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IN THIS ACTION TO CANCEL AND DISCHARGE A MORTGAGE BASED UPON THE RUNNING OF THE STATUTE OF LIMITATIONS FOR A FORECLOSURE ACTION, THE BANK RAISED A QUESTION OF FACT WHETHER THE BANK WHICH SERVED THE 2008 COMPLAINT SEEKING FORECLOSURE HAD STANDING AND, THEREFORE, WHETHER THE DEBT WAS ACCELERATED IN 2008 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank had raised a question of fact about whether the mortgage had been accelerated such that the six-year statute of limitations for bringing a foreclosure action had run:

Pursuant to RPAPL 1501(4), a person having an estate or an interest in real property subject to a mortgage can seek to cancel and discharge that encumbrance where the period allowed by the applicable statute of limitations for the commencement of an action to foreclose the mortgage has expired, provided that the mortgagee or its successor was not in possession of the subject real property at the time the action to cancel and discharge the mortgage was commenced … . An action to foreclose a mortgage is governed by a six-year statute of limitations (see CPLR 213[4] ….). “[E]ven if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt” … . …

The defendants raised a triable issue of fact as to whether Greenpoint had standing to commence the 2008 foreclosure action and, therefore, whether the service of the 2008 complaint was effective to constitute a valid exercise of the option to accelerate the debt … . The affidavits submitted by the defendants were sufficient to raise a triable issue of fact as to whether the note was physically delivered to the defendant U.S. Bank, National Association (hereinafter US Bank), on September 27, 2006, two years before US Bank’s assignor, Greenpoint, commenced the 2008 foreclosure action … . Halfon v U.S. Bank, Natl. Assn., 2019 NY Slip Op 00860, Second Dept 2-6-19

 

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PLAINTIFF, AFTER FAILING TO ARGUE THAT DEFENDANTS WAIVED THE LACK OF STANDING DEFENSE BEFORE SUPREME COURT, COULD NOT RAISE DEFENDANTS’ WAIVER OF THE DEFENSE FOR THE FIRST TIME ON APPEAL, PLAINTIFF DID NOT DEMONSTRATE STANDING TO COMMENCE THE FORECLOSURE ACTION (SECOND DEPT).

The Second Department determined plaintiff did not demonstrate standing to bring the foreclosure action, and, further, could not raise defendant’s waiver of the lack-of-standing defense for the first time on appeal:

The defense of lack of standing in an action to foreclose a mortgage is waived if the defendant does not raise it in a pre-answer motion to dismiss or as an affirmative defense (see CPLR 3018[b]…). Here, in opposition to the plaintiff’s motion for summary judgment and in support of their cross motion to dismiss, the defendants argued that the plaintiff lacked standing to commence this action. The plaintiff, in its “reply . . . in further support of plaintiff’s motion for summary judgment, and in opposition to defendant’s [sic] cross-motion to dismiss,” entirely disregarded the defendants’ waiver of the standing defense. Instead, the plaintiff sought to establish that it had standing to commence the action. Now, having litigated the standing defense on the merits in the Supreme Court—both on the original motion and in opposition to reargument—the plaintiff argues on appeal that the issue of standing was waived. Having neglected to raise that dispositive issue in the Supreme Court, the plaintiff may not raise it for the first time on this appeal … .

The plaintiff also failed, on the merits, to establish prima facie that it had standing to commence the action. The loan servicer’s affidavit, which asserted that the named plaintiff “was in possession of the Note at the time of commencement of this action,” provided no specifics as to the date of delivery or the date of commencement. The plaintiff’s conclusory assertion as to possession on the date of commencement is insufficient to establish standing … . BAC Home Loans Servicing, LP v Alvarado, 2019 NY Slip Op 00584, Second Dept 1-30-19

 

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PLAINTIFF BANK DID NOT DEMONSTRATE NOTICE BY PROOF WHICH MET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE, THEREFORE 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 did not demonstrate compliance with Real Property Actions and Proceedings Law (RPAPL) 1304 and, therefore, the bank’s motion for summary judgment should not have been granted:

… [T]he plaintiff failed to submit an affidavit of service or proof of mailing by the post office evincing that it properly served the defendant pursuant to RPAPL 1304. Contrary to the plaintiff’s contention, its submission of an affidavit of the employee of its servicer was not sufficient to establish that the notices were sent to the defendant in the manner required by RPAPL 1304. While mailing may be proved by documents meeting the requirements of the business records exception to the hearsay rule under CPLR 4518 … , here, the affiant did not aver that he was familiar with the servicer’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 … . The affiant’s unsubstantiated and conclusory statements were insufficient to establish that the RPAPL 1304 notice was mailed to the defendant by first-class and certified mail … . Wells Fargo Bank, N.A. v Moran, 2019 NY Slip Op 00637, Second Dept 1-30-19

Similar issue and result in Fifth Third Mtge. Co. v Seminario, 2019 NY Slip Op 00589, Second Dept 1-30-19

