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PLAINTIFF BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate compliance with the notice requirements of RPAPL 1304. Therefore the bank’s motion for summary judgment should not have been granted:

… [T]he plaintiff submitted, inter alia, the affidavit of Ray Thacker, a vice president of the plaintiff, based upon his review of his employer’s records, which were attached thereto. However, Thacker’s affidavit contained no statement as to Thacker’s personal familiarity with the mailing practices of his employer … .

Moreover, although Thacker’s affidavit laid a proper foundation for the admission of the business records which were attached thereto (see CPLR 4518[a] …), the content of those records did not demonstrate, prima facie, that the requisite RPAPL 1304 mailings were completed. The copies of letters addressed to the defendant, bearing 20-digit bar codes, were insufficient to demonstrate, prima facie, that the certified mailing or first class mailing actually occurred … . The “Proof of Filing Statement” from the New York State Banking Department, pursuant to RPAPL 1306, reflecting a tracking number, a “Mailing Date Step 1” of May 16, 2012, and a “Filing Date Step 1” of May 17, 2012, also was insufficient to demonstrate, prima facie, the plaintiff’s compliance with all of the requirements of RPAPL 1304 … . JPMorgan Chase Bank, Natl. Assn. v Gershfeld, 2020 NY Slip Op 05895, Second Dept 10-21-20

 

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REFEREE’S REPORT IN THIS FORECLOSURE ACTION RELIED UPON HEARSAY AND SHOULD NOT HAVE BEEN CONFIRMED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the referee’s report should not have been relied upon in this foreclosure action because the report was based on hearsay:

The referee relied on an affidavit sworn to October 2, 2018 by an assistant vice president of plaintiff’s loan servicer, who asserted that, according to the books and records of plaintiff pertaining to defendant’s loan and payment history, defendant had been in default since March 1, 2009, and owed plaintiff the amount stated. However, because the books and records themselves were not submitted to the court, the affiant’s assertions are inadmissible hearsay … . Nor did the affiant lay a foundation for the introduction of the books and records as a business record (see CPLR 4518[a]). Deutsche Bank Natl. Trust Co. v Kirschenbaum, 2020 NY Slip Op 05849, First Dept 10-20-20

 

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PLAINTIFF DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF RPAPL 1304 AND THE MORTGAGE; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion for summary judgment in this foreclosure action should not have been granted. Plaintiff did not demonstrate compliance with the notice provisions of RPAPL 1304 and the mortgage:

… [T]he evidence submitted in support of the motion failed to establish, prima facie, the plaintiff’s strict compliance with RPAPL 1304 and that the required notice of default was in fact mailed to the defendants by first-class mail, or actually delivered to the designated address if sent by other means, as required by the terms of the mortgage as a condition precedent to foreclosure … . Deutsche Bank Natl. Trust Co. v Buah, 2020 NY Slip Op 05722, Second Dept 10-14-20

 

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PLAINTIFF DID NOT DEMONSTRATE STRICT COMPLIANCE WITH RPAPL 1304 IN THIS FORECLOSURE ACTION; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff (CV) did not provide the proof required by Real Property Actions and Proceedings Law (RPAPL) 1304:

The version of RPAPL 1304(2) as it existed at the time this action was commenced, provided that, “[t]he notices required by this section shall contain a current list of at least five housing counseling agencies that serve the region where the borrower resides from the most recent listing available from the department of financial services” …

… CV failed to submit evidence to demonstrate that the 90-day notices contained either five housing agencies that served the region where the defendants resided or were from the most recent listing available from the department of financial services. …

Additionally, CV did not submit an affidavit of service or proof of mailing by the United States Postal Service evidencing that the defendants were properly served pursuant to RPAPL 1304. Instead, CV relied upon the affidavit of Matthew W. Regan, its executive vice president, who averred that 90-day notices were sent in accordance with the statute. In his affidavit, Regan referenced copies of 90-day notices, which, however, did not bear any postmark. Moreover, “[t]he presence of 20-digit numbers on the copies of the 90-day notices . . . standing alone, did not suffice to establish, prima facie, proper mailing under RPAPL 1304” … . Also, Regan’s affidavit was insufficient to establish that the required notices were sent in the manner required by RPAPL 1304, as Regan did not attest to personal knowledge of the mailing practices of the entity which sent the notices, and provided no independent evidence of the actual mailing … . CV XXVIII, LLC v Trippiedi, 2020 NY Slip Op 05721, Second Dept 10-14-20

 

