POTENTIAL ARGUMENTS A FORECLOSURE DEFENSE ATTORNEY CAN ASSERT ON A CLIENT’S BEHALF
Foreclosure cases often involve sophisticated legal tactics and arguments intended to help a defendant keep avoid foreclosure and keep their home.
Chapter 1 – Default was “Excusable”
Examples of legal arguments challenging a default judgment based on reasonable excuses for not answering the foreclosure complaint.
Chapter 2 – Plaintiff failed to file a Timely Motion for Order of Reference
Arguments challenging the initiation of a default judgment based on a plaintiff’s untimely request for an Order of Reference.
Chapter 3 – Homeowner’s Right to a Mandatory Settlement Conference
Arguments to stand up for a defendant’s right to foreclosure prevention settlement negotiations, even in cases initiated in 2008 or earlier.
Chapter 4 – Defendant’s Right to Discovery prior to a Motion for Summary Judgment
Arguments against a plaintiff’s request for summary judgment when the discovery process has not been completed.
Chapter 5 – Requiring Original Documents from the Mortgage Lender
Challenging a lender who does not provide proof of possession of original loan documents and requesting that the court compel compliance with the request for originals.
Chapter 6 – The Defendant was Not Properly Served
Challenging a plaintiff’s assertion the defendant did not receive proper service of the foreclosure summons and complaint.
Foreclosure cases often involve sophisticated legal tactics and arguments intended to help a defendant keep avoid foreclosure and keep their home. Legal arguments can be presented to the court in many different situations in an attempt to challenge the plaintiff’s case and obtain adequate relief for the defendant. As a defendant, it may often be frustrating if you do not understand the complex legal arguments being set forth in your case. The following are some examples of potential arguments that a quality foreclosure defense attorney may submit on behalf of a defendant.
Foreclosure can be a complex process that involves numerous procedural rules, deadlines, motions submitted to the court by both parties, and more. At times, if you are the defendant in a foreclosure case, you can be overwhelmed by the court dates, paperwork, and legal jargon involved in defending your home. Sometimes, even attorneys who do not have as much experience with this type of case may also make mistakes during a foreclosure case and you could end up with a default judgment.
A default judgment is a judgment entered against you by the court because of a failure to appear or to answer a motion by the plaintiff. When your opposing party files a motion requesting that the court do something specific, you have only a certain period of time during which to argue against that motion. For example, if a plaintiff in a foreclosure case files a motion for summary judgment, which is a request to find in their favor without a full trial, and you fail to answer in a timely fashion, the court can enter a default judgment against you.
Fortunately, an experienced attorney should know that there are certain ways to challenge a default judgment and find relief. For example, the New York Civil Practice Law & Rules (CPLR)1 sets out when a party can obtain relief from a judgment. One such method of receiving relief is if you can prove “excusable default” within one year of after you receive notice the judgment is entered.
Whether or not your reason for the default was “excusable” is left to the discretion of the courts.2 Some excuses that have been deemed reasonable include “law office failure,”3 “various acts of misconduct and deception”4 by an attorney, and the fact that a defendant had moved from the residence in question and did not receive notice that the plaintiff had filed a motion for summary judgment.5
For example, in a recent case, a client’s former attorney had some confusion or disorganization in the office that led the attorney to believe that the office had never been served with notice of the plaintiff’s motion for summary judgment. Additionally, the defendant no longer resided at the home where service took place. We argued that these factors were enough to constitute a reasonable excuse based on previous court decisions and, therefore, requested that the court vacate the default judgment and allow our client to defend his case on the merits. Since there was no effective service on the defendant and because it was not our client’s fault that the previous attorney’s office had made an error, we sought relief from the judgment under New York law.
The choice of an attorney is extremely important when you are trying to defend your home. As the above case illustrates, some attorneys may not be as organized or familiar with the foreclosure process and therefore you may find yourself facing a default judgment when you wanted to defend your case on the merits. Some lawyers may mistakenly believe that a default judgment in a foreclosure is final and may not realize they have tools to challenge the default.
If there is reasonable excuse for the default, case law and New York law both allow a defendant to challenge a default judgment and an experienced attorney should always take every step possible to obtain relief for their foreclosure client.
1 CPLR §5015 (a)(1).
2Swensen v MV Transp., Inc., 89 A.D. 924; 933 NYS2d 96 (2nd Dept. 2011).
5Willen v. Richards, 33 Misc. 3d 32, 932 N.Y.S. 2d 305 (Aug. 5, 2011).
