Lenders certainly understand that if they make a home loan mortgage in New York, and if it goes into default necessitating a foreclosure action, a (lengthy and sometimes perilous) settlement process is imposed. While the conference mandate does not apply to all residential property, it does apply to a home loan – defined by statute (RPAPL §1304) inclusive of the obligation that the defendant resides at the property.
A new case exposes the problem when the status as a home loan is unclear. [Rich Lew Real Estate Venture v. Grant, 131 A.D.3d 1223, 17 N.Y.S.2d 475 (2d Dept. 2015).]
Here there were conflicting affidavits submitted by plaintiff and defendant which, according to the court, revealed a sharp factual dispute. This was as to whether the loan was made for the defendant’s personal, family or household use and whether the mortgaged premises was to be occupied as the defendant’s principle dwelling. Because of this factual dispute, the court found that a hearing was necessary to determine whether the loan was or was not a home loan as defined by statute and whether the defendant therefore was or was not entitled to a mandatory conference.
We need not burden this recitation with the minutia of the motion practice which consumed time and legal fees – to say nothing of the appeal which rendered this decision and the hearing which was yet to follow. But the point should be apparent. Because the certainty of it not being a home loan – which was the presumption of the lender – was lacking, the lender was subjected to all the noted infirmities with a conclusion still unknown.
The lesson from this case then is apparent. It is essential for a lender to know precisely whether the requirements of a home loan are met or not. If they are not and such is the intention of the lender, then the foreclosure process will be shorter and perhaps easier. But if an unexpected home loan is suddenly foisted upon a lender, time and expense lurk. The effort to know what one has in advance is vital.
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.