As a general rule in most judicial foreclosure states – and this is particularly true in New York – the stage of the foreclosure case devoted to service of process is perhaps the most fertile area for delay. Borrowers move, or hide, or are missing, perhaps in the middle of an acrimonious divorce case. And even if it isn’t the borrowers who are difficult to locate, there could be all sorts of junior lienors long out of business or years past gone to places unknown making service of process time consuming and difficult. Two recent cases highlight some of these difficulties and help servicers understand why they and their counsel can be bogged down in such issues. [NYCTL 1998-1 Trust v. Rabinowitz, 7 A.D.3d 459, 777 N.Y.S.2d 483 (1st Dept. 2004); Litton Loan Servicing v. Vasilatos, 7 A.D.3d 580, 777 N.Y.S.2d 165 (2nd Dept. 2004).]
In the case where the foreclosing plaintiff lost, the process server endeavored to serve the property owner, Jacob Rabinowitz. When he could not be found at home, service was made (according to the process server’s affidavit) upon the defendant’s son Randy Rabinowitz, who was described as a 26 year old male, 5’10” in height and weighing 175 lbs.
On the eve of the foreclosure sale, Jacob Rabinowitz came forward claiming to know nothing about the foreclosure and arguing that service was never made upon him because, although he has no son, he did have a daughter named Randi Rabinowitz who was 45 years old, resided full time in Washington, DC (not New York), was 5’4″ in height and weighed 124 lbs. He also said that he knew of no person present on the day of the claimed service fitting any description contained in the affidavit of service. Given this sharp dispute in facts, the court vacated the service and ordered a traverse hearing which certainly caused delay in the case and consternation to the lender. (It appears that the process server fell down in this case, although these things can sometimes be difficult to determine.)
But then there was the Litton case that the lender won – on appeal. The borrower owned a house in Greenport, New York, on the tip of Long Island’s north fork. The process server went to the house numerous times and when the borrower could not be found, ultimately affixed the summons and complaint to the door of the premises and mailed a copy to that address in April of 1999.
Only after judgment of foreclosure and sale did the borrower emerge, arguing that as of December, 1998 he left for Greece and was residing there at the time service was made. But he also admitted that he returned to New York to attend to legal matters in March of 1999 and stayed at the house. Indeed, he maintained a post office box in Greenport and continued to receive mail there which was forwarded to him in Greece by a friend. Furthermore, he maintained telephone service at the house and all his furniture and belongings remained there. A friend checked the house every weekday. Finally, he even stated that he intended to return to Greenport and when he filed a bankruptcy petition in April, 2000 (yet another thrust at delaying the foreclosure) he listed his address in Greenport. In short, it was apparent that this was the defendant’s address and that his sojourn in Greece was only temporary. So, service was upheld and the servicer was victorious.
It should be noted, however, that even in the case where the servicer won, the lower court judge had ruled the other way and it necessitated a time consuming and expensive appeal to reinstate dismissal of the whole foreclosure – a costly and time consuming victory.
As long as borrowers will seek creative ways to thwart foreclosure cases (and that will happen all the time) when the defensive efforts are addressed to the service of process stage, problems will too often lurk for lenders and servicers. It therefore helps to be aware of this possible and not uncommon roadblock in judicial foreclosure states (like New York).
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.