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THE REFEREE RELIED ON HEARSAY TO DETERMINE THE AMOUNT OWED IN THIS FORECLOSURE ACTION; SUPREME COURT SHOULD NOT HAVE CONFIRMED THE REFEREE’S REPORT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the evidence relied upon by the referee to determine the amount owed to plaintiff bank in this foreclosure action did not meet the requirements of the business records exception to the hearsay rule. The bank’s motion for summary judgment should not have been granted:

With respect to the amount due to the plaintiff, the referee based his findings on an affidavit of Jillian Thrasher, a vice president of Ocwen Loan Servicing, LLC (hereinafter Ocwen), the servicer of the subject loan. …

“A proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker’s business practices and procedures” … . Here, Thrasher’s affidavit was insufficient to establish a proper foundation for the admission of a business record pursuant to CPLR 4518(a), because she failed to attest that she was personally familiar with the record-keeping practices and procedures of her employer, Ocwen, the entity that generated the subject business records. Accordingly, she failed to demonstrate that the records relied upon in her affidavit were admissible under the business records exception to the hearsay rule … . Thus, Thrasher’s affidavit, upon which the referee relied, “constituted inadmissible hearsay and lacked probative value” on the issue of the amount due and owing to the plaintiff, including the amount of interest due for the relevant period … , and the Supreme Court erred in confirming the report. The error in relying on hearsay evidence was not harmless, as the referee’s determination is not substantially supported by other evidence in the record … . IndyMac Fed. Bank, FSB v Vantassell, 2020 NY Slip Op 05495, Second Dept 10-7-20

 

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THE BANK DID NOT SUBMIT SUFFICIENT EVIDENCE OF STANDING OR COMPLIANCE WITHE THE RPAPL 1304 NOTICE REQUIREMENTS IN THIS FORECLOSURE ACTION; THE BANKS’ MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank did not present sufficient evidence of standing to bring the foreclosure action and compliance with the RPAPL 1304 notice requirements:

… [T]he plaintiff failed to establish, prima facie, that it had standing to commence this action. Although the employee of the plaintiff’s loan servicer stated in her affidavit, which was submitted by the plaintiff in support of its motion, that the plaintiff was the holder of the note, she never stated that the plaintiff was the holder of the note at the time the action was commenced … . Further, the plaintiff failed to establish that the note was attached to the complaint at the time of the commencement of the action … . …

… [T]he plaintiff failed to establish, prima facie, that it complied with RPAPL 1304 because the employee of the plaintiff’s loan servicer, in her affidavit, failed to assert personal knowledge of the purported mailing or make the requisite showing that she was familiar with the plaintiff’s mailing practices and procedures in order to establish “proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed” … . Bank of Am., N.A. v Palacio, 2020 NY Slip Op 05480, Second Dept 10-7-20

 

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THE MERE PRESENCE OF A REINSTATEMENT CLAUSE IN THE MORTGAGE, WHICH ESSENTIALLY ALLOWS A BORROWER IN DEFAULT TO PAY THE ARREARS AND STOP THE ACCELERATION OF THE DEBT, DOES NOT AFFECT OR IMPEDE THE ACCELERATION OF THE DEBT WHEN A FORECLOSURE ACTION IS STARTED; THE DEBT HERE WAS ACCELERATED WHEN THE FIRST FORECLOSURE ACTION WAS COMMENCED IN 2009 RENDERING THE INSTANT FORECLOSURE ACTION TIME-BARRED (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice Curran, agreeing with the Second Department, determined the mere presence of reinstatement clause in a mortgage, which allows a borrower who has missed payments to pay the amount of the missed payments and resume monthly payments, does not affect or impede the acceleration of the debt when a foreclosure action is brought. Therefore the foreclosure action at issue was time-barred:

The mortgage is a uniform instrument issued by Fannie Mae, among others, for use in New York State and contains several provisions that are relevant on appeal. Section 22 (acceleration provision) permits the lender to require immediate payment of the loan in full upon the borrower’s default, provided certain conditions are met. Section 19 (reinstatement provision) grants a borrower in default the right to effectively de-accelerate the maturity of the mortgage debt by paying in full the past due amount, thereby returning the loan to its pre-default status. * * *

… [W]e conclude that the mortgage’s reinstatement provision does not in any way affect or impede acceleration of the full mortgage debt. The reinstatement provision is not mentioned anywhere in the text of the mortgage’s acceleration provision, which governs when Fannie Mae could exercise its option to accelerate the full debt … . Further, the language of the reinstatement provision “indicates that [Fannie Mae’s] right to accelerate the entire debt may be exercised before the [borrower’s] rights under the reinstatement provision . . . are exercised or extinguished” … . Thus, in effect, the reinstatement provision merely “gives the borrower the contractual option to de-accelerate the mortgage when certain conditions are met” … —which presupposes that an acceleration has already occurred. Federal Natl. Mtge. Assn. v Tortora, 2020 NY Slip Op 05410, Fourth Dept 10-2-20

