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The Second Department Reverses Another Grant Of Summary Judgment To A Foreclosing Lender On A Home Loan Due To The Insufficiency Of Proof Of Mailing Statutorily Required Notices To The Borrower

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  • Posted on: Jan 19 2018

In two recent blog posts entitled: “Appellate Division, Second Department Tells Foreclosing Residential Lender to ‘SHOW ME THE EVIDENCE’” and “The Second Department Denies Summary Judgment to Another Foreclosing Mortgagee Due to the Insufficiency of Evidence Presented on the Motion,” foreclosing mortgagees were cautioned that evidence in admissible form must be submitted to the court to demonstrate compliance with the many statutory provisions that must be followed to ensure a successful foreclosure action.  In Bank of New York Mellon v. Zavolunov (2nd Dep’t January 17, 2018), the Court once again reiterates the importance of the need for sufficient evidence when it comes to satisfying the burdens of a summary judgment movant in mortgage foreclosure actions.  While Zavolunov was a residential mortgage foreclosure action, the decision is instructive in all cases where proof of mailing is a necessary requisite to a parties’ prima facie case.

As previously discussed on this Blog, RPAPL 1304(1) and (2) requires, inter alia, that at least ninety days prior to commencing a foreclosure action against a borrower with respect to a “home loan” (as defined in the relevant statutes (a “Home Loan”)), a lender must send written notice to the borrower by certified and regular mail that the loan is in default.  Such notice must: be sent to the borrower’s last known address and to the residence that is the subject of the foreclosure; 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 lender in Zavolunov (the “Lender”) commenced an action to foreclose a mortgage on a Home Loan and alleged in its complaint that it served the required RPAPL 1304 notices.  The Zavolunov supreme court granted Lender’s motion for summary judgment and the borrower appealed.

In reversing the supreme court on this issue, the Zavolunov Court recognized that “[p]roper service of RPAPL 1304 notice on the borrower or borrowers is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of this condition.”  (Citations and internal quotation marks omitted.)  The Zavolunov Court also cautioned that a lender moving for summary judgment “must prove its allegations [of compliance with RPAPL 1304] by tendering sufficient evidence demonstrating the absence of material issues as to its strict compliance with RPAPL 1304.” (Citations and internal quotation marks omitted.)

In support of its motion for summary judgment, the Zavolunov plaintiff provided an affidavit from a representative of Lender’s loan servicer asserting that more than ninety days prior to the commencement of the foreclosure action “notice was sent to Defendant by certified mail and first class mail to the last known address of the Defendant and, if different, to the residence that is the subject of the mortgage.”  Annexed to the affidavit were copies of the 90-day notices “all of which contained a bar code with a 20-digit number below it”.  However, the Court noted that the notices contained no language “indicating that a mailing was done by first -class or certified mail, or even that a mailing was done by the U.S. Postal Service”.  Moreover, the Zavolunov Court also found that the Lender’s representative failed to make the “requisite showing that he was familiar with the plaintiff’s mailing practices and procedures, and therefore did not establish proof of a standard office practice and procedure designed to ensure that items are properly addressed and mailed.”  (Citations and internal quotation marks omitted.)

Because the Zavolunov Court found that the Lender failed to establish that complied with the requirements of RPAPL 1304, it held that the supreme court should have denied the Lender’s summary judgment motion.

TAKEAWAY

Whether specifically related to RPAPL 1304 or otherwise, proof of compliance with statutory and/or contractual notice requirements is important.  It is also important that all evidence of required statutory and/or contractual compliance is submitted to the Court.  For example, a contemporaneous affidavit of mailing from the individual that actually mailed the notice indicating that he/she actually deposited the notice in a mailbox or delivered the notice to the post office, might have satisfied the Second Department.  It might also help to have had photocopies of the addressed envelopes with proper postage and, where applicable, the certified mail card affixed to the envelope.  The Second Department also suggests that it was looking for an indication on each of the respective notices as to how it was mailed (i.e., regular mail or certified mail).  If the evidence suggested here was presented, perhaps the Second Department would have found compliance with RPAPL 1304.

Many times, it is difficult for a bank employee to undertake to actually place notices in a mail box or to personally deliver a notice to the post office.  In such situations, as suggested by the Second Department, proof of compliance with notice requirements can be satisfied by the submission of an affidavit by someone with knowledge, of the company’s standard office procedures regarding the mailing of notices and other documents explaining the nature of such procedures and attesting to the fact that all such procedures were followed in the given case.

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