Foreclosure Defense

Our law firm can represent you right from the start by answering the initial summons and complaint. Considering that 20-30 days from the date of service an answer and/or motion to dismiss is due, it is imperative to file a timely response. Such answer is one out of several documents that are usually filed as part of a foreclosure defense. Other documents include a notice of appearance, discovery demands, a motion to dismiss, if applicable, and a response to a motion for summary judgment.

• The Answer
• Discovery
• The Notice of Appearance
• Settlement Conferences
• Motion Practice by the Defendant
• Motion Practice by the Plaintiff
• Emergency Orders to Show Cause
• Legal Issues in Foreclosure Litigation
• Federal Foreclosure Litigation
• How Has Covid-19 Affected Foreclosure Defense Law and Practice?
• The Potential Benefits of Foreclosure Defense and the Role of Our Law Office

The Answer –

The plaintiff’s complaint and defendant’s answer together are called the “pleadings”. When the defendant answers, the pleadings are considered to be “joined”, thereby creating a contested foreclosure. Timing is important in foreclosure defense since by law the homeowner is given only a short time, 20 to 30 days, depending on the method of service, to respond to a Summons & Complaint with an Answer and/or a Motion to Dismiss, which are formal legal documents, usually prepared by an attorney. Because mortgage lending and foreclosures are heavily regulated and subject to many laws and new requirements, such Answer, as prepared by the Law Office of Ronald D. Weiss, P.C. is extensive with many detailed and fact specific affirmative defenses and counter claims that are customized to each client’s specific case. Affirmative defenses seek to protect the client by challenging the technical and substantive grounds of the foreclosure action with issues such as: standing, “robo-signing”, “dual tracking”, predatory lending, documentation, notice, service, waiver and estoppel, fraud, statue of limitations and modification/negotiation issues. Counterclaims seek to bring claims for damages based on the defendant’s allegations that the plaintiff has caused injury to the defendant and/or based on statutory violations. The defenses and counterclaims, asserted on behalf of each client, by foreclosure defense attorneys, like the Law Office of Ronald D. Weiss, P.C. should be based on each client’s unique facts and situation.

Certain potential defenses and/or counterclaims may be waived if not in the answer. For example, per CPLR 3211(e), a statute of limitations defense may be waived if not asserted in the answer. A defective service of process issue, also may be waived if not asserted in the answer; but per CPLR 3211(e), to appropriately challenge jurisdiction, the defendant must also shortly file a motion to dismiss specifically arguing/demonstrating how there was defective service of the summons and complaint and challenging jurisdiction. In challenging defective service, CPLR 3211(e) requires a motion to dismiss within 60 days after filing the answer which asserts the jurisdictional defense, or a motion to dismiss within 60 days after the service of the complaint in a pre-answer motion. The standing defense, on the other hand, has been considered is so integral to the foreclosure action, that statutorily by recent statutory amendment in December 2019, RPAPL 1302-a, states that despite CPLR 3211(e), that the standing defense can not be waived in residential foreclosures if the defendant has previously failed to raise the defense and could be raised at any time. There is less uniformity and there is currently a debate in the courts as to whether defenses pertaining to the 90 day pre-foreclosure notice are waived if not asserted in the answer. The strategy for a defendant in a new foreclosure litigation is to quickly retain a good foreclosure defense lawyer, like the Law Office of Ronald D. Weiss, P.C., to both file a very complete and detailed answer and when there are potentially serious defenses and counterclaims to also potentially assert them separately in a motion to dismiss.

Discovery –

Since most of the information and documents in a foreclosure action are in the control of the lender, the homeowner as the defendant in a foreclosure action, needs to obtain, if possible such information and documents through discovery. Therefore, foreclosure lawyers, like the Law Office of Ronald D. Weiss, P.C., serve extensive discovery demands on the plaintiff-lender’s attorneys, in an effort to bolster the client’s defenses. The lender’s attorneys do not always fully comply with such discovery demands. If they completely disregard the discovery demands, the lender’s attorneys would have trouble continuing their foreclosure action with a motion for summary judgment, since a clear defense to such a motion would be their disregard of discovery. Also, the defendant’s foreclosure attorney would be able to make on behalf of the defendant, a motion to compel discovery. More often, however, the lender’s attorneys only partially comply, relying on many objections to excuse their lack of full compliance. The defendant would still have the same options, although it would need to more clearly show that the lender’s objections lack merit. While it is usually our office, a the defendant’s foreclosure lawyer, that asks for discovery, sometimes the lender’s attorney may ask us for discovery, but this is often meant more to burden us and to cover for the fact that the lender is not in full compliance with discovery.

The Notice of Appearance or Change of Attorney Stipulation

Unlike some other law offices that just file a “boiler plate” answers to the foreclosure complaints, we, are retained as the defendant’s foreclosure lawyers, and file a notice of appearance in the foreclosure action which designates us to be the defendant’s attorneys of record for the entire foreclosure action. Without an attorney’s notice of appearance, you would still remain a pro se litigant (or without an official attorney of record) and be disadvantaged in not having legal counsel for the rest of the foreclosure action that continues well past the initial pleadings. When there was a previous attorney of record in a case, it is necessary for us to have signed and filed a change of attorney stipulation, where we would be signing on as the defendant’s incoming foreclosure attorneys and the former firm would sign off as the outgoing attorneys and the client would also sign to convey their consent.

