By Michael L. Moskowitz
New York’s Real Property Actions and Proceedings Law (“RPAPL”) § 1304 requires a mortgage lender to notify a residential home borrower of an impending foreclosure action at least 90 days before the foreclosure action is commenced, using specific statutory language, printed in 14 point type, sent by registered or certified mail, as well as by first class mail, to the borrower. The emphasis of this article is the peril which will befall a lender if it fails to timely register the statutorily mandated notice.
Pursuant to RPAPL § 1306, lenders, assignees, or mortgage loan servicers, must file certain information with the New York State Superintendent of Financial Services on a form determined by the Superintendent (the Pre-foreclosure Information Form). Such information must be filed within three business days after the mailing of (i) the “90-day pre-foreclosure notice” required by section 1304 of the RPAPL, or (ii) the notice required by section 9-611(f) of the New York Uniform Commercial Code (UCC) (“Notice”).
Within 3 business days of the mailing of the notice under either of RPAPL Section 1304 or UCC Section 9-611(f), the lender, assignee, or mortgage loan servicer, must file with the State Superintendent of Banks, among other information, the name, address and last known telephone number of the borrower, the amount claimed as due and owing on the loan, and the type of loan. The information, to be provided electronically on a form as prescribed by the Superintendent, is used to: (a) monitor the extent of foreclosure filings within New York State, (b) enable an analysis to be made of loan types subject to foreclosure, and (c) direct foreclosure prevention and counseling services to borrowers at risk of foreclosure. This three-day time frame is strictly construed.
The recordation with the Superintendent is not considered a ministerial act, as demonstrated in the recent case of TD Bank, N.A. v. Oz Leroy, 121 A.D. 3d 1256, 995 N.Y.S. 2d 625 (3d Dep’t 2014). By way of background, the Ulster County Supreme Court granted summary judgment to Plaintiff and appointed a referee to compute. Defendant appealed the lower court’s grant of summary judgment. The Appellate Division reversed the lower court’s ruling, holding that lender’s filing of the form containing the requisite Notice with the Superintendent more than three months after the three-day deadline was a failure to comply with the “mandatory condition precedent” to the commencement of the foreclosure action against the mortgagor. The Appellate Division, in ruling for the mortgagor defendant, invoked the drastic remedy of dismissal of the foreclosure complaint, rather than a reversal of the mortgagee’s motion for summary judgment. The court held that the failure to timely register, albeit even though it was completed before the complaint was filed, was not a ministerial act that could be overlooked.
The Appellate Division ruling gives clear guidance for best practices and procedures for mortgagees and their counsel for completion of the mailing and recording of the Notice. When serving and recording the 90-day pre-foreclosure notice and thereafter filing the foreclosure complaint, mortgagors and counsel should:
- Contemporaneous with the mailing of the Notice, execute an affidavit of mailing, sworn to by a person with knowledge that the Notice was actually mailed on a specific date to the address set forth on the envelope;
- If possible, retain a copy of the postmarked envelope;
- If the Notice is sent by the mortgagee, and not counsel, a sworn statement should be executed explaining the customary business practice of the mortgagee with respect to its mailing of the Notice;
- Retain the certified mail receipts and the returned signature cards;
- Retain a copy of the screen shot of the recorded Notice, along with the filing number provided by the Superintendent’s office; and
- The Foreclosure complaint should contain an affirmative allegation that at the time the complaint is filed, the Plaintiff has complied with the requisite provisions of RPAPL §1306.
By strictly complying with the RPAPL’s statutory requirements, lenders and their counsel will avoid the pitfalls that may arise from failures that may seem to be minor technical glitches, but which can be fatal to the foreclosure case and result in dismissal.
Contact Michael L. Moskowitz at mlm@weltmosk.com to review your firm’s policies respecting compliance with New York’s pre-foreclosure notice provisions.
About Weltman & Moskowitz, LLP, A New York and New Jersey Business, Bankruptcy, and Creditors’ Rights Law Firm:
Founded in 1987, Weltman & Moskowitz, LLP is a business law firm concentrating on creditors’ rights, bankruptcy, foreclosure, and business litigation. Michael L. Moskowitz is a partner with the firm, focusing on business and bankruptcy litigation, as well as foreclosure, corporate counseling, M&A, and transactional matters. Michael can be reached at (212) 684-7800, (201)794-7500 or mlm@weltmosk.com. Michele K. Jaspan, an associate of the firm, contributed research and reporting to this article.
