In Shrewsbury v. The Bank of New York Mellon, No. 306, 2016 (Del. Apr. 17, 2017), a divided Delaware Supreme Court held that a mortgage assignee must be entitled to enforce the underlying obligation that the mortgage secures in order to foreclose on the mortgage. The decision means that the mortgage holder in a foreclosure action must also prove that it owns the underlying note. The majority opinion, while eschewing the notion that it was imposing a new pleading requirement for mortgage foreclosure actions, nevertheless suggested that best practice for plaintiffs counsel in a foreclosure action where a mortgage has been assigned would be to include an averment that the note, as well as the mortgage, was assigned to the plaintiff.
The lone dissenter, Chief Justice Leo E. Strine Jr., accused the majority of ignoring the plain language of the statute that allows foreclosure by the mortgage holder, and thereby increasing the costs to lenders of enforcing their rights when it was not necessary to protect the legitimate rights of borrowers. More interestingly, Strine invites lawmakers to take a comprehensive look at outdated statutory and rule provisions based on writs “with a Latin name.”