The New York Civil Practice Laws and Rules (CPLR) set out distinct time limits for certain motions to be set forth by each party in a civil case and foreclosure cases are no different. For example, once a plaintiff/mortgage lender serves a complaint initiating the foreclosure case and a summons for the defendant to appear in court, the defendant has 20 days during which to file a legal response to that complaint, referred to as an “answer.” If the defendant does not file an answer, the lender then has one year to file a motion with the court requesting an Order of Reference, which asks the court to appoint a “referee” to determine the full amount that would be owed to the lender in the foreclosure. Once the amount is totaled and reported to the court, the lender can then request a default Judgment of Foreclosure and Sale to be entered against the defendant. However, the Order of Reference must be requested first prior to a request for a default judgment.
Under CPLR § 3215(c), the plaintiff in a foreclosure case has only one year from the time the defendant’s answer was due during which to submit a Motion for an Order of Reference in order to begin the default process.1 However, it is all too common that a lender fails to submit this motion in a timely fashion. The law states that a failure to submit such a motion to initiate the default process within on year should lead the court to “dismiss the complaint as abandoned.”2 Several past cases in New York demonstrate that courts will enforce the CPLR and dismiss an action if the one year deadline for default judgment has passed.3
The law does allow an extension on the deadline to file for an Order of Reference if the plaintiff can show “sufficient cause” for the delay.4 However, in many cases, the plaintiff offers an insufficient explanation or even no explanation at all for filing an untimely motion. This deadline “prevents a plaintiff from taking advantage of a defendant’s default where the plaintiff has also been guilty of inaction.”5 In many situations, this legal argument can obtain relief for a vulnerable defendant who opted not to participate in the foreclosure action and is now possibly facing a default judgment against them and the loss of their home.
An experienced foreclosure defense attorney will be familiar with all of the civil practice time limits set out in the New York CPLR and will try to hold lenders to these deadlines whenever possible. In many cases, if a lender files a Motion for Order of Reference beyond the deadline set by law, that motion should be denied by the court. A qualified defense attorney should always challenge an untimely Motion for Order of Reference and at least have the court require that the plaintiff show sufficient cause for being late. If the plaintiff cannot show sufficient cause, this type of legal argument set forth by the defense attorney can save the defendant from default under many circumstances.
1CPLR § 3215(c).
3See. Freedom Mtge. Corp. v Akther, 40 Misc.3d 1203(a); 975 NYS 2d 709; 2013 WL 3242812(N.Y. Sup); 2013 NY Slip Op 51015 (U); Six Star Supply, Inc. v Praetorian Ins. Co., 39 Misc. 3d 141 (a); 971 NYS 2d 75, 2013 WL 209 579 (N.Y. Sup. Appellate Term); 2013 NY Slip Op 50755(U).
4CPLR § 3215(c).
5Myers v Slutsky (139 AD2d 709 at 710 ).
When a homeowner answers a foreclosure action, they have certain rights throughout the litigation process that follows. For example, the current version of § 3408 of the New York Civil Practice Laws and Rules sets out the requirements for mandatory settlement conferences in all residential foreclosure actions. The rule states that within 60 days of a plaintiff/lender filing proof that the defendant had been served with the foreclosure complaint and summons, the parties must sit down and have a conference to discuss alternative options to resolve the issue other than foreclosure and sale of the home.1 This settlement conference is often very important to help a defendant keep their residence and avoid foreclosure.
The law requires that the parties in a foreclosure “negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.”2 An experienced foreclosure defense attorney will know how to effectively negotiate with the mortgage lender to present options other than foreclosure based on a defendant’s financial situation, which can include the following:
If the lender and the defendant can reach a mutually agreed-upon solution in the settlement conference, the foreclosure action is halted and the homeowner has another chance to keep their home.
Under the current law, which was updated in 2009 and will remain in effect until at least 2020, the requirements to be eligible for a mandatory settlement conference are as follows:
Prior to 2009, the original version of CPLR § 3408 was significantly more narrow and only required mandatory foreclosure prevention settlement conferences for “high cost” loans originated between 2003 and 2008 or “subprime or nontraditional” loans. The law did not give every homeowner facing foreclosure the right to a mandatory settlement conference.
However, in recent years, New York courts have applied the new, broader version of the law retroactively to apply to foreclosure actions that originated before the update. This means that, even if a foreclosure action was initiated prior to 2009, a homeowner’s loan would not have to meet the “high cost” or other requirements in order for the defendant to have the right to a mandatory settlement conference. This is very important for homeowners who have traditional, lower cost mortgages and who wish to seek an alternative arrangement with their lender to keep their home.
