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THE BORROWER’S APPLICATION FOR A LOAN MODIFICATION DID NOT RELIEVE THE BANK OF THE RPAPL 1304 NOTICE REQUIREMENTS IN THIS FORECLOSURE ACTION; THE BANK DID NOT PROVIDE SUFFICIENT PROOF OF THE MAILING OF THE NOTICE (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined (1) the bank was still required to provide the RPAPL1304 notice despite the application for a loan modification, and (2) the proof of mailing the notice was insufficient. The court noted that proof of mailing submitted for the first time in reply cannot be considered as part of the bank’s prima facie case:

When the instant action was commenced, RPAPL 1304(3) provided: “The ninety day period specified in the notice[ ] contained in [RPAPL 1304(1)] shall not apply, or shall cease to apply, if the borrower has filed [an application for the adjustment of debts of the borrower or an order for relief from the payment of debts], or if the borrower no longer occupies the residence as the borrower’s principal dwelling” … . A loan modification was not an adjustment of debts within the meaning of the version of RPAPL 1304(3) then in effect and, in any event, a lender was relieved only from the requirement to provide notice within the “ninety day period” (RPAPL 1304[3]), not from the requirement to provide the notice specified in RPAPL 1304(1) … . …

US Bank failed to establish, prima facie, that it complied with RPAPL 1304. Although Ubinas stated in her affidavit that the RPAPL 1304 notices were mailed by certified and regular first-class mail, and attached copies of those notices, of an envelope addressed to the defendant bearing a certified mail 20-digit barcode, and of an envelope bearing a first-class mail postage stamp, US Bank failed to attach, as exhibits to the motion, any documents to prove that the mailing actually occurred. There is no copy of any United States Post Office document indicating that the notice was sent by registered or certified mail as required by the statute. Further, while Ubinas attested that she had personal knowledge of the record-making practices of Ocwen, and that the 90-day notice was sent in compliance with RPAPL 1304, she did not attest to knowledge of the mailing practices of the Law Offices of McCabe, Weisberg, and Conway, P.C., the entity that allegedly sent the notices to the defendant on behalf of Ocwen. On appeal, US Bank relies upon the signed certified mail return receipt submitted in reply. The moving party, however, cannot meet its prima facie burden by submitting evidence for the first time in reply … . U.S. Bank N.A. v Hammer, 2021 NY Slip Op 01439, Second Dept 3-10-21

 

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IN THIS FORECLOSURE ACTION, THE JUDGE SHOULD HAVE FIRST DETERMINED WHETHER ANY DISTRIBUTEES OF THE DECEASED MORTGAGORS WERE NECESSARY PARTIES [RPAPL 1311 (1)] AND, IF SO, SUMMON THEM PURSUANT TO CPLR 1001 [b]; THE MOTION TO DISMISS FOR FAILURE TO JOIN NECESSARY PARTIES SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there were questions of fact whether any distributees of the deceased mortgagors were necessary parties in this foreclosure action. The motion to dismiss for failure to join necessary parties should not have been granted. The court should have determined whether joinder of any parties was required and then summon them pursuant to CPLR 1001 [b]:

Pursuant to RPAPL 1311(1), “necessary defendants” in a mortgage foreclosure action include, among others, “[e]very person having an estate or interest in possession, or otherwise, in the property as tenant in fee, for life, by the curtesy, or for years, and every person entitled to the reversion, remainder, or inheritance of the real property, or of any interest therein or undivided share thereof, after the determination of a particular estate therein.”

“In certain circumstances, the estate of the mortgagor is not a necessary party to a mortgage foreclosure action” … . In particular, “where a mortgagor/property owner dies intestate and the mortgagee does not seek a deficiency judgment, generally a foreclosure action may be commenced directly against the distributees,” in whom title to the real property automatically vests … .

