The article "New Statute Eliminating Waiver of Standing Defense Imperils Title Insurance (and Foreclosures)" (April 28) dispenses dire warnings about the parade of horribles that supposedly will ensue from a new law that makes the defense of lack of standing nonwaivable in a residential foreclosure action. Does newly enacted section 1302-a of the Real Property Actions and Proceedings Law (RPAPL 1302-a) truly give cause for alarm, though? Perhaps, but only for a foreclosure plaintiff who cannot show that it actually has the right to enforce the subject mortgage, and therefore the right to take the home that secures the mortgage loan. The Legislature is entirely justified in making clear that the courts can only adjudicate a foreclosure action when the party bringing the action has a stake in the matter.

The article reveals the author's misunderstanding of the jurisprudential foundations of standing when he conflates standing with capacity to sue—a defense that, as he notes, the CPLR deems waivable. The Court of Appeals, however, draws a distinction between the two, and—in contrast to the capacity defense—nowhere does the CPLR include standing as one of the defenses which is waived if not timely asserted. While capacity "concerns a litigant's power to appear and bring its grievance before the court," standing "is an element of the larger question of justiciability" concerned with whether "the party seeking relief has a sufficiently cognizable stake in the outcome so as to cast the dispute in a form traditionally capable of judicial resolution."  Community Bd. 7 v. Schaffer, 84 N.Y.2d 148, 154-55 (1994) (citations, internal punctuation, and alterations omitted). If, through such a fundamental defect as the plaintiff's lack of interest in the case, the matter cannot be judicially resolved, the court must be made aware of that impediment, no matter if the defendant failed to identify the problem at the case's outset.  RPAPL 1302-a merely codifies long-held judicial doctrine.

The author furthermore omits the context that makes standing such a critical element of residential foreclosure actions, and so worthy of scrutiny. After the 2008 financial crisis gave rise to a deluge of new foreclosure actions, it soon became clear that many of these cases were being brought by plaintiffs who were unable to demonstrate that they actually owned or otherwise were entitled to enforce the mortgage loans on which they were suing, and that many of the documents that supposedly established that entitlement were missing, defective, or "robosigned." The defects in residential foreclosure cases were so pervasive that they led to the imposition of new requirements on foreclosure attorneys to affirm that the action had merit, and to include copies of the subject note and mortgage in their initial filings. See CPLR section 3012-B.

More context: most foreclosure defendants are not represented and, ignorant of the import of standing, may omit that defense from an answer or pre-answer motion to dismiss. If they later receive legal advice or representation, the new law allows them to raise that defense and, if that defense proves to have merit, the court will correctly recognize its inability to adjudicate the case and dismiss. The specter invoked by the author of "unscrupulous" homeowners raising the defense in the 11th hour is illusory and incoherent: no one concerned about saving her home will hold a meritorious defense in reserve and risk losing it, and a meritless defense of lack of standing will be easily disposed of by courts.

The author professes consternation that allowing the court to consider standing at all stages of a residential foreclosure action and even (in cases where judgment was obtained on a homeowner's default) after sale creates uncertainty about the marketability of title post-auction and theorizes that title insurers will refuse to insure title for properties emerging from foreclosure. But all default foreclosure judgments, like any other judgments, have always been subject to possible vacatur in the unlikely event that a defendant is able to satisfy the rigorous standards justifying vacatur—both a reasonable excuse for the default and a potentially meritorious defense. Standing was always among those potentially meritorious defenses until appellate case law conflated standing with capacity to sue (the latter is deemed waived if not timely asserted by operation of CPLR 3211(e), while the former is not). In effect, the author worries that courts will fail to apply the law and will not demand a showing of a reasonable excuse for defaulting in raising the standing defense and simply vacate judgments based on an assertion of a standing defense. A recent decision from Westchester County in which a defendant unsuccessfully invoked the new law in an effort to vacate a default judgment demonstrates that courts will not abdicate their duty to consider whether the homeowner waited too long to raise a standing defense: In JPMorgan Chase Bank, N.A. v. Carducci, 2020 N.Y. Misc. LEXIS 1147, 2020 NY Slip Op 20072, 2020 WL 1161598 (Sup. Ct. Westchester Cty. Mar. 10, 2020), the court denied a post-sale motion to vacate the judgment of foreclosure and sale on the ground that the homeowners had not shown excusable neglect. 2020 N.Y. Misc. LEXIS 1147, *6–7.  The court was able to decide this motion only three weeks after the scheduled auction date, indicating that any uncertainty regarding marketability of title would be short-lived.

Notably, although it was not necessary to its decision, the Carducci court went on to observe that the defense itself lacked merit. It was able to reach that determination because the plaintiff's initial filings—made in compliance with the aforementioned CPLR section 3012-B—sufficiently established the plaintiff's standing to sue. The inescapable conclusion is that any uncertainty about whether a judgment or sale will remain final is within the control of the plaintiff and its exercise of diligence in ensuring that its stake in the outcome is on firm ground before it brings an action to foreclose.

The author should not be afraid of actions being decided on their merits, and neither should we be—that is the principle value that animates our judicial system.  RPAPL 1302-a promotes that goal, and seems likely to introduce more transparency and fairness into the residential foreclosure process. Title insurers' supposed refusal to insure properties acquired through foreclosure sales based on this recent legislation should be greeted with skepticism, because default judgments have always been subject to vacatur if a reasonable excuse and a potentially meritorious defense can be demonstrated.

Sara Manaugh

Director of the Homeowner Defense Project at Staten Island Legal Services, a program of Legal Services NYC