CitiMortgage's foreclosure was on track—until a court decided otherwise. Here’s what every lender needs to double-check
Even when a borrower gives up the property in bankruptcy, poor documentation can still stall a foreclosure. That’s the message from a recent New York ruling.
On July 16, 2025, the Appellate Division, Second Department, partially reversed a lower court’s ruling in Citimortgage, Inc. v Erickson. The court upheld CitiMortgage’s legal right to foreclose but refused to confirm the referee’s report or grant a judgment of foreclosure and sale. The reason: the bank didn’t properly back up its numbers.
The case goes back to 2011, when CitiMortgage first tried to foreclose on a Suffolk County home owned by Gregory Erickson, also known as Gregory James Erickson. That case was voluntarily discontinued by the lender in December 2011.
Three years later, in 2014, Erickson filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Middle District of North Carolina. The case was later converted to Chapter 13. A year after filing, in June 2015, a final Chapter 13 plan was confirmed by the bankruptcy court. That plan included releasing—essentially surrendering—the property to CitiMortgage for liquidation.
CitiMortgage then launched a new foreclosure action on June 14, 2019. Erickson pushed back with a defense that the case was time-barred under the statute of limitations. He also tried to assert counterclaims. But in 2022, the trial court sided with CitiMortgage, finding that Erickson had already surrendered the property and was now judicially estopped—legally blocked—from taking a contrary position in state court. The Appellate Division agreed, noting that a confirmed bankruptcy plan binds both the borrower and the lender, and surrendering the property ends a borrower’s right to contest foreclosure.
Erickson later tried to reopen the issue by citing the Foreclosure Abuse Prevention Act (FAPA), which became law in New York at the end of 2022. He argued that the new law gave him a fresh chance to challenge the foreclosure. But the court rejected that too, ruling that FAPA didn’t override the doctrine of judicial estoppel.
Where CitiMortgage ran into trouble was not on legal grounds, but on paperwork. The lender moved to confirm a referee’s report to calculate how much was owed, but the court found that the numbers were based on business records that weren’t included in the record. Without those documents, the court said it couldn’t accept the payoff amount as valid.
As a result, the Appellate Division denied CitiMortgage’s motion to confirm the report and refused to grant a judgment of foreclosure and sale. The case was sent back to the trial court for a new report with proper documentation.
For mortgage professionals, especially those dealing with default servicing or legal enforcement, this case is a reminder that even when the borrower’s defenses don’t hold up, the process can still hit a wall if the numbers aren’t airtight. Foreclosure requires more than legal standing—it requires proof, on paper, of exactly what’s owed.
In short: if you’re heading to court, make sure your paperwork can stand on its own.
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