What Happens When Foreclosure Dismissed For Failure Of 90-Day Notice?
This subject, that is the strictly construed, condition precedent, statutorily mandated (RPAPL § 1304) 90-day pre-foreclosure notice in the home loan foreclosure case, is incessant fodder for these alerts and like legal articles as well. These pages inveigh against lender notice miscues which defeat foreclosures for the sole reason of infirmity in the notice process. Such analysis inherently serves the dual purpose of alerting lenders to the errors to avoid (how to do it correctly) and exposing to borrowers the faulty methodology to attack.
While the primary purpose of this discussion is not to offer yet another instance of a lender blunder, mentioning one typical recent case underscores that point. [Federal National Mortgage Association v. Williams-Jones, 235 A.D.3d 953, 228 N.Y.S.3d 706 (2d Dept. 2025)]
Perhaps the most common lender insufficiency is the inability to prove proper mailing of the notice. Not here. Likely the easiest aspect of the pre-foreclosure notice is compliance of notice contents with statutory dictates. RPAPL § 1304 quotes directly the text, the words to be used. The lender need only conform the notice to that recitation. And yet, lenders still founder here too.
In the case cited, the statute, as it was at the time of the notice, required that the borrower be advised that if further information was needed a call could be made to the New York State Department of Financial Services toll free hotline with that phone number to be provided. Did the lender present the phone number? It did not. Result for that easily avoidable gaffe: the foreclosure was dismissed. It was not a matter of any prejudice to the borrower. It was simply as it has always been, the imperative that the notice statute invokes strict compliance and interpretation.
Returning now to the title of this excursion, what happens when the foreclosure is indeed dismissed for some lender neglect in assuring service of a proper pre-foreclosure notice? Dismissal, of course, means that the mortgage holder, the once foreclosing plaintiff, needs to begin again. One immediate concern is whether that is even possible, for example if the statute of limitations may have expired. This then leads to another recent case [Wells Fargo Bank, N.A. v. Palaigos, 235 A.D.3d 1027, 228 N.Y.S.3d 644 (2d Dept.. 2025)] where the trial court found the foreclosing plaintiff unable to prove mailing in conformance with the statute. Having reached that common conclusion, the court then dismissed the foreclosure with prejudice.
On appeal however, and this is the key message, it was found that the trial court should not have directed dismissal of the complaint with prejudice. Compliance with RPAPL § 1304 is a condition precedent to a mortgage foreclosure action and dismissal of a complaint for failure to satisfy a condition precedent is not a “final judgment upon the merits” for the purposes of CPLR 205-a – the section which allows a foreclosure to begin anew. Therefore, it was ruled on appeal that the court should have directed dismissal without prejudice because the foreclosing plaintiff was entitled to the benefit of CPLR 205(a) or the newer CPLR 205-a.
When a foreclosure falls based upon want of pre-foreclosure notice, the plaintiff faces the time and expense of beginning the action anew. If the statute of limitations has expired – and it does happen sometimes – there is a savings provision allowing initiating of the action anew. But that is unavailable if there has been a final judgment on the merits. The recent case is critical in reaffirming the concept that dismissal under RPAPL § 1304 is not a final judgment on the merits. The mortgage holder still has a chance to begin anew.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2024), is a partner with Berkman, Henoch, Peterson & Peddy, P.C. in Garden City, New York. He is also a member of the The American College of Real Estate Lawyers, a fellow of The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.