Real Property Actions and Proceedings Law (RPAPL) – Page 7

PLAINTIFF BANK DID NOT DEMONSTRATE THE NOTICE OF FORECLOSURE WAS MAILED IN ACCORDANCE WITH RPAPL 1304; THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULDN’T HAVE BEEN GRANTED (SECOND DEPT).

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

… [T]he plaintiff relied on the affidavit of Brown, an employee of Nationstar, the plaintiff’s loan servicer, who stated that the plaintiff had mailed the RPAPL 1304 notice in accordance with the plaintiff’s practices and procedures. However, Brown then stated that her conclusion was based on her review of Nationstar’s file, and on Nationstar’s mailing practices and procedures. Thus, Brown’s affidavit failed to eliminate triable issues of fact as to who actually mailed the RPAPL 1304 notice, and the plaintiff failed to establish, prima facie, that it complied with RPAPL 1304 … . Wells Fargo Bank, N.A. v Matsuoka, 2023 NY Slip Op 00230, Second Dept 1-18-23

Practice Point: In a foreclosure action, if the bank doesn’t prove who mailed the notice of foreclosure as required by RPAPL 1304 the bank’s motion for summary judgment should not be granted.

January 18, 2023

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

THE BANK DID NOT PROVE COMPLIANCE WITH THE NOTICE AND MAILING REQUIREMENTS OF RPAPL 1304 IN THIS FORECLOSURE ACTION (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 establish its strict compliance with RPAPL 1304. The plaintiff relied upon the affidavit of Summer Young, a vice president of the plaintiff’s purported loan servicer. The affidavit was based upon Young’s review of her employer’s records, which were attached thereto. Young did not aver that she had personal knowledge of the mailing, and her affidavit did not contain proof of the standard office mailing procedure at the time the RPAPL 1304 notice allegedly was sent … . Nor did the annexed records demonstrate, prima facie, that the requisite RPAPL 1304 mailings were completed … . Because 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,” and therefore failed to establish, prima facie, its entitlement to judgment as a matter of law … The plaintiff also failed to establish, prima facie, that it complied with the notice of default requirement of the mortgage agreement … . HSBC Bank USA, N.A. v Michalczyk, 2022 NY Slip Op 07222, Second Dept 12-21-22

Practice Point: the bank in this foreclosure action did not present sufficient evidence of compliance with the notice and mailing requirements of RPAPL 1304.

December 21, 2022

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

PLAINTIFF IN THIS NON-JURY TRIAL DID NOT DEMONSTRATE COMPLIANCE WITH RPAPL 1303; JUDGMENT OF FORECLOSURE AND SALE REVERSED (SECOND DEPT).

The Second Department, reversing the judgment (after a non-jury trial) of foreclosure and sale, determined plaintiff did not demonstrate compliance with RPAPL 1303:

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 … . “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” … . “Proper service of an RPAPL 1303 notice is a condition precedent to the commencement of a foreclosure action, and noncompliance mandates dismissal of the complaint” … . The foreclosing party bears the burden of establishing compliance with RPAPL 1303 … .

Here, it is undisputed that the plaintiff did not offer any evidence at trial establishing that it complied with the specific requirements of RPAPL 1303, or that it delivered such notice to Nodumehlezi [defendant] at all. Contrary to the plaintiff’s contention, the Supreme Court’s reliance, in a posttrial decision, on documents that had been previously e-filed to establish the plaintiff’s compliance with RPAPL 1303 was improper, since Nodumehlezi had no opportunity to rebut the previously filed affidavit of service and the related documents … . 21st Mtge. Corp. v Nodumehlezi, 2022 NY Slip Op 07212, Second Dept 12-21-22

Practice Point: Here there was a non-jury trial and plaintiff did not prove compliance with RPAPL 1303. The judgment of foreclosure and sale was reversed.

