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THE AFFIDAVIT SUPPORTING THE ADMISSIBILITY OF THE BUSINESS RECORDS OFFERED BY THE BANK IN THIS FORECLOSURE PROCEEDING DID NOT LAY A SUFFICIENT EVIDENTIARY FOUNDATION FOR THE RECORDS, RENDERING THE AFFIDAVIT INADMISSIBLE HEARSAY (SECOND DEPT).

The Second Department, reversing Supreme Court, determine the evidentiary foundation for the business records submitted by plaintiff bank (JPMorgan) in this foreclosure action was inadequate:

JPMorgan submitted, among other things, the affidavit of Nathan Abelin, a document management specialist for FNMA’s loan servicer, Seturus, Inc. (hereinafter Seturus), who, based upon his review of business records, attested to the defendant’s default in payment, JPMorgan’s standing to commence the action, and JPMorgan’s compliance with RPAPL 1304. Although Abelin averred that he was personally familiar with Seturus’s record-keeping practices and procedures, the business records he relied upon and attached to the affidavit were created by JPMorgan and another entity. Abelin failed to lay a proper foundation for these records because he did not aver either that he had personal knowledge of those entities’ business practices and procedures, or that the records “were incorporated into [Seturus’s] own records and routinely relied upon by [Seturus] in its own business”… . Accordingly, Abelin’s affidavit constituted inadmissible hearsay and lacked probative value … . Federal Natl. Mtge. Assn. v Allanah, 2021 NY Slip Op 07269, Second Dept 12-22-21

 

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IN A FORECLOSURE PROCEEDING, THE REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304 NOTICE MUST BE SENT TO THE BORROWER IN A SEPARATE ENVELOPE; HERE OTHER NOTICES WERE INCLUDED IN THE ENVELOPE ALONG WITH THE RPAPL 1304 NOTICE; DEFENDANT’S SUMMARY JUDGMENT MOTION WAS PROPERLY GRANTED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Duffy, determined, in a foreclosure action, the requirement that the RPAPL 1304 notice be sent to the borrower “in a separate envelope from any other mailing or notice” must be strictly complied. Because other notices were included in the same envelope, the defendant’s motion for summary judgment was properly granted:

… [T]he plaintiff acknowledged that the envelope that it sent to the defendants, which contained the requisite notice under RPAPL 1304, also included other information in two notices pertaining to the rights of a debtor in bankruptcy and in military service. Since the plaintiff failed to establish, prima facie, that it strictly complied with the requirements of RPAPL 1304, the Supreme Court properly denied those branches of its motion which were for summary judgment … . … [O]n his cross motion, [defendant] established his … entitlement to judgment as a matter of law dismissing the complaint … by showing that the plaintiff failed to comply with RPAPL 1304 when it sent additional material in the same envelope as the requisite notice under RPAPL 1304. Bank of Am., N.A. v Kessler, 2021 NY Slip Op 06979, Second Dept 12-15-21

 

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THE COMPUTATIONS IN THE REFEREE’S REPORT IN THIS FORECLOSURE ACTION WERE BASED UPON BUSINESS RECORDS WHICH WERE NOT PRODUCED; THE REPORT SHOULD NOT HAVE BEEN CONFIRMED (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined the referee’s report should not have been confirmed because computations were based on business records which were not produced:

The Supreme Court should have denied the plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale because the referee’s computations as to escrow disbursements and advancements and property inspection fees were premised upon unproduced business records … . JPMorgan Chase Bank, N.A. v Bracco, 2021 NY Slip Op 06839, Second Dept 12-8-21

 

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A CROSS-MOTION TO DISMISS THE COMPLAINT PURSUANT TO CPLR 3215 (C) IS NOT AN APPEARANCE AND DOES NOT WAIVE THE LACK-OF-JURISDICTION DEFENSE; INFANT DEFENDANT IN THIS FORECLOSURE ACTION WAS NOT SERVED IN ACCORDANCE WITH CPLR 309; THE COMPLAINT SHOULD HAVE BEEN DISMISSED FOR LACK OF PERSONAL JURISDICTION (SECOND DEPT)

The Second Department, reversing Supreme Court, determined the infant defendant’s (A.M.’s) cross-motion to dismiss the foreclosure complaint for lack of personal jurisdiction should have been granted:

