REFinBlog

May 3, 2013

Noncompliance with PSA Voids Assignment of Note and Mortgage

Wells Fargo Bank, N.A. v Erobobo, 2013 NY Slip Op 50675(U) (Sup. Ct. Kings, Apr. 29, 2013) reaches a pretty extraordinary result: noncompliance with the assignment provisions of a Pooling and Servicing Agreement voids the assignment of a note and mortgage. In particular, the court found that

The assignment of the note and mortgage from Option One [the first assignee] rather than from the Depositor ABFC violates section 2.01of the PSA which requires that the Depositor deliver to and deposit the original note, mortgage and assignments to the Trustee. The assignment of the Defendant’s note and mortgage, having not been assigned from the Depositor to the Trust, is therefore void as in being in contravention of the PSA.The evidence submitted by Defendant that the note was acquired after the closing date and that assignment was not made by the Depositor, is sufficient to raise questions of fact as to whether the Plaintiff owns the note and mortgage, and precludes granting Plaintiff summary judgment. (13)

If the Court’s reasoning holds up on appeal or is adopted in other jurisdictions, it could have a big, big impact on Foreclosure litigation.

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