Court Rejects TARP As Defense To Mortgage Foreclosure

In an action to foreclose a mortgage on a commercial property, a New York state court judge has rejected defense contentions grounded more in public policy arguments than in law. The defendants asked the court to "take judicial notice of the fact that the people of the State of New York, are faced and subjected to an international economic catastrophe that is not of our making," that "financial entities that hold and/or have ownership interests" in the note and mortgage have benefitted from "federal capital infusions" (presumably the TARP program), that the failure to provide similar financial relief to defendants constituted discrimination and was violative of the New York State Constitution, that the defendants "have been left to hold the ashes left from this international economic tragedy," and that the plaintiff was the "beneficiary of an unconstitutional Act of Congress" (i.e. TARP). 

The court concluded that if it were to accept the defendants’ arguments, “it would call into question the entire federal structure put in place by the Congress to respond to what defendants have described as the ‘international economic catastrophe.’” The court simply stated that it “declines to do so.”
 
The case is Bayview Loan Servs., LLC v. Avery Enters., Inc., 2010 N.Y. Slip Op. 50336(U) (Kings Co. March 8, 2010). Attorneys involved are Samit G. Patel, Fein, Such, Kahn & Shepard, and Emanuel Towns.