An experienced foreclosure defense attorney will present the legal argument to the court that a homeowner deserves a settlement conference even if the foreclosure began in 2008 or earlier. In prior cases, New York courts have agreed that the law regarding settlement conferences should be retroactively applied to “any foreclosure action on a home loan, in which the action was initiated prior to September 1, 2008 but where the final order of judgment has not been issued.”4
One New York judge further stated that courts within the state have the “affirmative obligation to ensure that the primary statutory goal of keeping homeowners in their homes.” One method of working toward a solution that involves allowing homeowners to remain in their homes is negotiating an alternative arrangement in the mandatory settlement conference. Even if your foreclosure was initiated before the new law, an experienced foreclosure defense attorney will know how to argue that the new law should retroactively apply to your case.
1 CPLR § 3408(a)
2CPLR § 3408(f)
3N.Y. RPA. LAW § 1304
4JP Morgan Chase Bank, N.A. v Casanova, 2014 NY Slip Op 24037 [February 10, 2014] Supreme Court, Westchester.
5U.S. Bank National Association v. Padilla, 31 Misc.3d 1208(A), 2011 WL 1348387 (N.Y. Sup).
If parties cannot come to a mutually agreed-upon alternative arrangement at the mandatory settlement conference, the foreclosure action will generally proceed in court. At this stage, a foreclosure defense attorney will focus on gathering information and evidence in order to build a strong legal defense to the foreclosure.
The “discovery” process is a highly important part of any type of legal case. Discovery refers to the part of the litigation process during which each party seeks important information from the other with which to build their case. Though there are some limitations on the types of information that are eligible for discovery (such as privileged information), a large amount of information can be rightfully requested in line with the applicable New York Civil Practice Laws and Rules.1
There are many different ways to request different types of information during the discovery process, including the following:
Interrogatories – Interrogatories involve a list of questions sent to the other party, requesting honest and accurate answers.
Requests for production – This is a request for the other party to produce and share documents, such as the original mortgage note in a foreclosure action.
Requests for admissions – This tool requests the other party to effectively admit or deny a particular fact that is relevant to the legal action. If a party admits a fact, that fact becomes stipulated and is no longer considered to be in dispute in the case.
Depositions – Depositions are formal meetings during which one party asks questions of the other party or a relevant witness that must be answered under oath. The answers are recorded by a court reporter who is also present. These meetings generally take place in an attorney’s office or conference room.
The discovery phase is often the longest part of the litigation process due to delays in collecting information, objecting to requests, and scheduling depositions. However, the litigation is generally not allowed to continue until all discovery requests have be completed by both parties.
A Motion for Summary Judgment in a foreclosure case is generally filed by the plaintiff (the “movant”) if, after the discovery phase, it believes that the defendant does not have a meritorious defense. The motion is, in short, a request for the court to find in favor of the plaintiff at that stage of the case without any further litigation. The defendant then has the opportunity to submit arguments in opposition to the summary judgment request stating why they believe their defense has merit.
If a plaintiff submits a Motion for Summary Judgment prior to the completion of the discovery, the defendant may not have all of the information they need to properly oppose the motion. In fact, New York court have held that “summary judgment motions are also premature when the movant has not responded to all discovery demands”2 or “when the time to conduct discovery has not lapsed.”3
Therefore, if the deadline for discovery has not passed and the plaintiff has not yet properly and completely responded to all of the defendant’s interrogatories, requests for production, requests for admissions, and requests for depositions, an experienced foreclosure defense attorney should argue that the Motion for Summary Judgment is premature and that the court should deny the motion. Such an argument can prevent to court from entering judgment in the plaintiff’s favor at that time to ensure the defendant has all the information necessary to present a strong defense.
1CPLR § 3120
2Matter of Fasciglione, 73 AD3d 769, 770 [2d Dept. 2010].
3See James v Aircraft Service Intern. Group, 84 AD3d 1026, 1027 [2d Dept. 2011].
As we previously discussed in the last chapter, discovery is an extremely important part of the litigation process. During the discovery phase, a foreclosure defense attorney will try to gather any evidence possible to build a defense against the foreclosure action to prevent judgment in the mortgage lender/plaintiff’s favor and allow the defendant to keep their home. There are several different legal defenses to foreclosure, including the following:
“Standing” refers to a party’s legal capacity to bring a civil action against another party through a connection to the matter and harm suffered from the defendant. For example, in a foreclosure action, the lender must establish standing by demonstrating that they had actual physical possession of the original mortgage loan documents from the first initiation of the legal action. Such possession of the original documents establishes that the plaintiff has the right to enforce payment of the mortgage debt through foreclosure. A defendant will generally request these documents as part of the discovery process to ensure the plaintiff has the originals and has the right to bring the action.
