The Perils Of Publication


1 May, 2008


Mortgage Lender and Servicer Alerts

A new case reminds us of how tenuous service by publication can be – and the unfortunate effect that can have on the foreclosure case. [Contimortgage Corporation v. Isler, 48 A.D.3d 732, 853 N.Y.S.2d 162 (2d Dept. 2008)].

Over the many years of these alerts, we regularly advise of the difficulty in serving process in the foreclosure action – for two good reasons. Because this is such a fertile arena for delay, it can be helpful for servicers to know the possibilities; it helps explain unwelcome delays.  Perhaps more important, awareness of process service issues alerts servicers to the importance of presenting all possible information about borrowers’ whereabouts so that they can be found and properly served.

For any number of reasons, sometimes a borrower or borrowers can not be found to serve.  Whether this is because a borrower moved and then dies, or there is a divorce situation with whereabouts unknown, or someone is in hiding – and there are many other scenarios – the result is the same.  A very time consuming and expensive process follows to serve by some other means – typically, and for the purpose of this review, publication. Not incidentally, if it is the borrower being served by publication, yet another infirmity is that this service is not considered personal service and therefore does not provide a basis to pursue a deficiency.

Beyond the borrower, though, inherent in the nature of a foreclosure case is the likihood that there will be other defendants to be served, perhaps many.  The reason is that the action needs to extinguish all interests later in time and junior to the mortgage: judgments, mechanics liens, subordinate mortgages, among others.  This greatly increases the odds that one of these defendants cannot be located, thus eliciting service by publication.

As regrettable as service by publication may be, even though it is directed by court order, it is still not certain to give jurisdiction, it is not immune from attack.  Such  is the lesson of the new case, although it is hardly the first time it has happened.

The basic dilemma – and the danger – is that a party served by publication can emerge later in the case, or even after the foreclosure sale as in the new decision, claiming that they were available for service and that publication was unnecessary, wrong and ineffectual.

Although this is more for the mortgage holder’s counsel, to briefly understand this, observe that a publication order is obtained only when plaintiff persuades the court that all efforts to locate the apparently unavailable defendant were thoroughly pursued and exhausted: we went to the last know residence and place of business, did a postal search, a motor vehicle bureau search, checked the phone books etc. Usually, a genuine effort meant the person really could not be found – but not always.  That is what happened in the new case.

Here, publication was granted against a judgment creditor.  Concededly, his address was transposed in the judgment docket.  But his attorney was available to confirm where his client lived.  Moreover, the judgment creditor had for years resided at the same place in the county and presumably anyone could have looked that up.

The result was that the creditor’s post-sale motion claiming lack of jurisdiction was granted on the ground that the publication had not been designed to give proper notice.  He could have been found.  So, title was divested when the foreclosure sale was vacated by the order.

The final lesson is enlightening but maybe not helpful, except to underscore uncertainties in foreclosure actions.  Had the protesting partly been the borrower, and had the mortgage servicer not provided helpful information which could have aided counsel’s search, the message would have been a wakeup call to servicers.  But this was not the borrower and there was nothing the mortgage servicer could have done to help.  The fault was with the process server.

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.