 

 

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MERE DENIAL OF THE ALLEGATIONS IN A FORECLOSURE COMPLAINT THAT THE PLAINTIFF IS THE OWNER AND HOLDER OF THE NOTE AND MORTGAGE IS NOT SUFFICIENT TO ASSERT THE DEFENSE THAT THE PLAINTIFF LACKS STANDING, PRECEDENT TO THE CONTRARY OVERRULED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Castro, over an extensive dissenting opinion, determined that a denial of the allegations in a foreclosure complaint that the plaintiff is the owner and holder of the note and mortgage is not sufficient to assert that plaintiff lacks standing, a defense that is waived if not asserted:

… [T]he issue of standing is waived absent some affirmative statement on the part of a mortgage foreclosure defendant, which need not invoke magic words or strictly adhere to any ritualistic formulation, but which must clearly, unequivocally, and expressly place the defense of lack of standing in issue by specifically identifying it in the answer or in a pre-answer motion to dismiss. A mere denial of factual allegations will not suffice for this purpose. * * *

Taken to its logical conclusion, the … defendants’ position would mean that their denials preserve all conceivable affirmative defenses that can be parsed from reading the factual allegations of the complaint in conjunction with their corresponding and conclusory denials, so that these defenses may be raised at some subsequent point in the case. Such a result would render the obligation under CPLR 3018(b) to specifically plead affirmative defenses in the answer meaningless, delay the legislatively favored prompt adjudication of the defenses at an early point in the litigation, and cause prejudice and surprise to plaintiffs. Moreover, the practical realities of mortgage foreclosure litigation are that foreclosure complaints invariably allege that the plaintiff is the holder and/or assignee of the note, and answering defendants reflexively deny (or deny knowledge as to the truth of) most or all of the allegations in their responsive pleadings. Were such denials by themselves sufficient to place standing in issue, then standing would effectively become a prima facie element of the plaintiffs’ claims in all contested foreclosure actions, an unwarranted consequence. Rather, if a defendant in a foreclosure action genuinely believes that she or he has a basis upon which to contest standing, it is not too much to ask her or him to specifically and affirmatively assert that position in the answer as the CPLR requires.

To the extent that some decisions of our Court have strayed from the foregoing principles by indicating that a mere denial in the answer of factual allegations set forth in the complaint will suffice to place standing in issue, thereby injecting uncertainty into this formerly settled area … . US Bank N.A. v Nelson, 2019 NY Slip Op 00494, Second Dept 1-23-19

 

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AFFIRMATION CONTESTING SERVICE DID NOT CONFORM TO NEW YORK LAW AND THEREFORE DID NOT REBUT THE PROCESS SERVER’S AFFIDAVIT (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined that defendant’s affirmation did not conform to New York law and therefore was not sufficient to rebut the process server’s affidavit of service. Defendant’s made his affirmation in front of a notary in Israel, but the affirmation did not indicate it was made under penalty of perjury:

“[A]ny person who, for religious or other reasons, wishes to use an affirmation as an alternative to a sworn statement may do so,” but such affirmation “must be made before a notary public or other authorized official,” and the affirmant must “be answerable for the crime of perjury should he make a false statement” … . Furthermore, an affirmation from a person physically located outside the geographic boundaries of the United States must comply with the additional formalities of CPLR 2309 (c), and must, in substance, affirm that the statement is true under the penalties of perjury under the laws of New York (see CPLR 2106 [b]). While the defendant’s identity was verified by an authorized official in Israel acting in the capacity of a notary, the affirmation itself failed to indicate that the statements made therein were true under the penalties of perjury. Therefore, the affirmation was without probative value … . U.S. Bank N.A. v Langner, 2019 NY Slip Op 00492 [168 AD3d 1021], Second Dept 1-23-19

 

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DEFENDANT DID NOT MAKE A PRIMA FACIE SHOWING THAT PLAINTIFF BANK DID NOT HAVE STANDING IN THIS FORECLOSURE ACTION BY MERELY POINTING OUT ALLEGED GAPS IN PLAINTIFF’S CASE, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, THEREFORE, SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that defendant did not make a prima facie showing that plaintiff bank lacked standing in this foreclosure action, as opposed to pointing to alleged gaps in plaintiff’s case. Therefore defendant’s motion for summary judgment should not have been granted:

“On a motion for summary judgment, the burden is on the moving defendant to establish, prima facie, the plaintiff’s lack of standing, rather than on the plaintiff to affirmatively establish its standing in order for the motion to be denied'” … . “To defeat a defendant’s motion, the plaintiff has no burden of establishing its standing as a matter of law” … . Here, the defendant merely pointed to alleged gaps in the plaintiff’s case and failed to meet her burden of establishing, prima facie, the plaintiff’s lack of standing as a matter of law … . Cenlar FSB v Lanzbom, 2019 NY Slip Op 00092, Second Dept 1-9-19

 