Foreclosure Settlement Conferences –

An important part of foreclosure defense is attending Foreclosure Settlement Conferences, which are court conferences where home owners and their attorneys can confer with the lender’s attorneys about possible settlement and modification. Attendance and representation and submission of documents at such conferences can allow a client to obtain time, leverage, and possible modification. For such settlement conferences to be effective it is necessary for the defendant and/or the defendant’s foreclosure attorney to attend and comply with documents requested by the lender’s attorney. While such conferences do not constitute true loan modification negotiations, in the sense that loan modifications are supposed to be directly with the lender itself, the discussions at the foreclosure settlement conferences help pressure the lender into looking into non-foreclosure options. The first foreclosure conference usually results in the each party’s attorneys introducing themselves and making sure that the court clerk or magistrate conducting the conferences had noted their appearances and their desire to reach a non-foreclosure alternative through negotiations. The conference is adjourned for 1-2 months with the lenders attorney asking to be forwarded documents from any ongoing modification effort by the defendant or their attorneys. Conferences, if regularly attended, can add pressure on the lender and their attorneys to reach a resolution and can add significant time to the foreclosure proceeding. If a conference is missed by the defendant or their attorneys, or if after several conferences there appears to be no settlement at hand, the court will stop adjourning the conferences and reference the action to the regular foreclosure part of the court where the litigation can continue. Because conferences do give defendants a better chance of obtaining a modification and slow down the foreclosure proceedings, they are useful to a defendant and should be attended. There are several types of conferences: Foreclosure Settlement Conferences (usually in the early parts of an action to try to settle the matter through negotiated solutions like mortgage modification), Status Conferences (later in the action to assess where the litigation and negotiations are going), Pre-Trial Conferences (where the Court believes that discovery or a trial is necessary in a case and wants to lay out the the deadlines and timing for these matters), and during the Covid-19 pandemic there were Covid-19 Conferences (given to foreclosure cases that were pending but paused during the Covid-19 moratorium of foreclosures imposed in New York State, to determine if the the defendants were affected by Covid-19, as well as the loss mitigation status of the file). By retaining skilled, foreclosure defense lawyers, like the Law Office of Ronald D. Weiss, P.C., the defendant would be maximizing their opportunities at foreclosure conferences to obtain a potential resolution to the foreclosure action and/or better leveraging for more time.

Motion Practice by the Defendant –

The defendant’s foreclosure lawyer is often able to file motions where appropriate, with the following possibilities:

i) Motions to dismiss – Where there are jurisdictional and meritorious defenses to the complaint, such as defective service, lack of standing and/or statue of limitations defenses that need to be or could be asserted right from the start by the defendant to potentially dismiss the action. Motions to dismiss are also appropriate where the 90 day notice of foreclosure, which is an essential pre-condition to foreclosure, was defectively served and/or prepared.

ii) Motions to extend time to answer – Where the defendant is outside the 20-30 day time to answer and can not obtain a consensual extension from the plaintiff’s attorneys, a motion to extend the time to answer can be made to show reasonable excuse and a meritorious defense to justify an extension.

iii) Motions to amend the answer – Where time has passed since the defendant has timely filed its answer, but the defendant wishes to supplement or enhance their answer, a motion to amend can be made where the amendment does not create prejudice to the plaintiff.

iv) Motions to compel discovery – Where the plaintiff has failed for a considerable period of time to comply with the defendant’s discovery demands, the defendant may seek by letter to demand and warn the plaintiff that it must produce the desired documents and if they are not produced the defendant can seek relief from the court with a motion to compel. Prior to such a motion to compel discovery, the court usually expects the parties to negotiate over any legitimate objections by the party subject to the discovery demand with the goal of the parties themselves trying to come to reasonable compromise and seeking court intervention when necessary.

v) Motions to dismiss based on lack of prosecution – Where there has been inactivity in a case for a considerable period of time, the defendant’s foreclosure lawyer, may warn the plaintiff that the defendant intends to move to dismiss based on such inactivity. If the plaintiff does not take action, and resumes their prosecution of the foreclosure, the defendants’s foreclosure attorney can then move to dismiss based on lack of prosecution.

vi) Motion for summary judgment – Where a defendant believes that it can prevail in a foreclosure action based on the legal arguments alone and only depend on undisputed facts (not on any non-proven or disputed alleged facts), it can move for summary judgment in favor of the defendant, especially in situations where the defendant asserts counterclaims against the plaintiff. While a motion for summary judgment by a defendant is less frequent than the same motion by the plaintiff, such a motion can often overlap a motion to dismiss by the defendant when the motion is made after the pleadings stage of the foreclosure action.

vii) Motion to reargue or renew or vacate – Where the defendant disagrees with a court decision on a contested motion and believes the court erred in interpreting the facts or law before the court, the defendant can move, within 30 days of the notice of entry, to reargue the motion to the same judge. Where the defendant disagrees with a court decision on a contested motion and believes there are new facts or laws that would change how the court decided, the defendant can move to renew the motion before the same judge. See CPLR 2221. Where the defendant either defaulted within one (1) year, and has a reasonable excuse and meritorious defense and/or if the defendant otherwise believes that there are material procedural grounds to vacate a decision (see CPLR 5015), the defendant can move to vacate a decision.

