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Lender Denied Summary Judgment Because It Failed To Demonstrate That The Five Housing Agencies Identified In Its RPAPL 1304 Notice Served The County In Which The Subject Property Was Located

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  • Posted on: Feb 11 2022

By Jonathan H. Freiberger

Followers of this Blog know that we frequently address issues involving residential mortgage foreclosure.  Decisions involving the pre-foreclosure requirements of RPAPL 1304 are frequently rendered by the Appellate Courts in New York and, accordingly, are analyzed in this Blog’s articles.  See, e.g., [here], [here], [here], [here], [here], [here] and [here].  By way of background and as previously noted in our Blog:

RPAPL 1304 requires that at least ninety days prior to commencing legal action against a borrower with respect to certain loans, 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).

From January 14, 2020, to the present, RPAPL 1304(2) provides:

The notices required by this section shall be sent by the lender or mortgage loan servicer to the borrower, by registered or certified mail and also by first-class mail to the last known address of the borrower, and to the residence which is the subject of the mortgage.  Notice is considered given as of the date it is mailed.  The notices required by this section shall contain a current list of United States department of housing and urban development approved housing counseling agencies, or other housing counseling agencies serving the county where the property is located from the most recent listing available from the department of financial services.  The list shall include the counseling agencies’ last known addresses and telephone numbers.  The department of financial services shall make available a listing, by county, of such agencies which the lender or mortgage loan servicer may use to meet the requirements of this section.  (Emphasis added.)

Prior to January 14, 2020 (the time period relevant to the decision that is the subject of today’s article), RPAPL 1304 provided:

The notices required by this section shall be sent by such lender, assignee (including purchasing investor) or mortgage loan servicer to the borrower, by registered or certified mail and also by first-class mail to the last known address of the borrower, and to the residence that is the subject of the mortgage.  The notices required by this section shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice.  Notice is considered given as of the date it is mailed.  The notices required by this section shall contain a current list of at least five housing counseling agencies serving the county where the property is located from the most recent listing available from department of financial services.  The list shall include the counseling agencies’ last known addresses and telephone numbers.  The department of financial services shall make available on its websites a listing, by county, of such agencies.  The lender, assignee or mortgage loan servicer shall use such lists to meet the requirements of this section.  (Emphasis added.)

On February 9, 2022, the Appellate Division, Second Department, decided U.S. Bank National Association v. Gordon, in which an interesting issue under RPAPL 1304 was raised by borrowers and analyzed by the Court.  Lender in Gordon commenced a mortgage foreclosure action in June of 2017.  After borrowers interposed their answer, lender moved for summary judgment on the complaint, to strike borrower’s answer and for an order of reference.  Borrowers cross-moved for summary judgment dismissing the complaint on the ground that lender failed to comply with RPAPL 1304(2).  While this Blog has, on numerous occasions, discussed RPAPL 1304 defenses based on, inter alia: a lender’s failure to properly mail and/or address the requisite notices; the contents of said notices; and/or, the lender’s failure to submit admissible proof as to the mailing of proper notices, the borrowers in Gordon argued something different – that not all of the five housing counseling agencies listed with the RPAPL 1304 notice “served” Queens County, where the subject property was located, as required by RPAPL 1304.  Nonetheless, supreme court granted lender’s motion and denied borrowers’ cross-motion.

On borrowers’ appeal, the Second Department reversed the granting of summary judgment to lender and determined that summary judgment was properly denied to borrowers, stating that:

Here, in support of its motion, the [lender] failed to establish, prima facie, its strict compliance with RPAPL 1304, as it failed to demonstrate that the 90-day notices it sent to [borrowers] contained the requisite list of five housing counseling agencies serving the county in which the subject property is located. In support of its motion, [lender] submitted the notices pursuant to RPAPL 1304, annexed to which was a list of five agencies. Four of the agencies were located in Queens, and one of the agencies, Hispanic Brotherhood of Rockville Centre, Inc., was located in Nassau County. Thus, [lender] failed to establish, prima facie, that all five of the agencies served Queens County.

Conversely, [borrowers] also failed to establish that they were entitled to summary judgment dismissing the complaint insofar as asserted against them based upon [lender]’s failure to comply with RPAPL 1304.  A defendant still has to meet its burden, on a cross motion for summary judgment dismissing the complaint, of establishing that a condition precedent was not fulfilled. Here, [borrowers] failed to offer evidence showing that the list annexed to the RPAPL 1304 notices included fewer than five housing counseling agencies that servethe county in which the mortgaged property is located. They failed to establish as a matter of law that any of the five agencies in the list, including Hispanic Brotherhood of Rockville Centre, Inc., did not serve Queens County or that they contacted any of the agencies and were denied assistance because the property is located in Queens County.

(Emphasis in original; citations, internal quotation marks and internal brackets 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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