You are here: / Foreclosure
,

THE 30-DAY NOTICE PROVISION IN THE MORTGAGE DID NOT PRECLUDE ACCELERATING THE DEBT BY THE ALLEGATIONS IN THE FORECLOSURE COMPLAINT, SUPREME COURT SHOULD NOT HAVE NULLIFIED THE ACCELERATION (FIRST DEPT).

The First Department, reversing Supreme Court, determined Supreme Court should not have nullified the acceleration of the mortgage in this foreclosure action. Because acceleration was optional, the 30-day notice provision in the mortgage did not preclude acceleration by the allegations in the foreclosure complaint:

Supreme Court erred in nullifying plaintiff’s assignor’s acceleration in the prior action based on Section 22 of the mortgage which provides that the lender may accelerate the mortgage only if, inter alia, it has served defendant with a proper 30-day notice of default. Where the acceleration is optional as here, some affirmative action must be taken to evince the note holder’s election to accelerate … . Affirmative action can be in the form of a letter … or the commencement of a foreclosure action … . Plaintiff’s assignor accelerated the mortgage debt by commencing the prior action and stating in its complaint that “plaintiff elects herein to call due the entire amount secured by the mortgage(s).” Capital One, N.A. v Saglimbeni, 2019 NY Slip Op 01837, First Dept 3-14-19

 

,

PROVISION IN MORTGAGE WHICH GAVE BORROWER RIGHT TO DE-ACCELERATE THE DEBT DID NOT PRECLUDE PLAINTIFF BANK FROM ACCELERATING THE DEBT BY FILING A SUMMONS AND COMPLAINT, FORECLOSURE ACTION TIME-BARRED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Miller, determined that a reinstatement provision in a mortgage which gives the borrower the option to de-accelerate the debt did not preclude the plaintiff bank from accelerating the debt, rendering the foreclosure action time-barred:

This appeal presents an issue of first impression for this Court. The plaintiff in this mortgage foreclosure action contends that it lacked the authority to exercise its contractual option to accelerate the maturity of the entire balance of the loan it seeks to recover. The plaintiff argues that it was prevented from validly accelerating the debt by virtue of a reinstatement provision in the subject mortgage which gives the borrower the option, under certain circumstances, to effectively de-accelerate the maturity of the debt. The plaintiff further argues that the statute of limitations did not begin to run until the borrower’s rights under the reinstatement provision in the subject mortgage were extinguished. * * *

… .[T]he defendant demonstrated that the subject mortgage provided the plaintiff with the right to require the defendant to immediately pay “the entire amount then remaining unpaid under the Note and [mortgage]” if the plaintiff first satisfied certain conditions set forth in the mortgage. The defendant’s evidentiary submissions established that the plaintiff complied with those conditions … , and then validly exercised its option to accelerate the entire remaining balance due under the note by filing the summons and complaint in the first foreclosure action in June 2010 … . Accordingly, since this action was not commenced until October 2016, the defendant established, prima facie, that the time in which to commence this action has expired (see CPLR 213[4]). * * *

… [T]the extinguishment of the defendant’s contractual right to de-accelerate the maturity of the debt pursuant to the reinstatement provision in paragraph 19 of the mortgage was not a condition precedent to the plaintiff’s acceleration of the mortgage … . Bank of N.Y. Mellon v Dieudonne, 2019 NY Slip Op 01732, Second Dept 3-13-19

 

, ,

PROOF DID NOT DEMONSTRATE THE NOTICE REQUIREMENTS OF REAL PROPERTY ACTIONS AND PROCEEDINGS LAW (RPAPL) 1304 WERE MET (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank did not demonstrate that the notice requirements of RPAPL 1304 were met:

… Lechtanski [the loan servicer representative] did not have personal knowledge of the purported mailing and failed to make the requisite showing that he was familiar with the 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” … . Moreover, the copy of the notice annexed to the Lechtanski affidavits, while bearing a notation “VIA CERTIFIED AND FIRST CLASS MAIL,” bears no indicia of actual mailing such as postal codes and was unaccompanied by any mailing receipts or tracking information … . Wells Fargo Bank, N.A. v Taylor, 2019 NY Slip Op 01817, Second Dept 3-13-19

 

,

PROOF OF STANDING DID NOT MEET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the evidence of standing did not meet the business record exception to the hearsay rule:

