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THE 2007 NOTICE OF DEFAULT IN THIS FORECLOSURE ACTION DID NOT ACCELERATE THE DEBT; THE INITIAL ACTION WAS DISMISSED FOR LACK OF STANDING AND DID NOT, THEREFORE, ACCELERATE THE DEBT (SECOND DEPT),

The Second Department, reversing Supreme Court, determined the 2007 notice of default in this foreclosure action did not accelerate the debt. Also, the initial action was dismissed for lack of standing and, therefore did not accelerate the debt.  Therefore the action should not have been dismissed as time-barred:

Supreme Court erred in denying the defendant’s motion to dismiss the complaint. The defendant established that the mortgage was not accelerated. The language in the 2007 notice of default did not serve to accelerate the loan, as it was nothing more than a letter discussing acceleration as a possible future event which does not constitute an exercise of the mortgage’s optional acceleration clause … . Moreover, since the 2008 foreclosure action was dismissed on the ground that the defendant lacked standing, the commencement of that action as purported acceleration was a nullity, and the statute of limitations did not begin to run at the time of the purported acceleration … . Accordingly, the Supreme Court should have granted the defendant’s motion pursuant to CPLR 3211(a)(1) to dismiss the complaint.  IPA Asset Mgt., LLC v Bank of N.Y. Mellon, 2022 NY Slip Op 01151, Second Dept 2-23-22

 

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THE AFFIDAVITS SUBMITTED TO PROVE THE BANK’S STANDING TO BRING THE FORECLOSURE ACTION WERE NOT ACCOMPANIED BY THE RELEVANT DOCUMENTS AND THEREFORE CONSTITUTED INADMISSIBLE HEARSAY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the affidavits purporting to demonstrate the bank’s standing to bring the foreclosure action were not accompanied by the relevant documents and therefore constituted inadmissible hearsay:

… [I]n order to establish standing, the plaintiff submitted affidavits from two contract management coordinators of the plaintiff’s loan servicer, Ocwen Loan Servicing, each of whom stated that the plaintiff was in possession of the note at the time the action was commenced. However, neither affiant identified any particular document reviewed that pertained to the issue of standing, nor did they attach to their respective affidavits any admissible document to show that the plaintiff possessed the note at the time of the commencement of this action. The affidavits also failed to show that either affiant possessed personal knowledge of whether the plaintiff possessed the note at the time of the commencement of the action. Under these circumstances, the affidavits constituted inadmissible hearsay and lacked any probative value (see CPLR 4518[a] …). Thus, the plaintiff failed to establish its standing to commence this action. Deutsche Bank Natl. Trust Co. v Idarecis, 2022 NY Slip Op 01144, Second Dept 2-23-22

 

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THE CONDITIONAL ORDER OF DISMISSAL OF THIS FORECLOSURE ACTION DID NOT MEET THE REQUIREMENTS OF CPLR 3216; THEREFORE THE ACTION SHOULD NOT HAVE BEEN DISMISSED AS ABANDONED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the plaintiff-bank’s motion to vacate the conditional order of dismissal in this foreclosure action should have been granted. The conditional order of dismissal did not meet the requirements of CPLR 3216 and therefore did not dismiss the action as abandoned:

… [T]he conditional order of dismissal “was defective in that it failed to state that the plaintiff’s failure to comply with the notice ‘will serve as a basis for a motion’ by the court to dismiss the action for failure to prosecute” … . Moreover, there was no indication that the plaintiff’s counsel was present at the status conference at which the Supreme Court issued the conditional order of dismissal, nor was there evidence that the conditional order of dismissal was ever properly served upon the plaintiff … . In addition, notwithstanding the statement in the conditional order of dismissal that “more than one year ha[d] elapsed since the joinder of issue,” there is no dispute that issue was not joined … .. Accordingly, the court should have granted the plaintiff’s motion to vacate the conditional order of dismissal, and to restore the action to the active calendar…. . Deutsche Bank Natl. Trust Co. v Beckford, 2022 NY Slip Op 01143, Second Dept 2-23-22

 

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THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304, INCLUDING THE “ONE ENVELOPE” RULE (SECOND DEPT).

