Foreclosure – New York Appellate Digest

HERE THE BORROWER DIED AND DEFENDANT INHERITED THE PROPERTY SUBJECT TO THE BORROWER’S MORTGAGE; THE BANK’S FAILURE TO COMPLY WITH THE NOTICE OF FORECLOSURE REQUIRMENTS IN RPAPL 1304 IS A DEFENSE WHICH IS PERSONAL TO THE BORROWER; IT IS NOT AVAILABLE TO THE DEFENDANT, A “STRANGER TO THE NOTE AND MORTGAGE” (FIRST DEPT).

The First Department, reversing Supreme Court, determined the bank’s failure to comply with RPAP 1304 (notice of foreclosure) is a personal defense to the borrower and does not apply to a stranger to the note and mortgage. Here the borrower died and defendant inherited the property:

Supreme Court should have granted plaintiff’s motion for summary judgment and an order of reference because defendant lacks standing to raise a defense based on plaintiff’s failure to comply with RPAPL 1304. Plaintiff does not dispute that the loan was a home loan subject to the statute and that, therefore, Wells Fargo needed to comply with it as a condition precedent to bringing this action. However, “[n]oncompliance with RPAPL 1304 . . . in a mortgage agreement [is a] personal defense[] that may not be raised by parties who are strangers to the subject note and mortgage” … . Here, once plaintiff discontinued the action as against the father’s estate, the case continued against defendant solely in his individual capacity as current owner of the property. Even though defendant remains an obligor in the sense that he acquired the property subject to his father’s mortgage, he is no different from any other transferee of property subject to a mortgage, and thus he is a stranger to the note and mortgage instruments and lacks standing to raise an RPAPL 1304 defense, which is personal to the borrower … . Wilmington Sav. Fund Socy. v Lopez, 2026 NY Slip Op 06037, First Dept 10-15-26

Practice Point: A bank’s failure to comply with the notice of foreclosure requirements in RPAPL 1304 is a defense which is personal to the borrower. Here the defense could not be raised by defendant who inherited the property from the borrower. Defendant was a “stranger to the note and mortgage.”

October 15, 2026

Civil Procedure, Foreclosure

IN A FORECLOSURE PROCEEDING, IT IS AN AFFIRMATIVE DEFENSE THAT PLAINTIFF BANK FAILED TO COMPLY WITH 24 CFR 203.604 BY HOLDING A MEETING BEFORE ACCELERATING THE DEBT (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined the bank’s motion for summary judgment should not have been granted because plaintiff did not demonstrate compliance with 24 CFR 203.604 which requires a meeting before acceleration of the debt:

… [T]he plaintiff moved, among other things, for summary judgment on the complaint insofar as asserted against the defendant, to strike the defendant’s answer, and for an order of reference. In opposition, the defendant argued that the plaintiff was not entitled to accelerate the debt because it failed to comply with, inter alia, 24 CFR 203.604, a HUD regulation requiring a meeting prior to acceleration. * * *

… [T]he affirmative defense alleging a failure to comply with 24 CFR 203.604 was pleaded with the particularity required by CPLR 3015(a). Here, the plaintiff failed to establish that it complied with that regulation or that it was exempt from complying with it … . Accordingly, the court should have denied those branches of the plaintiff’s motion which were for summary judgment on the complaint … . U.S. Bank N.A. v Ali, 2026 NY Slip Op 05823, Second Dept 10-7-26

Practice Point: Here the bank’s failure to demonstrate it complied with 24 CFR 203.604 by holding a meeting before accelerating the debt precluded summary judgment in this foreclosure action.

October 7, 2026

Civil Procedure, Foreclosure

PLAINTIFF DID NOT DEMONSTRATE THE PROCESS SERVER ACTED WITH “DUE DILIGENCE” BEFORE RESORTING TO “NAIL AND MAIL” SERVICE; THE COURT THEREFORE DID NOT ACQUIRE PERSONAL JURISDICTION OVER DEFENDANT; CRITERIA EXPLAINED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff did not demonstrate the process server acted with “due diligence” before resorting to “nail and mail” service:

“Service of process upon a natural person must be made in strict compliance with the statutory methods of service set forth in CPLR 308” … . “Service pursuant to CPLR 308(4) may be used only where personal service under CPLR 308(1) and (2) cannot be made with due diligence” … . “To satisfy the ‘due diligence’ requirement, the plaintiff must demonstrate that the process server made genuine inquiries about the defendant’s whereabouts and place of employment” … . “The failure to serve process in an action leaves the court without personal jurisdiction over the defendant, and all subsequent proceedings are thereby rendered null and void” … .