viii) Motion for a stay pending appeal – Where the defendant believes the Supreme Court had erred in its decision or order, the defendant’s foreclosure lawyer can within 30 days of the notice of entry for such decision or order file a notice of appeal to the Appellate Division of the Court of Appeals for the State of New York. To the extent matters are going forward in the foreclosure action that would be affected by the appeal, the defendant can move for a stay either in the Supreme Court or in the Appellate Division.

ix) Orders to show cause – Orders to show cause are emergency applications to consider a motion on an expedited basis usually brought by foreclosure defense lawyers when there is a potential emergency that needs immediate resolution by the court, ie a foreclosure sale. Usually the orders to show cause ask for a temporary restraining order (“TRO”)in the form of a temporary stay of the plaintiff’s actions or upcoming actions (ie, a stay of the foreclosure sale) and therefore if a stay is requested, before filing the order to show cause, 24 hour advance notice to opposing counsel is needed. Within usually 1-3 days the Court decides whether to grant the TRO in the form of the stay. If the the order to cause is signed it will either grant or not grant the defendant the requested TRO, and set a return date for the plaintiff to oppose the order to show cause. After the plaintiff responds to the order to show cause application, the court will within a few weeks again will need to decide if the grant a longer stay in the form of an injunction and will also decide the underlying application.

Motion practice by the defendant is not always necessary, and in many cases, the defendant is financially strapped and the defendant’s foreclosure attorney does not wish to increase the costs of litigation and is willing to buy its client time in the foreclosure action and will therefore avoid bringing matters in front of the court, unless absolutely necessary.

Motion Practice by the Plaintiff –

Motion practice is more typically brought by the plaintiff, since the plaintiff has a greater incentive to move the foreclosure action forward. A plaintiff sometimes like a defendant, may seek discovery and may move to compel discovery, where it is not forthcoming, however, because the plaintiff, as the lender, is usually is in control of most of the documents and information in the foreclosure action, the plaintiff usually prefers to avoid getting bogged down with discovery. Therefore, where the defendant has failed to file a timely answer, the plaintiff may move to obtain an Order of Reference which appoints a referee to the action to compute the funds owed to the plaintiff and to ultimately sell the property subject to foreclosure. Countering this motion, the defendant’s foreclosure attorney would usually oppose and cross move to extend the time for the defendant to answer. Where the defendant has answered on a timely basis, the plaintiff would make a motion seeking Summary Judgment, which is usually a lengthy and well documented effort to show that there is no merit to the defendant’s defenses and that the case should be decided in favor of the plaintiff.

The defendant needs to oppose the Motion for an Order of Reference and/or for Summary Judgment by showing that there is merit to its defenses and sufficient doubt or ambiguity as to a determination so that the court may deny the plaintiff’s motion. Skilled foreclosure defense attorneys will carefully go through the documents that are exhibits to the Motion for Summary Judgment and/or supplied by the plaintiff during discovery to try to support the defendant’s assertion that there are material issues of fact or law in dispute that require an evidentiary hearing or adjudication before a motion for summary judgment should be decided. Skilled defense lawyers usually argue and can show that discovery is still needed for issues where facts are not before the court and potentially are needed before there could be any decisions.

Assuming that the plaintiff prevails on its Motion for an Order of Reference or Summary Judgment Motions, it would next seek to move for a Judgment of Foreclosure and Sale, which is a more procedural motion designed to show the court that the plaintiff has met all of its procedural requirements and that the fees and costs requested are fair and accurate. The granting of the Judgment of Foreclosure and Sale would allow the plaintiff to obtain an order that would allow the plaintiff to sell the mortgaged property. However, if the defendant prevails on either of the two main motions by the plaintiff, the foreclosure action would be delayed, with the court requiring additional evidence from the plaintiff, making it so that the foreclosure action may be difficult to continue.

These two (2) motions by the Plaintiff, the Motion for Summary Judgment (“MSJ”) and the Motion for a Judgment of Foreclosure and Sale (“MJFS”) can both be vigorously by the defendant with opposition to the plaintiff’s motions and cross motions by the defendant. Between these two (2) motions, the plaintiff typically serves a Notice of Computation, giving the anticipated costs and judgment amount it would seek in the future MJFS that it would file in the action. This Notice of Computation, like the two (2) main motions made by the plaintiff can be opposed and challenged by the defendant, which may require a referee hearing to compute, and potentially more litigation, and give the defendant additional time and leverage in the action. Defendants can cause a foreclosure action to continue for at least several years where they vigorously defend the litigation, while seeking to resolve the foreclosure by obtaining a modification, short pay, short sale and/or other agreement settling the foreclosure.

Emergency Orders to Show Cause and Other Methods of Obtaining a Stay of the Litigation and/or Foreclosure Sale –

If you have been in a foreclosure proceeding for an extended period of time and/or if there is a foreclosure sale presently scheduled for your property, you may need to act immediately since time is of the essence. One way of quickly obtaining relief in State Supreme Court is to retain a foreclosure defense attorney to file an Emergency Order to Show Cause to either: i) stay the foreclosure sale, ii) to vacate the judgment of foreclosure and sale, and/or iii) to extend the defendant’s time to answer. An Order to Show Cause not only asks the Court to immediately schedule an expedited hearing as to the requested relief, but it also asks the Court to stay foreclosure proceedings, including a foreclosure sale date pending the hearing and decision of the Court as to the Order to Show Cause. If you are in an emergency situation or wish to oppose the foreclosure proceeding despite not participating in opposing the action earlier, please make reference to the Section dealing with “Orders to Show Cause” and please contact us to discuss your options.

