Foreclosure Judgments Reversed Where Referee’s Computations Rely on Unidentified, Unproduced Business Records

1. Introduction

Bank of N.Y. Mellon v Prestia (2026 NY Slip Op 04735) is a Second Department mortgage-foreclosure decision addressing both (i) merits-stage foreclosure requirements (standing, default, summary judgment) and (ii) the proof required at the amount-due stage when a referee computes sums owed.

The plaintiff, Bank of New York Mellon, commenced a Suffolk County foreclosure action in 2012 against borrowers Monica Prestia and John Prestia (collectively, the “defendants”). The defendants answered with affirmative defenses, including lack of standing. The Supreme Court granted summary judgment and an order of reference, denied renewal, confirmed the referee’s report, and entered a judgment of foreclosure and sale. The defendants appealed.

The key appellate issues were: (1) whether the plaintiff established standing and default at summary judgment; (2) whether renewal was properly denied; (3) whether failure to hold a CPLR 4313 hearing required reversal; and (4) whether the referee’s report was confirmable under CPLR 4403 where computations were based on business records that were not identified and produced.

2. Summary of the Opinion

The Second Department reversed the judgment of foreclosure and sale, not because the plaintiff failed to obtain summary judgment on liability, but because the referee’s report should not have been confirmed.

  • The court held the plaintiff did establish standing and default for summary judgment purposes.
  • The court held denial of the defendants’ motion to renew was proper.
  • The court held the lack of a CPLR 4313 hearing did not require reversal absent prejudice.
  • Critically, the court held that the referee’s computations for certain amounts (notably advances for taxes and insurance) were based on unidentified and unproduced business records, constituting inadmissible hearsay lacking probative value. Therefore, the referee’s report had to be rejected, confirmation denied, and the matter remitted for a new computation.

3. Analysis

3.1. Precedents Cited

A. Appellate review: the judgment brings up prior orders

  • CPLR 5501(a)(1) and Matter of Aho, 39 NY2d 241, 248: The court relied on these authorities to hold that an appeal from the judgment of foreclosure and sale “brings up for review” the issues raised by earlier interlocutory orders, even where appeals from those orders were dismissed because entry of judgment terminated the right to appeal directly from them.

B. Summary judgment in foreclosure: prima facie case, standing, and default

  • Avail 1, LLC v Singh, 239 AD3d 927, 928: Cited for the basic foreclosure summary-judgment elements (mortgage, unpaid note, and evidence of default), and for standing principles.
  • Deutsche Bank Natl. Trust Co. v Abdan, 131 AD3d 1001, 1002: Reinforced that production of the mortgage, note, and default evidence establishes a prima facie entitlement to summary judgment.
  • Wells Fargo Bank, N.A. v Arias, 121 AD3d 973, 973-974: Supplied the rule that when standing is placed in issue, the plaintiff bears the burden to prove standing to obtain relief.
  • Dyer Trust 2012-1 v Global World Realty, Inc., 140 AD3d 827, 828 and Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361-362: Cited for the central standing rule—standing is shown by being the holder or assignee of the note at commencement.
  • Wilmington Sav. Fund Socy., FSB v Racer, 217 AD3d 730, 732: Clarified the mechanics of proving standing: written assignment or physical delivery of an endorsed note prior to commencement.
  • Deutsche Bank Natl. Trust Co. v Pirozzi, 230 AD3d 736, 737; U.S. Bank Trust, N.A. v Smith, 217 AD3d 899, 900; and BNH Milf, LLC v Milford St. Props., LLC, 192 AD3d 960, 962: These cases supported the proposition that default may be established through an affidavit from a person with personal knowledge or other admissible evidence.

C. Issue preservation: hearsay objections raised for the first time on appeal

  • Bank of Am., N.A. v ABC Realty Holdings, Inc., 241 AD3d 615, 617; Bank of New York Mellon v Tedeschi, 240 AD3d 466, 468; and U.S. Bank N.A. v Sallie, 215 AD3d 714, 716: The court invoked these authorities to reject defendants’ attempt to newly characterize the plaintiff’s standing/default affidavits as hearsay on appeal. The decision underscores a recurring foreclosure-appellate theme: evidentiary objections must be timely raised in the trial court.

D. Renewal under CPLR 2221(e)

  • Hernandez v Harrison Cent. School Dist., 36 AD3d 665, 666: Used to support denial of renewal where the “new” letter was not actually new; it was already before the court on the prior motion.

E. Referee procedure: hearings and prejudice

  • U.S. Bank N.A. v Glasgow, 218 AD3d 717, 720 and Bank of Am., N.A. v Scher, 205 AD3d 989, 990: These cases framed the court’s holding that failure to hold a CPLR 4313 hearing is not reversible error absent prejudice, particularly where the defendant can submit evidence and objections to the Supreme Court on the motion to confirm.