December 21, 2022

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

THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE MAILING REQUIREMENTS OF RPAPL 1304 OR THE NOTICE REQUIREMENTS OF RPAPL 1303 (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined plaintiff in this foreclosure action did not demonstrate compliance with the notice (mailing) requirements of RPAPL 1304 or the notice requirements of RPAPL 1303:

… [T]he letter log submitted by the plaintiff and relied upon by the employee of the plaintiff’s alleged loan servicer in his affidavit failed to establish that the 90-day notice was actually mailed to the defendant by both certified mail and first-class mail … . “‘[I]t is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted'” … . None of the other documents submitted by the plaintiff, considered individually or together, including the copies of the 90-day notice letters themselves, provided any information as to whether the notice was sent to the defendant by regular first-class mail … . …

… [T]he plaintiff’s submissions did not demonstrate that the notice served upon the defendant complied with the type-size requirements in RPAPL 1303 … .Federal Natl. Mtge. Assn. v Raja, 2022 NY Slip Op 06912, Second Dept 12-7-22

Practice Point: Once again, the bank in this foreclosure action did not submit sufficient proof of strict compliance with the notice and mailing requirements of RPAPL 1303 or 1304.

December 7, 2022

Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE PROPERTY OWNER, MCWHITE, HAD BEEN DISMISSED FROM THE ORIGINAL FORECLOSURE ACTION AND HER INTEREST IN THE PROPERTY HAD NOT BEEN EXTINGUISHED BY THE JUDGMENT OF FORECLOSURE WHICH FALSELY NAMED HER AS A DEFENDANT; THE REFEREE’S DEED-HOLDER DID NOT STATE A CAUSE OF ACTION FOR REFORECLOSURE AGAINST MCWHITE AND MCWHITE WAS ENTITLED TO SUMMARY JUDGMENT ON HER QUIET TITLE CAUSE OF ACTION (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s deed-holder’s (I & I’s) complaint failed to state a cause of action for reforeclosure (RPAPL 1503, 1523) against McWhite, the owner of the subject property. McWhite had been dismissed from the original foreclosure action because plaintiff never moved for a default judgment. The foreclosure plaintiff was aware McWhite was not included in the foreclosure when it filed its judgment, which falsely indicated McWhite’s interest in the property had been extinguished. McWhite was entitled to summary judgment on her quiet title action:

Under the circumstances of this case, I & I failed to state a cause of action against McWhite for reforeclosure because the defect in the foreclosure action was due to the willful neglect of the foreclosure plaintiff as a matter of law. The underlying objective of foreclosure actions is “to extinguish the rights of redemption of all those who have a subordinate interest in the property and to vest complete title in the purchaser at the judicial sale” … . The defect in the underlying foreclosure action was that McWhite’s interest was not validly extinguished in the judgment of foreclosure and sale due to her effective dismissal from the action. … [T]he foreclosure plaintiff here knew that McWhite had been effectively dismissed from the action and that the judgment of foreclosure and sale could not validly extinguish her interest in the premises. The foreclosure plaintiff nevertheless made a conscious decision to proceed to judgment and sale without validly extinguishing McWhite’s known interest … . * * *

Here, the judgment of foreclosure and sale was void as to McWhite and the foreclosure sale did not transfer her interest in the premises to I & I. Moreover, McWhite established, prima facie, that the foreclosure action accelerated the mortgage debt, that the foreclosure action was dismissed as abandoned pursuant to CPLR 3215(c), and the commencement of a new foreclosure action would be time-barred by the applicable six-year statute of limitations (see CPLR 213[4] … ). In opposition, I & I failed to raise a triable issue of fact. Accordingly, the Supreme Court should have granted that branch of McWhite’s motion which was for summary judgment on the complaint in the quiet title action. McWhite v I & I Realty Group, LLC, 2022 NY Slip Op 06795, Second Dept 11-30-22

Practice Point: Here the foreclosure plaintiff was aware the owner of the subject property, McWhite, had been dismissed from the original foreclosure action because plaintiff never moved for a default judgment. Yet the foreclosure plaintiff filed the judgment of foreclosure falsely indicating McWhite’s interest in the property had been extinguished. The owner of the referee’s deed therefore could not bring a reforecloscure action (RPAPL 1503, 1523) against McWhite and McWhite was entitled to summary judgment on her quite title action.

