Real Property Actions and Proceedings Law (RPAPL)

IN THIS FORECLOSURE ACTION, A PARTY WHO DID NOT SIGN THE NOTE BUT DID SIGN THE MORTGAGE IS A “BORROWER” ENTITLED TO RPAPL 1304 NOTICE; PLAINTIFF BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that a borrower, Ellen Weininger, who signed the mortgage but not the note, was entitled to notice of foreclosure pursuant to RPAPL 1304:

… [I]t is undisputed that the plaintiff failed to serve Ellen Weininger with timely notice pursuant to RPAPL 1304, and, contrary to the plaintiff’s contention, Ellen Weininger was entitled to such notice as a “borrower” within the meaning of that statute. Although Ellen Weininger did not sign the underlying note, both of the defendants executed the mortgage as a “borrower.” Where, as here, a homeowner defendant is referred to as a “borrower” in the mortgage instrument and, in that capacity, agrees to pay amounts due under the note, that defendant is a “borrower” for the purposes of RPAPL 1304, notwithstanding the absence of a consolidation, extension, and modification agreement signed by that defendant or any ambiguity created by a provision in the mortgage instrument to the effect that parties who did not sign the underlying note are not personally obligated to pay the sums secured … . Since Ellen Weininger signed the mortgage as a “borrower” and, in that capacity, agreed to pay the amounts due under the note, she was entitled to timely notice pursuant to RPAPL 1304 … As the plaintiff conceded that it did not send the requisite notice pursuant to RPAPL 1304 to Ellen Weininger until 17 days before commencement of this action, it failed to meet its prima facie burden of establishing compliance with RPAPL 1304, and those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the defendants, to strike their answer, and for an order of reference should have been denied. Deutsche Bank Natl. Trust Co. v Weininger, 2022 NY Slip Op 04008, Second Dept 6-22-22

Practice Point: In this foreclosure proceeding, a party who did not sign the note but did sign the mortgage is a “borrower” entitled to the notice required by RPAPL 1304.

June 23, 2022/0 Comments/by Bruce Freeman

Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

COMPLIANCE WITH THE NOTICE PROVISIONS OF RPAPL 1304, PARTICULARLY THE MAILING REQUIREMENTS, WAS NOT SHOWN IN THIS FORECLOSURE ACTION (SECOND DEPT).

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

… [A}lthough the plaintiff submitted a certified mail receipt, the receipt did not contain a postal stamp, indication that postage was paid, or an attendant signature, and the plaintiff did not submit any United States Postal Service tracking information … . The affidavit of Nancy Sczubleski, submitted by the plaintiff for the first time in opposition to the defendant’s cross motion, also failed to establish strict compliance with RPAPL 1304. Sczubleski did not have personal knowledge of the purported mailing … . Furthermore, while Sczubleski averred that she was familiar with the plaintiff’s mailing practices and procedures, the notices submitted by the plaintiff in support of its motion for summary judgment indicate that they were not mailed by the plaintiff, but rather were mailed by an entity known as MGC Mortgage, Inc. (hereinafter MGC). Sczubleski, who stated in her affidavit that she was employed by Dovenmuehle Mortgage, Inc., a sub-servicer of the loan, does not address this fact at all, let alone demonstrate that she was familiar with MGC’s mailing practices and procedures … . LNV Corp. v Allison, 2022 NY Slip Op 03716, Second Dept 6-8-22

Practice Point: Yet another example of the mortgagee’s failure to demonstrate the RPAPL 1304 notice was properly mailed in its foreclosure motion papers.

June 8, 2022/0 Comments/by Bruce Freeman

Civil Procedure, Real Property Actions and Proceedings Law (RPAPL), Real Property Law

ALTHOUGH DEFENDANT’S MOTION TO AMEND ITS ANSWER (ADDING AFFIRMATIVE DEFENSES) WAS MADE AFTER A TWO-YEAR DELAY, THE DELAY ALONE DID NOT DEMONSTRATE THE PLAINTIFF WAS PREJUDICED; THE MOTION TO AMEND SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant’s motion to amend its answer to add additional affirmative defenses should have been granted. The two-year delay was not enough to show plaintiff was prejudiced. Discovery was ongoing:

The court should have granted defendant’s motion to amend its answer to add the four affirmative defenses of RPAPL 1951, adverse possession, mutual breach, and unclean hands, as leave to amend is freely given and plaintiff did not show that it would be prejudiced by the delay in asserting the defenses (CPLR 3025[b] …). While over two years had passed since defendant served its original answer, discovery was still ongoing … . Plaintiff’s claim of significant prejudice is unpersuasive, as all it points to is mere delay, which is insufficient to show prejudice … . Nor did plaintiff rebut defendant’s showing that the proffered amendment is not palpably insufficient or clearly devoid of merit … . Board of Mgrs. of the Porter House Condominium v Delshah 60 Ninth LLC, 2022 NY Slip Op 03680, First Dept 6-7-22

Practice Point: Here defendant moved to amend its answer by adding affirmative defenses two years after the answer was served. Discovery was still ongoing. The delay alone was not enough to demonstrate the plaintiff was prejudiced. The motion to amend should have been granted.