In many cases, a plaintiff will not provide the original documents in response to requests for production made by the defendant as part of the discovery phase. If a plaintiff claims to have the original documents but then only provides blurred, reduced, or otherwise unclear copies of the loan documents, such documents do not support the assertion that the plaintiff is in actual possession of the true original loan documents.
In such a situation, an experienced foreclosure defense attorney can argue that the plaintiff did not properly comply with discovery and, therefore, discovery is not complete. As previously discussed, a foreclosure defendant cannot properly defend against a lender’s Motion for Summary Judgment until the discovery phase is complete and all pertinent information is exchanged.
If a plaintiff fails to comply with the request for original documents and files a Motion for Summary Judgment, the legal argument can be made that, under New York law, the motion should be denied based on the failure to comply with all proper discovery requests.1 Additionally, the defense attorney can then request in a Cross Motion that the court compel the plaintiff to adequately comply with requests for original documents. If the plaintiff still refuses to comply with the request for original documents, the defendant can seek further remedies from the court including striking parts of the pleading, dismissing the action altogether, or rendering judgment in favor of the defendant.2
Additionally, in 2013, a new law was established in New York that applies to all foreclosure actions initiated after August 30, 2013.3 The law requires the foreclosing party to file the following documents with the court at the start of a foreclosure action:
This requirement is intended to reduce delays in document production and, in turn, reduce delays in the overall foreclosure timeline. In accordance with the new “produce the note” law, courts will be able to make sure that the foreclosing party has actual possession of all of the correct and necessary documents in place from the very start of the legal case. If the lender attempting foreclosure cannot produce the note, the court may find it does not have standing to bring the action against the homeowner.
When a mortgage lender/plaintiff files a complaint for a foreclosure against a homeowner, the homeowner must be provided with adequate notice that a legal action has been submitted against them. If proper notice is given, the defendant will not know that he or she needs to respond to a complaint, appear in court, or take other steps necessary to defend against a lawsuit. Furnishing notice to a defendant of a complaint and summons to court is referred to as “service of process.” Service of process may be achieved in a number of ways, including delivery of the necessary papers to the defendant or the defendant’s residence by a Sheriff or private process server. If service cannot be properly completed, the foreclosure action may not proceed.
In order to make sure that the defendant has been properly served, the plaintiff must file an Affidavit of Service with the court. This Affidavit is a sworn statement, usually by a process server, stating the date and method of service on the defendant. When a court receives this sworn statement, it will “give rise to a presumption of proper service.”1 If the defendant then fails to participate in the legal action, they may be at risk of facing a default judgment.
There are instances, however, when a plaintiff files an Affidavit of Service and the defendant did not, in fact, receive proper notice of the foreclosure action. In such cases, the foreclosure defense attorney can assist the defendant in challenging the presumption of proper service as well as the default judgment. In order to do so, a defendant must sign their own sworn statement “containing specific facts showing that a defendant was not served with process.”2
If the defendant submits such a sworn statement, the court can order a hearing at which the plaintiff will be expected to prove that proper service occurred by a preponderance of the evidence. If the plaintiff cannot meet that burden of proof, the default judgment may be set aside and the defendant will be given adequate time to respond to the legal action.
1US Consults v APG, Inc., 82 AD3d 753 [2d Dept 2011]; Bank of New York v Segui, 68 AD3d 908 [2d Dept 2009]; Household Fin. Realty Corp. of NY v Brown, 13 AD3d 340 [2d Dept 2004].
2Wells Fargo Bank, NA v Chaplin, 65 AD3d 588[2dDept 2009]; Mortgage Access Corp. v Webb, 11 AD3d 592 [2d Dept 2004; Bankers Trust Co. of California, N.A. v Tsoukas, 303 AD2d 343, 344 [2d Dept 2003].
The above are only six examples of the many legal arguments that may be asserted on behalf of a defendant in a foreclosure case. Simply because a foreclosure action is initiated against you does not mean that you will necessarily lose your home. However, because this type of civil action often involves complex procedural rules and legal issues, it is always in your best interest to have an experienced foreclosure attorney representing you during every step of your case.
At the Long Island law office of Ronald D. Weiss, P.C., our legal team is committed to protecting the rights of homeowners facing possible foreclosure, so please do not hesitate to call us at 631-296-0908 for a free consultation today.