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Another Judgment of Foreclosure and Sale Reversed Due to Lender’s Failure to Lay Bare Sufficient Proof of Compliance with RPAPL 1304

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  • Posted on: Sep 24 2021

By Jonathan H. Freiberger 

This Blog frequently analyzes residential mortgage foreclosure issues.  See, e.g., [here] and the articles hyperlinked therein.  As relates specifically to today’s article, we have frequently focused on the pre-foreclosure notice requirements of RPAPL 1304. [here], [here], [here], [here], [here], [here]. 

In general, and as discussed in previous articles, a foreclosing mortgagee demonstrates prima facie entitlement to judgment as a matter of law by “produc[ing] the mortgage, the unpaid note, and evidence of default.”  M&T Bank v. Barter, 186 A.D.3d 698, 700 (2nd Dep’t 2020) (citations omitted).  In and after 2006, the New York State Legislature passed legislation to protect homeowners in “response to the subprime lending crisis and the epidemic of foreclosures at that time.”  HSBC Bank US, Nat. Assoc. v. Ozcan, 154 A.D.3d 822, 825 (2nd Dep’t 2017) (citation omitted).  Some such measures required a lender, under certain circumstances, to provide notices to borrowers in the context of anticipated and pending litigation.  See, e.g., RPAPL 1303 and 1304.

RPAPL 1304 requires that at least ninety days prior to commencing legal action against a borrower with respect to a “home loan” (as defined in the relevant statutes), a lender must: send written notice to the borrower by certified and regular mail that the loan is in default; provide a list of approved housing agencies that provide free or low-cost counseling; and, advise that legal action may be commenced after ninety days if no action is taken to resolve the matter.  The failure of a lender to comply with RPAPL 1304 will result in the dismissal of a foreclosure complaint (see, e.g., U.S. Bank N.A. v. Beymer, 161 A.D.3d 543 (1st Dep’t 2018)) when the issue is raised as an affirmative defense by the borrower (see, e.g., One West Bank, FSB v. Rosenberg, 189 A.D.3d 1600, 1602-3 (2nd Dep’t 2020) (citation omitted)).  Indeed, “proper service of the notice containing the statutorily mandated content is a condition precedent to the commencement of a foreclosure action.”  U.S. Bank N.A. v. Taormina, 187 A.D.3d 1095, 1096 (2nd Dep’t 2020) (citations omitted).  When failure to comply with RPAPL 1304 is raised as an affirmative defense, the foreclosing lender must demonstrate its compliance with the statute as part of its prima facie case.  Bank of America, N.A. v. Wheatly, 158 A.D.3d 736 (2nd Dep’t 2018) (citations omitted).  Accordingly, borrowers frequently interpose a defense to mortgage foreclosure actions, lender’s lack of statutory compliance with the notice requirements of, inter alia, RPAPL 1304.  

On September 22, 2021, the Appellate Division, Second Department, decided Caliber Home Loans, Inc. v. Weinstein.  The facts of Caliber reinforce the notion that compliance with statutory foreclosure requirements, as well as evidentiary burdens, are paramount.  The borrowers in Caliber, presumably husband and wife, defaulted in their repayment obligations under a consolidated note and lender commenced action.  Among other defenses, borrowers alleged lender’s failure to comply with RPAPL 1304.  Lender moved for summary and, to address the RPAPL 1304 defense:

[lender] submitted … an affidavit from Josh Cantu, a default servicing officer for the [lender]. Cantu averred, inter alia, that the information in his affidavit was taken from the [lender]’s business records, and that he had personal knowledge of the [lender]’s procedures for creating and maintaining such records. Cantu stated that “[t]he Loan Records reflect” that the [borrowers] defaulted on the subject loan by failing to make a payment…. Cantu also averred that “[lender] mailed to [borrowers]” “at the Subject Property” the 90-day notice required under RPAPL 1304 by both first-class and certified mail on November 19, 2015. In support of that assertion, Cantu attached copies of the 90-day notices allegedly addressed to each of the [borrowers] at the property, along with envelopes bearing certified mail 22-digit barcodes. However, the 90-day notices attached, as well as the envelopes, were addressed to each of the defendants at an address in Seaford, Nassau County, which was not the proper address.

Borrowers opposed the motion.  One of the borrowers (wife) submitted an affidavit in which she averred that the notices were not received, that there was insufficient proof that the notices were actually mailed in compliance with RPAPL 1304, that the evidence indicated that the purported mailings were made by non-party, Waltz Group, Inc., and that the purported mailings were made to an address at which neither of the borrowers lived.  Over borrowers’ opposition, supreme court granted lender’s motion for summary judgment and determined that borrower’s “affidavit was insufficient to raise a triable issue of fact as to whether the 90-day notices were received at the property.”

Thereafter, lender moved to confirm the referee’s calculation report and for a judgment of foreclosure and sale and Borrowers cross-moved to renew their opposition to lender’s summary judgment motion.  In support of the cross-motion, one of the borrowers (husband) submitted an affidavit in which he averred that due to his ill health he was unable to participate in opposing lender’s summary judgment motion and that neither he nor his wife ever lived at the Seaford address to which the RPAPL 1304 notices were sent.  Lender’s reply affirmation from counsel contained, for the first time, “certified and first-class mail envelopes addressed to the property bearing barcodes matching those on accompanying 90-day notices.”  Cantu, on lender’s behalf, also submitted an affidavit explaining the Waltz Group’s involvement with, and authorization to, send the RPAPL 1304 notices.

Supreme court granted lender’s motion to confirm the referee’s report and for a judgment of foreclosure and sale.  On borrowers’ appeal, the Second Department reversed, finding that, in its moving papers, lender failed to meet its prima facie burden that it strictly complied with RPAPL 1304, and stated:

Although Cantu stated in his affidavit that the RPAPL 1304 notices were mailed by certified and first-class mail to the [borrowers] at the property, and he attached copies of 90-day notices with corresponding certified and first-class envelopes, Cantu did not attach the 90-day notices and envelopes addressed to the property where the [borrowers] resided or any United States Post Office documentation showing that the purported mailings to the property actually.  To the extent [lender] relies on copies of the 90-day notices with corresponding certified and first-class envelopes addressed to the property which were submitted for the first time in its reply papers on its subsequent motion, inter alia, to confirm the referee’s report, those documents were insufficient to satisfy the [lender]’s prima facie burden on its initial motion, among other things, for summary judgment.  A party seeking summary judgment should anticipate having to lay bare its proof and should not expect that it will readily be granted a second or third chance.  Further, while Cantu asserted that he had personal knowledge of the [lender]’s procedures for creating and maintaining its business records, he did not attest that he was familiar with the mailing practices and procedures of Walz, the third-party entity that he acknowledged sent the notices. Thus, [lender] failed to establish proof of standard office practices and procedures designed to ensure the notices were properly addressed and mailed.  (Citations and internal quotation marks omitted.)


Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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