We have commented many times before that borrower friendly legislation of recent years presents a trap for foreclosing plaintiffs and a recent case confirms that yet again. [Aronson v. Callahan, 61 Misc.3d 658, 83 N.Y.S.3d 792 (Sup. Ct. 2018)]
What happened this time? A foreclosing lender lost his motion for summary judgment – and suffered dismissal of the entire foreclosure action – for want of the summons containing a certain boldface warning as required by RPAPL §1320.
Institutional lenders might not concern themselves very much with this, assuming instead that their New York counsel will be familiar with the obligation and will comply. This is certainly a reasonable presumption. But for any other lenders, especially those who may engage counsel who do not regularly prosecute foreclosures, this mandate may be obscure.
The cited provision (RPAPL § 1320) states that in a foreclosure action upon a residential property containing not more than three units, in addition to usual requirements for a summons, that summons shall contain a notice in boldface in the following form:
“NOTICE YOU ARE IN DANGER OF LOSING YOUR HOME
If you do not respond to this summons and complaint by serving a copy of the answer on the attorney for the mortgage company who filed this foreclosure proceeding against you and filing the answer with the court, a default judgment may be entered and you can lose your home.
Speak to an attorney or go to the court where your case is pending for further information on how to answer the summons and protect your property.
Sending a payment to your mortgage company will not stop this foreclosure action.
YOU MUST RESPOND BY SERVING A COPY OF THE ANSWER ON THE ATTORNEY FOR THE PLAINTIFF (MORTGAGE COMPANY) AND FILING THE ANSWER WITH THE COURT.”
It is doubtful that neglect to include this language would prejudice a borrower defendant. Indeed in the reported case, the borrower engaged counsel who interposed a defense in the answer, and then opposed the motion for summary judgment on the very ground that the language was missing. The borrower was certainly was not being hurt here but was, understandably, employing the system to defeat the action.
But that is not the point. The statute requires the language and then the question is will its absence prove fatal? In the cited case it did. The court observed that these remedial statutes to protect borrowers are strictly enforced as a matter of course, which is accurate, albeit not pleasing to lenders. While acknowledging that where a substantial right of a party is not prejudiced, failing to comply with a directive might in some instances be excused, the court was not prepared to treat this as minor and thereby, ultimately ignore it. Rather, as noted, the judge dismissed the foreclosure – certainly a serious matter because the plaintiff spent much time and money to get to that point.
Concededly too, this is a decision at the trial court level, Supreme Court, in Ulster County. Editorially we can observe, though, that the decision is likely to be followed. It is not absolutely binding until it may reach the Appellate Division level, but it will probably create a standard.
The necessary language in the summons for certain residential foreclosures must therefore not be neglected.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2018), 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.