There are two aspects to a foreclosure lawsuit. The first is a breach of the terms of the note. The note is simply an IOU. The second is the breach of the terms of the mortgage. The mortgage secures the note to the property and creates a lien. This permits the financial institution to have a security interest in the real estate to cause the note to be paid off. The foreclosure lawsuit is basically a lawsuit based on the breach of a contract. The bank’s attorneys need to prove that the homeowner breached the terms of the contract involving the note.

The following are the terms of a contract that must be proven by the bank:

• The homeowner and the financial institution entered into a written agreement.
• The financial institution performed all of its contractual obligations.
• The homeowner has failed to fulfill their financial obligations, e.i., making the mortgage payments.

The Foreclosure Lawsuit

Foreclosure lawsuits are more complicated than basic contract violation cases. A note (IOU) is a negotiable instrument under Article 2 of the New York Uniform Commercial Code. In addition to the obligations under a simple breach of contract, the financial institution must show it has rights to enforce the note to prevail in the foreclosure litigation.

Holder of the Note

The bank must prove they are the holder of the note and mortgage to move forward with the foreclosure lawsuit. If the financial institution does not possess the original note and mortgage documents, the homeowner has a defense to the foreclosure lawsuit that can be used to get the case dismissed.

The law firm of Schlissel DeCorpo LLP has been helping families deal with mortgage and foreclosure problems for more than 30 years. We can be reached at 718-350-2802, 516-561-6645 or 631-319-8262 or by e-mail at [email protected].