June 7, 2022/0 Comments/by Bruce Freeman

Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

PLAINTIFF BANK DID NOT SEND THE 90-DAY FORECLOSURE NOTICE IN A SEPARATE ENVELOPE AS REQUIRED BY RPAPL 1304; THEREFORE THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED AND DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD 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 because the plaintiff did not sent the RPAPL 1304 notice in a separate envelope. Defendants’ motion for summary judgment should have been granted for the same reason:

… [T]he copies of the 90-day notice submitted by the plaintiff in support of its motion included additional notices not contemplated by RPAPL 1304(2). The plaintiff acknowledged that the envelopes it sent to the defendants, which contained the requisite RPAPL 1304 notice, also included a separate notice pertaining to the rights of a debtor in military service and a debtor in bankruptcy, among others. This Court recently determined, in Bank of America, N.A. v Kessler (202 AD3d 10), that RPAPL 1304(2) requires that the requisite notice under its provision be mailed in an envelope separate from any other notice. Since the plaintiff failed to demonstrate that the RPAPL 1304 notice was “served in an envelope that was separate from any other mailing or notice” … . …

… [A]s the defendants established their prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against them “by showing that the plaintiff failed to comply with RPAPL 1304 when it sent additional material in the same envelopes as the requisite notice under RPAPL 1304,” and as the plaintiff failed to raise a triable issue of fact in opposition, the Supreme Court should have granted the defendants’ cross motion for summary judgment dismissing the complaint insofar as asserted against them … . Wells Fargo Bank N.A. v Bedell, 2022 NY Slip Op 03413, Second Dept 5-25-22

Practice Point: If the bank doesn’t send the foreclosure notice required by RPAPL 1304 in a separate envelope, the defendants in the foreclosure action are entitled to summary judgment.

May 25, 2022/by Bruce Freeman

Civil Procedure, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

ONLY AN EXPRESS ACKNOWLEDEMENT OF THE MORTGAGE DEBT PURSUANT TO GENERAL OBLIGATIONS LAW 17-105 COULD REVIVE OR TOLL THE STATUTE OF LIMITATIONS IN THIS FORECLOSURE ACTION; THE REFERENCES TO THE MORTGAGE DEBT IN FINANCIAL STATEMENTS AND TAX RETURNS PROVIDED TO THE MORTGAGOR BY THE MORTGAGEE WERE NOT ENOUGH (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Troutman, over an extensive two-judge dissent, determined that the statute of limitations on the underlying foreclosure action was not tolled based upon acknowledgments of the mortgage debt in financial statements and tax returns. Rather, pursuant to General Obligations Law 17-105, only and express promise to pay the debt would revive an otherwise expired statute of limitations:

The primary question presented by this appeal is which section of article 17 of the General Obligations Law governs the tolling or revival of the statute of limitations period in an action pursuant to Real Property Actions and Proceedings Law (RPAPL) § 1501 (4). RPAPL § 1501 (4) allows a party to cancel a mortgage where the limitations period for commencing a foreclosure action has expired. We hold that General Obligations Law section 17-105, not section 17-101, governs whether the statute of limitations has been tolled or revived in such an action. * * *

Under General Obligations Law § 17-105 (1), the Partnership’s (mortgagee’s) actions in this case could only toll or revive the statute of limitations for the Council (mortgagor) to bring a foreclosure action if the Partnership made an “express” “promise to pay the mortgage debt.” Accordingly, the Appellate Division correctly concluded that the Partnership’s delivery of its financial statements and tax returns to Council did not meet the requirements of section 17-105 (1) because they were not express promises to pay the mortgage debt (189 AD3d at 28). Batavia Townhouses, Ltd. v Council of Churches Hous. Dev. Fund Co., Inc., 2022 NY Slip Op 03361, CtApp 5-24-22

Practice Point: Here references to the mortgage debt in financial statements and tax returns provided to the mortgagor by the mortgagee did not revive or toll the statute of limitations on the underlying foreclosure action. Pursuant to General Obligations Law 17-105, only an express acknowledgement of the mortgage would revive the action.

