Second Department Holds that Compliance with RPAPL 1303 Notice Requirement is a Mandatory Condition Precedent

By Nicholas M. Moccia
Law Offices of Robert E. Brown, P.C.


First Natl. Bank of Chicago v Silver, 2010 NY Slip Op 02511 (2d Dep't 2010)

At issue here are the requirements added to foreclosure proceedings by RPAPL 1303, which deal with the required statutory notice. The underlying purpose of this notice requirement was to afford greater protections to homeowners confronted with foreclosure.

This decision is noteworthy since it is an issue of first impression at the appellate level.  In short, the Second Department held that the notice requirement of RPAPL 1303 is a mandatory condition precedent to the commencement of a foreclosure action.  Failure to comply warrants a dismissal of a foreclosure action.

More importantly, a defense based on failure to comply with the RPAPL 1303 notice requirement is never waived and may be raised at any time, even on appeal.

The full text of RPAPL 1303 is as follows:

§ 1303. Foreclosures; required notices. 

1. The foreclosing party in a mortgage foreclosure action, involving residential real property shall provide notice to: (a) any mortgagor if the action relates to an owner-occupied one-to-four family dwelling; and (b) any tenant of a dwelling unit in accordance with the provisions of this section. 

2. The notice to any mortgagor required by paragraph (a) of subdivision one of this section shall be delivered with the summons and complaint. Such notice shall be in bold, fourteen-point type and shall be printed on colored paper that is other than the color of the summons and complaint, and the title of the notice shall be in bold, twenty-point type. The notice shall be on its own page. 

3. The notice to any mortgagor required by paragraph (a) of subdivision one of this section shall appear as follows:

Help for Homeowners in Foreclosure 

New York State Law requires that we send you this notice about the foreclosure process. Please read it carefully. Summons and Complaint You are in danger of losing your home. If you fail to respond to the summons and complaint in this foreclosure action, you may lose your home. Please read the summons and complaint carefully. You should immediately contact an attorney or your local legal aid office to obtain advice on how to protect yourself. Sources of Information and Assistance The State encourages you to become informed about your options in foreclosure. In addition to seeking assistance from an attorney or legal aid office, there are government agencies and non-profit organizations that you may contact for information about possible options, including trying to work with your lender during this process. To locate an entity near you, you may call the toll-free helpline maintained by the New York State Banking Department at (enter number) or visit the Department's website at (enter web address). Foreclosure rescue scams Be careful of people who approach you with offers to "save" your home. There are individuals who watch for notices of foreclosure actions in order to unfairly profit from a homeowner's distress. You should be extremely careful about any such promises and any suggestions that you pay them a fee or sign over your deed. State law requires anyone offering such services for profit to enter into a contract which fully describes the services they will perform and fees they will charge, and which prohibits them from taking any money from you until they have completed all such promised services. 

4. The notice to any tenant required by paragraph (b) of subdivision one of this section shall be delivered within ten days of the service of the summons and complaint. Such notice shall be in bold, fourteen-point type and shall be printed on colored paper that is other than the color of the summons and complaint, and the title of the notice shall be in bold, twenty-point type. The notice shall be on its own page. For buildings with fewer than five dwelling units, the notice shall be delivered to the tenant, by certified mail, return receipt requested, and by first-class mail to the tenant's address at the property if the identity of the tenant is known to the plaintiff, and by first-class mail delivered to "occupant" if the identity of the tenant is not known to the plaintiff. For buildings with five or more dwelling units, a legible copy of the notice shall be posted on the outside of each entrance and exit of the building.

5. The notice required by paragraph (b) of subdivision one of this section shall appear as follows: Notice to Tenants of Buildings in Foreclosure New York State Law requires that we provide you this notice about the foreclosure process. Please read it carefully. The dwelling where your apartment is located is the subject of a foreclosure proceeding. If you have a lease, are not the owner of the residence, and the lease requires payment of rent that at the time it was entered into was not substantially less than the fair market rent for the property, you may be entitled to remain in occupancy for the remainder of your lease term. If you do not have a lease, you will be entitled to remain in your home until ninety days after any person or entity who acquires title to the property provides you with a notice as required by section 1305 of the Real Property Actions and Proceedings Law. The notice shall provide information regarding the name and address of the new owner and your rights to remain in your home. These rights are in addition to any others you may have if you are a subsidized tenant under federal, state or local law or if you are a tenant subject to rent control, rent stabilization or a federal statutory scheme. If you need further information, please call the New York State Banking Department's toll-free helpline at 1-877-BANK-NYS (1-877-226-5697) or visit the Department's website at http://www.banking.state.ny.us. 