Here, the plaintiff failed to demonstrate that the process server acted with due diligence before relying on affix and mail service pursuant to CPLR 308(4) … . The process server resorted to service pursuant to CPLR 308(4) after only twice attempting personal service at the defendant’s residence during weekday hours when it could reasonably have been expected that the defendant was either working or in transit to or from work … . Moreover, there was no evidence that the process server made any genuine inquiries about the defendant’s whereabouts and place of business … . Citibank, N.A. v Sagastume, 2026 NY Slip Op 05765, Second Dept 10-7-26

Practice Point: Consult this decision for a clear explanation of the criteria for the exercise of due diligence by a process server. Here the process server made no inquiries about the defendant’s whereabouts or place of business before resorting to “nail and mail.”

October 7, 2026

Civil Procedure, Foreclosure, Trusts and Estates

THE DEATH OF A DEFENDANT IN THIS FORECLOSURE PROCEEDING AFFECTED THE MERITS OF THE ACTION; THEREFORE THE DEATH TRIGGERED A STAY OF THE PROCEEDINGS PENDING SUBSTITUTION OF A REPRESENTATIVE; HERE ALL THE DETERMINATIONS OF SUPREME COURT MADE AFTER DEFENDANT’S DEATH WERE A NULLITY (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined the death of a defendant affected the merits of the action triggering a stay of all proceedings. Therefore the determinations made by Supreme Court after defendant’s death were a nullity:

“Generally, the death of a party divests a court of jurisdiction to act, and automatically stays proceedings in the action pending the substitution of a personal representative for the decedent” … . “Any determination rendered without such a substitution is ordinarily deemed a nullity” … . However, “if a party’s death does not affect the merits of a case, there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution” … . “A judgment of foreclosure and sale entered against a defendant is final as to all questions at issue between the parties, and concludes all matters of defense which were or might have been litigated in the foreclosure action” … . However, “[a] judgment of foreclosure and sale does not divest the mortgagor of its title and interest in the property until the sale is actually conducted” … .

Here, the decedent answered the complaint and was entitled to service of all papers in the action, including any motions to extend the time in which to conduct the foreclosure sale and any notice of sale (see CPLR 2103 …). … [T]he decedent’s death did affect the merits of this action and triggered a stay of all proceedings in the action pending substitution of a legal representative … . Any determinations made by the Supreme Court after the decedent’s death were a nullity, including the amended order and judgment of foreclosure and sale and the orders appealed from … . Real Estate Mtge. Network, Inc. v Perez, 2026 NY Slip Op 05562, Second Dept 9-30-26

Practice Point: Where a defendant’s death affects the merits of the action, the action is stayed pending substitution of a representative.

Practice Point: All rulings made while the action was stayed were a nullity.

Practice Point: A judgment of foreclosure and sale does not divest a mortgagor of title to and interest in the property until the sale is conducted.

September 30, 2026

Civil Procedure, Evidence, Foreclosure

THE EVIDENCE PRESENTED BY DEFENDANT WAS NOT SUFFICIENT TO REBUT THE PRIMA FACIE PROOF OF PROPER SERVICE PRESENTED IN THE PROCESS SERVER’S AFFIDAVIT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s affidavit was not sufficient to rebut the prima facie demonstration of proper service in the process server’s affidavit:

… [T]he affidavit of service constituted prima facie evidence of valid service pursuant to CPLR 308(1) … . The process server alleged therein that on July 24, 2010, at 8:50 a.m., at the premises, he served the summons and complaint and RPAPL 1303 notice on the defendant by delivery to the defendant personally.