May 24, 2022/by Bruce Freeman

Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

IN THIS FORECLOSURE ACTION, THE RPAPL 1304 NOTICE DID NOT INCLUDE THE REQUIRED INFORMATION AND THE PROOF OF MAILING OF THE NOTICE WAS DEFICIENT; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined proof of mailing of the RPAPL 1304 notice and failure to comply with the content-requirements for the RPAPL 1304 notice in this foreclosure action warranted denial of the plaintiff’s motion for summary judgment:

The respondent failed to establish the plaintiff’s strict compliance with RPAPL 1304. The respondent submitted an affidavit of Alfreda Johnson, a “Foreclosure Specialist” of Fay Servicing, LLC (hereinafter Fay), the plaintiff’s servicer. Johnson did not have personal knowledge of the purported mailing … . Furthermore, while Johnson averred that she was familiar with Fay’s mailing practices and procedures, the record indicates that the notices were not mailed by Fay. The record indicates that the notices were mailed by an entity known as “Seterus” … . Johnson does not address this fact at all, let alone demonstrate that she was familiar with Seterus’s mailing practices and procedures. Thus, the respondent failed to establish that the 90-day notices were properly mailed in strict compliance with RPAPL 1304 … .

Moreover, the content of the 90-day notices did not strictly comply with RPAPL 1304 … . Here, the 90-day notices omitted information that was required by RPAPL 1304 … . Prof-2014-S2 Legal Tit. Trust II v DeMarco, 2022 NY Slip Op 03263, Second Dept 5-18-22

Practice Point: Here, in this foreclosure action, not only was proof of mailing the RPAPL 1304 notice insufficient, but the notice did not include all the required information.

May 18, 2022/by Bruce Freeman

Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE “SEPARATE ENVELOPE” RULE AND THEREFORE DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; THE BANK’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank in this foreclosure action failed to demonstrate the 90-day notice required by RPAPL 1304 was sent to the defendant in a separate envelope:

RPAPL 1304(2) also provides, in relevant part, that “[t]he notices required by this section shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice.”

The plaintiff failed to establish, prima facie, that it sent 90-day notices to the defendant “in a separate envelope from any other mailing or notice” … . Since the plaintiff failed to establish, prima facie, its strict compliance with RPAPL 1304, the Supreme Court should have denied those branches of the plaintiff’s motion which were for summary judgment on the complaint insofar as asserted against the defendant and dismissing his answer with affirmative defenses and for an order of reference, regardless of the sufficiency of the opposing papers … . Deutsche Bank Natl. Trust Co. v Bonal, 2022 NY Slip Op 03230, Second Dept 5-18-22

Practice Point: To warrant summary judgment in a foreclosure action, the bank must demonstrate that the RPAPL 1304 notice was sent to each borrower in a separate envelope which includes no other materials.

May 18, 2022/by Bruce Freeman

Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE BANK DID NOT RAISE A QUESTION OF FACT ABOUT WHETHER IT VIOLATED THE SEPARATE-ENVELOPE RULE 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 defendants demonstrated the bank in this foreclosure action did not demonstrate compliance with the notice requirements of RPAPL 1304, which requires the notice of foreclosure be mailed in a separate envelope which includes nothing else:

… [T]he defendants established that the plaintiff failed to strictly comply with RPAPL 1304, on the ground that additional information was included in the same envelope as the 90-day notice required by RPAPL 1304 … . The plaintiff failed to raise a triable issue of fact in opposition. HSBC Bank USA, N.A. v Hibbert, 2022 NY Slip Op 03102. Second Dept 5-11-22

Practice Point: RPAL 1304 is violated if the bank in a foreclosure action mailed the notice of foreclosure to the borrower(s) in an envelope which included other materials along with the notice.

May 11, 2022/by Bruce Freeman

Civil Procedure, Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE BANK’S AFFIDAVIT IN THIS FORECLOSURE ACTION DID NOT LAY A SUFFICIENT FOUNDATION FOR THE ADMISSIBILITY OF BUSINESS RECORDS, INCLUDING PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the bank’s proof of compliance with the notice requirements of RPAPL 1304 was deficient because the foundation for the admission of business records was not laid:

