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THE PROPER FOUNDATION FOR BUSINESS RECORDS WAS NOT LAID AND COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 WAS NOT DEMONSTRATED, THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s motion for summary judgment in this foreclosure action should not have been granted:

Harrell [bank vice president]  failed to establish that Wells Fargo was servicing the subject loan at the time of Bhatti’s [defendant’s] alleged default, and that she was personally familiar with the recordkeeping practices and procedures of the plaintiff and/or the loan servicer at that time. Therefore, the plaintiff failed to establish a proper foundation for the admission of the records relied upon to establish Bhatti’s default under the business records exception to the hearsay rule (see CPLR 4518[a] …). …

“By requiring the lender or mortgage loan servicer to send the RPAPL 1304 notice by registered or certified mail and also by first-class mail, the Legislature implicitly provided the means for the plaintiff to demonstrate its compliance with the statute, i.e., by proof of the requisite mailing, which can be established with proof of the actual mailings, such as affidavits of mailing or domestic return receipts with attendant signatures, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure” … .

Here, the … affidavits were insufficient to establish that the plaintiff mailed the 90-day pre-foreclosure notice required by RPAPL 1304, “as the representative[s] did not provide evidence of a standard office mailing procedure and provided no independent evidence of the actual mailing” … .

Moreover, the Harrell and Green affidavits were also insufficient to establish that a notice of default was in fact mailed to Bhatti by first-class mail, or actually delivered to the designated address if sent by other means, which was required by the terms of the mortgage … . HSBC Bank USA, Natl. Assn. v Bhatti, 2020 NY Slip Op 04734, Second Dept 8-26-20

 

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ALTHOUGH THE QUESTION WHETHER THE NOTICE REQUIREMENTS OF RPAPL 1304 APPLIED ONLY TO HIGH-COST OR SUBPRIME LOANS WAS NOT RAISED BELOW, THE QUESTION WAS CONSIDERED AND REJECTED ON APPEAL; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department considered an issue raised for the first time on appeal because it raised an issue of law which could not have been avoided if raised below. The defendant argued that the strict compliance with the notice requirements of RPAPL 1304 applies only to high-cost or subprime loans, not the loan at issue in the case. The Second Department rejected the argument and reversed Supreme Court finding the plaintiff did not demonstrate compliance with RPAPL 1304:

We decline to construe RPAPL 1302(2) in a manner that would render the amendment to RPAPL 1304 superfluous and the requirements set forth in that statute ineffective. Thus … compliance with RPAPL 1304 was a component of its prima facie burden on its motion for summary judgment … . …

Although Mahdak [plaintiff’s representative] stated in her affidavit that the notices were sent to the defendant at his last known address and the subject property, Mahdak did not have personal knowledge of the mailing, and [plaintiff] failed to provide any documents to prove that the notices were actually mailed … . [Plaintiff] also failed to submit a copy of any United States Post Office document indicating that the notices were sent by registered or certified mail as required by the statute … . Furthermore, Mahdak did not aver that she was familiar with [plaintiff’s] mailing practices and procedures, and therefore did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed … . H&R Block Bank, FSB v Liles, 2020 NY Slip Op 04733, Second Dept 8-26-20

 

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THE BANK’S DISCONTINUANCE OF THE FORECLOSURE ACTION DID NOT REVOKE THE ACCELERATION OF THE DEBT; THE REQUEST, AFTER DISCONTINUANCE, FOR A DECLARATION THE ACCELERATION HAD BEEN REVOKED WAS A REQUEST FOR AN IMPERMISSIBLE ADVISORY OPINION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the acceleration of the debt had not been revoked by the discontinuance of the foreclosure action and plaintiff’s request for a declaration the acceleration had been revoked, made after the action was discontinued, was an improper request for an advisory opinion:

Upon discontinuance of the action, a judicial declaration on the issue of whether the plaintiff elected to revoke its acceleration would be merely advisory inasmuch as there was no active case in which such declaration could have an immediate effect. Indeed, by seeking voluntary discontinuance of the action, the plaintiff, in effect, waived any right to seek any further judicial relief in the action … . …

In this Department, a lender’s mere act of voluntarily discontinuing an action does not constitute, in and of itself, an affirmative act revoking an earlier acceleration of the debt … . This is so because “the full balance of a mortgage debt cannot be sought without an acceleration, whereas the voluntary discontinuance of a foreclosure action may be occasioned for any number of different reasons, including those that have nothing to do with an intent to revoke the acceleration” … . Thus, it is the plaintiff who has authority to revoke its election to accelerate the mortgage debt under the terms of a note, and not the court. U.S. Bank Natl. Assn. v McCaffery, 2020 NY Slip Op 04805, Second Dept 8-26-20

 

