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For Want of a Postage Stamp, the Foreclosure Action Was Lost

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  • Posted on: Jun 9 2023

By Jonathan H. Freiberger

This Blog has frequently written about RPALP 1304.  By way of background, and as previously noted in this Blog, RPAPL 1304 requires that at least ninety days before commencing legal action against a borrower with respect to a “home loan” (as defined in the relevant statutes), a “lender, assignee or mortgage loan servicer” 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 offer 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.  [Eds. Note: our most recent article can be found here and numerous other articles related to this issue are hyperlinked therein.]

In one such article, we wrote about Wells Fargo Bank, N.A. v. Yapkowitz, 199 A.D.3d 126 (2nd Dep’t 2021), in which the Court held that if there are more than one borrower, each one must receive a separate RPAPL 1304 notice because the “practice [of jointly addressing such notices] is insufficient to satisfy the requirements of RPAPL 1304, and that the plaintiff is required to mail a 90–day notice addressed to each borrower in separate envelopes as a condition precedent to commencing the foreclosure action.”  Yapkowitz, 199 A.D.3d at 128.  In our February 11, 2022, Blog article, we discussed U.S. Bank National Ass’n v. Gordon, 202 A.D.3d 872 (2022), in which the Second Department held that the lender did not strictly comply with the requirements of RPAPL 1304 because it failed to demonstrate that the 90-day notices it sent to the borrowers contained the requisite list of five housing counseling agencies serving the county in which the subject property is located.

In another case, Bank of America, N.A. v. Kessler, 202 A.D.3d 10 (2021), rev’d, 39 N.Y.3d 317 (2023), the Second Department affirmed the supreme court’s strict construction of RPAPL 1304 and dismissed a complaint because the lender, in the same envelope as the RPAPL 1304 notice,  included “two notices pertaining to the rights of a debtor in bankruptcy and in military service.”  Kessler, 202 A.D.3d at 19.  In other cases, complaints were dismissed because lenders included notices under the Federal Fair Debt Collection Practices Act.  See, e.g., Ocwen Loan Servicing, LLC v. Sirianni, 202 A.D.3d 702, 705 (2nd Dep’t 2022).  The Court of Appeals reversed the Kessler Second Department, holding that, inter alia, its “bright-line rule would also lead to nonsensical results.”  Kessler, 39 N.Y.3d at 325.  [Eds. Note: this Blog discussed the Court of Appeals’ decision in Kessler [here].]

On May 31, 2023, the Second Department decided HSBC Bank USA, N.A. v. Schneider.  In 2013, the lender in Schneider commenced a residential foreclosure action against the borrowers, a husband and wife.  The lender moved for summary judgement and the borrowers cross-moved for summary judgment dismissing the complaint for failure to comply with RPAPL 1304.  The borrowers appealed the denial of their cross-motion.  In reversing the supreme court, the Second Department stated:

RPAPL 1304(1) provides that, “at least ninety days before a lender … commences legal action against the borrower, … including mortgage foreclosure, such lender … 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” (Citibank, N.A. v. Conti–Scheurer, 172 A.D.3d 17, 20, 98 N.Y.S.3d 273; see RPAPL 1304[2]). Strict compliance with RPAPL 1304 notice to the borrower is a condition precedent to the commencement of a foreclosure action (see Citibank, N.A. v. Conti–Scheurer, 172 A.D.3d at 20, 98 N.Y.S.3d 273; Citimortgage, Inc. v. Banks, 155 A.D.3d 936, 936–937, 64 N.Y.S.3d 121).

Here, the defendants established, prima facie, that the plaintiff did not comply with RPAPL 1304, since the 90–day notice was jointly addressed to both of the defendants (see Deutsche Bank Natl. Trust Co. v. Loayza, 204 A.D.3d 753, 755, 166 N.Y.S.3d 654; Wells Fargo Bank, N.A. v. Yapkowitz, 199 A.D.3d 126, 134, 155 N.Y.S.3d 163). Moreover, while the plaintiff contends that two identical copies of the notice were included in the mailing, one for each of the defendants, the plaintiff concedes that they were mailed in the same envelope, which was also improper (see Duetsche Bank Natl. Trust Co. v. Loayza, 204 A.D.3d at 755, 166 N.Y.S.3d 654; Wells Fargo Bank, N.A. v. Yapkowitz, 199 A.D.3d at 134, 155 N.Y.S.3d 163). In opposition, the plaintiff failed to raise a triable issue of fact.

I do not recall how much it cost to mail a letter in, or prior to, 2013 when the RPAPL 1304 notices were sent in the HSBC action, but the lender probably should have sprung for a second stamp and mailed the RPAPL 1304 notices in separate envelopes.  “For want of a postage stamp, the foreclosure action was lost” after ten years of litigation. 

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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