The defendant James McGown purchased the subject property on January 25, 2006. On March 15, 2007, he executed a mortgage encumbering the subject property in favor of Mortgage Electronic Registration Systems, Inc. (… MERS) … . MERS subsequently assigned the mortgage to the plaintiff. McGown failed to make a payment due under the terms of the mortgage … . … McGown executed a deed purportedly conveying the subject property to his daughter, the infant A.M., who at the time was less than one year old. * * *

… A.M. did not waive the defense of personal jurisdiction by cross-moving to dismiss the complaint pursuant to CPLR 3215(c). “‘A defendant may waive the issue of lack of personal jurisdiction by appearing in an action, either formally or informally, without raising the defense of lack of personal jurisdiction in an answer or pre-answer motion to dismiss'” … . However, certain types of limited involvement in an action by a defendant do not waive jurisdictional defenses, including “cross-moving to dismiss the complaint pursuant to CPLR 3215(c), as such a motion by a defendant ‘does not constitute an appearance in the action'” … . …

… [T]he process server attested that he served A.M. pursuant to CPLR 308(2) by delivering a copy of the summons and complaint to the “housekeeper” at A.M.’s dwelling place and then completing the requisite mailing. … [A]lthough McGown was served individually, he was not served … as an individual and representative of A.M. … . Since neither of these methods of service complied with the requirements of CPLR 309, the present action was jurisdictionally defective as asserted against A.M. US Bank N.A. v McGown, 2021 NY Slip Op 06879, Second Dept 12-8-21

 

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WHERE A FORECLOSURE ACTION IS TERMINATED BY A STIPULATION OF DISCONTINUANCE WITH PREJUDICE, THE STIPULATION CANNOT BE VACATED BY A MOTION, A PLENARY ACTION MUST BE BROUGHT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff bank’s motion to vacate the stipulation terminating the foreclosure action should not have been granted:

The Supreme Court improperly granted Deutsche Bank’s motion to vacate the stipulations. The mortgage foreclosure action was terminated by the stipulation of discontinuance with prejudice and Deutsche Bank could only vacate that stipulation by commencing a plenary action … . Deutsche Bank Natl. Trust Co. v Goltz, 2021 NY Slip Op 06671, Second Dept 12-1-21

 

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IN THIS FORECLOSURE ACTION, THE BANK’S PROOF OF MAILING THE RPAPL 1304 NOTICE WAS INSUFFICIENT (SECOND DEPT). ​

The Second Department, reversing Supreme Court in this foreclosure action, determined the bank’s proof that the RPAPL 1304 notice was properly mialed to the defendant was insufficient:

… [A]lthough Gonzales [an employee of plaintiff Wilmington’s loan servicer] stated in her affidavit that RPAPL 1304 notices were mailed by certified and first-class mail, and attached copies of those notices, Wilmington failed to attach any documents showing that the mailings actually happened … . Further, Gonzales did not aver that she had personal knowledge of the purported mailings, and did not describe any standard office procedure designed to ensure that notices are properly addressed and mailed … . Accordingly, Wilmington failed to establish, prima facie, compliance with RPAPL 1304 … . Wilmington Sav. Fund Socy., FSB v Novis, 2021 NY Slip Op 06720, Second Dept 12-1-21

 

WHEN THE BALANCES OF FIRST MORTGAGES ARE INCREASED WITH SECOND MORTGAGE LOANS AND A CONSOLIDATION, EXTENSION, AND MODIFICATION AGREEMENT (CEMA) IS ENTERED CONSOLIDATING THE MORTGAGES INTO SINGLE LIENS, THE FIRST NOTES AND MORTGAGES STILL EXIST; WHEN A MORTGAGE IS ERRONEOUSLY DISCHARGED WITHOUT A SATISFACTION OF THE DEBT, THE MORTGAGE MAY BE REINSTATED IF THERE HAS BEEN NO DETRIMENTAL RELIANCE ON THE ERRONEOUS DISCHARGE (SECOND DEPT).