Orders to Show Cause can be filed either in the Supreme Court or in the Appellate Division (if the defendant’s foreclosure lawyer has filed a Notice of Appeal). Often Orders to Show Cause try to convince the court of both procedural defects, such as jurisdictional and notice defects in the foreclosure action and remedial options that the defendant alleges he is seriously pursuing and with which is the defendant is making hopeful progress (such as a modification, a short sale, a short pay agreement and/or other remedy). However Orders to Show Cause seek a discretionary stay, which can be denied by a court, if the court does not deem the arguments made meriting a stay. Because we can not always obtain a discretionary stay with an Order to Show Cause, we often rely as a backup on a mandatory stay, or an “automatic stay” which is immediately obtained upon the filing of a bankruptcy case. All chapters of the bankruptcy code – Chapter 7 (liquidation case), Chapter 11 (business reorganization) and Chapter 13 (wage earner’s plan) – cause an automatic stay to immediately take effect upon the filing of the bankruptcy case.

Besides potentially obtaining a discretionary stay through an Order to Show Cause, or a mandatory/ automatic stay through a bankruptcy case, the defendant, if it is making good progress towards a remedial solution, can sometimes convince the lender, on its own, to give a voluntary stay of a foreclosure auction. The voluntary stay is where the lender, on its own, voluntarily decides to postpone a foreclosure sale. If a modification application, that looks favorable, is being seriously pursued and the application is complete and finalized at least 37 days before the date of the foreclosure auction, the lender on its own may decide to postpone the foreclosure auction. Experienced foreclosure defense lawyers, like the Law Office of Ronald D. Weiss P.C., can help you decide and pursue legal options to obtain a stay of a foreclosure sale and/or other aspects of the foreclosure process.

Legal Issues in Foreclosure Litigation-

There are many issues that have been litigated during and after the last foreclosure driven financial crisis, that remain issues to this day. While some issues, for periods of time, have arisen in importance for the Courts, as issues to address and to carefully review, other issues have diminished in importance and are no long issues which Courts view as requiring in depth legal analysis. These issues can be raised by defendants in all phases of the litigation, but are potentially complex and nuanced and therefore require a foreclosure defense attorney to adequately assert. Here are some of the issues currently in litigation:

1) STANDING – The question of who has the right to bring litigation on behalf of the mortgage loan that is subject to foreclosure is in some cases is a litigious issue. It is a litigious issue because in many cases the servicer, owner and entities having power of attorney, are different and have changed over time, given that both the note and the mortgage documents have often been transferred numerous times. Some loans have complex histories given that they may have been part of a trust or created under MERES (the Mortgage Electronic Registration System) or owned by a bank that had financial problems and closed. Some technical issues with documents such as a break/contradiction in the chain of loan owners/services, robo-signing, and allegations of document fraud can in some cases bog down a litigation. The standing defense has recently been revitalized by a statutory amendment, RPAPL 1302-a, that states that the failure to raise the defense as to a home loan does not waive the defense, thereby allowing this defense to be raised late in a foreclosure case even if the defendant did not previously assert standing as a defense.

Standing issues may be complex and require the defendant’s foreclosure lawyer to thoroughly review all of the lender’s documents. Most of the important documents are required to be attached to the lender’s litigation documents and may also be available outside of a litigation with a Qualified Written Request (QWR) demand to the lender, to which the lender legally is required to respond. The documents needed to assess standing are all of the following: mortgages, notes, loan consolidations, mortgage assignments, servicer agreements, power of attorney forms, modification agreements, loan histories, lien searches, mortgage statements, correspondence from the lender, notices from the servicer and anything else that may be of value in determining what happened to the loan in terms of ownership, servicing and possession. Often the interaction of the “owner” of the loan (this in itself can be complex in that a trust may be the loan owner where a trustee oversees the trust), the “servicer” of the loan (whose role is to administer the loan for the owner who acts as an investor) and the attorneys for the plaintiff is less than clear. Both the owner and the servicer may change several times. There may be other entities that have “powers of attorney” from others in that often, trusts and complex securitized entities often need others to actually take actions, such as communications and other loan administration on their behalf. These relationships need to be formalized with agreements. Once the documents are assembled, a foreclosure lawyer could discern the following patterns that show potential standing issues:

a) Lender/Servicer No Longer in Business – If in the chain of mortgage owners or servicers there is an entity no longer in business and the loan ownership or servicing was transferred after the date of the closing of that entity, there are issues. Who signed documents for this entity when it was no longer in business? Did the signer have the initial and ongoing authority to do so? Who allegedly gave them this continuing authority, when the entity was closed, and is such authority valid or is it subject to challenge?