Here, the plaintiff did not seek a deficiency judgment. However, questions of fact existed, which should have been resolved by the Supreme Court, as to whether any distributees of the deceased mortgagors, other than the defendants herein, retained an interest in the property such that they were necessary parties to the foreclosure action. Further, to the extent that there were such necessary parties to the action, dismissal of the complaint was not the proper remedy; rather, the property remedy in such instance is to direct the joinder of those parties (see CPLR 1001[b] … . NRZ Pass-Through Trust IV v Tarantola, 2021 NY Slip Op 01423, Second Dept 3-10-21

 

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THE DEFAULT NOTIFICATION LETTER DID NOT ACCELERATE THE DEBT BECAUSE IT DID NOT STATE THE DEBT WAS DUE AND PAYABLE IMMEDIATELY; THE BANK DID NOT DEMONSTRATE THE PROPER MAILING OF THE RPAPL 1304 NOTICE (THIRD DEPT)

The Third Department, reversing Supreme Court, determined plaintiff bank was not entitled to summary judgment in this foreclosure action. The court held the action had never been dismissed pursuant to CPLR 3216 because no 90-day notice requiring the filing of a note of issue had been given. The foreclosure action was timely because the letter which defendants argued had accelerated the debt did not unambiguously state that the full mortgage debt had become due and payable immediately. However proof of the mailing of the the RPAPL 1304 notice was not sufficient:

The December 28, 2009 letter advised Mausler [defendant] that he was in default and that he could cure this default by making a payment “within thirty days from the date of this letter.” The letter further stated that “[i]f you do not cure this default within the specified time period, your obligation for payment of the entire unpaid balance of the loan will be accelerated and become due and payable immediately” … . Additionally, the letter provided that if the amount due was not paid, “foreclosure proceedings may commence to acquire the [p]roperty by foreclosure and sale” … . The Court of Appeals, however, recently explained that such language does not evince an intent by the noteholder to “seek immediate payment of the entire, outstanding loan, but referred to acceleration only as a future event”… . Accordingly, contrary to defendants’ contention, the December 2009 letter did not constitute a valid acceleration of the debt so as to trigger the applicable statute of limitations. …

Plaintiff relies on the affidavit from the loan servicing associate to demonstrate compliance with RPAPL 1304. The associate, however, “did not attest to familiarity with or provide any proof of the mailing procedures utilized by the party that allegedly mailed the RPAPL 1304 notice” … . Wilmington Trust, Natl. Assn. v Mausler, 2021 NY Slip Op 01296, Third Dept 3-4-21

 

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RPAPL 1304 AND 1302-a DO NOT APPLY WHERE THE LOAN SUBJECT TO FORECLOSURE IS NOT A “HOME LOAN;” COMPLIANCE WITH RPAPL 1303 IS A CONDITION PRECEDENT TO FORECLOSURE BUT FAILURE TO COMPLY CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL; FAILURE TO PROVIDE NOTICE OF DEFAULT CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff’s motion for summary judgment in this foreclosure action should have been granted. The Second Department noted: (1) RPAPL 1304 (re: notice) and 1302-a (re: standing) do not apply where the subject loan is not a “home loan” because the property was not defendant’s principal dwelling;  (2) compliance with the notice requirements of RPAPL 1303 is a condition precedent to the commencement of a foreclosure action, but the issue cannot be raised for the first time on appeal; (3) the failure to provide notice of default as required by the mortgage cannot be raised for the first time on appeal. Nationstar Mtge., LLC v Gayle, 2021 NY Slip Op 08194, Second Dept 2-24-21

 

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COMPLIANCE WITH THE NOTICE REQUIREMENT OF RPAPL 1304 WAS NOT PROVEN IN THIS FORECLOSURE ACTION; PROOF REQUIREMENTS EXPLAINED IN SOME DETAIL (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff mortgage company did not demonstrate compliance with the notice requirements of RPAPL 1304:

RPAPL 1304(1) provides that, “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower . . . , including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.” “The statute further 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” … . Strict compliance with RPAPL 1304 notice to the borrower is a condition precedent to the commencement of a foreclosure action … . “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 only purported evidence submitted by the plaintiff in support of its motion to show that it complied with RPAPL 1304 was a hearsay statement in the affidavit of the plaintiff’s legal affairs representative. Moreover, contrary to the plaintiff’s assertions, the 90-day notice which was attached to her affirmation does not demonstrate that the mailing requirements of RPAPL 1304 were met … . The plaintiff failed to submit an affidavit of service or proof of first-class mailing by the United States Postal Service evidencing that the defendant was served by first-class mail in accordance with RPAPL 1304 … . The plaintiff not only failed to provide proof of the actual first-class mailing, but its legal affairs representative also lacked personal knowledge of the purported mailing and did not aver that she was familiar with the mailing practices and procedures of the entity that purportedly sent the notices … . Thus, the plaintiff submitted no evidence that the letter had been sent to the defendant by first-class mail more than 90 days prior to commencement of the action … . 21st Mtge. Corp. v Broderick, 2021 NY Slip Op 00825, Second Dept 2-10-21

 

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FAILURE TO INCLUDE THE LACK OF STANDING DEFENSE IN THE ANSWER IS NO LONGER DEEMED A WAIVER OF THE DEFENSE; DEFENDANT IN THIS FORECLOSURE ACTION SHOULD HAVE BEEN ALLOWED TO AMEND HER ANSWER (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined defendant should have been allowed to amend her answer to add the lack of standing defense. Pursuant to RPAPL 1302-a the failure to include the lack of standing defense in the answer is no longer deemed waiver of the defense:

… [T]he defendant did not waive the affirmative defense of lack of standing. RPAPL 1302-a … provides that, notwithstanding the provisions of CPLR 3211(e), “any objection or defense based on the plaintiff’s lack of standing in a foreclosure proceeding related to a home loan, as defined in paragraph (a) of subdivision six of section thirteen hundred four of this article, shall not be waived if a defendant fails to raise the objection or defense in a responsive pleading or pre-answer motion to dismiss.” Under the circumstances of this case, the Supreme Court should have granted that branch of the defendant’s cross motion which was pursuant to CPLR 3025(b) for leave to amend her answer to assert the affirmative defense of lack of standing … . Further, the defendant’s affidavit was sufficient to raise a triable issue of fact as to whether the plaintiff was the holder or assignee of the note at the time the action was commenced … . In response, the plaintiff failed to demonstrate its standing as a matter of law … . US Bank N.A. v Blake-Hovanec, 2021 NY Slip Op 00893, Second Department 2-10-21

 

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DETAILED EXPLANATION OF HOW MAILING OF THE RPAPL 1304 NOTICE CAN (SHOULD) BE PROVEN (SECOND DEPT).

The Second Department, in affirming the judgment of foreclosure in favor of Nationstar, offered a detailed explanation of how mailing of the RPAPl 1304 notice can be proven:

The Supreme Court … properly determined that … Nationstar proved sufficient mailing of the statutory 90-day preforeclosure notice as required by RPAPL 1304. RPAPL 1304(1) provides that, “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower . . . , including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower.” The statute further 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 … . 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'” … . The notice must also be in 14-point type … . Here, at the framed-issue hearing, Nationstar submitted evidence that a third-party vendor mailed the 90-day preforeclosure notice through the testimony of a witness who had personal knowledge of the vendor’s standard business practice with regard to sending the 90-day preforeclosure notice to borrowers, and who affirmed, based on the business records she reviewed regarding the subject loan, that the notices had been sent to the defendant in compliance with the requirements of RPAPL 1304 … . Notwithstanding the use of a third party to mail the 90-day preforeclosure notice, Nationstar tendered sufficient evidence demonstrating strict compliance with RPAPL 1304. Nationstar Mtge., LLC v Paganini, 2021 NY Slip Op 00852, Second Dept 2-10-21

 

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THERE WAS NO PROOF THE NOTICE REQUIRED BY RPAPL 1304 WAS MAILED TO THE PROPER ADDRESS (FIRST DEPT).