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THE RPAPL 1304 NOTICE WAS DEFECTIVE ON ITS FACE; PLAINTIFF’S SUMMARY JUDGMENT MOTION IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff did not demonstrate compliance with RPAPL 1304 in this foreclosure action:

… [T]he plaintiff failed to establish, prima facie, its strict compliance with RPAPL 1304. In support of its motion, the plaintiff submitted copies of both its RPAPL 1304 notice and the 30-day notice of default required by the mortgage agreement. Both notices were dated April 15, 2013; however, these notices contained a factual discrepancy regarding the cure date, to wit, the cure date stated in the RPAPL 1304 90-day notice was May 15, 2013, whereas the cure date stated in the 30-day notice was May 20, 2013. Given the factual inaccuracy contained in at least one of the notices, and because the potential inaccuracy in the 90-day notice involved information that was required under RPAPL 1304, the plaintiff’s submissions did not eliminate the existence of a triable issue of fact as to whether the RPAPL 1304 notice was defective on its face … . Sparta GP Holding Reo Corp. v Lynch, 2020 NY Slip Op 04803, Second Dept 8-26-20

 

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QUESTION OF FACT WHETHER THE ACCELERATION OF THE DEBT IN 2010 WHEN THE FORECLOSURE ACTION WAS STARTED WAS REVOKED BEFORE THE SIX-YEAR STATUTE OF LIMITATIONS RAN OUT (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined plaintiff bank raised a question of the fact whether the acceleration of the debt at the time the foreclosure action was commenced in 2010 was revoked before the six-year statute of limitations ran out:

We nevertheless agree with plaintiff that its submissions in opposition to the motion raised a question of fact whether the present action was timely commenced. It is well settled that “[a] lender may revoke its election to accelerate the mortgage, [although] it must do so by an affirmative act of revocation occurring during the six-year statute of limitations period subsequent to the initiation of the prior foreclosure action” … .

Here, plaintiff submitted evidence that its predecessor in interest mailed letters to defendants in January 2016, i.e., before the statute of limitations expired, revoking the prior acceleration of the mortgage. As plaintiff correctly contends, the evidence, including an affidavit of mailing, established that the letters were properly mailed to defendants at their address, thereby giving rise to the presumption that the letters were received by defendants … . Defendants’ unsubstantiated denial of receipt was “insufficient to rebut the presumption of proper service at the address where all notices under the mortgage were to be sent” … . Moreover, on the limited record before us, we conclude that language of the letters and the surrounding circumstances raised a question of fact whether plaintiff’s predecessor in interest validly revoked the prior acceleration of the mortgage and, thus, whether the present action was timely commenced … . U.S. Bank N.A. v Brown, 2020 NY Slip Op 04653, Fourth Dept 8-20-20

 

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BANK DID NOT COMPLY WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 IN THIS FORECLOSURE ACTION; THE BANK’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

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

RPAPL 1304 provides that at least 90 days before a lender, an assignee, or a mortgage loan servicer commences an action to foreclose the mortgage on a home loan as defined in the statute, such lender, assignee, or mortgage loan servicer must give notice to the borrower. The statute provides the required content for the notice and provides that the notice must be sent by registered or certified mail and also by first-class mail to the last known address of the borrower (see RPAPL 1304[2]). “Strict compliance with RPAPL 1304 notice to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action” … “and the plaintiff has the burden of establishing satisfaction of this condition” … . Here, although the plaintiff provided a photocopy of a “US Postal Service Receipt for Certified Mail” with a 20-digit number along with the purported 90-day notice, the receipt is undated and does not demonstrate that the notice was actually sent by certified mail more than 90 days prior to commencement of the action. The plaintiff also failed to submit sufficient evidence to demonstrate that the notice was sent by first-class mail. M&T Bank v Barter, 2020 NY Slip Op 04548, Second Dept 8-19-20

 

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THE BANK’S COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1303 AND 1304 WAS NOT DEMONSTRATED IN THIS FORECLOSURE ACTION, SUMMARY JUDGMENT SHOULD NOT HAVE BEEN AWARDED TO THE BANK (SECOND DEPT).

The Second Department determined plaintiff bank’s motion for summary judgment should not have been granted in this foreclosure action. There was a question of fact whether plaintiff complied with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1303, and plaintiff did not establish it complied with the notice requirements of RPAPL 1304:

… [D]efendant raised a triable issue of fact with respect to whether the RPAPL 1303 notice was in the proper form, as he asserted in his affidavit that the notice with which he was served “was on white colored paper, the same color papers as the summons and complaint and the heading entitled Help for Homeowners in Foreclosure’ was smaller than twenty-point type” … .

