How Careful Must A Foreclosing Plaintiff Be In New York?


15 January, 2024


Mortgage Lender and Servicer Alerts

Is there even a need for such an alert?  Readers can likely surmise immediately that the answer to the question presented in the title is “very careful” and we are reminded of that by a recent case: Deutsche Bank National Trust Company v. Velasquez, 213 A.D.3d 807, 184 N.Y.S.3d 763 (2d Dept. 2023).

First, be aware that New York appropriately has a number of remedial statues which allow any party to correct mistakes, albeit with some reasonable standards.  One of these, which was the issue in the cited case, is CPLR § 5015 which provides for relief from a judgment or order – for our purposes, a lender can save itself from a mistake.

Regarding a motion for salvation, the rule is that upon such a motion the court which rendered a judgment or order may relieve a party from that upon such terms as may be just, critically though on the ground of “excusable default, if such a motion is made within one year after service of a copy of the judgment or order with written notice of its entry…”.

In the cited case, the plaintiff brought a foreclosure action in 2006 but failed to appear (as did the defendant) at two successively rescheduled status conferences. Therefore, by order in 2012, the court on its own dismissed the foreclosure complaint.  Seven years later (!) (yes that’s the point), in April 2019 the plaintiff moved to vacate the order directing dismissal and to restore the action to the calendar.  Not surprisingly, this was opposed by the defendant.

The court understandably observed that while relief from a default (here the plaintiff’s failure to appear at a conference) is available, it is proper only when the party seeking relief demonstrates a reasonable excuse for the default and a potentially meritorious defense.  Here the seven year delay was unexplained. Therefore, it was held by an appeals court that denial of the motion to vacate the default should not be disturbed.

To be sure, the seven year delay is more than just a minor miscue.  Waiting that long is obviously a major gaffe and it would be apparent to foreclosing lenders that an error of that magnitude is going to be a source of trouble.  Still, though, it underscores the notion that with all the impediments to foreclosure in New York, foreclosing parties are well advised not to exacerbate the situation by failing to pay prompt attention to mistakes.

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 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.