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THE BANK DID NOT SUPPLY THE DOCUMENTS RELIED ON TO SHOW DEFENDANT’S DEFAULT AND DID NOT LAY A PROPER FOUNDATION FOR THE DOCUMENTS RELIED ON TO SHOW COMPLIANCE WITH THE MAILING REQUIREMENTS OF RPAPL 1304; 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 plaintiff bank did not attach the business records relied on to prove defendant’s default and did not lay a proper foundation for the records purporting to show compliance with the mailing requirements of RPAPL 1304. Therefore the bank’s motion for summary judgment should not have been granted:

The plaintiff failed to demonstrate, prima facie, the defendant’s default in payment under the note. In her affidavit, Wallace [employee of the loan servicer] stated that the defendant failed to make certain payments due under the terms of the note and mortgage, but she failed to identify the records that she relied upon and did not attach those records to her affidavit … .

… The plaintiff relied upon Wallace’s affidavit, in which she averred that the RPAPL 1304 notice was sent to the defendant by certified and first-class mail. Although Wallace averred that she had personal knowledge of [the loan servicer’s] record-keeping practices and procedures, the business records she relied upon and attached to the affidavit were created by other entities. Wallace did not aver that she had personal knowledge of those entities’ business practices and procedures, or otherwise provide a proper foundation for the admission of those records … . U.S. Bank N.A. v Zakarin, 2022 NY Slip Op 05229, Second Dept 9-21-22

Practice Point: To prove a defendant’s default in a foreclosure action, the documents relied upon must be attached to the papers.

Practice Point: A proper foundation must be laid for documents relied upon to prove compliance with the mailing requirements of RPAPL 1304 in a foreclosure actions. Here the documents were not created by the affiant.

 

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THE BANK DID NOT COMPLY WITH THE “SEPARATE ENVELOPE” RULE OF RPAPL 1304 WHICH REQUIRES THAT NOTHING ELSE BE INCLUDED IN THE ENVELOPE WITH THE NOTICE OF FORECLOSURE; THE BANK SHOULD NOT HAVE BEEN AWARDED SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank in this foreclosure action did not comply with the “separate envelope” for the notice of foreclosure required by RPAPL 1304. Therefore the bank’s summary judgment motion should not have been granted:

… [T]he plaintiff failed to establish its prima facie entitlement to judgment as a matter of law, as it failed to show its strict compliance with RPAPL 1304(2). The “separate envelope” mandate of RPAPL 1304(2) provides 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 copies of the 90-day notice submitted by the plaintiff included additional notices not contemplated by RPAPL 1304(2). 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'” …. it failed to establish its strict compliance with RPAPL 1304 ,,, , Deutsche Bank Natl. Trust Co. v Ghosh, 2022 NY Slip Op 05076, Second Dept 8-31-22

Practice Point: If the bank includes other information in the envelope containing the notice of foreclosure, the bank has not complied with RPAPL 1304 and is not entitled to summary judgment.

 

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EVIDENCE OF COMPLIANCE WITH THE NOTICE-OF-FORECLOSURE MAILING REQUIREMENTS OF RPAPL 1304 FIRST SUBMITTED IN REPLY SHOULD NOT HAVE BEEN CONSIDERED; THE EVIDENCE THE BANK HAD STANDING TO BRING THE FORECLOSURE ACTION WAS INSUFFICIENT (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff’s proof of mailing of the foreclosure notice first submitted in reply should not have been considered, and plaintiff did not demonstrate it had standing to bring the foreclosure action:

… [T]he affidavits that the plaintiff appended to its moving papers failed to establish that the RPAPL 1304 notices were mailed by first-class mail in accordance with RPAPL 1304. While the plaintiff submitted an additional affidavit in reply, with proof of first-class mailing attached, this evidence should not have been considered in the determination of whether the plaintiff met its prima facie burden, as the issue which the new evidence was intended to address was not an issue raised for the first time in the defendants’ opposition, and the defendants were not afforded an opportunity to submit a surreply in response to the plaintiff’s newly submitted evidence in reply … . …