… [T]he affidavit of Lorene Alford Marsh, an Assistant Vice President of the plaintiff, was insufficient to establish that the notice was sent to the defendant in the manner required by RPAPL 1304. Although Marsh attested that the 90-day notices of default were sent to the defendant by certified mail and first-class mail on March 8, 2013, and attached copies of those notices, the plaintiff failed to attach, as exhibits to the motion, any documents to prove that the mailings actually occurred … . Nor did Marsh attest that she had personal knowledge of the mailing practices of her employer at the time the RPAPL 1304 notices allegedly were sent. Instead, she merely stated that she had personal knowledge of the plaintiff’s procedures for creating and maintaining notices mailed in connection with the loan. Moreover, rather than establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed, Marsh, in her affidavit, merely described the mailing requirements listed in the statute … . Bank of Am., N.A. v Lauro, 2020 NY Slip Op 04531, Second Dept 8-19-20

 

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DEFENDANT’S MOTION TO RENEW HIS OPPOSITION TO THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD HAVE BEEN GRANTED; THE BANK HAD ORIGINALLY ALLEGED IT POSSESSED THE NOTE AND THEREFORE HAD STANDING TO FORECLOSE; SUBSEQUENTLY THE BANK SUBMITTED A LOST NOTE AFFIDAVIT IN SUPPORT OF ITS MOTION TO CONFIRM THE REFEREE’S REPORT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined defendant’s motion to renew his opposition to the bank’s motion for summary judgment should have been granted in this foreclosure action. In support of its summary judgment motion the bank alleged it had standing based upon possession of the note. However, in support of the bank’s subsequent motion to confirm the referee’s report the bank submitted a lost note affidavit:

A motion for leave to renew “shall be based upon new facts not offered on the prior motion that would change the prior determination” (CPLR 2221[e][2]), and “shall contain reasonable justification for the failure to present such facts on the prior motion” (CPLR 2221[e][3]).

Here, in support of his cross motion for leave to renew, the borrower had a reasonable justification for his failure to present the new facts in opposition to the original motion, since the plaintiff had previously—and unequivocally—represented that the original note was in Investors’ possession, and only later disclosed that the original note had in fact been lost, without providing any further details as to when the search for the note occurred, who conducted the search, and when the note was lost … .

Under these circumstances, the Supreme Court should have granted the borrower’s cross motion for leave to renew and, upon renewal, denied those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the borrower, to strike his answer and counterclaims, and for an order of reference, based on unresolved issues of fact regarding the plaintiff’s standing … . CitiMortgage, Inc. v Barbery, 2020 NY Slip Op 04377, Second Dept 8-5-20

 

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ALTHOUGH PLAINTIFF BANK DID NOT DEMONSTRATE THE RPAPL 1304 NOTICE WAS MAILED TO DEFENDANT IN THIS FORECLOSURE ACTION, DEFENDANT’S DENIAL OF RECEIPT OF THE NOTICE WAS NOT SUFFICIENT TO WARRANT SUMMARY JUDGMENT IN FAVOR OF DEFENDANT (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined defendant’s cross motion for summary judgment in this foreclosure action should not have been granted. Supreme Court properly found that the bank did not provide sufficient proof that the Real Property Actions and Proceedings Law (RPAPL) 1304 notice was mailed to defendant. But defendant’s mere denial of receipt of the notice was not enough to warrant summary judgment in defendant’s favor:

The plaintiff failed to establish, prima facie, that it mailed the RPAPL 1304 notice, because “the plaintiff failed to provide proof of the actual mailing, or proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by an individual with personal knowledge of that procedure” … .

We disagree, however, with the Supreme Court’s determination to grant [defendant] Parker’s cross motion for summary judgment dismissing the complaint insofar as asserted against her. Parker offered only a mere denial of receipt of the RPAPL 1304 notice in support of her cross motion, and such a mere denial is insufficient to establish entitlement to such relief … . Bank of N.Y. Mellon v Parker, 2020 NY Slip Op 04376, Second Dept 8-5-20

 

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REFEREE’S FINDINGS WERE BASED UPON HEARSAY PROVIDED BY THE BANK IN THIS FORECLOSURE ACTION; THE REFEREE’S REPORT SHOULD NOT HAVE BEEN CONFIRMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report in this foreclosure action should not have been confirmed. The report was based upon hearsay provided by the bank and therefore the referee’s findings were not supported by the record:

The Supreme Court should have denied the plaintiff’s motion, in effect, to confirm the referee’s report and for leave to enter a judgment of foreclosure and sale. In support of its motion, the plaintiff relied upon the affidavit of a representative of its loan servicer, who attested, based upon his review of the servicer’s books and records, to the amount due under the mortgage loan. However, the plaintiff’s affiant failed to annex or otherwise produce the subject business records. Under the circumstances, the affidavit relied upon by the plaintiff constituted inadmissible hearsay and lacked probative value, and the referee’s findings with respect to the total amount due upon the mortgage were not substantially supported by the record … . Bank of N.Y. Mellon v Fontana, 2020 NY Slip Op 04375, Second Dept 8-5-20

 

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