6. The banking department shall prescribe the telephone number and web address to be included in either notice. 

7. The banking department shall post on its website or otherwise make readily available the name and contact information of government agencies or non-profit organizations that may be contacted by mortgagors for information about the foreclosure process, including maintaining a toll-free helpline to disseminate the information required by this section.

Obama readies steps to fight foreclosures, particularly for unemployed

By Renae Merle and Dina ElBoghdady
Washington Post Staff Writer
Friday, March 26, 2010

The Obama administration plans to overhaul how it is tackling the foreclosure crisis, in part by requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed, senior officials said Thursday.

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Justice Schack Admonishes Steven J. Baum Again

By  Nicholas M. Moccia
      Law Offices of Robert E. Brown, P.C.

Lasalle Bank N.A. v Smith, 2010 NY Slip Op 50470(U) (Sup. Ct. Kings County 2010)

Here, Plaintiff Lasalle Bank, N.A., (“Lasalle”) sought a judgment of foreclosure and sale on default against the defendant borrower.  subordinate lender MERS as nominee of First Franklin Financial Corp. (“Franklin”) also sought relief pursuant to RPAPL 1351(3) and 1354(3).  Defendant borrower purchased the subject premises financing 100% of the purchase with two mortgages.  The first mortgage is held by Lasalle and constituting 80% of the purchase price.  The second mortgage is held by Franklin constituting the other 20%.

Justice Schack denied without prejudice Plaintiff Lasalle’s motion for a judgment of foreclosure and sale on default because it failed to comply with CPLR 3215(f) which requires an affidavit of facts executed by an officer of Lasalle or by someone with a valid power of attorney from Lasalle.  Schack also denied without prejudice the relief requested by Franklin for the same reason.  Schack noted that although the Plaintiff supplied a power of attorney for this purpose, Plaintiff is required to submit either an original copy of the power of attorney or a copied certified pursuant to CPLR 2105—i.e. that Plaintiff’s counsel compared the copy with the original document and found it to be a true and complete copy.

Most interestingly, Schack chastised Plaintiff’s counsel, Steven J. Baum, P.C., for the simultaneous representation of Lasalle and Franklin since Franklin holds clearly holds a divergent interest from that of Lasalle. Franklin holds a second mortgage that is subordinate to that of Plaintiff’s.  Schack pointed out that such a simultaneous representation is a violation of 22 NYCRR 1200.24 of the Disciplinary Rules of the Code of Professional Conduct.  Simultaneous representation of this sort is permitted only if the lawyer can (i) competently represent the interest of each party and (ii) if each consents to the representation after full disclosure of the implications of simultaneous representation and the advantages and risks involved.  Accordingly, Schack order Baum to demonstrate that Lasalle and Franklin gave such consented—no doubt Baum will be able to produce an after-the-fact consent.  Whether he can demonstrate that he can competently represent both parties still remains to be see…

Homeowners Sue Bank of America for Failing to Permanently Modify Loans

Homeowners in Washington State are suing Bank of America, alleging the nation’s largest lender is “intentionally” and “systematically” thwarting and ignoring borrowers’ requests to make reasonable mortgage modifications that would prevent homes from being foreclosed.

The case, filed in a Seattle federal court, claims that Bank of America is required to modify troubled mortgages as a condition of the $25 billion federal bailout it accepted as part of the Troubled Asset Relief Program (TARP). 

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Foreclosure Defendant Waives Defenses of Lack of Standing and Improper Service

By  Nicholas M. Moccia
      Law Offices of Robert E. Brown, P.C.

Wells Fargo Bank Minn., Natl. Assn. v Perez, 2010 NY Slip Op 00956 (2d Dep't 2010)

Here, a foreclosing plaintiff was awarded summary judgment in an action to foreclose a mortgage, and the Second Department affirmed upon appeal.  During this appeal, the defendant failed to raise the defenses of lack of standing or improper service.  Thereafter, the plaintiff moved for a judgment of foreclosure and sale. When the defendant opposed the motion, she raised the previously mentioned defenses.  The Second Department held that the defendant waived her defenses since she already had a full and fair opportunity to address the issues on the prior appeal. Moreover, she provided no basis for re-examining those issues.