… [T]he defendant failed to rebut the presumption of proper service established by the affidavit of service. In her affidavit submitted in support of the motion, the defendant generally denied receipt of service but failed to specifically address the alleged service at the premises on July 24, 2010 … , or aver that she did not meet the description included in the affidavit of service … . The defendant further provided a letter from the New York City Police Department, Human Resources Division. Although the defendant averred that she was at work at the time she allegedly was served, the evidence submitted failed to establish that she was not at the premises at the time of service … . Rather, the letter merely established that she was employed as a “Police Comm Tech” from July 20, 1987, to January 26, 2018, and that she worked 35 hours per week. Wilmington Sav. Fund Socy., FSB v Bryant, 2026 NY Slip Op 05570, Second Dept 9-30-26

Practice Point: Consult this decision for insight into the nature of the evidence necessary to rebut the prima facie proof of proper service presented in a process server’s affidavit. Here, defendant failed to rebut the presumption of proper service.

September 30, 2026

Civil Procedure, Foreclosure

HERE THE FORECLOSURE SALE TOOK PLACE ABOUT AN HOUR BEFORE DEFENDANTS CLOSED WITH ANOTHER BUYER; THE FORECLOSURE SALE EXTINGUISHED DEFENDANTS’ RIGHT TO REDEEM THE MORTGAGE; THE SUCCESSFUL BIDDER AT THE FORECLOSURE SALE THEREFORE PREVAILED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the foreclosure sale to the successful bidder, Pekich, took place before the purported sale of the same property by defendants to Ore on the same day. Therefore defendants’ right to redeem the property was extinguished by the foreclosure sale:

“‘A mortgagor or other owner of the equity of redemption of a property subject to a judgment of foreclosure and sale may redeem the mortgage at any time prior to the foreclosure sale'” … . However, “[t]he right to redeem is extinguished as a matter of law upon the foreclosure sale, whether or not the deed has been delivered, and once the right to redeem is lost, it cannot be revived, even by court order” … .

Here, the record demonstrates that the foreclosure sale of the property at which Pekich was the successful bidder concluded at 3:15 p.m. on June 21, 2024, and that the payoff sum was wired to the plaintiff during Ore and the [defendants’] closing more than one hour later, at 4:23 p.m. on June 21, 2024. Under these circumstances, Pekich became the equitable owner of the property upon the completion of the foreclosure sale, and any right to redeem the mortgage had already been extinguished by the time Ore and the [defendants] purported to close on the property … . JPMorgan Chase Bank, N.A. v Gezlev, 2026 NY Slip Op 05387, Second Dept 9-23-26

Practice Point: A foreclosure sale to a successful bidder extinguishes a mortgagor’s right to redeem the mortgage. Here the foreclosure sale took place one hour before defendants attempted to redeem the mortgage with proceeds from another purported sale of the property. The successful bidder prevailed.

September 23, 2026

Civil Procedure, Evidence, Foreclosure

IN THIS FORECLOSURE ACTION DEFENDANT’S MOTION TO VACATE THE NOTE OF ISSUE SHOULD HAVE BEEN DENIED; THE MOTION WAS UNTIMELY AND DID NOT DEMONSTRATE ANY UNANTICIPATED CIRCUMSTANCES SINCE THE FILING OF THE NOTE OF ISSUE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion to vacate the note of issue in this foreclosure action should have been dismissed as untimely:

… [S]upreme Court also should have denied the defendant’s … motion pursuant to CPLR 5015(a)(3) to vacate the note of issue filed by the plaintiff. A motion to vacate a note of issue is governed by 22 NYCRR 202.21, pursuant to which any party to an action may, within 20 days of service of the note of issue and certificate of readiness, move to vacate the note of issue upon an affidavit demonstrating that the case is not ready for trial … . Where a party’s motion to vacate a note of issue is timely, “the party is ‘required only to demonstrate why the case [is] not ready for trial'” … . However, where the motion is not timely, the party seeking relief must meet the “‘more difficult standard'” of 22 NYCRR 202.21(d) which “‘requires the movant to demonstrate unusual or unanticipated circumstances and substantial prejudice'” … .

