No 90-Day Notice Required If Borrower Deceased


15 September, 2016


Mortgage Lender and Servicer Alerts

Lenders and servicers are all too aware that when courts interpret the various borrower–friendly foreclosure statutes, the possible close calls are often interpreted to favor the borrowers’ position; not so in a new case though.  [US Bank, N.A. v. Levine, 2016 N.Y. Misc. Lexis 2514]

As by now is well known, a prerequisite to acceleration and foreclosure of a home loan mortgage in New York is the sending of a 90-day notice.  (This is a whole subject unto itself, explored in further detail 1 Bergman On New York Mortgage Foreclosures §2.01[1][a] and [i] and [ii], LexisNexis Matthew Bender (rev. 2016)).

This mandate is a matter of statute (RPAPL §1304) and the notice must be sent to the “borrower.”  If the borrower is not the same person as the owner – which is assuredly possible – did the statute perhaps mean that someone other than the borrower was entitled to the notice, the actual owner for example?  The legislature could have addressed this but never did.  While as an extra ounce of caution lenders and their attorneys would probably err on the side of prudence and serve an owner who is not a borrower, or an estate representative of a borrower who had died.  But why lose the 90 days if not required?

The new case (albeit not at the appeal court level) very cogently clarifies the issue and cites other cases on point.

Just to set the stage, here, Belle signed the note and mortgage.  She died and an executrix of the estate was appointed.  When default ensued, the lender initiated a foreclosure action but had not sent the 90-day notice.  The estate answered the complaint and upon plaintiff’s motion for summary judgment the defense of lack of sending the notice was one of the responses.

Summary judgment granted!  The ruling was that the notice need only be sent to a “borrower” and logically a borrower, at a minimum, is somebody who received something and/or is responsible to return it.  One who did not sign the note is not a borrower.  In this case, Belle borrowed the money, but was deceased.  There was no longer a borrower to receive the notice.  Notice to the estate was not required.

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.