In February, the New Mexico Supreme Court rejected the practices widely used to pursue mortgage foreclosure in New Mexico. In two opinions, Bank of New York v. Romero and Bank of America v. Quintana, the Court threw out attempts to establish the right to bring suit (standing) through post-Complaint evidence. This is not a small issue of procedure, but rather a direct refutation of the practices by which banks had pursued foreclosure based upon negotiated instruments. Accordingly, the decisions bring into question the validity of a huge number of currently pending foreclosure complaints and should force banks to rethink current practices for pursuing foreclosure. Perhaps unintentionally, the decisions also raise problems for any entity attempting to prove facts through reliance on business records. Accordingly, focused consideration of how to establish standing is now necessary in New Mexico.
Both Romero and Quintana appear to be fairly standard foreclosure cases. In both, a borrower obtained a home loan and defaulted on the payments on that loan. Also in both cases, the initial lender attempted to assign the note to one or more successors, doing so through specific endorsement and also through a blank endorsement on the note, making the note bearer paper. No endorsement was dated. In both cases, when the plaintiff brought suit, it attached to its complaint a copy of the note since that document existed when the borrower took out the loan, before the inclusion of any endorsements. Because the notes attached to the complaints did not have endorsements and because the plaintiff-banks were not the entities that issued the loans, the question of standing was readily apparent.
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