 

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GENERAL OBLIGATIONS LAW 17-105, NOT 17-101, APPLIES TO THE REVIVAL OF AN EXPIRED STATUTE OF LIMITATIONS FOR A MORTGAGE FORECLOSURE; THE RELEVANT DOCUMENTS HERE DID NOT MEET THE CRITERIA OF SECTION 17-105; FORECLOSURE WAS THEREFORE TIME-BARRED (FOURTH DEPT).

The Fourth Department, in a full-fledged opinion by Justice Peradotto, determined that General Obligations Law 17-105, not 17-101, applied to the revival of an expired statute of limitations for foreclosure of a mortgage and the documents in this case did not meet the criteria of section 17-105. Therefore the foreclosure action was time-barred. The court noted that Supreme Court should have issued a judgment declaring the rights of the parties pursuant to Real Property Actions and Proceedings Law 1501 and 1521:

General Obligations Law § 17-105 (1) provides, in relevant part:

“A waiver of the expiration of the time limited for commencement of an action to foreclose a mortgage of real property or a mortgage of a lease of real property, or a waiver of the time that has expired, or a promise not to plead the expiration of the time limited, or not to plead the time that has expired, or a promise to pay the mortgage debt, if made after the accrual of a right of action to foreclose the mortgage and made, either with or without consideration, by the express terms of a writing signed by the party to be charged is effective, subject to any conditions expressed in the writing, to make the time limited for commencement of the action run from the date of the waiver or promise.”

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… [T]the financial statements submitted by defendant do not meet the requirements of subdivision (1) of section 17-105 because those documents merely list the mortgage as a liability and do not constitute an express promise to pay the mortgage debt … . Batavia Townhouses, Ltd. v Council of Churches Hous. Dev. Fund Co., Inc., 2020 NY Slip Op 05331, Fourth Dept 10-2-20

 

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CANCELLATION AND DISCHARGE OF A MORTGAGE PURSUANT TO RPAPL 1501 (4) MUST BE SOUGHT BY AN ACTION OR COUNTERCLAIM, NOT BY A MOTION (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the motion to cancel and discharge the mortgage pursuant to RPAPL 1501 (4) should not have been granted. That relief must be sought by an action or counterclaim:

Supreme Court should not have granted that branch of the motion which was to cancel and discharge the mortgage pursuant to RPAPL 1501(4), since that relief must be sought in an action or counterclaim and not by motion … . Bank of N.Y. Mellon v 11 Bayberry St., LLC, 2020 NY Slip Op 05175,  Second Dept 9-30-20

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THE REFEREE’S REPORT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN CONFIRMED; THE REFEREE RELIED ON HEARSAY AND FAILED TO CONDUCT A HEARING ON NOTICE AS REQUIRED BY THE CPLR (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report should not have been confirmed.  The evidence of default presented to the referee was hearsay and the referee did not hold a hearing on notice as required by CPLR 4320:

… [W]ith respect to the amount due to the plaintiff, the referee based his findings on the affidavit of Nicholas J. Raab, an employee of Specialized Loan Servicing, LLC, the plaintiff’s loan servicing agent for the subject loan. While Raab provided a proper foundation for the admission of business records made by a prior servicer … , he failed to attach the business records themselves to his affidavit. Accordingly, Raab’s assertions regarding the date of the defendant’s default in making her mortgage payments, the total sum due to the plaintiff, which included the amount of accrued interest calculated from the date of default, and amounts purportedly paid in an escrow advance and for property preservation, without the business records themselves, constituted inadmissible hearsay … .

… [T]he referee should not have computed the amount due to the plaintiff without holding a hearing on notice to the defendant (see CPLR 4313 …). “While [the] Supreme Court has the authority to engage a Referee to compute and report the amount due under a mortgage (see, RPAPL 1321[1]), and can, in its order of reference, define the scope of the reference and delineate the Referee’s powers and duties thereunder (CPLR 4311), absent any specified restrictions the Referee has those powers and duties delineated in CPLR article 43 and also must comply with the procedures specified therein … . One of the specified procedures is the conducting of a hearing (CPLR 4320[a]), upon notice (CPLR 4313)” … . Wells Fargo Bank, N.A. v Yesmin, 2020 NY Slip Op 05257, Second Dept 9-30-20

 

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