New Developments in NM Foreclosure Standing Saga

01/19/2017

In 2014, the New Mexico Supreme Court ruled in Bank of New York v. Romero (“Romero I”) that a creditor must prove its standing at the time it files its complaint when foreclosing on real property in New Mexico. After the case was remanded to the state district court, the lower court ruled that the Bank of New York (the “Bank”) could not prove standing and dismissed the case “with prejudice,” a ruling that barred the Bank from seeking foreclosure against the Romeros ever again.   

In 2016, the Romero case went up on appeal again, this time on the issue of whether the Romero case should have been dismissed “with prejudice.”  In the resulting decision, Bank of New York v. Romero, No. 34,426 (“Romero II”), the New Mexico Court of Appeals held that the New Mexico Supreme Court’s decision in Romero I was not a final decision on the merits. In Romero II, the New Mexico Court of Appeals found that Romero I made no findings to preclude the Bank from filing another action to prove its standing. The Court of Appeals walked through the legal doctrines of claim and issue preclusion and held that the state district court confused the doctrines and improperly prevented the Bank from seeking to establish its standing in a subsequent case. The Court of Appeals remanded the case to the district court again with instructions to dismiss the case “without prejudice” so that the Bank could seek to foreclose again, presumably once it fixed its standing issues as articulated in Romero I. The New Mexico Supreme Court denied certiorari, so the Court of Appeals has the final say for now.

The ultimate resolution of Romero remains to be seen, but both Romero I and Romero II should remind banks, creditors, and practitioners to have proper standing documentation before foreclosing in New Mexico courts.

If you have questions or would like to discuss how to properly establish standing and how to document a loan assignment prior to initiating foreclosure, contact lawyers Justin Sawyer at 505-883-3415 or JRS@sutinfirm.com, or Katharine Downey at 505-883-3329 or KCD@sutinfirm.com.