b) The Mortgage Electronic Registration Systems (MERS) and Standing Issues – The Mortgage Electronic Registration System is a recording system adopted by many mortgage lenders which relied on an electronic centralized system for the purposes of recording mortgages, notes and other mortgage loan documents without burdening each new owner of the loan with the task of physically recording new loan or assignment documents evidencing their interests. The MERS system became very popular for the purposes of recording mortgages at a time in the early 2000’s as the market for mortgage loans for banks became more profitable and an easier/faster method was advantageous in allowing a more fluid system of transfer of mortgage loan portfolios. The advantageous of the MERS system was that it enhanced the ability to easily market, transfer and trade in mortgage securities and portfolios. The disadvantage of the the MERS system was a complex system of transferring loans where multiple parties had many fragmented interests and it became hard to tell who actually owned the mortgage loan. The MERS system received a set back in a decision Bank of N.Y. vs. Silverberg, 86 A.D. 3d 274 (NY App. Div. 2d Dept June 7, 2011) which held that in order to properly transfer a loan it was not just needed that there be an effective assignment of the mortgage, but it was necessary that there be either a valid transfer of the note or that the lender named on the caption of the foreclosure action, at the time of the commencement of the foreclosure action, actually be the holder of the note. “…[T]he foreclosing party [needed to] be both the holder or assignee of the subject mortgage, and the holder or assignee of the underlying note at the time the action is commenced.” The Silverberg decision caused many MERS loans to need to have their mortgage documents reviewed by lenders, revised and reassigned to try to prevent standing issues from being a problem.

c) Chain of and Dates of Mortgage, Note and Servicer Agreement Transfers – If the mortgage, note and/or servicing agreement were transferred and if the lender and/or servicer changed, especially post-mortgage default, the dates of and proof of the various transfers and whether they are consistent can raise issues. For example:

• i) Assignments vs. endorsements inconsistencies – The number of and dates of the mortgage assignments should match the number and dates of the note endorsements/allonges in that the mortgage and note should be transferred together, in a uniform and consistent manner, without discrepancies. However, a foreclosure defense lawyer often will conclude that there is much better documentation for the mortgage assignment, whereas the the note endorsements/allonges usually have gaps that fail to follow the assignments;
• ii) Service transfer or power of attorney change inconsistencies – Similarly, the dates of the servicer transfers and/or powers of attorney should be consistent with other documents in terms of the dates and/or coverage of the servicing. However, a foreclosure attorney will often observe that these documents have gaps or contradictions especially where the servicer signs modification documents at a time before it had formal servicer rights or powers of attorney;
• iii) Negotiator and signatory of any modification agreement should be consistent – A modification agreement is a critical document in that it is like a new loan document, where it is essential for the defendant’s foreclosure lawyer to see who is the signatory for the lender, specifically which owner/servicer signed to determine if that entity is consistent with other documents showing who was the owner/servicer and over what period of time;
• iv) Signatories to all communications should be consistent – Signatories of legal letters, notices, letters advising of ownership/servicer changes, mortgage statements, of default and ninety-day letters should be consistent with other documents as to the identity and dates of who was an owner or servicer at what time;
• v) Attorney and lender communications should be consistent – Attorney and lender letters, notices and documents should be consistent and clear as to who is the ”owner”, ”servicer”, ”has power of attorney” and who the attorneys are representing and which entity they believe has standing.

2) 90 DAY NOTICE OF FORECLOSURE – Besides proper notice of default as required under the mortgage, under New York State law, the mortgage lender or servicer must mail a 90 day pre-foreclosure notice (and properly file it with the NYS superintendent) giving notice, prior to commencement of the foreclosure procedure, of its intent to foreclose. The notice needs to be within at least 90 days before initiating a foreclosure, if the mortgage loan default is not cured within that time. The 90 day pre-foreclosure notice, stands out from other notices in foreclosure litigation, such as notices of foreclosure settlement and status conferences, notices of motion, notices of entry, notices of a referee hearing and/or notices of sale, in that this notice more than others is a critical pre-condition to a valid foreclosure action. Proof of proper 90-day notice and whether there is proof that it was actually and properly sent can be an important issue in a foreclosure case. One of the issues that arises with this 90 Day Notice issue, as well as the related issues of standing and possession (see below), is the reliability of the the plaintiff’s sworn affidavits in terms of the actual knowledge of those giving the affidavits and the extent with which they could rely on business records and the reliability of the business records. The issue of whether the 90 day notice, prior to the commencement of a foreclosure proceeding was proper, was recently strengthened by an Appellate Division decision in the 2nd Department which ruled that the notice must be mailed in a separate envelope from any other notice.

The question of whether the 90 Day Notice of Foreclosure was valid or adequate is rich with many considerations for foreclosure defense lawyers, since the notice is considered to be a critical pre-condition to commencing a foreclosure action. The purpose of the 90 Day Notice is to give the borrower unambiguous, consistent notice of the amount needed to cure the mortgage arrears and of the time by which the lender would start foreclosure proceedings if the matter was not resolved. Over the years the 90 Day Notice of Foreclosure requirement has created many different issues for foreclosure lawyers that have been the focus of foreclosure litigation, as follows:

a) Issues with the 90 Day Notice Requirement – The following are issues that are often raised concerning the 90 Notice:

i) To each Borrower at Last Known Residence and Address of the Property Subject to the Residential Mortgage – The 90 day notice is only valid if it was mailed to where each borrower lives and declares as their legal residence and to the address of the property subject to the mortgage that is in arrears;

ii) Mail and Certified RRR – Each borrower needs to be served twice, once by 1st class mail for the initial 90 day notice and second by certified mail return notice requested;