November 30, 2022

Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

IN THIS FORECLOSURE DEFICIENCY-JUDGMENT CASE, THE FAIR VALUE OF THE PROPERTY WAS CONSIDERABLY HIGHER THAN THE LIQUIDATION VALUE USED BY THE COURT TO CALCULATE THE DEFICIENCY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the fair market value of the property in this foreclosure-deficiency-judgment proceeding was considerably greater than the liquidation valued used by the court:

“RPAPL 1371(2) permits the mortgagee in a mortgage foreclosure action to recover a deficiency judgment for the difference between the amount of indebtedness on the mortgage and either the auction price at the foreclosure sale or the fair market value of the property, whichever is higher” … . “It is the lender who bears the initial burden of demonstrating, prima facie, the property’s fair market value as of the date of the auction sale” … . “When a lender moves to secure a deficiency judgment against a borrower, ‘the court . . . shall determine, upon affidavit or otherwise as it shall direct, the fair and reasonable market value of the mortgaged premises as of the date such premises were bid [o]n at auction or such nearest earlier date as there shall have been any market value thereof'” … .

Here, the record does not support a finding that the estimated liquidation value of $620,000 constituted the fair and reasonable market value of the property at the time of the foreclosure sale … . Rather, the record supports a determination that the higher estimated value of $1,060,000 presented by the plaintiff’s appraiser constituted the fair and reasonable market value of the property at the time of the foreclosure sale. Rhinebeck Bank v WA 319 Main, LLC, 2022 NY Slip Op 06507, Second Dept 11-16-22

Practice Point: Here the court should have used plaintiff’s appraiser’s determination of the fair market value of the foreclosed property to calculate the amount of the deficiency judgment pursuant to RPAPL 1371(2). The court used a much lower “liquidation value.”

November 16, 2022

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

THE BANK IN THIS FORECLOSURE ACTION FAILED TO LAY A FOUNDATION FOR THE BUSINESS RECORDS REQUIRED TO SHOW STANDING TO BRING THE ACTION AND DID NOT SUBMIT SUFFICIENT PROOF OF COMPLIANCE WITH THE NOTICE-OF-DEFAULT MAILING REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank in this foreclosure did not demonstrate standing the bring the action and compliance with the notice-of-default mailing requirement of RPAPL 1304:

A plaintiff has standing to maintain a mortgage foreclosure action where it is the holder or assignee of the underlying note at the time the action is commenced … . Here, in support of its motion, the plaintiff submitted the affidavit of Shamona Marisa Truesdale, a vice president of loan documentation for Wells Fargo Bank, N.A. (hereinafter Wells Fargo), the plaintiff’s loan servicer. Truesdale stated that she was familiar with Wells Fargo’s records and record-keeping practices. She further stated that the plaintiff was in possession of the note on October 8, 2009, the date this action was commenced. Truesdale’s statement that the plaintiff had possession of the note at the time this action was commenced was inadmissible hearsay. Although Truesdale stated that she was familiar with the records and record-keeping practices of Wells Fargo, the plaintiff’s loan servicer, she failed to state that she was familiar with the records and record-keeping practices of the plaintiff itself. Thus, Truesdale failed to lay a proper foundation for the admission of any of the plaintiff’s business records … . * * *

The plaintiff can establish strict compliance with RPAPL 1304 by submitting domestic return receipts, proof of a standard office procedure designed to ensure that items are properly addressed and mailed, or an affidavit from someone with personal knowledge that the mailing of the RPAPL 1304 notice actually happened … .

