New York law only allows for judicial foreclosures, which means a mortgage lender must initiate a legal action and obtain a court order for a foreclosure. New York caselaw requires that the plaintiff in a mortgage case be the current owner of the loan at the time the complaint is filed and not a servicer, past/future owner, or using the wrong corporate name. In the mentioned case, Kluge v. Fugazy, (145 AD 2d 537 – NY: Appellate Div., 2nd Dept. 1988), the mortgage was not properly assigned, so the claimed assignee could not file a foreclosure action. The court ruled:
The plaintiff’s first and second causes of action for foreclosure and a deficiency judgment, respectively, must fail since foreclosure of a mortgage may not be brought by one who has no title to it and absent transfer of the debt, the assignment of the mortgage is a nullity (Merritt v Bartholick, 36 N.Y. 44, 45; Flyer v Sullivan, 284 App Div 697, 698; Beak v Walts, 266 App Div 900; Manne v Carlson, 49 App Div 276, 278). Moreover, we find that the written agreement and assignment between the parties were clear and unambiguous. They indicate that no delivery of the underlying obligation was intended, and they were entered into by sophisticated, counseled businessmen (see, Chimart Assocs. v Paul, 66 N.Y.2d 570, 573; Nau v Vulcan Rail & Constr. Co., 286 N.Y. 188, 198-199, rearg denied 287 N.Y. 630). As a result, the plaintiff’s third cause of action, for specific performance, must fail.
If the plaintiff is a valid owner or assigner, like any other type of legal action, a lender initiates a foreclosure case by filing a complaint with the appropriate court. The borrower will then be served with a copy of the complaint, along with two other documents called a summons and notice of lis pendens. New York Real Property Actions and Proceedings Law (RPAPL) § 1303 also requires that lenders include a notice called “Help for Homeowners” with a summons and complaints in any residential foreclosure involving a dwelling for one to four families, as well as notice to tenants of such dwellings. This notice should provide clear information about the situation, including:
You are in danger of losing your home. If you fail to respond to the summons and complaint in this foreclosure action, you may lose your home. Please read the summons and complaint carefully. You should immediately contact an attorney or your local legal aid office to obtain advice on how to protect yourself.
If you receive these documents and ignore them, it will not stop the foreclosure from proceeding. Instead, in most cases, it will allow the lender to obtain a default judgment of foreclosure without having to address any challenges or defenses from you. For this reason, you should never fail to answer a complaint and summons.
Knowing whether a complaint and summons meet all the requirements for a valid foreclosure action can be difficult, as New York foreclosure laws are complicated. As soon as you receive these documents, your first call should be to an experienced foreclosure defense lawyer who can evaluate your situations and options.
The complaint, which can also be called a “petition,” will set out all of a lender’s claims for seeking a foreclosure. It must include certain information and, in New York, it must include additional exhibits and proof of certain claims in the complaint. Some information contained in the complaint will include:
The complaint must also include a statement that the lender complied with RPAPL § 1304 and RPAPL § 1306 by providing the proper 90-day pre-foreclosure notices to the borrowers, as well as filing proof of the notice with the New York Superintendent of Financial Services within three days of mailing the notice.
Finally, the complaint will state the legal relief the lender seeks, which will be a judgment to foreclose on the property. Relief can include the right to put the property up for sale and use the proceeds toward the mortgage debt, as well as a deficiency judgment if the proceeds are insufficient to cover the debt.
The complaint should be supplemented with exhibits, some of which New York law requires. For example, New York’s “Produce the Note” law, CPLR 3012-B, went into effect on August 30, 2013, and requires that the plaintiff in a foreclosure case produce certain documents to prove the mortgagee has the proper standing to seek a foreclosure at the very start of the case. The law states:
Prior to this law, plaintiffs would drag their feet producing the required documents (often because they could not do so), and the foreclosure timelines became longer and longer. Instead of waiting for a defendant to challenge standing, the law now requires plaintiffs to include the following documents with an initial complaint:
The law requires the attorney for the plaintiff to sign and submit a certificate of merit assuring the court they have reviewed all documents and reasonably believe the plaintiff has the right to bring the foreclosure action. The statute does allow for “a single certificate [to] be filed for each action even if more than one defendant has been named in the complaint or is subsequently named.” In addition, if a lender does not have the original documents, New York law CPLR R4539 allows them to submit acceptable reproductions. Specifically, anything that “accurately reproduces or forms a durable medium for reproducing the original, such reproduction, when satisfactorily identified, is as admissible in evidence as the original, whether the original is in existence or not.” There are many cases, such as Goldman Sachs Mortgage Co. v. Mares or Bank of NY Mellon v. McClintock in which New York courts have scrutinized whether standing is established based on documents provided on a case-by-case basis.
A lender should issue a summons to each defendant named in the lawsuit. This can include homeowners, judgment holders, lienholders, or occupants of the property. The summons lets the defendants know that they must respond to the complaint by filing a formal answer with the court within either 20 or 30 days, depending on whether the service was in person or by mail. The summons also informs defendants of the date of the first court hearing. If a homeowner wants to try to defend against a foreclosure and/or reach a settlement with the lender, they must file the answer in the specified time.
Under RPAPL § 1320, the summons for private residential cases in New York must also include special notice that the defendant will be in danger of losing their home if they do not respond to the summons and complaint.
Lis pendens simply means that a suit is pending in Latin. Also called a notice of pendency, this notice gets recorded in the records of the county where the lender filed the foreclosure and gives notice to the public that the property is the subject of a pending lawsuit. This can be a simple statement including the description of the property and the fact that the lender initiated the action, and usually constitutes one or two pages of the documents delivered to defendants. This expires after three years and then needs to be renewed by the lender.
You may not realize there are many ways to prevent the foreclosure of your home. A skilled attorney can identify any deficiencies in the complaint, set forth affirmative defenses, and move to have the case dismissed. Additionally, New York foreclosure proceedings require mandatory settlement meetings at which your attorney can negotiate a possible loan modification or another option to stop the foreclosure. Never assume that losing your home is inevitable, as the foreclosure system in New York often favors homeowners and allows for many opportunities to help them and prevent the loss of their homes.
As soon as you receive a foreclosure summons and complaint, or if you suspect one may be coming in the future, please do not wait to contact the Law Office of Ronald D. Weiss. Our foreclosure defense attorneys help many clients obtain positive resolutions, so call (631) 271-3737 or contact us online to discuss your situation as soon as possible.