by Joseph Dunaj, Esq.
McCalla Raymer Leibert Pierce, LLC
USFN Member (AL, CA, CT, FL, GA, IL, MS, NV, NJ, NY)

The Connecticut Appellate Court issued an opinion in January which should serve as a cautionary reminder to foreclosing plaintiffs and counsel whenever a modified note is foreclosed.  In the case of HSBC Bank, USA, Nat’l Ass’n v. Karlen, 195 Conn. App. 170 (2020), the Appellate Court was faced with an appeal challenging the trial court’s rendering of summary judgment in favor of the Plaintiff.  The Plaintiff pled in its complaint that it was the holder of a Note and assignee of a Mortgage originally executed in 2006.  The Plaintiff further pled that the Note was affected by a Loan Modification that was executed in 2010. The Defendants filed an answer and a disclosure of defenses denying the allegations in the complaint.

In response to the answer, the Plaintiff filed a Motion for Summary Judgment.  The Motion for Summary Judgment was supported by an Affidavit executed by the loan servicer, which averred that the Plaintiff was the holder of the Note and assignee of the Mortgage, that the Defendants were in default for failure to make payments under the Note and Mortgage, and that a notice of default had been sent.  Copies of the Note, Mortgage, Assignment of Mortgage, and default letter were attested to and attached to the Affidavit.  However, the Plaintiff’s Affidavit did not mention the Loan Modification, nor was a copy of the Loan Modification attached.  The Defendant did not file an opposition to the Motion for Summary Judgment.  The trial court granted the Plaintiff’s Motion for Summary Judgment and entered a judgment of strict foreclosure, from which the Defendants appealed.

On appeal, the Defendants contended that, although they did not oppose the Motion for Summary Judgment, the court improperly granted the Motion because the Plaintiff failed to meet its burden.  The Appellate Court ruled in favor of the Defendants.  In order to obtain summary judgment in a foreclosure case, the Court reiterated that a Plaintiff must establish its prima facie case before it is entitled to summary judgment.  The Plaintiff’s Affidavit failed to contain any averment that the Note was modified, the terms of the modified Note (including a copy), or that the Defendants defaulted pursuant to the terms of the modified Note.  The facts concerning the Loan Modification were held to be part of the Plaintiff’s prima facie case, and the failure to produce any evidence regarding the Loan Modification meant that the trial court had no evidentiary basis to determine whether the Defendants were in default under the modified Note.  The Appellate Court reversed and remanded the case back to the trial court for further proceedings.

Karlen highlights the importance of preparation regarding a foreclosure case.  This fact is especially crucial given the vast number of modified loans that default.  Plaintiffs and Counsel should ensure that any loan modifications are properly reviewed for their impact on the foreclosure case, that the pleadings and affidavits properly reflect the existence of any modifications, and that copies of any loan modifications are provided as evidence, whether in seeking summary judgment, a standard judgment hearing, or a trial.

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February USFN e-Update