Defend Your Case Using RPAPL 1304 and 1306 When The Lender Fails To Give Notice
RPAPL §1304 requires that the lender or assignee send a borrower a mandatory 90 day pre-foreclosure warning notice as follows:
1304. Required prior notices. 1. Notwithstanding any other provision of law, with regard to a home loan, at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type which shall include the following: “YOU COULD LOSE YOUR HOME. PLEASE READ THE FOLLOWING NOTICE CAREFULLY” “As of ___, your home loan is ___ days in default. Under New York State Law, we are required to send you this notice to inform you that you are at risk of losing your home. You can cure this default by making the payment of _____ dollars by ____. If you are experiencing financial difficulty, you should know that there are several options available to you that may help you keep your home. Attached to this notice is a list of government approved housing counseling agencies in your area which provide free or very low-cost counseling. You should consider contacting one of these agencies immediately. These agencies specialize in helping homeowners who are facing financial difficulty. Housing counselors can help you assess your financial condition and work with us to explore the possibility of modifying your loan, establishing an easier payment plan for you, or even working out a period of loan forbearance. If you wish, you may also contact us directly at __________ and ask to discuss possible options. While we cannot assure that a mutually agreeable resolution is possible, we encourage you to take immediate steps to try to achieve a resolution. The longer you wait the fewer options you may have. If this matter is not resolved within 90 days from the date this notice was mailed, we may commence legal action against you (or sooner if you cease to live in the welling is your primary residence.) If you need further information, please call the New York State Department of Financial Services’ toll-free helpline at (show number) or visit the Department’s website at (show web address)”.
RPAPL §1304[2] Further provides that such notice must be sent by registered or certified mail, and also by first-class mail, to the borrower:
“Such notice 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 if different, to the residence which is the subject of the mortgage.”
In Deutsche Bank National Co. v. Spanos, 102 A.D.3d 909, 910 (2d Dept. 2013), the Court explained that RPAPL §1304 applies to any home loan:
“RPAPL 1304 currently applies to any “home loan,” as defined in RPAPL 1304(5)(a).When the statute was first enacted, it applied only to “high cost,” “subprime,” and “non-traditional” home loans (Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 104 [citing L 2008, ch 472, § 2]). In 2009, the Legislature amended the statute, “effective January 14, 2010, to take its current form, by deleting all references to high-cost, subprime, and non-traditional home loans” (Aurora Loan Servs., LLC, 85 AD3d at 105 [citing L 2009, ch 507, § 1-a]). Since the instant action was commenced on March 26, 2010, the 90-day notice requirement set forth in the statute is applicable.” Id.
When a lender alleges compliance with Section 1304 in its complaint, this can be used against the lender to argue that the lender has conceded that the subject Mortgage is a “home loan” and that Section 1304 is applicable.
RPAPL §1306, in turn, requires the lender, assignee, or mortgage loan servicer to file notice with the Superintendent of Banks within three days of mailing the notice.
Lender’s complaints typically allege compliance with this in a general sense but fail to allege any details about when or how such filing might have occurred and fails to attach a copy of any such notice with proof that it was filed with the Superintendent of Banks within three days of mailing.
The Second Department has held in Aurora Loan Services LLC v. Weisblum, 85 A.D.3d 95, 103 (2 Dept. 2011), that, “proper service of the RPAPL §1304 notice containing the statutorily-mandated content is a condition precedent to the commencement of the foreclosure action. The plaintiff’s failure to show strict compliance requires dismissal.” (emphasis added.)
The Third Department has held that the failure to meet the requirements of 1304 is a defense to a home foreclosure action but does not deprive the court of subject matter jurisdiction. Pritchard v. Curtis, 101 A.D. 3d 1502 (3d Dept. 2012).
In TD Bank, N.A. v. Leroy, 121 A.D. 3d 1206 (3rd Dept. 2014), the Third Department dismissed the Complaint and denied the Plaintiff’s motion for summary judgment, holding that the mortgagee failed to comply with the mandatory RPAPL §1304 condition precedent to commencing the foreclosure action. The bank submitted an affidavit of an assistant vice president who averred that the notice was sent and produced a copy of a letter dated more than 90 days prior to commencement along with a certified mail receipt that contained the Defendant’s name and address but—as is the case here – the notice did not contain a postmark or date of mailing. This evidence was insufficient to demonstrate strict compliance with RPAPL §1304 and precluded judgment in the Plaintiff’s favor. Id. In TD Bank, the Third Department also held that the Plaintiff had failed to satisfy the additional statutory condition precedent under RPAPL §1306. Id.
A mortgagee’s failure to comply with these statutory requirements is not required to be raised as an affirmation defense and may be raised at any time. First Natl. Bank of Chicago v. Silver, 73 A.D.3d 162, 163 (2d Dept. 2010)(RPAPL 1303).
Further, a lender cannot rely on a pre-foreclosure letter that it served as an attachment to its complaint because the statute requires that such notice be sent in a separate envelope. See e.g., Emigrant Mortgage Co. v. Persad, 117 A.D.3d 676, 677, (2d Dept. 2014)(discussing “separate envelope” requirement that began in 2010).