"As a general rule, the law of the case doctrine precludes this Court from re-examining an issue which has been raised and decided against a party on a prior appeal where that party had a full and fair opportunity to address the issue." Frankson v Brown & Williamson Tobacco Corp., 67 A.D.3d 213, 217 (2d Dep't 2009); see Allison v Allison, 60 A.D.3d 711, 711 (2d Dep't 2009). The doctrine forecloses re-examination of an issue "absent a showing of subsequent evidence or change of law."  J-Mar Serv. Ctr., Inc. v Mahoney, Connor & Hussey, 45 A.D.3d 809, 809 (2d Dep't 2007), quoting Matter of Yeampierre v Gutman, 57 AD2d 898, 899 (2d Dep't 1977).
 
Wells Fargo Bank Minn., Natl. Assn. v Perez

Second Department Grants Leave to Amend Answer

By  Nicholas M. Moccia
      Law Offices of Robert E. Brown, P.C.

Aurora Loan Servs., LLC v Thomas, 2010 NY Slip Op 01606 (2d Dep't 2010)

Here, the Second Department granted a foreclosure defendant's motion for leave to amend his answer to assert the defenses of lack of standing and lack of capacity to sue.

Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit.  See CPLR 3025(b); Lucido v Mancuso, 49 AD3d 220, 222 (2d Dep't 2008). Here, the defendant's proposed amendments were not palpably insufficient or patently devoid of merit. Since the documents upon which defendant relied in making his motion were obtained from the plaintiff in discovery, there was also no showing of prejudice or surprise resulting directly from defendant's delay in seeking leave.

Aurora Loan Servs., LLC v Thomas

Rebutting the Presumption of Proper Service

By  Nicholas M. Moccia
      Law Offices of Robert E. Brown, P.C. 
Washington Mut. Bank v Holt,  2010 NY Slip Op 01787 (2d Dep't 2010)

Here, the Second Department reverses the Queens County, Supreme Court, judgment of foreclosure and sale.  The Second Department remitted the case to the Supreme Court in order to conduct a traverse hearing to determine whether the defendant homeowner was properly served with process.

Generally, a process server's affidavit of service establishes a prima facie case as to the method of service and, therefore, gives rise to a presumption of proper service. However, a defendant's sworn denial that he was served by the plaintiff's process server and submission of proof of unexplained, serious irregularities in the service of the reputed tenants of the foreclosed property involving the same process server has rebutted this presumption of proper service. In light of defendant's denial of receipt of the summons and complaint served pursuant to CPLR 308(4) and the submission of an affidavit raising bona fide concerns involving the veracity of the process server, a hearing was ordered to determine, by a preponderance of the evidence, if the process server acted with due diligence before resorting to "nail and mail" service pursuant to CPLR 308(4).  See Mortgage Access Corp. v Webb, 11 A.D.3d 592, 593 (2d Dep't 2004); Bankers Trust Co. of Cal. v Tsoukas, 303 A.D.2d 343, 344 (2d Dep't 2004).



Washington Mut. Bank v Holt

Short sales and foreclosures account for

Short sales and foreclosures account for ‘nearly half’ of home purchases

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Kudos to Staten Island Legal Services for Providing Staten Island Home Owners With Quality Legal Assistance For Free

By  Nicholas M. Moccia
      Law Offices of Robert E. Brown, P.C.
Staten Island Legal Services launched the Homeowner Defense Project in 2006 to address the pressing legal needs of homeowners affected by the mortgage lending crisis.  It is the only organization in Staten Island providing free legal assistance to low and middle-income homeowners in foreclosure.  Its goal is to keep families in their homes and prevent foreclosures from destabilizing Staten Island neighborhoods.  In addition to providing legal advice and representation in state and federal court, Staten Island Legal Services offers assistance with newly required court settlement conferences, loan negotiations, and applying for refinancing or relocation assistance. 

Margaret Becker is director of the Homeowner Defense Project at Staten Island Legal Services.  Margaret started the Homeowner Defense Project in 2006, bringing to it 13 years of experience in public and private practice.  She began practicing law as a staff attorney representing farmworkers with Michigan Migrant Legal Assistance Project.  She practiced union-side labor and employment law and public utilities law (representing non-profit environmental groups) with a private firm in Wisconsin, represented homeless clients as a staff attorney with Legal Action of Wisconsin, and served as an editor for the Clearinghouse Review: Journal of Poverty Law and Policy.  She received her B.A. from the University of Michigan in 1985 and her J.D. cum laude from Harvard Law School in 1992.

Staten Island Legal Services provides free online guidance for those served with a foreclosure summons and complaint.  The guide explains how to “answer” a foreclosure complaint without an attorney using the sample answer form.