Here, the plaintiff relied on the affidavit of Jack Whitmarsh, a vice president of loan documentation for Wells Fargo, who averred that, based on his review of Wells Fargo’s records, the required notice was sent by both certified mail and first-class mail. The plaintiff also submitted a copy of the RPAPL 1304 notice, which was sent to the defendants at the mortgaged premises, and which was stamped with a certified mailing number, as well as a printout of a record purportedly evidencing certified mailing of the notice. However, these documents were insufficient to prove the mailing of the notice by certified mail actually occurred … . Moreover, the plaintiff failed to submit any evidence that the notice was mailed by first-class mail … . Further, Whitmarsh did not aver that he had personal knowledge of the mailing and did not describe any standard office procedure designed to ensure that the notices are mailed … . HSBC Bank USA, N.A. v Gordon, 2022 NY Slip Op 06473, Second Dept 11-16-22

Practice Point: Here the bank apparently submitted the business records necessary to demonstrate the bank’s standing to bring the foreclosure action but the accompanying affidavit did not lay a proper foundation for admitting them. In addition the bank failed to demonstrate compliance with the notice-of-default mailing requirements of RPAPL 1304.

November 16, 2022

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

THE BANK IN THIS FORECLOSURE ACTION FAILED TO DEMONSTRATE COMPLIANCE WITH THE NOTICE-OF-DEFAULT MAILING REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the bank in this foreclosure action did not demonstrate compliance with the notice-of-default mailing 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” ( … see RPAPL 1304[2]). “Proper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition” … . …

… [T]he plaintiff failed to demonstrate, prima facie, that it strictly complied with the mailing requirements of RPAPL 1304. The affidavit of Daniel Delpesche, a contract management coordinator for the plaintiff’s attorney-in-fact, Ocwen Loan Servicing, LLC …, did not make the requisite showing that Delpesche was familiar with Ocwen’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” … . HSBC Bank USA, N.A. v Martin, 2022 NY Slip Op 06471, Second Dept 11-16-22

Practice Point: If the affidavit submitted by the bank in a foreclosure action to prove the notice of default was mailed in accordance with RPAPL 1304 does not state that affiant is familiar with the relevant entity’s mailing procedures the bank’s motion for summary judgment must be denied.

November 16, 2022

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

IN THIS FORECLOSURE ACTION, THE BANK FAILED TO PROVE DEFENDANT’S DEFAULT (EVIDENCE SUBMITTED IN REPLY NOT CONSIDERED) AND THE BANK FAILED TO DEMONSTRATE IT NOTIFIED A TENANT OF THE FORECLOSURE AS REQUIRED BY RPAPL 1303 (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank (Merrill Lynch) in this foreclosure action failed to prove defendant’s default and failed to notify a tenant on the property of the foreclosure. The bank’s attempt to prove the default in reply papers was rejected:

Merrill Lynch failed to submit admissible evidence establishing the defendant’s default. In support of its motion, Merrill Lynch submitted, inter alia, the affidavit of Theresia Ang, the vice president of its loan servicer and attorney-in-fact. However, Ang failed to attach the business records on which she relied, and thus, her averment to the defendant’s default was hearsay lacking in probative value … . Although Merrill Lynch attempted to submit evidence of the defendant’s default in reply, a moving party “cannot meet its prima facie burden by submitting evidence for the first time in reply” … .

… RPAPL 1303 requires, inter alia, the party foreclosing a mortgage on residential property to provide the notice prescribed by the statute to any tenant of the property by certified mail, if the identity of the tenant is known to the foreclosing party (see id. § 1303[1][b]; [4]). Proper service of an RPAPL 1303 notice is a condition precedent to commencing a foreclosure action, and the “‘foreclosing party has the burden of showing compliance therewith'” … .

