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  • Posted on: Jun 19 2020

As noted on numerous occasions in this BLOG, the New York State Legislature has responded to the residential foreclosure crisis by promulgating a series of rules designed to protect residential homeowners.  These rules, however, place additional burdens on foreclosing lenders and courts throughout New York State have demonstrated little sympathy for foreclosing lenders that fail to follow these rules.

For example, 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.  This BLOG has addressed issues related to RPAPL 1304 on numerous occasions.  [HERE, HERE, HERE]

RPAPL 1303, requires that the plaintiff in a residential mortgage foreclosure action provide certain borrowers (and tenants in dwelling units subject to foreclosure) with specific written notices of the foreclosure process.  The specific text of the RPAPL 1303 notice is set forth in the statute.  See RPAPL 1303(3) (for mortgagors) and 1303(5) (for tenants).  

In addition, RPAPL 1303(2), which provides for the delivery and appearance of the notice to mortgagors, provides:

The notice to any mortgagor required by paragraph (a) of subdivision one of this section shall be delivered with the summons and complaint.  Such notice shall be in bold, fourteen-point type and shall be printed on colored paper that is other than the color of the summons and complaint, and the title of the notice shall be in bold, twenty-point type.  The notice shall be on its own page.

(See RPAPL 1303(4) for the requirements for delivery and appearance of notices to tenants.)

Proper service of the RPAPL 1303 notice is critical because it “is a condition precedent to the commencement of a foreclosure action, and noncompliance mandates dismissal of the complaint.”  Onewest Bank, N.A. v. Mahoney, 154 A.D.3d 770, 771 (2nd Dep’t 2017) (citations omitted).  Further, it is the lender’s burden to demonstrate compliance with RPAPL 1303.  U.S. Bank National Assoc. v. Ahmed, 174 A.D.3d 661, 664 (2nd Dep’t 2019) (citations omitted).  

In Onewest, the Court found that the “plaintiff further established its prima facie entitlement to judgment as a matter of law by … affidavits of service attesting to the proper service of notices that complied with RPAPL 1303.”  Onewest, 154 A.D.3d at 772.  The Court found unavailing, the Onewest mortgagor’s “bare and unsubstantiated denial of receipt of the RPAPL 1303 notice [which] was insufficient to rebut the presumption of proper service created by the process server’s affidavits of service.  Onewest, 154 A.D.3d at 772 (citation omitted).

A similar issue was decided in LNV Corp. v. Sofer, 171 A.D.3d 1033 (2nd Dep’t 2019).  While the LNV Court denied summary judgment to the lender for different reasons, compliance with RPAPL 1303 was found to be proper.  In that regard, the LNV Court stated:

Further, contrary to the defendant’s contention, the plaintiff established, prima facie, that it provided notice in compliance with RPAPL 1303 by submitting the process server’s affidavit of service on the defendant, in which the process server stated that he served the summons and complaint, together with a “1303 NOTICE–Help for Homeowners in Foreclosure in bold fourteen-point type and printed on colored paper, and the title to the notice printed in twenty-point type in compliance with RPAPL Sect 1303”. The statement in the affidavit of service that the notice was on colored paper was sufficient to comply with the language in the statute stating that the notice shall “be printed on colored paper that is other than the color of the summons and complaint”. Moreover, the defendant’s bare and unsubstantiated denial of receipt of the RPAPL 1303 notice, without more, was insufficient to rebut the presumption of service created by the process server’s affidavit.

LNV Corp., 171 A.D.3d at 1036 (citations omitted).

In Flagstar Bank, FSB v. Hart, decided by the Second Department on June 10, 2020, the Court reversed the grant of summary judgment to the foreclosing lender.  After setting forth the requirements of RPAPL 1303, the Court determined that the lender failed to demonstrate compliance and stated:

Here, in support of its motion, the plaintiff submitted the process server’s affidavit indicating that a notice was served with the summons and complaint. However, the plaintiff did not submit a copy of the RPAPL 1303 notice allegedly served, and the process server made no averments that the notice served complied with the requirements of RPAPL 1303 concerning content and form. The plaintiff, therefore, failed to demonstrate, prima facie, that it complied with RPAPL 1303.

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