When the holder of a junior mortgage – or any other interest for that matter – is named as a defendant in a mortgage foreclosure action, if it is has a defense, of course, that position must be set forth in a timely served answer. As a practical matter, there is room for some tardiness, but eventually, and sooner rather than later it must be interposed. A new case exposes a lender-defendant’s default in answering as non-curable and serves as a sharp reminder about paying attention to such things. [Wells Fargo Bank v. Krauss, 120 A.D.3d 813, 10 N.Y.S.3d 257 (2d Dept. 2015).]
Here, a foreclosing plaintiff moved to enter a default judgment which was opposed by a junior lender first wishing to submit an answer at that late date. But in order to serve a late answer, the defaulting party must show both an excuse for its default and a meritorious defense.
Whether an excuse for default is reasonable is to be decided on a case-by-case basis but among the factors to be considered are the extent of the delay, whether there has been prejudice to the opposing party, whether there has been willfulness – contrasted with the strong public policy to dispose of cases on the merits.
Here, the junior lender’s excuse for default was a clerical error. But this was unsubstantiated, conclusory and inadequately explained. Thus, it did not constitute a reasonable excuse.
This was exacerbated by the defaulter’s ignoring of an earlier plaintiff declaration that a late answer would not be accepted – with still no action taken despite the warning. This was a part of events which led the court to conclude that the supposed mistake was not an isolated error but rather part of a pattern of repeated neglect.
Without an excuse for the default, there was no need for the court to address the merit of the junior’s defense. It was in default and remained so. Yes, care and attention are always in order.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), 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.