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BANK’S PROOF OF THE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 INSUFFICIENT, BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank’s (Nationstar’s) motion for summary judgment in this foreclosure action should not have been granted. Defendant alleged in her answer that plaintiff did not comply with the notice requirements of Real Property Actions and Proceedings Law (RPAPL) 1304. Therefore, in moving for summary judgment, the band was required to demonstrate compliance with RPAPL 1304 and its evidence of compliance was insufficient because it did not meet the requirements of the business records exception to the hearsay rule:

“Generally, in moving for summary judgment in an action to foreclose a mortgage, a plaintiff establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default” … . However, where, as here, a defendant raises the issue of compliance with RPAPL 1304 as an affirmative defense, the moving party is also required to make a prima facie showing of strict compliance with RPAPL 1304 … . * * *

Here, Nationstar relied on the affidavit of its employee, Michael Woods, who averred, in relevant part, that “the 90-day notices required by statute were mailed to [d]efendant by regular and certified mail to the last known mailing address and to the property address on January 3, 2013,” and that the letters “were sent in separate envelopes from any other mailing or notice.” However, the record contains a single 90-day notice, bearing the plaintiff’s letterhead and addressed to the defendant at the subject property, with no clear indication as to whether the mailing was made by registered or certified mail, or by first-class mail. Moreover, Woods—who is not an employee of the plaintiff—did not aver in his affidavit to having any familiarity with the plaintiff’s mailing practices and procedures. Bank of Am., N.A. v Bittle, 2019 NY Slip Op 00086, Second Dept 1-9-19

Similar issue and result in Bank of Am., N.A. v Kljajic, 2019 NY Slip Op 00087, Second Dept 1-9-19

 

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BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE PROVISIONS OF THE MORTGAGE IN THIS FORECLOSURE PROCEEDING, THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined that the plaintiff bank did not demonstrate compliance with the notice provisions of the mortgage in this foreclosure proceeding. Therefore plaintiff’s motion for summary judgment should not have been granted:

… [T]hose branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against [defendant], to strike his answer, and for the appointment of a referee to ascertain and compute the amount due should have been denied. The statements in the affidavit of the plaintiff’s employee that was submitted in support of the motion failed to establish, prima facie, that the affiant mailed the required notice of default to [defendant] by first-class mail on any particular date, or actually delivered such notice to the designated address if sent by other means, which was required by the terms of the mortgage as a condition precedent to foreclosure … . Wells Fargo Bank, N.A. v Sakizada, 2019 NY Slip Op 00162, Second Dept 1-9-19

 

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JUDGE WAS NOT PRESENTED WITH ANY EXTRAORDINARY CIRCUMSTANCES JUSTIFYING, SUA SPONTE, DISMISSAL OF THE COMPLAINT IN THIS FORECLOSURE ACTION (SECOND DEPT)

The Second Department, reversing Supreme Court, determined there was no basis for the judge’s, sua sponte, dismissal of the complaint in this foreclosure action:

“A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal” … .

Administrative Order 548/10, issued by the Chief Administrative Judge on October 20, 2010, and amended by Administrative Order 431-11 [requiring confirmation of the accuracy of the execution and notarization of an affidavit of merit] … , was not in effect at the time the order of reference and the judgment of foreclosure and sale were issued …  . In this case, no substantial right of the defendant would have been affected by the substitution of a new affidavit of merit … . Accordingly, the Supreme Court was not presented with any extraordinary circumstances warranting sua sponte dismissal of the complaint … . LaSalle Bank N.A. v Lopez, 2019 NY Slip Op 00104, Second Dept 1-9-19

 

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DOCUMENTS SUBMITTED BY FANNIE MAE IN THIS FORECLOSURE ACTION DID NOT MEET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE, FANNIE MAE’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the evidence submitted by the plaintiff (Fannie Mae) in this foreclosure action did not meet the requirements of the business records exception to the hearsay rule and, therefore, plaintiff’s motion for summary judgment should not have been granted:

In support of those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendants and for an order of reference, Fannie Mae submitted affidavits of foreclosure specialists employed by Seterus, Inc., its loan servicer. The foreclosure specialists attested that they were personally familiar with the record-keeping practices and procedures of Seterus, Inc., but failed to lay a proper foundation for the admission of records concerning the defendants’ payment history and default. Accordingly, Fannie Mae failed to demonstrate that the records relied upon in the affidavits were admissible under the business records exception to the hearsay rule (see CPLR 4518[a] … ). Since Fannie Mae’s motion was based on evidence that was not in admissible form … , Fannie Mae failed to establish its prima facie entitlement to judgment as a matter of law, and those branches of its motion which were for summary judgment on the complaint insofar as asserted against the defendants and for an order of reference should have been denied, regardless of the sufficiency of the defendants’ papers in opposition … . Federal Natl. Mtge. Assn. v Marlin, 2019 NY Slip Op 00095, Second Dept 1-9-19

 

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