The Second Department, reversing Supreme Court. determined the bank in this foreclosure action did not demonstrate strict compliance with the notice provisions of RPAPL 1304, including compliance with the “one envelope” rule:

… [T]he plaintiff failed to establish … that it strictly complied with the requirements of RPAPL 1304 … . Moreover, in support of their cross motion, the defendants … demonstrated, prima facie, that the plaintiff included additional material in the same envelope as the RPAPL 1304 notice, in violation of the separate mailing requirement of RPAPL 1304(2) … . US Bank N.A. v Kaplan, 2022 NY Slip Op 01201, Second Dept 2-23-22

 

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THE BANK FAILED TO SUBMIT THE BUSINESS RECORDS RELIED ON IN ITS AFFIDAVIT IN THIS FORECLOSURE ACTION RENDERING THE AFFIDAVIT INADMISSIBLE HEARSAY; SUPREME COURT’S DETERMINATION THE BANK HAD COMPLIED WITH THE NOTICE PROVISIONS OF RPAPL 1304 AND THE MORTGAGE WAS THE LAW OF THE CASE PRECLUDING RECONSIDERATION OF THE ISSUE PURSUANT TO DEFENDANTS’ CROSS MOTION (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the failure to identify and attach the documents demonstrating the defendants’ default in this foreclosure action rendered the bank’s affidavit inadmissible hearsay. The court noted that Supreme Court’s determination the bank had complied with the notice requirements of RPAL 1304 was the law of the case precluding reconsideration of the issue pursuant to defendants’ cross motion:

The plaintiff relied upon the affidavit of Richard L. Penno, a vice president of loan documentation for Wells Fargo Bank, N.A. (hereinafter Wells Fargo), the plaintiff’s loan servicer. Based upon his review of Wells Fargo’s books and records concerning the defendants’ loan, Penno attested to the defendants’ default in payment. However, Penno did not identify the records he relied upon in order to attest to the defendants’ default and did not attach them to his affidavit … . “While a witness may read into the record from the contents of a document which has been admitted into evidence, a witness’s description of a document not admitted into evidence is hearsay” … . Thus, Penno’s assertions as to the contents of Wells Fargo’s servicing records were inadmissible … . Contrary to the plaintiff’s contention, a review of records maintained in the normal course of business does not vest an affiant with personal knowledge … . …

… [C]ontrary to the defendants’ … contention, the Supreme Court properly denied that branch of their cross motion which was to dismiss the complaint insofar as asserted against them for failure to comply with RPAPL 1304 and the notice of default provision of the mortgage agreement. The plaintiff’s strict compliance with RPAPL 1304 and the notice of default provision of the mortgage agreement were both considered and decided in the plaintiff’s favor on its motion for summary judgment. Therefore, while it is true that a defense based on noncompliance with RPAPL 1304 may be raised at any time … , the doctrine of law of the case precluded the court from reconsidering those issues on the defendants’ cross motion … . U.S. Bank N.A. v Ramanababu, 2022 NY Slip Op 01199, Second Dept 2-23-22

 

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THE BANK’S PROOF OF COMPLIANCE WITH THE NOTICE PROVISIONS OF RPAPL 1304 IN THIS FORECLOSURE ACTION WAS DEFICIENT; THE FAILURE TO SUBMIT THE BUSINESS RECORDS REFERRED TO IN THE BANK’S AFFIDAVIT RENDERED THE AFFIDAVIT INADMISSIBLE HEARSAY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s proof of compliance with the notice requirements of RPAPL 1304 in this foreclosure action was deficient, and the failure to submit the business records referred to in the bank’s affidavit rendered the affidavit inadmissible hearsay:

In support of its motion for summary judgment, the plaintiff submitted the affidavit of Becky J. Layman, an officer of the plaintiff. Layman’s assertions that the plaintiff complied with the notice of default provision of the mortgage and that the plaintiff complied with the notice provision of RPAPL 1304 were insufficient, since she failed to provide proof of the actual mailings or attest to knowledge of the plaintiff’s mailing practices and procedures … . Layman’s affidavit was also insufficient to establish, prima facie, that the defendant defaulted under the note and mortgage, since her purported knowledge was based upon review of unidentified business records which were not attached to her affidavit … . Thus, her assertions regarding the defendant’s default, without the business records upon which she relied in making those assertions, constituted inadmissible hearsay … . U.S. Bank N.A. v Campbell, 2022 NY Slip Op 01198, Second Dept 2-23-22

 

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THE PURPORTED STIPULATION OF DISCONTINUANCE OF THE FORECLOSURE ACTION AND THE PURPORTED NOTICE OF DISCONTINUANCE WERE INVALID; SUPREME COURT SHOULD NOT HAVE DETERMINED THE ACCELERATION OF THE MORTGAGE DEBT HAD BEEN REVOKED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined both the purported stipulation of discontinuance and the purported notice of discontinuance were invalid. Therefore the judge should not have determined the acceleration of the mortgage debt had been revoked:

…Supreme Court erred in discontinuing the action based upon a purported stipulation of discontinuance, and then interceding on the plaintiff’s behalf to declare the acceleration of the loan revoked. The stipulation was clearly ineffective as it was only signed by the attorney for the plaintiff (see CPLR 3217[a][2] …). Further, to the extent that the stipulation was construed as a notice of discontinuance, it was equally ineffective to discontinue the action, as it was not served upon the appellant (see CPLR 3217[a][1] …). HSBC Bank USA, N.A. v Rini, 2022 NY Slip Op 01016, Second Dept 2-16-22

 

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THE BANK’S PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 IN THIS FORECLOSURE ACTION WAS INSUFFICIENT; THE BUSINESS RECORDS REFERRED TO IN THE AFFIDAVIT WERE NOT PRODUCED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court in this foreclosure action, determined the bank’s proof of compliance with the notice requirements of RPAPL 1304 was insufficient. The court noted that, under the facts, standing to contest the bank’s compliance with RPAPL 1304 was personal to each borrower, one borrower could not assert that defense on behalf of another borrower:

JPMorgan submitted an affidavit, entitled an “Affidavit of Mailing,” signed by James A. Ranaldi, an “Authorized Signer” employed by JPMorgan. Ranaldi, however, did not attest to personal knowledge of the actual mailings. Nor did he state that he had personal knowledge “of a standard office mailing procedure designed to ensure that items are properly addressed and mailed” … . Although Ranaldi asserted, based upon his review of business records associated with the subject loan, that “a ninety-day (90) pre-foreclosure notice dated 12/04/2009 was sent by regular first class and certified mail under the exclusive care and custody of the United States Postal Service addressed to [the defendant at the subject property],” “it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted”… . The records attached to Ranaldi’s affidavit provided evidence that the 90-day notice was sent to the defendant by certified mail. But none of the documents, considered individually or together, including the copies of the notice letters themselves, provided any information as to whether the 90-day notice was sent to the defendant by regular first-class mail … . Without business records proving the matter asserted, Ranaldi’s “unsubstantiated and conclusory” statement, by itself, was insufficient to establish that the RPAPL 1304 notice was mailed to the defendant by first-class mail … . Wilmington Sav. Fund Socy., FSB v Kutch, 2022 NY Slip Op 01066, Second Dept 2-16-22

 

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THE AFFIDAVIT UPON WHICH THE REFEREE’S REPORT WAS BASED DID NOT LAY A PROPER FOUNDATION FOR THE ASSERTIONS MADE BY THE AFFIANT AND THE CALCULATIONS IN THE AFFIDAVIT WERE BASED UPON BUSINESS RECORDS WHICH WERE NOT PRODUCED, RENDERING THE INFORMATION INADMISSIBLE HEARSAY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report should not have been confirmed. The affidavit submitted by the mortgage servicer was insufficient and the records upon which the calculations in the affidavit were based were not produced:

… [T]he referee’s report was not substantially supported by the record. The report was based in significant part on the affidavit of Elizabeth A. Ostermann, a vice president for Carrington Mortgage Services, LLC (hereinafter Carrington), the purported “servicer and attorney-in-fact” for the plaintiff. However, Ostermann did not set forth when Carrington began servicing the loan and did not provide a power of attorney appointing it as attorney-in-fact … . Moreover, Ostermann did not state that “she was personally familiar with the record-keeping practices and procedures” at Carrington … .

Furthermore, computations based on the “review of unidentified and unproduced business records . . . constitute[ ] inadmissible hearsay and lack[ ] probative value” … . Here, the plaintiff did not submit the business records upon which Ostermann purportedly relied in computing the total amount due on the mortgage. Trust v Campbell, 2022 NY Slip Op 00845, Second Dept 2-9-22

Similar issue and result in HSBC Bank USA, N.A. v Sharon, 2022 NY Slip Op 00852, Second Dept 2-9-22

 

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SUPREME COURT SHOULD NOT HAVE DISMISSED THE FORECLOSURE ACTION AFTER TRIAL ON THE GROUND PLAINTIFF DID NOT LAY A PROPER FOUNDATION FOR THE ADMISSION OF THE DOCUMENTS REQUIRED TO MAKE OUT A PRIMA FACIE CASE; COMPLAINT REINSTATED AND JUDGMENT AWARDED TO PLAINTIFF (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff in this foreclosure action properly laid a proper foundation at trial for the admission of documents making out a prima facie case. Therefore the action should not have been dismissed and a judgment in favor of plaintiff should have been entered. At trial plaintiff established standing to bring the action, the defendant’s default, and compliance with the notice provisions of RPAPL 1304. Bank of Am., N.A. v Bloom, 2022 NY Slip Op 00839, Second Dept 2-9-22

 

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