Here, the defendant’s motion to vacate the note of issue was untimely as it was made … more than 20 days after the note of issue was filed … . Moreover, the defendant failed to demonstrate the existence of unusual or unanticipated circumstances since the filing of the note of issue warranting its vacatur … . Federal Natl. Mtge. Assn. v Cassis, 2026 NY Slip Op 05381, Second Dept 9-23-26

Practice Point: Where a motion to vacate the note of issue is made more than 20 days after the note of issue was filed it must demonstrate “the existence of unusual or unanticipated circumstances since the filing of the note of issue warranting its vacatur.” If the motion to vacate is timely made it must demonstrate only that the case is not ready for trial.

September 23, 2026

Civil Procedure, Foreclosure

DEFENDANTS’ PARTICIPATION IN FORECLOSURE SETTLEMENT CONFERENCES DID NOT CONSTITUTE AN “APPEARANCE” IN THE FORECLOSURE ACTION; THEREFORE DEFENDANTS COULD MOVE TO DISMISS THE ACTION AS ABANDONED WHERE PLAINTIFF FAILED TO TAKE A TIMELY DEFAULT JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendants in this foreclosure action did not waive their right to seek dismissal pursuant to CPLR 3215(c) by participating in settlement conferences. Pursuant to CPLR 3215(c) a defendant who has not appeared in an action may move to dismiss the action as abandoned where plaintiff has not obtained a default judgment within six years:

… [T]he defendants did not waive their right to seek dismissal pursuant to CPLR 3215(c). A defendant may waive the right to seek dismissal pursuant to CPLR 3215(c) by serving an answer or taking “any other steps which may be viewed as a formal or informal appearance” … . Here, the defendants did not serve an answer or participate in the action on the merits prior to cross-moving in July 2018, inter alia, pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against them as abandoned … . The defendants’ participation in settlement conferences pursuant to CPLR 3408 “did not demonstrate a clear intent to participate in the lawsuit on the merits” and thus, did not constitute a formal or informal appearance in the action … . Wilmington Sav. Fund Socy., FSB v Dresdner, 2026 NY Slip Op 05350, Second Dept 9-16-26

Practice Point: Participation in foreclosure settlement conferences does not constitute an “appearance” in a foreclosure action.

September 16, 2026

Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

HERE PLAINTIFF BANK FAILED TO PROVE THAT THE RPAPL 1304 NOTICE INCLUDED A LIST OF AT LEAST FIVE HOUSING COUNSELING AGENCIES IN THE REGION WHERE DEFENDANT LIVED; FAILURE TO DEMONSTRATE STRICT COMPLIANCE WITH THE RPAPL 1304 NOTICE REQUIREMENTS REQUIRED DENIAL OF THE BANK’S MOTION FOR SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s failure to strictly comply with the content requirements of the RPAPL 1304 notice of foreclosure precluded summary judgment:

… [I]n support of its motion … for summary judgment on the complaint, the plaintiff submitted … an affidavit of Shae Smith, a vice president of loan documentation for the plaintiff, who averred therein that a 90-day notice was mailed to the defendant on April 14, 2010. Smith annexed to the affidavit a copy of the notice, which included a list of 17 “HUD Approved Housing Counseling Agencies.” However, the plaintiff failed to establish, prima facie, that, of the 17 agencies listed in the RPAPL 1304 notice to the defendant, at least 5 of those agencies served the region where the defendant resided … . Contrary to the plaintiff’s contention, the failure to provide a list of five housing counseling agencies as required by the statute is not a defect that may be disregarded pursuant to CPLR 2001 … .

Since the plaintiff failed to establish its strict compliance with RPAPL 1304, the Supreme Court should have denied those branches of the plaintiff’s motion which were for summary judgment on the complaint and for an order of reference without regard to the sufficiency of the defendant’s opposition papers … . Wells Fargo Bank, N.A. v Curtis, 2026 NY Slip Op 05348, Second Dept 9-16-26

Practice Point: Proof of strict compliance with the content-requirements of an RPAPL 1304 notice of foreclosure is a prerequisite for summary judgment.

