A botched affidavit and shaky recordkeeping from a prior servicer just cost Nationstar Mortgage a foreclosure case. Here's what brokers and lenders need to know to avoid the same pitfall
A recent ruling from New York’s Appellate Division could serve as a cautionary tale for mortgage professionals navigating legacy loans and servicing transitions. In a May 7, 2025 decision, the court reversed a foreclosure judgment granted to Nationstar Mortgage, LLC, finding that the evidence used to justify the foreclosure just didn’t hold up.
The case centered around a Brooklyn property that Nationstar moved to foreclose on back in 2015. At first, things seemed to go smoothly. In 2017, the trial court approved Nationstar’s unopposed motion for summary judgment against borrower Ian O. Lewis and appointed a referee to calculate how much Lewis owed.
Later, Nationstar asked the court to confirm the referee’s report and allow the property to be sold. Lewis opposed the motion and also filed a cross-motion to vacate parts of the 2017 order. Still, in October 2022, the lower court sided with Nationstar and entered an order and judgment of foreclosure and sale.
But the appeals court wasn’t convinced.
The problem? The referee’s findings relied heavily on an affidavit from a Nationstar employee who said she had personal knowledge of the amount owed—knowledge she claimed came from reviewing Nationstar’s business records. But the court noted that simply reviewing internal documents doesn’t equal firsthand knowledge. More importantly, the payment history used by the referee dated back to 2009, even though Nationstar didn’t acquire the loan until 2013.
That distinction mattered. The Appellate Division ruled that Nationstar failed to establish a proper foundation for the admission of payment records from before it acquired the note. The employee who submitted the affidavit didn’t show she had any familiarity with the original lender’s business practices or how those earlier records were maintained.
Without reliable support for the full payment history, the court concluded that the referee’s report wasn’t backed by sufficient evidence. It reversed the trial court’s judgment, denied Nationstar’s motion to confirm the referee’s findings, and effectively halted the foreclosure.
While the decision turned on procedural evidence rules, the message for mortgage professionals is straightforward. When servicing rights transfer, courts still expect clear and legally acceptable documentation. Affidavits must be based on direct knowledge or be supported by properly introduced business records—especially if those records come from a prior lender.
This decision, though still uncorrected and subject to revision before final publication, offers a practical reminder. In foreclosure litigation, especially involving loans that have changed hands, the strength of your case depends not just on what’s in the file, but on how—and by whom—it’s presented.
