 (W.D.N.Y. September 30, 1992); see also Felin Assoc. Inc. v. Rogers. 38 A.D.2d 6,326 N.Y.S.2d 413,415 (lst Dep't 1971). Despite the strong language of these cases, there are certainly cases that have found a mortgage note to be negotiable. See, e.g., Slutsky v. Blooming Grove Inn. Inc .. 147 A.D.2d 208, 542 N.Y.S.2d 721, 723 (2d Dep't 1989) (,The note secured by the mortgage is a negotiable instrument .... '); In re AppOline.Com. Inc .. 285 B.R. 805,817-818 (Bankr. E.D.N.Y. 2002). In fact, as stated in Appoline. Com, the core inquiry comprises an examination of whether a note contains an unconditional promise to pay a sum certain or an impermissible promise. 285 B.R. at 818; see also P & K Marble. 537 N.Y.S.2d at 683. Application of this Appoline.Com analysis differentiates Plaintiffs' cited cases from the circumstances at hand." 27 Subsequent to Wilson v. Toussie, the Second Department in Mortgage Electronic Registration Systems, Inc. v. Coakley, 41 A.D.3d 674, 838 N.Y.S.2d 622, 2007 N.Y. App. Div. LEXIS 7703,2007 NY Slip Op 5478 (2nd Dept., 2007) re-emphasized that mortgage notes are negotiable instruments. Accordingly, it is mandatory that the mortgagee demonstrate to the fullest extent permitted by law that the mortgagee-plaintiff actually has physical possession of the original mortgage note or an assignment thereof or the maker of the mortgage note may be adversely affected. In fact, the provisions set forth in DCC §3-804 requires that a bond be posted in an amount of not less than twice the amount of the unpaid balance on the instrument, indemnifying the defendant, his heirs, personal representatives, successors and assigns against loss, including costs and expenses, by reason of further claims on the instrument, when there is a lost note. The use of an affidavit in lieu of the production of the original mortgage note to demonstrate its current possession of the note, especially if the note was unavailable for inspection, would needlessly prejudice the mortgagor- defendant, without the requirement for the mortgagor-plaintiff to post the required bond for the protection of the mortgagee-defendant. 28 In lieu of the actual production of the note, many courts have permitted the mortgage to demonstrate a copy of the mortgage note, along with an affidavit stating the date of its receipt of the mortgage note. CPLR §3212(b) provides in pertinent part: "The affidavit shall be by a person having knowledge of the facts: it shall recite all the material facts; and it shall show that there is no defense to the cause of action or that the cause of action or defense has no merit." Since the Second Department Opinion.,. Wells Fargo Bank, N.A. v. Eisler, 118 A.D.3d 982,988 N.Y.S.2d 682, 2014 N.Y. App. Div. LEXIS 4792, 2014 NY Slip Op 4753 (2nd Dept., 2014) stated at 2014 N.Y. App. Div. LEXIS 4792 at *2-*3: "In support of their cross motion, the Eisler defendants relied upon, inter alia, the affidavit of one of the plaintiff s employees. The unsubstantiated and conclusory statements in this affidavit, which indicated that the required notice of default was sent in accordance with the terms of the mortgage, combined with the copy of the notice of default, failed to show that the required notice was mailed by first class mail or actually delivered to the notice address if sent by other means, as required by the mortgage agreement." (Citations Omitted). Accordingly, conclusive statements in affidavits are not permitted and authorized to be utilized in lieu of actual proof of the date of the receipt of the mortgage note or the assignment of the mortgage note. This is especially imperative as most, if not all, institutional mortgagees keep Iportals (internal computerized records) as to the date of the receipt of each and every mortgage note and maintain detailed lists as to the date of receipt of the various mortgage notes 29 r that it receives and the date that it is placed in its vaults. Failure to annex these business records to the mortgagee's affidavit mandate that the mortgagee is seeking to utilize inadmissible hearsay as to its business records. The Holland Affidavit conclusively represented without providing any other factual details as to its receipt that the mortgage note was physically delivered to Aurora on May 20, 2010. May 20, 20 I ° was one (1) day prior to the date of the summons and four (4) days prior to the commencement of this mortgage foreclosure action. The Holland Affidavit was not admissible evidence, as there was no evidence proffered that: (a) Ms. Holland had personal knowledge of the receipt of the Purported Note, nor did she annex sufficient business records to reflect the date of the receipt of the Purported Note or the assignment of the Purported Note; or (b) that she personally inspected the Purported Note to insure its genuineness and authenticity. The physical receipt of the mortgage note has to be demonstrated by business records, subject to cross-examination in accordance with the provisions set forth in CPLR §4518. Again, there is no allegation that the Purported Note was lost or destroyed by fire, flood, hurricane, earthquake, tornado or the like to permit the filing of a lost note affidavit. Therefore, that representation made in the Holland Affidavit should have been stricken. Accordingly, Aurora was not able to demonstrate by admissible evidence that it possessed the Purported Note as of the date of the commencement 30 of the action. This failure required the dismissal of this mortgage foreclosure action as Aurora did not demonstrate its standing to commence and prosecute this mortgage foreclosure action. Miscellaneous The Second Department Opinion reversed the issuance of the judgment of foreclosure and sale issued by the Supreme Court for Aurora's failure to provide reasonable notification of the scheduling of the referee's computation hearing. Notwithstanding the passage of approximately five (5) months as of the drafting of this appellants' brief since the issuance of the Second Department Opinion, Aurora has not yet caused the referee's computation hearing to be conducted. Accordingly, as of the drafting of this appellants' brief, Aurora has not procured a proper judgment of foreclosure and sale to permit a re-foreclosure sale of the Property. It should be noted that Aurora caused an initial foreclosure sale of the Property to take place based on the issued judgment of foreclosure and sale by the Supreme Court, which judgment of foreclosure and sale was reversed by the Second Department Opinion. Please note that nothing set forth herein shall affect the right, if any, of Aurora to seek to enforce the personal liability of Monique based on the purported mortgage note, and the defenses, if any, that Monique may have thereto. It should 31 be further noted that Aurora never sought a deficiency judgment against Monique after the initial foreclosure sale of the Property. CONCLUSION F or the reasons set forth above, Aurora never had standing to commence and prosecute the mortgage foreclosure action against the Property, and, accordingly, the mortgage foreclosure action must be dismissed. Dated: Hauppauge, New York ;.....- August J ,2014 ZINKER & HERZBERG, LLP Attorneys for the Appellants-Defendants Leonard and Monique Taylor BY:~ 14 Jeffrey Herzberg 300 Rabro Drive, Suite 114 Hauppauge, New York 11788 (631) 265-2133 32