[Re; standing:] …[T]he plaintiff attached to the complaint copies of the 2003 note and 2004 note, which together constituted the consolidated note, and each note was accompanied by an undated purported allonge endorsed to the plaintiff. However, the plaintiff failed to demonstrate that the purported allonges, each of which was on a piece of paper completely separate from the corresponding note, was “so firmly affixed” to the corresponding note “as to become a part thereof,” as required by UCC 3-202(2) … . Wells Fargo Bank, N.A. v Murray, 2022 NY Slip Op 05110, Second Dept 8-31-22

Practice Point: Evidence of compliance with the notice-of-foreclosure mailing requirements of RPAPL 1304 first submitted in reply should not have been considered.

Practice Point: The bank did not demonstrate standing to bring the foreclosure action.

 

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ONCE PLAINTIFF’S FORECLOSURE ACTION WAS DISCONTINUED BY STIPULATION, THE FORECLOSURE COMPLAINT COULD BE AMENDED TO SEEK RECOVERY ON THE NOTE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the plaintiff, after its foreclosure action was discontinued, could amend the foreclosure complaint to seek recovery on the note:

“‘RPAPL 1301(3) . . . prohibits a party from commencing an action at law to recover any part of the mortgage debt while the foreclosure proceeding is pending or has not reached final judgment, without leave of the court in which the foreclosure action was brought'” ( … see RPAPL 1301[3]). Conversely, “‘where a foreclosure action is no longer pending and did not result in a judgment in the plaintiff’s favor, the plaintiff is not precluded from commencing a separate action without leave of the court'” … .

Here, pursuant to the so-ordered stipulation and the plaintiff’s release of the mortgage, the cause of action to foreclose the mortgage was, in effect, discontinued, without the entry of any judgment in the plaintiff’s favor … . Since the cause of action to foreclose the mortgage was no longer pending, the plaintiff was not precluded from seeking to recover on the note by RPAPL 1301(3), “‘a statute which must be strictly construed'” … .

Furthermore, “there is no reason the plaintiff could not seek such relief by seeking leave to amend its complaint, rather than by commencing a new action” … . Stewart Tit. Ins. Co. v Zaltsman, 2022 NY Slip Op 05107, Second Dept 8-31-22

Practice Point: Here the foreclosure action was discontinued and plaintiff was allowed to amend the foreclosure complaint to seek recovery on the note.

 

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AN ACTION FOR “STRICT FORECLOSURE” PURSUANT TO RPAPL 1352 ALLOWS THE PURCHASER OF FORECLOSED PROPERTY TO EXTINGUISH ANY POTENTIAL CLAIM TO THE PROPERTY BY A NECESSARY PARTY NOT INCLUDED IN THE ORIGINAL FORECLOSURE PROCEEDINGS (SECOND DEPT). ​

he Second Department explained that an action for “strict foreclosure” pursuant to RPAPL 1352 is properly brought by the purchaser of foreclosed property to extinguish any claim to the property by a necessary party who not named in the foreclosure action:

Where, as here, a necessary party was omitted from a foreclosure action, the purchaser of the foreclosed property may commence a strict foreclosure action pursuant to RPAPL 1352 … . “RPAPL 1352 permits a strict foreclosure action against a person not named in the original foreclosure action, who has either a right of redemption to the subject property or a right to foreclose a subordinate mortgage or other lien” … . The statute authorizes the court to issue a judgment that fixes a time period within which any such person must act to redeem or begin a foreclosure action. If the person fails to redeem the property or commence a foreclosure action within the time period fixed by the court, such person “shall be excluded from claiming any title or interest in such property and all title or interest of such person . . . or the right to foreclose a subordinate mortgage or other lien against such property shall thereby be extinguished and terminated” … . “Since RPAPL 1352 operates to dispose of the encumbrances of those whose interests were junior at the time of the original foreclosure but who were not joined as parties to that action, a judgment of strict foreclosure cures a defect in the judgment or sale under the first foreclosure” … . 71-21 Loubet, LLC v Bank of Am., N.A., 2022 NY Slip Op 05012, Second Dept 8-24-22

Practice Point: Pursuant to RPAPL 1352, the purchaser of foreclosed property can extinguish any potential claim to the property by a necessary party not included in the original foreclosure proceedings.