The First Department, reversing Supreme Court, determined the notice provisions of Real Property Actions and Proceedings Law (RPAPL) 1304 were not complied with and the bank’s motion for summary judgment in this foreclosure action should not have been granted. There was no proof the notice was mailed to the right place:

Plaintiff failed to demonstrate its strict compliance with RPAPL 1304, a condition precedent to the commencement of a foreclosure action … . Although the statute requires that the notice be sent to “the property address and any other address of record,” the affidavits submitted by plaintiff show that the notices were mailed neither to the mortgaged premises nor to defendant’s residence. One of the addresses to which the notices were sent not only was never occupied by defendant but also specified a unit that did not exist at that street address. The other was sent to the correct high-rise apartment building of more than 400 units but was missing the unit number. Thus, plaintiff did not send defendant proper notice under RPAPL 1304 … . U.S. Bank N.A. v Moran, 2021 NY Slip Op 00645, First Dept 2-4-21

 

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THE JUDGMENT LIEN WAS NOT DOCKETED UNDER THE SELLER’S SURNAME; THEREFORE THE BUYER’S ACTION FOR A JUDGMENT QUIETING TITLE WAS PROPERLY GRANTED (SECOND DEPT).

The Second Department determined plaintiff-buyer was entitled to judgment on his quiet title cause of action and to a declaration that the property is not subject to the defendant’s judgment lien. The judgment was not docketed under the seller’s surname:

… [T]he plaintiff demonstrated, prima facie, his entitlement to judgment as a matter of law on the cause of action to quiet title and for a declaration that the real property at issue is not subject to the defendant’s judgment lien. In support of his motion, the plaintiff submitted, among other things, the deposition transcript of a supervisor of the Docket Department of the Kings County Clerk’s Office (hereinafter the supervisor). The supervisor testified at her deposition that the judgment at issue was not docketed under “Paul”—the surname of the title owner of the property. Thus, no valid lien against the property was created (see CPLR 5018[c][1] …). Moreover, there is no dispute that the plaintiff had no actual or constructive notice of a judgment lien on the property … .

In opposition, the defendant failed to raise a triable issue of fact. Any alleged defects in the docketing procedure employed by the Kings County Clerk’s Office are not attributable to a bona fide purchaser of the property … . Charles v Berman, 2021 NY Slip Op 00542, Second Dept 2-3-21

 

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HOMEOWNERS’ ASSOCIATIONS IN THE HAMPTONS DEMONSTRATED OWNERSHIP OF THE BEACH TO THE HIGH WATER MARK; THE TOWNS THEREFORE COULD NOT ISSUE PERMITS ALLOWING VEHICLES ON THE BEACH (SECOND DEPT).

The Second Department, reversing Supreme Court in this action to quiet title pursuant to RPAPL Article 15,, determined the homeowners’ associations demonstrated ownership of about 4000 feet of beach in the Hamptons on Long Island. Therefore the towns could not allow vehicles to park on the beach:

In an action pursuant to RPAPL article 15, the plaintiff bears the burden of demonstrating, inter alia, the boundaries of the subject property with “common certainty” (see RPAPL 1515[2] … ). Here, contrary to the Supreme Court’s determination, we find that Seaview, Dunes, Tides, and Whalers established their title claims by a preponderance of the evidence, and that Ocean established its title claim by a preponderance of the evidence with respect to the westernmost portion of its property. At trial, the plaintiffs produced a land title expert who testified to the homeowners associations’ chains of title to their respective properties. Specifically, that expert testified, based on documentary evidence, that Seaview, Dunes, Tides, and Whalers owned fee simple title to their respective properties, extending to the mean high-water mark of the Atlantic Ocean. The expert also testified, in relevant part, that Ocean owned fee simple title extending to the mean high-water mark of the Atlantic Ocean, as to the westernmost 400 linear feet of its property. The plaintiffs produced all of the deeds in those respective chains of title, beginning with the Benson Deed, which is common to all of the homeowners associations’ chains of title. Based on the foregoing evidence, the homeowners associations established, to the extent previously indicated, that they owned title in fee simple absolute to the disputed portion of their respective properties (see RPAPL 1515[2] … ). Seaview at Amagansett, Ltd. v Trustees of Freeholders & Commonalty of Town of E. Hampton, 2021 NY Slip Op 00584, Second Dept 2-3-21

 

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