A New York appellate court has ruled in favor of a homeowner, Salochini Persaud, in a mortgage foreclosure case against One West Bank FSB. The decision, made on July 8, 2026, by the Appellate Division of the Supreme Court of the State of New York, allows Persaud to amend her defense to include claims of the bank's lack of standing and failure to comply with contractual obligations. This ruling is significant as it impacts how foreclosure defenses can be raised in court.
The case, One W. Bank FSB v. Persaud, docket number 2024-11867, centers around a dispute over a mortgage foreclosure initiated by One West Bank in 2009. The bank sought to foreclose on a property in Queens, New York, where Persaud was one of the defendants. Initially, Persaud did not raise certain defenses in her answer, which led to the bank's motion for summary judgment against her.
In 2024, the Supreme Court of Queens County ruled in favor of One West Bank, granting its motion to strike Persaud's answer and appointing a referee to compute the amount due on the mortgage. However, Persaud appealed this decision, arguing that she should be allowed to amend her answer to include defenses regarding the bank's standing and compliance with contractual conditions.
The Appellate Division reviewed the case and found that the lower court had erred. The judges noted that under New York law, specifically RPAPL 1302-a, a defendant's failure to raise the defense of lack of standing does not bar them from asserting it later in the proceedings. The court stated, "the defendant's failure to assert the affirmative defense of lack of standing in her answer does not bar her from asserting it in the action." This ruling is crucial as it highlights the rights of homeowners in foreclosure cases.
The court also emphasized that the defendant's request to amend her answer should have been granted. The judges pointed out that applications to amend pleadings are generally favored unless the opposing party can show significant prejudice or that the amendment is without merit. The court ruled, "in the absence of prejudice or surprise resulting directly from the delay in seeking leave, applications to amend or supplement a pleading are to be freely granted."
As a result, the Appellate Division reversed the lower court's order and denied One West Bank's motion for summary judgment. The judges instructed that Persaud's cross-motion to amend her answer was granted, allowing her to include the defenses of lack of standing and failure to comply with contractual conditions. The court also awarded costs to Persaud.
This ruling has significant implications for homeowners facing foreclosure. It reinforces the idea that defendants in these cases can assert defenses even if they did not include them in their initial responses. It also emphasizes that banks must demonstrate standing in foreclosure actions, which can help protect homeowners from wrongful foreclosures.
The decision may set a precedent for future foreclosure cases in New York, encouraging more homeowners to challenge banks' claims and assert their rights. It highlights the importance of procedural fairness in legal proceedings, particularly in cases involving significant financial stakes like mortgage foreclosures.
Looking ahead, it is unclear whether One West Bank will seek further appeals in this matter. The court's decision provides a pathway for Persaud to defend herself against the foreclosure action, but the bank may still pursue its claims in the lower court with the new defenses in mind. Additionally, there may be related cases pending that could further clarify the legal landscape surrounding mortgage foreclosures in New York.