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Financial Services Law Insights and Observations

New York State Appeals Panel Reinstates Foreclosure Action, Reversing Justice Known for Tossing Out Foreclosure Motions

Foreclosure

Lending

On February 14, a panel of judges in the Appellate Division, Second Department of the New York State Supreme Court reinstated the foreclosure action at issue in Aurora Loan Services, LLC v. Sookoo, 2012 WL 503663 (N.Y. App. Div. Feb. 14, 2012). The borrower defaulted on her mortgage loan and did not later appear in the foreclosure action or answer the complaint. The plaintiff, the holder of the mortgage and note, moved for an order of reference appointing a referee to compute the amount due. Brooklyn New York State Supreme Court Justice Aaron Schack, sua sponte, directed the dismissal of the complaint with prejudice and cancelled the notice of pendency based upon the plaintiff’s failure to provide the loan origination documents as required by the judge’s earlier order dated March 31, 2009. Reversing the decision, the unanimous panel wrote that Justice Schack "erred in, sua sponte, directing the dismissal of the complaint with prejudice and the cancellation of the notice of pendency.”  The panel remitted the matter for proceedings before a different justice, deeming it “appropriate” “under the circumstances of this case.” Justice Schack is known for his staunch stance against banks pursuing foreclosure actions and this is not the first instance in which he has been reversed in a foreclosure action (see, for example, US Bank, N.A. v. Guichardo, 90 A.D.3d 1032 (N.Y. App. Div. 2011)).