Here, Merrill Lynch failed to submit any evidence that it served any tenant of the subject property with the notices required by RPAPL 1303 by certified mail, or that it was not aware of any tenant’s identity. In contrast, the defendant’s affidavit and the affidavit of Richard Nicholson, submitted in opposition to Merrill Lynch’s motion, established that Richard Nicholson resided at the subject property, that he paid rent, and that the mortgage loan servicer was aware that he resided at the subject property. Merrill Lynch Credit Corp. v Nicholson, 2022 NY Slip Op 06239, Second Dept 11-9-22

Practice Point: The bank in this foreclosure action failed to submit sufficient evidence of defendant’s default and was not allowed to cure the defect in reply papers.

Practice Point: The bank in this foreclosure action did not demonstrate it notified a tenant of the foreclosure as required by RPAPL 1303.

November 9, 2022

Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE BANK INCLUDED OTHER NOTICES WITH THE NOTICE OF DEFAULT, A VIOLATION OF THE SEPARATE ENVELOPE RULE (RPAPL 1304) (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiff bank included other notice with the notice of default, a violation of RPAPL 1304 (the separate envelope rule):

“[P]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a residential foreclosure action” … . Here, the defendants established, prima facie, that the plaintiff did not comply with RPAPL 1304, since additional notices were sent in the same envelope as the 90-day notice required by RPAPL 1304, and a single notice was jointly addressed to both of the defendants … . HSBC Bank USA, N.A. v Schneps, 2022 NY Slip Op 06234, Second Dept 11-9-22

Practice Point: The separate envelope rule (RPAPL 1304) which requires that nothing else be included with the notice of default is a condition precedent to a foreclosure action.

November 9, 2022

PLAINTIFF BANK DID NOT DEMONSTRATE THE NOTICE OF FORECLOSURE WAS MAILED IN ACCORDANCE WITH RPAPL 1304; THE BANK’S MOTION FOR SUMMARY JUDGMENT SHOULDN’T HAVE BEEN GRANTED (SECOND DEPT).

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

PLAINTIFF IN THIS NON-JURY TRIAL DID NOT DEMONSTRATE COMPLIANCE WITH RPAPL 1303; JUDGMENT OF FORECLOSURE AND SALE REVERSED (SECOND DEPT).

THE BANK IN THIS FORECLOSURE ACTION DID NOT DEMONSTRATE COMPLIANCE WITH THE MAILING REQUIREMENTS OF RPAPL 1304 OR THE NOTICE REQUIREMENTS OF RPAPL 1303 (SECOND DEPT).

IN THIS FORECLOSURE DEFICIENCY-JUDGMENT CASE, THE FAIR VALUE OF THE PROPERTY WAS CONSIDERABLY HIGHER THAN THE LIQUIDATION VALUE USED BY THE COURT TO CALCULATE THE DEFICIENCY JUDGMENT (SECOND DEPT).

THE BANK IN THIS FORECLOSURE ACTION FAILED TO LAY A FOUNDATION FOR THE BUSINESS RECORDS REQUIRED TO SHOW STANDING TO BRING THE ACTION AND DID NOT SUBMIT SUFFICIENT PROOF OF COMPLIANCE WITH THE NOTICE-OF-DEFAULT MAILING REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

THE BANK IN THIS FORECLOSURE ACTION FAILED TO DEMONSTRATE COMPLIANCE WITH THE NOTICE-OF-DEFAULT MAILING REQUIREMENTS OF RPAPL 1304 (SECOND DEPT).

IN THIS FORECLOSURE ACTION, THE BANK FAILED TO PROVE DEFENDANT’S DEFAULT (EVIDENCE SUBMITTED IN REPLY NOT CONSIDERED) AND THE BANK FAILED TO DEMONSTRATE IT NOTIFIED A TENANT OF THE FORECLOSURE AS REQUIRED BY RPAPL 1303 (SECOND DEPT).

THE BANK INCLUDED OTHER NOTICES WITH THE NOTICE OF DEFAULT, A VIOLATION OF THE SEPARATE ENVELOPE RULE (RPAPL 1304) (SECOND DEPT).

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