Key Takeaway
Court ruling demonstrates strict requirements for establishing familiarity with predecessor business records under CPLR 4518 hearsay exception in foreclosure cases.
Understanding Business Records Requirements in Foreclosure Cases
When mortgage servicers attempt to prove standing in foreclosure actions, they must navigate strict evidentiary requirements under New York’s business records exception to the hearsay rule. A recent Second Department decision illustrates the challenges that arise when an affiant from one company tries to authenticate records from a predecessor entity without demonstrating proper familiarity with that entity’s record-keeping practices.
The business records exception under CPLR 4518 allows certain documents to be admitted into evidence despite being hearsay, but only when specific foundational requirements are met. This case highlights a critical gap that frequently undermines foreclosure plaintiffs’ attempts to establish standing through successor servicer testimony.
Jason Tenenbaum’s Analysis:
US Bank N.A. v Ballin, 2018 NY Slip Op 01212 (2d Dept 2018)
“Thrasher averred, in relevant part, that her affidavit was based upon her review of Ocwen’s business records, and that upon review of such records, the note was physically transferred to the plaintiff on December 1, 2006. The plaintiff failed to demonstrate that the records relied upon by Thrasher were admissible under the business records exception to the hearsay rule (see CPLR 4518) because Thrasher, an employee of Ocwen, did not attest that she was personally familiar with the plaintiff’s record-keeping practices and procedures (see Bank of N.Y. v Willis, 150 AD3d 652, 653; Arch Bay Holdings, LLC v Albanese, 146 AD3d 849, 852; Aurora Loan Servs., LLC v Mercius, 138 AD3d 650, 652). Thus, the plaintiff failed to establish, prima facie, that it had standing to commence the action.”
The question as you could imagine is what is sufficient to prove sufficiency of a prior entities practices.
Key Takeaway
Courts require more than mere access to predecessor records. An affiant must demonstrate actual familiarity with the record-keeping practices and procedures of the entity that originally created the business records. This foundational requirement remains a significant hurdle for mortgage servicers seeking to establish standing through successor testimony, as simple review of transferred records without knowledge of their creation process proves insufficient under CPLR 4518.