iii) Separate envelopes – [Kessler decision]– Per a recent decision of the Appellate Division for New York State, 2nd Department, Bank of America, N.A. v. Kessler, 2021 NY Slip Opinion 06979, decided 12/15/2021, the 90 day notice not only needs to be in a separate envelope by itself, but it cannot have any extraneous language other than that required by statute. For many years it was common to send the 90 day notices with other documents and/or notices such as the default notice, a statement required by debt collectors advising that “This is an attempt to collect a debt…” , as well as a cautionary statement about bankruptcy stating that the the 90 day notice does not intend to collect debt to the extent there may have been a bankruptcy discharge for the debt. Often the lender would also advise the borrower of mortgage modification options. Under Kessler these additional notices and statements, which could potentially dilute or distract from the 90 day notice, need to be sent separately. Because the Kessler decision is so far reaching, in that many 90 day notices in many foreclosure actions have Kessler violations, the Kessler decision is being appealed, but hopefully for the sake of foreclosure defendants survives mostly intact;

iv) Also Government Notice and Affidavit – The notice to the NYS Superintendent of Financial Services must be filed within 3 business days of the 90 Day Notice mailing, with the lender having proof of the filing;

v) 5 Addresses of Local Housing Counseling Agencies – This must be a current list of at least 5 agencies serving the county where the property is located with their last known addresses and telephone numbers as provided NYS Department of Financial Services;

vi) Notice in the Borrower’s Native Language – To avoid language barriers where the borrower is known to have limited English proficiency, the notice shall be in the borrower’s native language or a language in which the borrower is proficient, with the NYS Department of Financial Services website updated with the 90 day notice in the six (6) most common non-English languages spoken in NYS;

vii) Invalid after 12 months or after some mortgage payments made and accepted – As a condition precedent to starting a foreclosure action by serving and filing the summons and complaint, the 90 day notice expires after 12 months or after the lender accepts payments. Even a modification trial that did not result in a permanent modification, would require the lender to reserve a new 90 day notice;

viii) Detailed Affidavit as to Sending 90 Days Notice Filed Years Later – The lender, in its motion for summary judgment, needs to show that it has proof that the 90 Day Notices were correctly served on the borrower(s), despite the fact that significant time may have elapsed since the 90 Day Notices were sent. During that time, the lender or service may have changed, the plaintiff’s personnel in charge of mailing may have changed and the exact records of sending the notice may not be present. Lenders have more recently gotten much better at contemporaneously documenting service of the 90 Day Notice, but there is always a question as to how much detail and first hand knowledge of this specific, actual mailing (not just general mailing procedures) does the the lender’s representative need to have. Often the person making the affidavit for the lender makes reference to ”banking records” that they have reviewed that show that the defendant’s 90-day notice was correctly mailed by the lender. However, these alleged “business records” can be challenged by foreclosure defense lawyer who can demand to: a) have the alleged ”business records“ produced in discovery: b) have detailed information as to how the ”business records” were prepared and what was the source of the information and who transcribed that information; and c) have detailed information as to the custodians over the records and how they kept the documents so that they were not altered. The goal with such questioning by the defendant’s foreclosure attorney is to challenge the plaintiff’s potential witness and to undermine their potential testimony as to to verifying the 90 day notice mailing.

b) Exceptions to the 90 Day Notice Requirement: i) if the loan is not a “home” loan (a home loan is not a commercial loan, but can include a reverse mortgage); ii) the borrower is not a natural person; iii) the debt is not incurred primarily for a family, household or family purpose; iv) the borrower does not occupy the house and/or the property is a secondary or vacation house; v) the property is located outside of NYS; vi) the property is not intended to be one to four family dwelling; or vii) the foreclosure defendant is not the mortgage note borrower (they are either an heir, spouse, subsequent owner, owner that had bad credit that was never part of the loan application or another person/entity that never signed the mortgage note). However, even in these potential situations, because the 90 Day Notice in NYS is so important as a condition precedent to commence a foreclosure action, when ever there is ambiguity or as a precaution, it is always safer for the lender to serve the 90 Day Notice even if it appears that it may not be necessary.

3) DEFAULT NOTICE – The note and mortgage documents specify what constitutes a default on the note and mortgage obligations, such as how long the borrower needs to be in arrears on payments before the lender can send the borrower a default notice. The default notice provisions in the agreements specify how the default notice has to be transmitted/sent/mailed, to whom notice needs to be sent and at what address. Some mortgage notes require an acceleration of the note, before the lender commences its foreclosure litigation and specify when and how the loan can be accelerated. As with the 90 Day Notice, the Lender’s correctly sending and proving that they correctly sent out the default notice, as required under the mortgage note, is a condition precedent to commencing a foreclosure proceeding. A review by a foreclosure attorney of the mortgage and note for the contractually required mechanics of the default notification and a comparison to the specifics of the actual default notice given is necessary to accurately assess this issue.

4) POSSESSION OF ORIGINAL LOAN DOCUMENTS – Overlapping the standing issue but presented as a separate issue is the question of which entity, at what time, has been in possession of the original loan documents. The law requires the entity that started the foreclosure litigation to be in actual possession of the original loan documents on the day of the commencement of the case and when challenged to be able to assert with proof/details such possession. Often, the lender often in their complaint and motions makes vague, very broad references that it, the lender, or its attorney/agent, or its servicer, on the date of the commencement of the case had control of the original loan documents. Where the standing of the Plaintiff is otherwise uncontroverted, original loan document possession is less of an issue. However, where there are serious questions about the standing of the Plaintiff, the Plaintiff’s ability or non-ability to prove original loan document possession becomes a much more critical question. Here, as with the 90 Day Notice, proof of mailing, affidavits from persons with actual knowledge, giving detailed, as opposed to vague, testimony of their knowledge of the circumstance is needed where there is a question as to possession of the original loan documents. Where a Plaintiff cannot attest to possession of the original loan documents, the Plaintiff usually submits a lost note affidavit, where the Plaintiff acknowledges that it cannot produce the original loan documents, but asserts standing based on possession of copies of the loan documents, together with asserting a clear chain of assignments giving ownership over the mortgage loan. This issue is again a complex and nuanced issue both in terms of the laws and the usual facts in each case, so that should be reviewed by the defendant’s foreclosure lawyer.

