MORTGAGE FORECLOSURE - POST JUDGMENT ACTIONS TO SET ASIDE FORECLOSURE

Besides an appeal from the judgment of foreclosure and sale, some homeowners have tried other approaches to set aside the foreclosure. Here are two recent examples that failed.

In Monterosso v Garguilo, 2020 NY Slip Op 01488, Decided on March 4, 2020. Appellate Division, Second Department  - the homeowners commenced an action, inter alia, to impose a constructive trust upon certain real property to which they lost title in a previous foreclosure action, and for a judgment declaring that the referee's deed transferring title to the property to the defendants was void as the product of a usurious loan transaction. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint, and the Supreme Court granted the motion. The Second Department affirmed.



In Pusey v Morales, 2020 NY Slip Op 01519, Decided on March 4, 2020, Appellate Division, Second Department, after the foreclosure judgment and sale, the homeowner commenced an action against the bank and another defendant, seeking, inter alia, a judgment declaring that the assignment of mortgage was null and void and to remove the cloud on title to the premises. The court held that:

""[A] judgment of foreclosure and sale entered against a defendant is final as to all questions at issue between the parties, and concludes all matters of defense which were or might have been litigated in the foreclosure action" (SSJ Dev. of Sheepshead Bay I, LLC v Amalgamated Bank, 128 AD3d at 675 [internal quotation marks omitted]). Thus, subsequent claims are barred by the doctrine of res judicata where, as here, the granting of the requested relief "in the present action would destroy or impair the rights established by the judgment of foreclosure in the prior action" (id. at 675-676; see Chapman Steamer Collective, LLC v KeyBank N.A., 163 AD3d 760, 761-762)."