September 16, 2026

Civil Procedure, Foreclosure, Judges

PLAINTIFF BANK’S FAILURE TO MOVE FOR A JUDGMENT OF FORECLOSURE AND SALE AS DIRECTED IN A 2017 ORDER WAS NOT SUFFICIENT GROUNDS FOR THE COURT, SUA SPONTE, TO DISMISS THE COMPLAINT (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff bank’s failure to move for a judgment of foreclosure and sale as directed by a 2017 order was not sufficient grounds for the court, sua sponte, to dismiss the complaint:

“‘A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal'” … . Here, the plaintiff’s failure to move for a judgment of foreclosure and sale as directed by the March 2017 order was not a sufficient ground upon which to, sua sponte, direct dismissal of the complaint … . Accordingly, the Supreme Court should have granted those branches of the plaintiff’s motion which were to vacate the August 2017 order and to restore the action to the active calendar. U.S. Bank, N.A. v Morrison, 2026 NY Slip Op 05346, Second Dept 9-16-26

Practice Point: Appellate courts don’t like sua sponte dismissals of complaints.

September 16, 2026

IN A FORECLOSURE PROCEEDING, IT IS AN AFFIRMATIVE DEFENSE THAT PLAINTIFF BANK FAILED TO COMPLY WITH 24 CFR 203.604 BY HOLDING A MEETING BEFORE ACCELERATING THE DEBT (SECOND DEPT).

PLAINTIFF DID NOT DEMONSTRATE THE PROCESS SERVER ACTED WITH “DUE DILIGENCE” BEFORE RESORTING TO “NAIL AND MAIL” SERVICE; THE COURT THEREFORE DID NOT ACQUIRE PERSONAL JURISDICTION OVER DEFENDANT; CRITERIA EXPLAINED (SECOND DEPT).

THE DEATH OF A DEFENDANT IN THIS FORECLOSURE PROCEEDING AFFECTED THE MERITS OF THE ACTION; THEREFORE THE DEATH TRIGGERED A STAY OF THE PROCEEDINGS PENDING SUBSTITUTION OF A REPRESENTATIVE; HERE ALL THE DETERMINATIONS OF SUPREME COURT MADE AFTER DEFENDANT’S DEATH WERE A NULLITY (SECOND DEPT).

THE EVIDENCE PRESENTED BY DEFENDANT WAS NOT SUFFICIENT TO REBUT THE PRIMA FACIE PROOF OF PROPER SERVICE PRESENTED IN THE PROCESS SERVER’S AFFIDAVIT (SECOND DEPT).

HERE THE FORECLOSURE SALE TOOK PLACE ABOUT AN HOUR BEFORE DEFENDANTS CLOSED WITH ANOTHER BUYER; THE FORECLOSURE SALE EXTINGUISHED DEFENDANTS’ RIGHT TO REDEEM THE MORTGAGE; THE SUCCESSFUL BIDDER AT THE FORECLOSURE SALE THEREFORE PREVAILED (SECOND DEPT).

IN THIS FORECLOSURE ACTION DEFENDANT’S MOTION TO VACATE THE NOTE OF ISSUE SHOULD HAVE BEEN DENIED; THE MOTION WAS UNTIMELY AND DID NOT DEMONSTRATE ANY UNANTICIPATED CIRCUMSTANCES SINCE THE FILING OF THE NOTE OF ISSUE (SECOND DEPT).

DEFENDANTS’ PARTICIPATION IN FORECLOSURE SETTLEMENT CONFERENCES DID NOT CONSTITUTE AN “APPEARANCE” IN THE FORECLOSURE ACTION; THEREFORE DEFENDANTS COULD MOVE TO DISMISS THE ACTION AS ABANDONED WHERE PLAINTIFF FAILED TO TAKE A TIMELY DEFAULT JUDGMENT (SECOND DEPT).

PLAINTIFF BANK’S FAILURE TO MOVE FOR A JUDGMENT OF FORECLOSURE AND SALE AS DIRECTED IN A 2017 ORDER WAS NOT SUFFICIENT GROUNDS FOR THE COURT, SUA SPONTE, TO DISMISS THE COMPLAINT (SECOND DEPT).

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