F. Confirmation standard and the “unproduced business records” problem

  • Real Estate Mtge. Network, Inc. v Mason, 217 AD3d 796, 797-798: Provided both (i) the general confirmation standard (findings substantially supported by the record) and (ii) the key evidentiary limitation: computations based on unidentified and unproduced business records are inadmissible hearsay without probative value.
  • TLOA Mtge., LLC v 109-08 N. Blvd, LLC, 241 AD3d 963, 964-965: Reinforced and operationalized the same rule, and supported the remedy of rejecting the report and remitting for a new computation.
  • U.S. Bank N.A. v Jong Shin, 224 AD3d 933, 936: Cited as additional support for confirmation principles (substantial support, issue definition, credibility resolution).
  • Deutsche Bank Natl. Trust Co. v Geslani, 222 AD3d 835, 838: Supported the specific conclusion that amounts claimed (here, advances for taxes and insurance) cannot rest on hearsay derived from unproduced records.

3.2. Legal Reasoning

A. Liability stage: standing and default were adequately shown

The court applied well-settled foreclosure summary-judgment doctrine. The plaintiff met its standing burden by demonstrating physical possession of the note, endorsed in blank, at commencement. The court also found the plaintiff established default prima facie and that defendants failed to raise a triable issue. Attempts to attack affidavits as hearsay were deemed unpreserved because they were raised for the first time on appeal.

B. Renewal: no “new facts” and no change in law

Under CPLR 2221(e), renewal requires facts not offered previously that would change the prior determination, or a change in law. Because the defendants’ letter was already before the Supreme Court and no change in law was shown, renewal was properly denied.

C. Referee hearing: absence of prejudice defeats CPLR 4313 challenge

The court rejected the argument that reversal was required simply because the referee did not hold a hearing. The inquiry is functional: whether defendants were prejudiced. Here, defendants could challenge the report and submit evidence directly to the Supreme Court on the confirmation motion, so the lack of a hearing alone was not dispositive.

D. Amount-due stage: confirmation fails when the computation rests on unproduced records

The decision’s core rule is evidentiary: even where foreclosure liability is established, a judgment of foreclosure and sale cannot stand if the referee’s computation of sums owed relies on business records that are neither identified with specificity nor produced in admissible form.

The referee reported that information was obtained from the plaintiff’s “books and records,” but those materials were not shown to be annexed or otherwise produced and authenticated as part of the evidentiary record supporting the computation—particularly regarding advances for taxes and insurance. Under the Second Department’s line of cases, such unproduced, unidentified records render the calculation hearsay and non-probative.

Procedurally, the defendants used CPLR 4403 to seek rejection of the report. The Appellate Division agreed, rejected the report, denied confirmation, reversed the judgment, and remitted for a new report computing the amount due and subsequent proceedings culminating in an amended judgment.

3.3. Impact

  • Sharper evidentiary demands at the “amount due” phase: Plaintiffs who can win summary judgment on standing and default may still lose (or face remittal) if the amount-due proof is built on opaque references to “books and records” rather than produced, identifiable business records.
  • Focus on advances and escrow-type items: The opinion highlights advances for taxes and insurance as a recurring weak point; these line items often depend on servicer histories, invoices, disbursement ledgers, and escrow analyses that must be produced and properly supported.
  • Litigation strategy consequences: Defendants may concentrate objections on computation proof (where preservation is easier and prejudice may be clearer) even after losing on liability, while plaintiffs may respond by bolstering referee submissions with annexed payment histories, escrow records, tax bills, insurance invoices, and affidavits laying a business-record foundation.
  • Remedy is remittal, not dismissal: The plaintiff’s foreclosure claim survived; the defect was in proof of amounts due. This channels disputes into corrected computations and amended judgments rather than terminating foreclosure actions outright.

4. Complex Concepts Simplified

  • Standing (foreclosure): The plaintiff must show it had the legal right to sue when it filed—typically by being the holder of the note. Possession of a note “endorsed in blank” generally means whoever physically holds it can enforce it.
  • Order of reference / referee’s report: After liability is determined, a referee is often appointed to calculate the total amount owed (principal, interest, fees, advances). The referee submits a report.
  • CPLR 4313 hearing: A referee may conduct a hearing to take evidence, but a missing hearing does not automatically require reversal if the parties could present objections and proof to the court without prejudice.
  • CPLR 4403 (review of referee’s report): The court reviews the referee’s findings; parties may move to confirm or reject the report. Confirmation requires that findings be supported by the record.
  • Business records and hearsay: A “business record” can be admissible if properly identified and supported, typically through an affidavit explaining the record-keeping practices. If the calculation relies on records that are not produced (or are not clearly identified), the numbers are treated as hearsay and cannot support confirmation.
  • Renewal (CPLR 2221(e)): A do-over motion is not allowed just because a party wants another chance; it requires genuinely new facts or a relevant change in law.

5. Conclusion

Bank of N.Y. Mellon v Prestia reinforces a two-track foreclosure reality: a plaintiff may properly establish standing, default, and entitlement to an order of reference, yet still be denied a foreclosure judgment if the referee’s amount-due computation is not supported by produced, identifiable business records. The Second Department’s remedy—rejecting the report under CPLR 4403 and remitting for a new computation—signals that evidentiary rigor at the damages stage is not optional, particularly for advances and similar add-ons that require documentary substantiation.