Another Lender Trap – Want Of Prosecution


15 July, 2020


Mortgage Lender and Servicer Alerts

Lenders and servicers are all too aware of the difficulty in prosecuting a mortgage foreclosure action in New York (especially the home loan situation) and we highlight these as warnings in our series of alerts.  Among the issues are the need to serve process within 120 days, the obligation (if there is a default) to take a judgment within one year, the requirement in a home loan case that a certain ninety-day notice be sent and the ever present requirement that the foreclosing plaintiff have standing to pursue the action.   We typically refer to these as landmines.

But there is another, and we have commented upon it from time to time.  That is the danger to a foreclosing plaintiff of want of prosecution; a new case reminds of this although the result was favorable for the foreclosing party [HSBC Bank USA, N.A. v. Williams, 177 A.D.3d 950, 111 N.Y.S.3d 654 (2d Dept. 2019)]. 

This comes from New York’s Practice Statute (the CPLR) and Rule 3216 is entitled Want of Prosecution: where a party unreasonably neglects to proceed in an action, that action may be dismissed.  Because we have dealt with this in the past, and because it is detailed at length in 2 Bergman on New York Mortgage Foreclosures § 2.20[1][c] LexisNexis Matthew Bender (revised 2020), we need not outline those requirements in detail here.  But the essence is that if a defendant has interposed an answer, that is, issue has been joined, and one year has elapsed, but the case has still not proceeded, then the court or any party can serve a written demand upon the plaintiff requiring resumption of prosecution within ninety days after receipt of the notice.  Failing in resumption of prosecution dismissal can issue.

While one would think that foreclosing plaintiffs would be anxious to move their cases along, mistakes are made. There can be delay and sometimes when the plaintiff receives the notice there is no response, thus exposing the case to dismissal.  In the recent decision mentioned, the court emphasized the requirements of the statute and the need for the plaintiff to respond.   In this case the plaintiff failed to file a note of issue or make a motion to extend its time which therefore meant that the plaintiff was obliged to demonstrate an excuse for its failure to take timely action and show a potentially meritorious cause of action.  So there is a savings provision here.

Indeed, the court interpreted the statute as being quite liberal because it does not require the court to dismiss the plaintiff’s action based upon neglect but merely authorizes it.  Frankly we think that interpretation is overly generous in the real world.  Nonetheless, in this case the plaintiff was fortunate to be able to demonstrate the existence of a justifiable excuse and that potentially meritorious case of action.

In sum, the plaintiff suffered no harm here, although had the excuse been flimsy there may indeed have been danger.  This kind of delay is to be avoided for obvious reasons and that is the ultimate lesson of this excursion.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2020), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, 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.