Recently, we have been discussing various aspects of the sweeping legislative changes regarding foreclosure law in New York. Here, we will examine the new changes to the 90-day notice that must be provided to homeowners before a mortgage lender can take further legal action. This pre-foreclosure notice (“RPAPL 1304 notice”)1 is provided with specific language by the New York State Department of Financial Services (DFS) and last year, certain provisions were updated as part of the foreclosure bill.
In line with many of the changes to our state’s Real Property Actions and Proceedings Law (RPAPL),2 changes to RPAPL 1304 regarding notice to homeowners generally aims to provide those homeowners greater protections prior to the foreclosure process. The following is a brief overview of some material changes in this provision of New York law, which were passed on June 23, 2016, and went into effect on December 20, 2016.
Before the new change went into effect, courts in New York had a standing precedent that required mortgage lenders to send a 90-day notice to homeowners and wait for that time period to expire before accelerating the entire balance of the mortgage and subsequently filing a legal action for foreclosure with the civil courts. While this was a generally accepted requirement, the language of RPAPL 1304 has been updated to codify this requirement in state law. The law also requires that notice be sent to the property address as well as any other address the mortgage company has on record to increase the chances that a borrower will receive the notice. Such notice must also be sent by registered or certified mail.
Many homeowners face a language barrier when communicating with their mortgage lenders and do not understand some of the notices that they receive. The law now has new provision – RPAPL 1304(5)3 – that addresses this common issue by stating the following:
For any borrower known to have limited English proficiency, the notice required by subdivision one of this section shall be in the borrower’s native language (or a language in which the borrower is proficient), provided that the language is one of the six most common non-English languages spoken by individuals with limited English proficiency in the state of New York, based on United States census data.
The DFS website4 has been updated with the 1304 notice available in the following languages in addition to English:
While this provision is intended to benefit homeowners, it may create some complications in foreclosure cases. For example, what exactly constitutes a “limited” proficiency? Who decides how limited a borrower’s English skills must be to be entitled to a notice in a different language? For new mortgages, lenders may assess language proficiency as part of the initiation process, however, for already-existing mortgages, lenders likely have little idea of whether certain homeowners are proficient in English or not. While homeowners may use a language barrier to challenge proper notice, this issue is sure to be further flushed out by the courts in the coming months.
Another potentially confusing change in RPAPL 1304 involves the language of the notice itself. The prior notice provided by DFS stated that legal action could be taken by a lender “if this matter is not resolved within 90 days from the date this notice was mailed.” The new notice has been changed to advise that a foreclosure action may be filed “if you have not taken any actions to resolve this matter within 90 days.”
Neither the notice nor the law specifies exactly what type of action must be taken by a borrower to put off a foreclosure action. If reaching out to the lender to try to find a solution or applying for a mortgage loan modification enough to qualify as “actions to resolve this matter”? Again, as more foreclosures proceed under the new laws, the courts will hopefully clarify this provision and the extent of what a borrower must do to prevent a foreclosure action.
As we have discussed before on this blog, zombie properties have become a serious problem for many neighborhoods. Many zombie properties exist because homeowners believed they needed to vacate the premises once they were facing foreclosure and no one maintained the property, reducing property values and attracting crime.
Now, at the end of the 1304 notice, homeowners are specifically notified of the following:
IMPORTANT: You have the right to remain in your home until you receive a court order telling you to leave the property. If a foreclosure action is filed against you in court, you still have the right to remain in the home until a court orders you to leave. You legally remain the owner of and are responsible for the property until the property is sold by you or by order of the court at the conclusion of any foreclosure proceedings. This notice is not an eviction notice, and a foreclosure action has not yet been commenced against you.
In addition to the new requirements for mortgage lenders under the Abandoned Property Neighborhood Relief Act of 2016,5 state legislators hope this new notice of the right to remain in a home will serve to reduce the problem of zombie properties.
Another substantial change to RPAPL 1304 involves the number of notices that must be provided to a specific homeowner. Mortgage lenders do not want to have to send a barrage of notices in order to file a foreclosure and, previously, the law required only one notice to be sent per each 12-month period.
However, the law now clarifies that one notice must be sent each 12-month period for the same delinquency. The new rule instructs that if a borrower cures their delinquency and then defaults again within a 12-month period, the lender must provide another 90-day notice for the subsequent delinquency and wait another 90 days before taking legal action. The text of the provision6 is as follows:
The notice and the ninety-day period required by subdivision one of
this section need only be provided once in a twelve month period to the
same borrower in connection with the same loan and same delinquency.
Should a borrower cure a delinquency but re-default in the same twelve
month period, the lender shall provide a new notice pursuant to this
The change in the law intended to ensure that borrowers have new notice every time a new delinquency has occurred and have the necessary time to cure the default prior to a foreclosure if at all possible. However, this new requirement can play out in interesting ways, including the following scenario:
This could present an option for homeowners to extend the period of time they have to qualify for other loss mitigation solutions in lieu of foreclosure.
New York has seen some major changes in foreclosure laws in recent months, many of which benefit struggling homeowners. An experienced Long Island foreclosure defense attorney can help you identify your options in the face of foreclosure and will know how to apply the changed laws to your case. If you would like to learn more about how to overcome a mortgage delinquency, please call the Law Offices of Ronald D. Weiss, P.C. at 631-271-3737 for assistance today.