Here, since Thrasher [plaintiff’s loan officer] did not allege that she was personally familiar with the plaintiff’s record-keeping practices and procedures, a proper foundation for the admission of the records was not provided, rendering them inadmissible to establish that the subject note was possessed by or assigned to the plaintiff prior to the commencement of the action. Moreover, even if a proper foundation had been set forth in the Thrasher affidavit, Thrasher’s assertions as to the contents of the records is inadmissible hearsay to the extent that the records she purports to describe were not submitted with her 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 (seeCPLR 4518[a]…). Furthermore, although the plaintiff submitted an endorsed copy of the note in support of its motion for summary judgment, after having appended an unendorsed copy of the note to the complaint, the plaintiff failed to eliminate a triable issue of fact as to whether the plaintiff was in possession of the original note at the time the action was commenced … . U.S. Bank Natl. Assn. v 22 S. Madison, LLC, 2019 NY Slip Op 01635, Second Dept 3-6-19

 

, ,

BANK’S FAILURE TO SUBMIT EVIDENCE WHICH MET THE CRITERIA OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE REQUIRED DENIAL OF THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION, THE BANK’S FAILURE TO COMPLY WITH THE RPAPL 1304 NOTICE AND MAILING CRITERIA REQUIRED THAT DEFENDANT’S MOTION FOR SUMMARY JUDGMENT BE GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s evidence in this foreclosure action did not meet the requirements of the business records exception to the hearsay rule and therefore the bank’s summary judgment motion should not have been granted in this foreclosure action. The court further held that defendant’s motion for summary judgment based upon the bank’s failure to comply with the notice requirements of RPAPL 1304, an issue that can be raised at any time, should have been granted:

The plaintiff failed to demonstrate that the records Wallace relied upon were admissible under the business records exception to the hearsay rule (see CPLR 4518[a]). Wallace did not attest to personal knowledge of SLS’s record-keeping business practices and procedures  … . Wallace also failed to attest that the records were made in the regular course of SLS’s business and that it was the regular course of SLS’s business to make them, at the time of the act, transaction, occurrence, or event, or within a reasonable time thereafter (see CPLR 4518[a] …). Thus, Wallace failed to lay a proper foundation for the admission of records, and her assertions based on these records were inadmissible … . Bank of N.Y. Mellon v Weber, 2019 NY Slip Op 01383, Second Dept 2-27-19

 

, ,

IN THIS FORECLOSURE ACTION THE MORTGAGE COMPANY DID NOT DEMONSTRATE STANDING WITH PROOF MEETING THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff mortgage company did not demonstrate standing with proof meeting the requirements of the business records exception to the hearsay rule:

In support of its motion, the plaintiff submitted the affidavit of Melissa Black, an employee of the plaintiff’s loan servicer, who alleged, based upon a review of business records maintained by the loan servicer, that the plaintiff had been “in continuous possession of the note and mortgage since June 26, 2007.” However, because Black did not attest that she was personally familiar with the plaintiff’s record-keeping practices and procedures, the plaintiff failed to demonstrate that the records relied upon by Black were admissible under the business records exception to the hearsay rule (see CPLR 4518[a] … ). In any event, the submissions by the plaintiff of different copies of the note raise a triable issue of fact, inter alia, as to whether the note was assigned to the plaintiff prior to the commencement of the action … . EMC Mtge. Corp. v Tinari, 2019 NY Slip Op 01392, Second Dept 2-27-19

 

, ,

PROOF OF MAILING REQUIREMENTS OF RPAPL 1304 NOT MET, BANK’S SUMMARY JUDGMENT MOTION IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff bank did not present sufficient proof of compliance with the notice requirements in Real Property Actions and Proceedings Law (RPAPL) 1304:

The plaintiff submitted the affidavit of Sherry Benight, an officer of the plaintiff’s loan servicer, Select Portfolio Servicing, Inc. (hereinafter SPS), stating that her review of records maintained by SPS revealed that a “[ninety-day pre-foreclosure notice] dated September 13, 2012, . . . was sent to Borrower(s) by certified and first class mail.” A copy of the notice to Fisher was annexed to Benight’s affidavit, which contained a bar code with a 20-digit number below it, but no language indicating that a mailing was done by first-class or certified mail, or even that a mailing was done by the U.S. Postal Service … . Further, Benight did not make the requisite showing that she was familiar with the 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 … . U.S. Bank N.A. v Fisher, 2019 NY Slip Op 01444, Second Dept 2-27-19

Similar issues and result in US Bank N.A. v Rode, 2019 NY Slip Op 01446, Second Dept 2-27-19

 

 

,

BANK ENTITLED TO JUDGMENT UNDER THE DOCTRINE OF EQUITABLE SUBROGATION (SECOND DEPT).