5) SERVICE OF PROCESS AND SERVICE OF MOTIONS – The initial summons and complaint, as well as subsequent motions and notices of motion, need to be properly served on the defendants at the proper addresses where they can have due process. The procedures for the service of summons and complaint are especially strict, as well as, the requirement to provide certain notices along with the summons and complaint such as a “Help for Homeowners in Foreclosure” form and during the Covid-19 pandemic a form dealing with additional time to answer for persons affected by Covid-19 hardships.

The summons and complaint need to be served on the defendants, within 120 days of their initial filing with the Court. Substitute service on a person of ”suitable age and discretion” (in lieu of personal service on the actual defendant) also requires that there be additional service of the summons and complaint by mail on the defendant meant to be served, at the same address. Where the Plaintiff is able to serve the defendants through personal service on one of the defendants or substitute service on co-defendants or co-occupants, it is harder for the defendants to contest service. However, where the defendants are difficult to find to personally serve, service by ”nail and mail” service is permitted where the after three (3) attempts to personally serve, the summons and complaint are left at the door of the the defendant’s last known residence and in addition the summons and complaint are also mailed by first class mail to the defendants at the same address.

The difference between service of process of the summons and complaint and the service of motions, notices of entry/settlement/sale/conferences is that service of process is much stricter and if it is proven, even late in the foreclosure, that service of process was never done correctly, the defendant’s foreclosure lawyer may have a way to question whether the court ever had jurisdiction over the defendants, and to try to dismiss the entire action based on the lack of jurisdiction over the defendants.

a) Issues Considered with the Affidavit of Service that May Cause Difficulty With Service of Process – There are frequent situations where service of process can be challenged by a foreclosure defense attorney who is familiar with the issues usually considered with service of process.
What Are Issues Usually Considered With Service of Process?
–Hair – This could be wrong if hair stands out as colored/bald/braided and/or otherwise unique or the defendant always/usually wears a hat or a head scarf.
-Gender/Sex – This could be wrong where the name of the defendant is one where the sex/gender of the person is difficult to tell and the process server is mistaken as to who they served and/or is uncertain about the sex/gender of the defendant.
-Skin/Race – This could be a major problem where the process server describes a person of a different race/ethnicity or skin color.
–Age – This could also be an issue where the age given by the process server is significantly off, although the process server usually gives a range of ages. A driver’s license can establish age.
–Weight – This could also be an issue where the weight given by the process server is significantly off, although the process server usually gives a range of weights. A doctor’s physical is usually used to establish weight at a certain point in time around the date of the alleged service.
–Height – This could also be an issue where the height given by the process server is significantly off, although the process server usually gives a range of heights. A driver’s license can establish height.
–Military – The plaintiff needs to establish that the defendant is not in the military at the time of service, but sometimes that statement is inaccurate and defendant is in the reserves or was recently in the military.
–Other – Sometimes the defendant has obvious physical aspects that is not mentioned by the process server could cause service to be questioned, for example glasses, obvious facial hair, obvious tattoos, a cane/walker/wheel chair, and/or other possible physical impairments and/or challenges.
–Place – The plaintiff needs to serve the defendant at its last known residence or place of work. But if the defendant was not home or not at work at the time, there can be questions as to whether service was correct. Sometimes the residence and/or the work place are old and no longer accurate.
-Person Served for Substitute Service – Often the person served is not a person of “suitable age and discretion” when it is a child, a hostile tenant, a divorcing spouse, a co-occupant who does not speak English, an old/challenged person, a mentally/emotionally impaired person, or a person who has a history of substance abuse.