 

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PLAINTIFF BANK DID NOT DEMONSTRATE THE RPAPL 1304 NOTICE OF FORECLOSURE WAS PROPERLY MAILED AND THE DEFECT COULD NOT BE CURED BY THE SECOND AFFIDAVIT SUBMITTED IN REPLY (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff bank did not demonstrate compliance with the mailing requirements of RPAPL 1304 and the defect was not cured by an affidavit submitted in reply:

… [T]he plaintiff submitted the affidavit of Kolette Modlin, an authorized officer of Caliber Home Loans, Inc. (hereinafter Caliber), the loan servicer for the plaintiff’s successor in interest. Modlin stated that she had reviewed the plaintiff’s business records, which had been verified for accuracy, incorporated into Caliber’s records, and relied upon by Caliber in the ordinary course of its business, and determined that 90-day notices were mailed by first-class and certified mail to the defendant at the mortgaged premises. The plaintiff also submitted copies of the 90-day notices that were allegedly sent to the defendant. However, the plaintiff failed to attach, as exhibits to the motion, any documents establishing that the notices were actually mailed … . Moreover, although Modlin attested that she had personal knowledge of Caliber’s records, and that those records included the plaintiff’s records, Modlin did not attest to knowledge of the mailing practices of the plaintiff, which was the entity that allegedly sent the 90-day notices to the defendant … . Contrary to the plaintiff’s contention, although it submitted with its reply papers a second affidavit from Modlin, along with documentary evidence in the form of a letter log purportedly establishing the mailing of the 90-day notices, the plaintiff could not, under the circumstances, rely on the second affidavit to correct deficiencies inherent in the original one … . Ditech Fin., LLC v Cummings, 2022 NY Slip Op 04949, Second Dept 8-17-22

Practice Point: Plaintiff bank did not submit the records proving the notice of foreclosure was properly mailed and the affiant did not demonstrate familiarity with the mailing procedures used by the party which mailed the notice. The defects were not cured by a second affidavit submitted in reply. The bank’s motion for summary judgment should not have been granted.

 

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THE BANK DID NOT PROVE COMPLIANCE WITH THE RPAPL 1304 NOTICE-OF-FORECLOSURE MAILING REQUIREMENTS; THE JUDGE SHOULD NOT HAVE, SUA SPONTE, DISMISSED THE FORECLOSURE COMPLAINT (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the plaintiff bank in this foreclosure action did not prove compliance with the mailing requirements for mailing the RPAPL 1304 notice and the judge should not have, sua sponte, dismissed the complaint:

… [P]laintiff failed to submit sufficient evidence to demonstrate that the required RPAPL 1304 notice was sent by first-class mail. In an affidavit in support of its motion, Joanna M. Gloria, the plaintiff’s vice president of loan documentation, neither attested that she had personal knowledge of the mailing, nor did she present proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed. “‘[T]he mere assertion that the notice was mailed, supported by someone with no personal knowledge of the mailing, in the absence of proof of office practices to ensure that the item was properly mailed, does not give rise to the presumption of receipt'” … . …

… [T]he Supreme Court erred in, sua sponte, directing dismissal of the complaint. “A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal” … . No extraordinary circumstances were present in this case, as the “failure to comply with RPAPL 1304 is not jurisdictional” … , the defendant did not present any proof as to the plaintiff’s failure to comply with RPAPL 1304, and did not cross-move for summary judgment dismissing the complaint insofar as asserted against him. Wells Fargo Bank, N.A. v Cascarano, 2022 NY Slip Op 04998, Second Dept 8-17-22

Practice Point: The bank did not prove the notice of foreclosure was properly mailed, requiring denial of the bank’s motion for summary judgment. But the judge should not have, sua sponte, dismissed the foreclosure complaint.

