Proper Evidentiary Support for Compliance with RPAPL 1304 Remains an Issue for Foreclosing LendersPrint Article
- Posted on: Jun 30 2023
Because there have been a number of appellate decisions interpreting RPAPL 1304, this Blog has written frequently on that topic. See, e.g., [here], [here], [here], [here], [here], [here], [here], [here], [here], [here], [here], [here] and [here]. By way of background, and as previously noted in the 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. Many cases we have treated relate to the sufficiency of proof presented to demonstrate compliance with RPAPL 1304. See, e.g., [here] and [here].
On June 28, 2023, the Appellate Division, Second Department, decided two more RPAPL 1304 cases related to the sufficiency of proof presented by the lender.
Borrower borrowed approximately $400,000.00 from GMAC Mortgage Corp. secured by a mortgage on real property. Ocwen Loan Servicing, LLC, GMAC’s successor in interest, commenced a foreclosure action against borrower, who, in his answer, asserted defenses based on lender’s failure to comply with, inter alia, RPAPL 1304.
Owen Loan Servicing moved, inter alia, for summary judgment on its complaint, to strike borrower’s answer and to substitute Ditech Servicing, LLC as plaintiff. The motion court granted the motion to the extent of substituting Ditech as plaintiff, but denied the remainder of the motion.
Thereafter, lender renewed its motion for summary judgment and to strike borrower’s answer. Borrower cross-moved to dismiss the complaint for failure to, inter alia, comply with RPAPL 1304. In support of the motion, lender:
submitted an affidavit of Richard J. Schwiner, a loan analyst employed by Ocwen Financial Corporation …, “whose indirect subsidiary is the original named plaintiff in this action, [Ocwen Servicing].” Throughout his affidavit, Scwhiner [sic] referred to Ocwen Servicing exclusively as “Ocwen.” Schwiner stated that he was familiar with the records and record-keeping practices of Ocwen Servicing, and that its records had incorporated GMAC’s prior records for the subject loan.
Regarding Ocwen Servicing’s compliance with RPAPL 1304 …, Schwiner stated, inter alia, that “[i]t was the practice, policy, and procedure of Ocwen to contemporaneously enter a notation into the account notes of borrowers once the 90-Day Notice letters were sent by regular and certified mail.” He stated that Ocwen Servicing’s business records showed that such a contemporaneously entered notation was entered on March 14, 2013, showing that the RPAPL 1304 notice was sent to the defendant in accordance with New York State law. Schwiner attached the business records upon which he relied to his affidavit.
By Order dated March 6, 2020, the motion court granted lender’s motion for summary judgment and to strike borrower’s answer and denied borrower’s cross-motion. On the same day, the motion court also issued another order granting the same relief and appointing a referee to compute. Borrower appealed both orders.
The Second Department modified the first order by denying lender’s motion. In so doing, the Court agreed with borrower that lender failed to demonstrate compliance with RPAPL 1304 and stated:
In support of its motion, the plaintiff submitted, among other things, a copy of a 90-day notice dated March 14, 2013, addressed to the defendant at the address of the mortgaged premises. However, the copy of the notice contains no indication that it was sent by registered or certified mail, or by first-class mail. Nor is there a copy of any United States Post Office document indicating that the notice was sent by registered or certified mail as required by the statute. Although Schwiner stated his purported familiarity with the records and record-keeping practices of Ocwen Servicing, this carried no probative value, as Schwiner never stated that he worked for that entity. Schwiner further represented that Ocwen Servicing was an “indirect subsidiary” of his employer, Ocwen Financial; however, he failed to explain why that would have made him privy to the record-keeping practices utilized by Ocwen Servicing at the time that the 90-day notice was allegedly sent, which was more than 5 ½ years before Schwiner executed his affidavit. Morever, Schwiner did not attest to having any personal knowledge of, or familiarity with, Ocwen Servicing’s actual standard mailing procedures during the relevant time period, which were designed to ensure that items are properly addressed and mailed. Accordingly, Schwiner’s assertion in his affidavit that the RPAPL 1304 notice was sent to the defendant on March 14, 2013, at the address of the mortgaged premises, “by registered or certified and first-class mail,” was unsubstantiated and conclusory. (Citations, internal quotation marks and brackets omitted.)
The Court also determined that the motion court properly denied borrower’s cross-motion because he failed to “affirmatively demonstrate that [lender] did not comply with RPAPL 1304….” (Citation omitted.)
Lender commenced an action to foreclose a mortgage and moved for summary judgment on its complaint and to strike borrower’s answer. Borrower opposed the motion, and cross-moved to dismiss the complaint, for failure to comply with RPAPL 1304. The motion court denied lender’s motion and granted borrower’s cross-motion. On lender’s appeal, the Second Department modified and denied lender’s motion and, in so doing, stated:
Here, the plaintiff failed to establish, prima facie, that it strictly complied with RPAPL 1304. The plaintiff submitted a detailed affidavit of mailing from an assistant secretary of loan documentation at Rushmore Loan Management Services, LLC (hereinafter Rushmore), which demonstrated that the RPAPL 1304 notices had been mailed in accordance with the statute. However, this affidavit failed to demonstrate that Rushmore had the authority to service the loan at the time that it mailed the RPAPL 1304 notices to the defendant, and this record presents triable issues of fact as to whether Rushmore had this authority.
The Court also held that borrower’s cross-motion should have been denied because borrower’s “bare denial of receipt of the RPAPL 1304 notice was insufficient to establish her prima facie entitlement to judgment as a matter of law, and she did not carry her burden in moving for summary judgment by pointing to the gaps in the plaintiff’s proof. (Citations, internal quotation marks and brackets omitted.)