The Second Department determined plaintiff was entitled to summary judgment pursuant to the equitable subrogation theory in this foreclosure action:

… [T]he plaintiff commenced this action to foreclose a mortgage in the principal amount of $480,000, which it alleged was secured by real property in Brooklyn, owned by the defendants Tzilia Dalfin (hereinafter Tzilia) and Angel E. Daflin (hereinafter Angel), who have been divorced since the 1990s. It is undisputed that $453,900.03 of the proceeds of the mortgage were used to pay off Tzilia and Angel’s prior mortgage on the property as well as outstanding taxes. * ** *

Under the doctrine of equitable subrogation, “[w]here property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder” … . Even if, as Angel contends, his signature on the subject mortgage was forged, the plaintiff could still recover against him on the theory of equitable subrogation based upon its payoff of the prior mortgage and liens against his property at the closing of the subject mortgage … .

… [T]he plaintiff established its … entitlement to judgment as a matter of law on a theory of equitable subrogation by submitting evidence that $453,900.03 of the proceeds of the subject mortgage were used to pay off the prior mortgage and taxes for which Angel was liable … . Wells Fargo Bank, N.A. v Dalfin, 2019 NY Slip Op 01255, Second Dept 2-20-19

 

, ,

JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE FORECLOSURE ACTION WHEN PLAINTIFF BANK ATTEMPT TO TO BRING PREVIOUSLY FILED PAPERS INTO COMPLIANCE WITH SUBSEQUENT ADMINISTRATIVE ORDERS (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the judge should not have, sua sponte, dismissed the foreclosure action when plaintiff bank attempted to bring previously filed documents into compliance with subsequent administrative orders:

“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 counsel attempted to comply, in good faith, with Administrative Orders 548/10 and 431/11 of the Chief Administrative Judge, which did not exist at the time of the commencement of the action, or at the time of the plaintiff’s prior motion for an order of reference. Under such circumstances, dismissal was not warranted. Nothing in the Administrative Orders requires the dismissal of an action merely because the plaintiff’s counsel discovers that there was some irregularity or defect in a prior submission, nor is the plaintiff effectively required to commence an entirely new action … . JP Morgan Chase Bank, N.A. v Laszlo, 2019 NY Slip Op 01205, Second Dept 2-20-19

 

,

STIPULATION OF DISCONTINUANCE OF THE PRIOR FORECLOSURE ACTION DID NOT DE-ACCELERATE THE DEBT, INSTANT FORECLOSURE ACTION IS THEREFORE TIME-BARRED (SECOND DEPT).

The Second Department determined the prior action for foreclosure accelerated the debt and the subsequent stipulation of discontinuance did not de-accelerate the debt. The instant foreclosure action was therefore time-barred:

… [D]efendant established that the six-year statute of limitations began to run on the entire debt on April 21, 2008, the date the plaintiff accelerated the mortgage debt by commencing the prior action … . Since the plaintiff did not commence this action until December 15, 2015, more than six years later, the defendant sustained his initial burden of demonstrating, prima facie, that this action was untimely … . The burden then shifted to the plaintiff to present admissible evidence establishing that the action was timely or to raise a question of fact as to whether the action was timely … .

The plaintiff failed to meet its burden. Contrary to its contention, the plaintiff failed to raise a question of fact as to whether it affirmatively revoked its election to accelerate the mortgage within the six-year limitations period. Its execution of the stipulation of discontinuance did not, by itself, constitute an affirmative act to revoke its election to accelerate, since the stipulation was silent on the issue of the election to accelerate, and did not otherwise indicate that the plaintiff would accept installment payments from the defendant … . Bank of N.Y. Mellon v Craig, 2019 NY Slip Op 00846 [169 AD3d 627], Second Dept 2-6-19

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy