US Bank loses foreclosure fight after suing a dead borrower

In the first case, the borrower, James Williams, signed a $627,000 note in April 2008, secured by a mortgage on a property in Elmhurst. Williams died on April 24, 2009. The lender’s predecessor went ahead and filed the foreclosure action in January 2010 – against Williams, even though he was already dead.

What followed was more than a decade of procedural wrangling. The Surrogate’s Court appointed an estate administrator. The mortgage changed hands through multiple assignments, eventually landing with Wilmington Trust, National Association, as Trustee of ARLP Securitization Trust. The property itself was transferred to a company called Lyberty 18805 Corp. in September 2016 by the decedent’s heirs. ARLP got itself substituted as plaintiff, amended the case caption to name “Unknown Heirs,” and even won summary judgment in October 2019.

But Lyberty pushed back. It argued the whole case was dead on arrival because you simply cannot sue someone who is no longer alive. The lower court agreed, tossing the case. The Appellate Division affirmed. The rule is straightforward: you cannot start a foreclosure against a deceased borrower. And renaming the defendants on the caption after the fact does not fix the problem. Justices Mark C. Dillon, William G. Ford, Deborah A. Dowling, and Susan Quirk all agreed.

For servicers, the takeaway is clear. Before you file, confirm your borrower is alive. If they are not, you need to go through the estate. There is no workaround.

The second and third cases come from the same foreclosure. This one involved a $330,000 note signed by Michael M. Speller in July 2005, secured by a mortgage on a property in Brewster. The mortgage was also signed by his wife, Ellen M. Fitzsimmons.