A state appeals court has ruled that a bank followed the required legal steps to move ahead with a foreclosure after a homeowner failed to respond to the case or dispute missed mortgage payments, clearing the way for the court to appoint a referee to calculate how much money is owed on the loan.

The Appellate Division has upheld two orders issued by Justice Lawrence Knipel in a long-running Brooklyn foreclosure case, concluding that Deutsche Bank National Trust Company properly established the borrower’s default and was entitled to a default judgment and an order of reference.

The case, Deutsche Bank v. Amoah, began in 2008, when the bank filed suit to foreclose on a property in Brooklyn. Avenue K NY Corp. was granted permission to intervene in 2017, meaning it was allowed to join the case to protect its claimed interest in the property, but it later failed to answer the complaint. The bank moved for a default judgment and the appointment of a referee to calculate the amount owed. Justice Knipel granted both requests in separate orders dated July 26, 2023.

Avenue K appealed, arguing that the bank had not met the evidentiary burden required in foreclosure matters. The panel disagreed. 

In its decision, the court said the bank produced the note, the mortgage and proof of the borrower’s default, supported by an affidavit from a vice president of PHH Mortgage Corporation, which services the loan.

The appellate judges held that the vice president’s affidavit was enough to admit the loan records into evidence, even though they were created by prior servicers. Rodriguez explained that PHH had incorporated those records into its own files and relied on them in the ordinary course of business. That satisfied the business-records rule, the court said.

Finding no defect in the bank’s proof, the panel affirmed Knipel’s orders allowing the default judgment to be entered and a referee appointed.