• Guide (PDF)
• Sample Answer Form (PDF) 

This guide and the attached form should not replace finding professional assistance from a non-profit housing counselor or legal services attorney. 

• New York State Foreclosure Process (PDF) 

Staten Island Legal Services Contact Info


36 Richmond Terrace, Ste. 205 (across the street from Staten Island ferry)
Staten Island, New York 10301
Tel: (718) 233-6480
Fax: (718) 448-2264

Wells Fargo Sues Wells Fargo? You can’t Expect a Bank that is Dumb Enough to Sue Itself to know why it is Suing Itself…

Wells Fargo Sues Wells Fargo?

Fox News Interviews Al Lewis of Dow Jones about it…

You can’t expect a bank that is dumb enough to sue itself to know why it is suing itself.

Yet I could not resist asking Wells Fargo Bank NA why it filed a civil complaint against itself in a mortgage foreclosure case in Hillsborough County, Fla.

Wells Fargo Sues Wells Fargo? You can’t Expect a Bank that is Dumb Enough to Sue Itself to know why it is Suing Itself…

 

 

 

Sue Your Lender, Save Your Home

For homeowners struggling to keep up with their mortgage payments, their best hope may be negotiating a lower, more affordable monthly payment while they try to get their financial houses back in order. That's the aim of the government's Home Affordable Modification Program, which encourages lenders to modify loan payments.

Sue Your Lender, Save Your Home

"Foreclosure Mill" Law Firms Cash in Big on Homeowner Woes

By  Nicholas M. Moccia
      Law Offices of Robert E. Brown, P.C.

 Who loves a depressed real estate market? A certain shady brand of law firm, that's who.

As countless Americans suffered the sting of mortgage foreclosure, the obscure Amherst, N.Y., law firm of Steven J. Baum, P.C., made millions in fees from the some of the nation's largest banks. Known as one of a handful of regional "foreclosure mills," nicknamed for their voluminous, repetitive transactions, Baum processed 12,551 lawsuits in New York City and its suburbs in 2009 -- nearly 48 per day.

"Foreclosure Mill" Law Firms Cash in Big on Homeowner Woes

Obama Foreclosure-Prevention Plan Lagging, New Data Shows

Only about a third of the homeowners who have successfully completed the trial period of the Obama administration's mortgage modification program have been offered permanent relief, according to new federal data obtained by the Huffington Post.

The conversion rate -- about 33 percent -- is woefully short of what the Treasury Department had forecast. Treasury thought the rate would be "ranging up to 75 percent," Herbert M. Allison Jr., assistant secretary for financial stability, told the Congressional Oversight Panel in October.

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Developers Embrace New 'Flip Tax'

Apparently, developers feel they haven't been getting theirs. With new home development stalling, developers seem to think that the only way they can increase profitability is to build it into their work. Behold then, the latest financial scheme from the housing industry: a flip tax that gets paid to the developer every time the home gets sold.

Developers Embrace New 'Flip Tax'

New Foreclosures Plan Will Pay Homeowners to Sell -- Politics Daily

The government's mortgage modification plan hasn't helped as many defaulting homeowners as was hoped, so the Obama administration will try a different tack to avoid.

New Foreclosures Plan Will Pay Homeowners to Sell -- Politics Daily

Firm Sanctioned for 'Perfect Storm' of Improper Practices in Debt Collection

Vesselin Mitev
New York Law Journal
March 08, 2010

A Manhattan law firm committed a "veritable 'perfect storm' of mistakes, errors, misdeeds and improper litigation practices" in trying to collect a debt from a Long Island, N.Y., woman, a New York state judge has ruled in ordering sanctions against the firm...[continue reading]

NPV stands for net present value, and it is an accounting calculation that every lender makes about each loan that is reviewed for a possible loan modification. The goal of the NPV is to help a lender calculate whether it is more profitable to do a loan modification or let the home fall into foreclosure...

Calculating the Net Present Value (NPV) of a Foreclosure vs. a Loan Modification

FDIC Asset Plan Danger to Markets, Bankers Say

A Federal Deposit Insurance Corp. (FDIC) plan to restrict securitizations is drawing intense opposition from bankers, who claim it would damage the secondary market...


FDIC Asset Plan Danger to Markets, Bankers Say

Mortgage debt waived after bank can't find paperwork

Two weeks ago, a bankruptcy court in suburban New York did the formerly unthinkable: It waived a homeowner's mortgage debt after the bank trying to foreclose on the home couldn't submit any proof that it actually had a claim on the property....


Mortgage debt waived after bank can't find paperwork