Justice John Levanthal, writing for the unanimous four judge panel in New York’s appellate division, just decided the case of Bank of America v. Silverberg, (Bank of NY v. Silverberg, 2011 NY Slip opinion 05002, App Division, Second Department. June 7, 2011.) involving an attempt by Bank of New York, as trustee for a mortgage-backed security trust, to foreclose on a delinquent mortgage supposedly held in a MBS trust. The appellate court held that the bank didn't have the right to foreclose because it could not prove that it had legal ownership or physical possession of the promissory note and mortgage signed by the original lender, which was Countrywide Mortgage and the borrowers, the Silverbergs. Countrywide was absorbed by Bank of American in 2008 when Countrywide was crashing.
Levanthal’s opinion noted, at page 1, that:
This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property
(For the Impact on Michigan mortgages of a similar decision there, see Muskegon Foreclosures Drop 97% after Court Order+* by Muskegon Critic.)