The Sharp Borrower And Tender Of Arrears


15 June, 2012


Mortgage Lender and Servicer Alerts

Lenders and servicers are well aware that borrowers frequently promise to pay their arrears and then do not do so.  Or, they send a check, but for less than the actual sum due.  Such conduct can create problems and confusion – to say nothing of litigation – and a recent case confirms this, although it stands for a recognized principle and the lender was not defeated by the borrower’s tactics.  [Thompson v. Naish, 93 A.D.3d  1203, 940 N.Y.S.2d 714 (4th Dept. 2012)].

Here, six months before the mortgage was to mature, the borrower ceased all payments.  Upon maturity, the plaintiff’s attorney wrote to the borrower demanding payment within seven days.  Payment was not made.

A month later, however, and that is one month after expiration of the seven day period, the borrower belatedly sent a check for the sum demanded in the letter.  Nonetheless deeming the borrower to be in default, a foreclosure was begun.  The argument in seeking to later overturn the judgment in the case was the borrower’s assertion that she had tendered all sums due.  But was it all sums due?

The court correctly found that it was not.  The opinion observed that because a month had passed between the final date recited in the plaintiff’s demand letter and the time the money was sent, and given that additional interest had accrued and was properly added to the debt pursuant to the terms of the mortgage, the remittance could not have constituted full payment.  Still further, just after the borrower sent to the lender’s attorneys the tardy – and insufficient – remittance, and before the lender actually knew the payment had arrived, the lender paid an old tax bill.  That was found to be proper and created an even greater sum due so that the amount submitted by the borrower was yet more deficient.

As an aside, the borrower tried to argue that equity had to be invoked in her favor and that she was entitled to a ruling that she really had paid the sum due.  But she hadn’t and the court was not prepared to say that equity was on her side – it wasn’t.

The lender won.

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.