The Second Department noted that where balances of first mortgage loans are increased with second mortgage loans and a Consolidation, Extension, and Modification Agreement (CEMA) is entered consolidating the mortgages into single liens, the first notes and mortgages still exist. And where, as here, there has been an erroneous discharge of mortgage without a satisfaction of the mortgage debt, the mortgage may be reinstated where there has been no detrimental reliance on erroneous discharge:

… [T]he plaintiff demonstrated … that MERS [Mortgage Electronic Registration Systems, Inc] erred in executing and filing the satisfaction of mortgage dated October 31, 2005, which certified that the first mortgage in the principal sum of $600,000 was paid. … [T]he satisfaction references the second mortgage, dated April 12, 2005, in the sum of $8,421.28, and acknowledges that the two mortgages were combined and consolidated to form a “single first lien.” Accordingly, the defendants failed to raise a triable issue of fact or support their contention that no mortgage existed upon which the plaintiff can foreclose. Bank of Am., N.A. v Schwartz, 2021 NY Slip Op 06602, Second Dept 11-24-21

 

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IN THIS FORECLOSURE PROCEEDING, PLAINTIFF BANK FAILED TO DEMONSTRATE STRICT COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; NO FOUNDATION FOR THE SUBMITTED BUSINESS RECORDS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s summary judgment motion in this foreclosure action should not have been granted. Strict compliance with the notice requirements of RPAPL 1304 was not demonstrated with admissible evidence:

… [I]n support of its motion Bayview [plaintiff, successor-in-interest to the original plaintiff, Bank of America (BoA)] submitted the affidavit of Nicole Currey, a supervisor for Bayview, who attached to her affidavit copies of various documents generated by nonparty Walz Group, Inc. (hereinafter Walz), to establish compliance with the mailing requirements of RPAPL 1304. However, Currey failed to address the nature of the relationship between Walz and BoA , and Bayview’s submissions were insufficient to establish a foundation for the admission of the business records relied upon by Bayview to establish compliance with RPAPL 1304 … . Therefore, Bayview failed to demonstrate, prima facie, its strict compliance with the 90-day notice requirement of RPAPL 1304 … . Bank of Am., N.A. v Evanson, 2021 NY Slip Op 06601, Second Dept 11-24-21

 

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FAILURE TO COMPLY WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 CAN BE RAISED AT ANY TIME; HERE IT WAS RAISED IN OPPOSITION TO THE MOTION TO CONFIRM THE REFEREE’S REPORT; THE PROOF OF COMPLIANCE WAS INSUFFICIENT (SECOND DEPT).

The Second Department, reversing Supreme Court’s grant of summary judgment to the bank in this foreclosure action, noted that the failure to comply with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1304 can be raised at any time. Here it was raised in opposition to the bank’s motion to confirm the referee’s report:

… [T]he plaintiff failed to establish that it complied with the requirements of RPAPL 1304. The affidavits of Armenia L. Harrell and La’Shana Farrow, both of whom are officers of Wells Fargo Bank, N.A. (hereinafter Wells Fargo), the servicing agent of the plaintiff, were insufficient to establish that the plaintiff complied with RPAPL 1304. Both Harrell and Farrow attested that they were familiar with Wells Fargo’s records and record-keeping practices. Farrow averred, inter alia, that the plaintiff complied with RPAPL 1304 by mailing the required notices. The record indicates that the 90-day notices appear to have been mailed by ASC (America’s Servicing Company). However, neither Harrell or Farrow attest that they personally mailed the notices or that they were familiar with the mailing practices and procedures of ASC. Therefore, they failed establish proof of standard office practice and procedures designed to ensure that items are properly addressed and mailed … . Moreover, the plaintiff failed to send individually addressed notices to each borrower; rather, the 90-day notices were jointly addressed to the [defendants]. U.S. Bank N.A. v Krakoff, 2021 NY Slip Op 06209, Second Dept 11-10-21

 

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IN COMPUTING THE AMOUNT OWED IN THIS FORECLOSURE ACTION, THE REFEREE RELIED ON AN AFFIDAVIT FROM A BANK EMPLOYEE WHICH DID NOT INCLUDE THE RELATED BUSINESS RECORDS; THE AFFIDAVIT THEREFORE WAS INADMISSIBLE HEARSAY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s computation of the amount owed in this foreclosure action was not supported by the record. The affidavit of the bank’s employee was based on business records which were not produced, rendering the affidavit hearsay:

Supreme Court should have denied the plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale, and granted that branch of the defendants’ cross motion which was to reject the referee’s report. The referee’s computations as to the amount due and owing to the plaintiff were not substantially supported by the record … . An affidavit of an assistant vice president of the plaintiff, which was submitted in support of the plaintiff’s motion to establish the amount due and owing, constituted inadmissible hearsay and lacked probative value because the business records purportedly relied upon in making the calculations were not produced … . Bank of Am., N.A. v Barton, 2021 NY Slip Op 05939, Second Dept 11-3-21

 

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