 

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THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE MAILING REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

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

… [P]laintiff failed to submit an affidavit of service or proof of mailing by the United States Postal Service evidencing that it properly served the defendants. Instead, the plaintiff relied on the affidavit of Carlos Bernal, an authorized representative of the plaintiff’s loan servicing company. Although Bernal averred to have personal knowledge of the company’s record keeping systems, he did not purport to be familiar with the office procedure for mailing notices once they have been generated, and, therefore, he did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed … . Further, the unsigned certified mail receipts, bearing no postmark from the United States Postal Service, do not prove that the notices were actually mailed … , and, in any event, the plaintiff produced no evidence that the notices were mailed by regular first-class mail … . Since 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 someone with personal knowledge of the procedure, the plaintiff failed to establish its strict compliance with RPAPL 1304… . Pennymac Corp. v Levy, 2022 NY Slip Op 04732, Second Dept 7-27-22

Practice Point: The bank in a foreclosure action must demonstrate strict compliance with the requirements for mailing the RPAPL 1304 notice. Failure to demonstrate strict compliance with the mailing requirements with admissible evidence precludes summary judgment.

 

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THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH RPAPL 1303 WHICH REQUIRES THE NOTICE OF FORECLOSURE TO USE SPECIFIC TYPE SIZES AND A PAPER-COLOR DIFFERENT FROM THE SUMMONS AND COMPLAINT; THE BANK’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff  bank in this foreclosure action did not demonstrate strict compliance with RPRL 1303, which requires that the notice of foreclosure use certain sizes of type and a different color paper:

RPAPL 1303 requires that a notice titled “Help for Homeowners in Foreclosure” be delivered to the mortgagor along with the summons and complaint in residential foreclosure actions involving owner-occupied, one- to four-family dwellings (see RPAPL 1303[1],[3] …). The statute mandates that the notice be in bold, 14-point type and printed on colored paper that is other than the color of the summons and complaint, and that the title of the notice be in bold, 20-point type (see RPAPL 1303[2]). Proper service of an RPAPL 1303 notice is a condition precedent to commencing a foreclosure action, and the plaintiff has the burden of showing compliance with the statute … . Bank of N.Y. Mellon v McCaffrey, 2022 NY Slip Op 04619, Second Dept 7-20-22

Practice Point: In a foreclosure action, the bank’s strict compliance with the notice requirements in the Real Property Actions and Proceedings Law (RPAPL) is a condition precedent for the action. Here the bank did not demonstrate that the notice of foreclosure complied with RPAPL 1303 which requires certain type sizes and a paper-color different from that of the summons and complaint. The bank’s motion for summary judgment should not have been granted.

 

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THE BANK’S PROOF THAT THE RPAPL 1304 NOTICE OF FORECLOSURE WAS MAILED TO THE DEFENDANTS WAS INSUFFICIENT; THE BANK’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that plaintiff bank did not demonstrate compliance with the notice requirements of RPAPL 1304 and therefore should not have been awarded summary judgment in this foreclosure action:

The affidavits of Daphne Proctor, Theresa Robertson, and April Martin, all of whom were document execution specialists employed by Nationstar Mortgage, LLC (hereinafter Nationstar), the plaintiff’s loan servicer, were insufficient to establish that the plaintiff complied with RPAPL 1304. Proctor, Robertson, and Martin attested that they were familiar with Nationstar’s records and record-keeping practices, but they failed to attest that they personally mailed the notices or that they were familiar with the mailing practices and procedures of Nationstar. Moreover, Martin attested that the plaintiff mailed the notices, but neither she nor Proctor or Robertson attested that they were familiar with the plaintiff’s mailing practices and procedures. Therefore, they failed to establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed … . The plaintiff also failed to submit any domestic return receipts or other documentation from the United States Postal Service proving the certified and first-class mailing … . The presence of numbered bar codes on the envelopes and the copies of the 90-day notices submitted by the plaintiff did not suffice to establish, prima facie, proper mailing under RPAPL 1304 … . Bank of N.Y. Mellon Corp. v Salvador, 2022 NY Slip Op 04618, Second Dept 7-20-22

Practice Point: These foreclosure summary-judgment reversals based on the bank’s failure to  submit sufficient proof of the mailing of the RPAPL 1304 notice of foreclosure to the defendants just keep coming, week after week, year after year.

 

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