NY Appellate Court Orders Stay Of Foreclosure Sale Based On New Evidence – WaMu Note Endorsements by “Cynthia Riley” Now Front And Center

 

I often tell clients that retaining my services after a lower court judgment has been issued makes it extremely difficult, if not nearly impossible, to have my findings and evidence reviewed by any appellate court. But never say “never.”

 

The attached Appellate brief was submitted with my affidavit, along with a motion to stay the foreclosure sale pending the outcome of the appeal. The brief and motion were submitted based on my findings, evidence, and opinions obtained after the lower court’s judgment was rendered, to which the Appellate Court reviewed (unusual, but encouraging). (See: JP Morgan v. Borukhov, Appellant’s Brief (1)) In turn, the Appellate Court issued an order granting the stay of the foreclosure sale (again, unusual, but encouraging). (See: NY Appelate Court – Order – Stay Enforcement).

 

Here are a few excerpts from the brief:

 

This appeal presents a truly unique set of circumstances with origins in the 2008 financial crisis. It appears to be a case of first impression which puts to the test the manner in which Plaintiff, JPMorgan Chase Bank, N.A. [“Bank”] has succeeded in papering over the gaps in the chain of title of a certain portfolio of mortgage loans it ostensibly acquired from the FDIC on September 25, 2008.

Simply stated, the Bank has succeeded in establishing its ownership of the subject mortgage loans, and attendant standing to foreclose thereon, not by establishing a verifiable, legal chain of title – but by offering its possession of a promissory note which was endorsed in blank, thereby putatively turning it into a bearer instrument.

This case appears to mark the first appellate case in this State where it is conclusively established (and the Bank does not attempt to deny) that the putative blank endorsement, effectuated via use of a stamped signature, was a forgery and/or a fraud.

However, the Homeowner has undertaken an exhaustive investigation of the Bank’s myriad litigations stemming from its WMB-asset purchase, and has conclusively established that the blank endorsement evident on the subject promissory note – which is the linchpin of the Bank’s claim of standing in this case– is a fraud.

 

2 Research has not evinced a single published decision in this State wherein a blank endorsementon a promissory note, which singularly operates to imbue a bank with standing to maintain a mortgage foreclosure action, was demonstrated to be a forgery and/or fraudulent act.

 

4 Subsequent events would incontrovertibly establish that Ms. Riley had left her employ with WMB on November 11, 2006, which was well before the time the Homeowner’s Note was executed on June 1, 2007 (R. 607). The Homeowner’s expert, William J. Paatalo, who has extensive experience in the mortgage-financing industry and has conducted over 1,200 investigations since the 2008 financial crisis, found that the Riley Endorsement is what is commonly known in the industry as a “tah-dah” endorsement, which is created when an endorsement and/or allonge is necessary to “prove-up” standing in the context of mortgage foreclosure litigations (R. 595). Mr. Paatalo further noted that these “tah-dah” endorsement “are never dated or witnessed by anyone having personal knowledge as to any underlying transactions” (R. 595). Mr. Paatalo opined that the Riley Endorsement was actually effectuated with a “Cynthia Riley” stamp after the FDIC takeover of WMU on September 25, 2008 (R. 595).