… [T]he plaintiff submitted … an affidavit of an employee of its current mortgage loan servicer, along with copies of the 90-day notice, which was generated by the plaintiff’s prior loan servicer, along with alleged proof of mailing, which was also generated by the prior loan servicer. The affiant averred … that the current mortgage loan servicer is responsible for maintaining the books and records pertaining to the subject mortgage, “including, but not limited to, the account ledgers, and prior servicer’s records.” However, the affiant did not aver to her familiarity with the prior loan servicer’s business practices and procedures, or that the prior loan servicer’s records were incorporated into the current loan servicer’s records. Thus, the plaintiff’s moving affidavit failed to satisfy the admissibility requirements of CPLR 4518(a) … , and the prior loan servicer’s records, including the 90-day notice, were not admissible … . “Accordingly, the plaintiff failed to demonstrate, prima facie, that it complied with the notice provision of RPAPL 1304” … . Bank of N.Y. Mellon v Basta, 2022 NY Slip Op 02971, Second Dept 5-4-22

Practice Point: In a foreclosure action, at the summary judgment stage, even if business records demonstrating the bank’s compliance with the notice requirements of RPAPL 1304 are submitted, they are not admissible unless a proper foundation (CPLR 4518(a)) is laid in the accompanying affidavit.

May 4, 2022/by Bruce Freeman

Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; I.E., THE NOTICE MUST BE MAILED IN A SEPARATE ENVELOPE WITH NO OTHER MATERIALS, AND THE NOTICE MUST BE SENT SEPARATELY TO EACH BORROWER (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined plaintiff did not comply with the RPAPL 1304 requirements that the 90-day notice of foreclosure be mailed in a separate envelope and that the notice be sent separately to both borrowers:

… [T]he plaintiff failed to establish … that it strictly complied with RPAPL 1304, since additional material was sent in the same envelope as the 90-day notice required by RPAPL 1304 … , and a single notice was jointly addressed to both defendants … . HSBC Bank USA, N.A. v DiBenedetti, 2022 NY Slip Op 02983, Second Dept 5-4-22

Practice Point: RPAPL 1304, which must be strictly complied with by the bank in any foreclosure action, requires (1) that the 90-day notice of foreclosure be sent in a separate envelope which includes nothing else and (2) that the 90-day notice be sent separately to each borrower.

May 4, 2022/by Bruce Freeman

IN THIS FORECLOSURE ACTION, A PARTY WHO DID NOT SIGN THE NOTE BUT DID SIGN THE MORTGAGE IS A “BORROWER” ENTITLED TO RPAPL 1304 NOTICE; PLAINTIFF BANK’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

COMPLIANCE WITH THE NOTICE PROVISIONS OF RPAPL 1304, PARTICULARLY THE MAILING REQUIREMENTS, WAS NOT SHOWN IN THIS FORECLOSURE ACTION (SECOND DEPT).

ALTHOUGH DEFENDANT’S MOTION TO AMEND ITS ANSWER (ADDING AFFIRMATIVE DEFENSES) WAS MADE AFTER A TWO-YEAR DELAY, THE DELAY ALONE DID NOT DEMONSTRATE THE PLAINTIFF WAS PREJUDICED; THE MOTION TO AMEND SHOULD HAVE BEEN GRANTED (FIRST DEPT).

PLAINTIFF BANK DID NOT SEND THE 90-DAY FORECLOSURE NOTICE IN A SEPARATE ENVELOPE AS REQUIRED BY RPAPL 1304; THEREFORE THE BANK’S MOTION FOR SUMMARY JUDGMENT IN THIS FORECLOSURE ACTION SHOULD NOT HAVE BEEN GRANTED AND DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (SECOND DEPT).

IN THIS FORECLOSURE ACTION, THE RPAPL 1304 NOTICE DID NOT INCLUDE THE REQUIRED INFORMATION AND THE PROOF OF MAILING OF THE NOTICE WAS DEFICIENT; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

THE BANK DID NOT DEMONSTRATE COMPLIANCE WITH THE “SEPARATE ENVELOPE” RULE AND THEREFORE DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; THE BANK’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

THE BANK DID NOT RAISE A QUESTION OF FACT ABOUT WHETHER IT VIOLATED THE SEPARATE-ENVELOPE RULE IN THIS FORECLOSURE ACTION; THE BANK’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

THE BANK’S AFFIDAVIT IN THIS FORECLOSURE ACTION DID NOT LAY A SUFFICIENT FOUNDATION FOR THE ADMISSIBILITY OF BUSINESS RECORDS, INCLUDING PROOF OF COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE NOTICE REQUIREMENTS OF RPAPL 1304; I.E., THE NOTICE MUST BE MAILED IN A SEPARATE ENVELOPE WITH NO OTHER MATERIALS, AND THE NOTICE MUST BE SENT SEPARATELY TO EACH BORROWER (SECOND DEPT).

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