United Wholesale Mortgage failed to prove it held the note when it filed its foreclosure case, leading a New York appeals court to reverse a summary judgment win
In a ruling with procedural significance for the mortgage industry, a New York appeals court has found that United Wholesale Mortgage, LLC (UWM) failed to prove it had standing to bring a foreclosure action, reversing a lower court’s summary judgment in its favor.
The decision, issued on April 10, 2025, by the Appellate Division of the Supreme Court of New York, Third Department, stems from a foreclosure case involving a residential property in the City of Schenectady. The appellate panel held that UWM did not establish it possessed the promissory note at the time it commenced the foreclosure action in December 2022, a requirement when a note is indorsed in blank.
The case began in February 2020, when Theodore and Debra Smith executed a promissory note to borrow a sum from UWM. The note was secured by a mortgage on their Schenectady property, executed in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for UWM. After defaulting on their payments in November 2020, the Smiths transferred the property title to Prime Property Protection, LLC.
In June 2021, MERS assigned the mortgage to UWM. Later, UWM filed a foreclosure action in December 2022. While the Smiths did not appear in the case—resulting in a default judgment and order of reference against them—Prime Property Protection did respond, challenging UWM’s standing to foreclose. The Supreme Court (Justice Thomas Buchanan) granted UWM’s motion for summary judgment against Prime. Prime appealed.
On review, the Third Department reversed that portion of the ruling. Although UWM attached a copy of the note to its complaint—indorsed in blank following a special indorsement to a third party—the court determined that this was not sufficient to prove standing. The indorsements were undated, and UWM did not provide evidence showing it possessed the note at the time it filed the foreclosure.
An affidavit submitted in July 2023 by a representative of UWM’s loan servicer stated that the servicer, acting as UWM’s agent, then had physical possession of the note indorsed in blank. However, the affidavit failed to state when that possession began. This omission proved critical.
The court emphasized that “plaintiff failed to demonstrate that it had standing to commence this mortgage foreclosure action.” Under New York law, possession of a note indorsed in blank must be shown at the time of commencement—not merely at the time of motion practice.
Further, the complaint itself could not be relied upon to fill that evidentiary gap. It was unverified and included conflicting allegations, leaving it with no probative value.
In reversing the grant of summary judgment against Prime, the appellate court allowed the default judgment against the Smiths to remain in effect. The matter will now proceed without a foreclosure judgment against Prime Property Protection.
The ruling adds to a growing body of appellate decisions in New York requiring strict compliance with standing requirements in foreclosure cases. Particularly when the note is indorsed in blank—making it payable to the bearer—plaintiffs must provide concrete proof of possession at the precise moment the action is initiated.
For lenders and servicers, the case underscores the need for detailed, dated evidence in support of foreclosure filings, especially where title transfers and mortgage assignments have occurred.
Case Reference:
United Wholesale Mtge., LLC v. Smith, 2025 NY Slip Op 02117 (Decided April 10, 2025)
Court: Appellate Division, Supreme Court of the State of New York, Third Department
Docket Number: CV-24-0017
