William, Moose et al.
Thanx for the comprehensive replies. Actually, it is a close associate who is in this situation, not me. But you are right---vacating a default judgment in NY is a tough row to hoe.
I am of the contrary opinion that the notes were intentionally destroyed. I spoke recently with an atty for a title company and she very unabashedly admitted that they scan all the docs in, send them on there way, and then destroy the originals.
Moreover, for servicing/foreclosure purposes, the notes were indorsed in blank. In order to keep the custodian BK remote, they can't have original promissory notes in their custody, indorsed in blank. If a custodian or other deal principal got into financial difficulty, creditors could seize the notes indorsed in blank and in the custody and possession of the principal. Indeed, if you look at any Fannie Mae deal, under Risk Factors, this is clearly stated as a Risk that prospective investors need to consider. Thus the intentional destruction of the notes. And I do think that what purport to be original promissory notes retrieved from custodial vaults, are actually machine reproductions with sophisticated color printer and signature machines. These can be detected with a minimal amount of physical forensic examination. (Yellow Dots analysis for example.)
Now, with respect to the other issues that you cite, let me posit this. I am betting that the Plaintiff does not want either of these cases appealed, because regardless of the probability of success, an appeal would serve to educate the appellate justices and their law clerks about the fraud, and how it is being perpetrated. The inside baseball, if you will.
And NY has a Civil Action Settlement Program (CASP), whereby a judicial arbitrator calls in the parties prior to the appeal being submitted, and tries to get them to settle so as to avoid the appeal. I'm betting that BAC would offer up some money to settle, stip to discontinue, and seal the records. Just my gut feeling on this one.
Let me also state that when we put together this guy's motion papers, we submitted a cover letter stating that any lost note affidavit would have to be double bonded, per NYUCC 3-804. And also that any putative original note would be subjected to forensic analysis. No affidavit of lost note or bonding was forthcoming. Neither was any putative original note.
Outside of NYC, the upstate judges rarely get it. They will ask the defendant if he signed the note to the Plaintiff, and did he stop making payments. This is an untoward line of questioning for a judge, in my opinion. He would never ask someone accused of murder if the accused actually committed the murder. But more often than not, the defendant answers in the affirmative, and as far as the judge is concerned, game over.
I now think that the way to deal with this at this stage is to make a formal demand for the tender of the original promissory notes marked by the Plaintiff "PAID." Since they cannot do this, an action may now lie for wrongful retention of the note, inasmuch as the plaintiff has obtained the judgment and been paid by Fannie according to the judicially confirmed statement of sale by the Referee. And in NY, "a mortgagee is only entitled to be made whole once." See Whitestone Savings and Loan Assn. v. Allstate Insur. Co., 28 NY2d 332 (1971).
In such an action it is possible to seek damages amounting to twice the value of the note, plus punitives if available, and a jury trial either in state or Federal court. The Federal courts seem to get this, and the U.S. Trustee in the BK court here has been pointing all this fraud out to the BK court, and is seeking sanctions against GMAC, BofA and the Steven J. Baum law firm for frauds upon the court. So bringing such an action in Federal court might be the best bet, strategy wise. It's nice to cite in District Court non-appealed decisions from the Federal BK judge down the hall.
And this gets around the collateral estoppel and res judicata problems, because the wrongful retention of the note post judgment was not available for litigation prior to judgment.
P.S. As an aside, I have been litigating fairly succesfully as a pro se litigant since 1992, and have made some rather good money at it (as a principal).