b) Particular Situations of Service Difficulty – There are also particular situation where service of process is particularly difficult where a foreclosure defense lawyer can discern a way for the defendant to challenge service. Below are some of the more challenging situations:
-Court Order for Publication service – Sometimes because locating the defendant for the sake of service of process is difficult the plaintiff cannot adequately serve the defendant with process. After showing due diligence in researching the defendant’s location and trying to serve the defendant at all possible locations where he/she may reside, the plaintiff may ask the Court to allow service by publication in a newspaper. Once this order is granted and the plaintiff follows the requirements for the publication, service on the defendant is deemed to be completed.
–Serving a “Gate Keeper” (Door Man, security Guard etc) – Where the defendant resides in a gated community or in a doorman building, the process server cannot directly access the defendant’s actual residence. Where the “gate keeper” is strictly a security guard and has no authority to accept service or mail or packages, the process server is not usually deemed to have completed serve by trying to assert that they served the security guard. However, where the duties of the gate keeper are broader, as in a doorman building where the doorman is authorized to accept packages, mail and deliveries, service on the doorman has been deemed to be permissible service in that there is a reasonable likelihood that that doorman would hand the package containing the summons and complaint to the defendant in the same manner as the doorman would give the defendant anything else delivered (mail, packages, deliveries).
–Death / Estate of Former Owner – Where the owner of the property has passed the plaintiff needs to serve the administrator of the estate (where there is no will) or the executor of the estate (where there is a will). Where there is no administrator or executor the plaintiff needs to serve all heirs and potential heirs (which sometimes could be difficult) or alternatively seek the appointment of a “public administrator” through the surrogates court who functions as the legal representative of the estate in the foreclosure action.
-Missing or Incompetent Person – Where the owner of the property is missing, incompetent or otherwise unavailable for service, an option for the plaintiff (besides service by publication) is the request to the Supreme Court for the appointment of a “guardian ad litem” for the sake of accepting serve for the missing or incompetent defendant. A separate issue is whether the person deemed to be incompetent at the time the plaintiff seeks to serve process was also incompetent at the time they signed the mortgage note; if the mortgage note was signed fairly close to the default and need for service of process, this may be an issue that may be used by the defendant’s foreclosure lawyer to challenge the mortgage note as a valid contract, alleging that the defendant never had the capacity to sign the mortgage note.
–Owner is in Hospital, Nursing Home or Hospice – Where the owner of the property is in a hospital, nursing home or hospice, the question is going to be are they so ill that they are deemed incompetent and are not fit to accept service of process? If they are potentially incompetent the plaintiff n
-Divorce / Separation – Where the owners of the property are a husband and wife who a separated, divorcing or actually divorced, the plaintiff needs to serve both spouses if they are living separately since substitute serve does not work if the parties live separately and are potentially at odds with each other. Therefore the plaintiff needs to learn where the spouse who left the property is residing for the sake of service of process.
–The Owner Has Permanently Moved or Abandoned the Property Subject to Foreclosure – Where the defendants have moved from the property subject to foreclosure, and can show that their residence has changed, the plaintiff, if it is aware of this situation, must strive to serve the defendants at their new residence. Typically there are signs at a property if the owners no longer reside there, with neglected maintenance, accumulating mail and a lack of activity in and around the household. Where it is clear that the property subject to foreclosure has been abandoned, the lender is allowed to secure and winterize the property, but must take care so that its agents do not to harm the interior or remaining personal property.
-Multiple properties / Property is not owner’s residence – Where the owner of the property subject to foreclosure has multiple properties, there will be a question of at which property the owner resides for the sake of service of process. A foreclosure defense attorney will try to assert that service was not at the owner’s residence and therefore the plaintiff would probably want to serve the defendant at all of their known properties if there is even a potential question as to the defendant’s residence.
–Multiple owners / multiple signatories to the mortgage / guarantors – Where there are either multiple owners of the property, multiple signatories to the note and/or mortgage and/or guarantors to the obligations, the plaintiff needs to serve all parties with an ownership and/or equitable interest and any signatory to the note or mortgage.
–Owner incarcerated – To serve process on a property owner who is incarcerated the plaintiff needs to know the location of the incarceration, file the correct applications and call certain administrative phone numbers to coordinate the service. Because this manner of service is unusual, there is a high risk that it can be challenged.
–Owner in active military – Under the Foreclosure Relief and Extension for Servicemember’s Act of 2015, mortgage lenders may not foreclose, or seize property based on non-payment of a mortgage obligation while a borrower is on active duty in the military and one year after such active service. The New York State Soldier’s and Sailor’s Civil Relief Act allows extension of a servicemember’s protections to his dependents upon application to the court.
–Owner in temporary housing (college, summer camp, extended trip, hospital/ recovery/nursing home ) – Where an owner is temporarily away for an extended period of time, the question is whether they have maintained their ”residence” at the property subject to foreclosure and whether it was their last known legal address for the purpose of service of process. In such a situation a plaintiff may argue that service at the residence is valid even though the borrower temporarily was not present. The defendant still would be able to object to service by showing that they were at the temporary address and were not actually served.
-Property transferred without a closing – Sometimes a borrower transfers its property without a formal closing and remains the initial defendant in a foreclosure action to which the plaintiff usually adds any new persons on the deed. The question here is where to serve the borrower who is still liable on the mortgage although he may have transferred the deed and moved.
–Attorney of record changes / becomes inactive / disabled/ disbarred – When the defendant has an attorney that attorney is usually considered to be the attorney or record, if they appeared in the action in any manner at all. That attorney needs to be served with all documents in a foreclosure matter, but cannot be if the plaintiff cannot locate the attorney. Often the attorney becomes inactive, disabled and/or disbarred; in such an event it is important to serve the defendant directly

c) Service of Process Issues with Default – Where the plaintiff wishes to prevail on a motion for an order of reference, where there was a default by the defendant, who has failed to answer, the plaintiff must meet certain requirements:
–Need additional service by mail – There needs to be a second, additional service of the summons and complaint (by first class mail) of the same Summons and Complaint served at the defendant’s last known residence.
–Need Order of Reference Within One Year – The Order granting the plaintiff the order of reference, or the default judgment, needs to be within 1 year of the default, in terms of the time the defendant’s answer was due.
–A Showing of Proper Service Where the Defendant Actually Resides – As stated above, there are situations where the defendant can not be located or may have moved to a unknown address. Therefore, when the plaintiff moves for a default judgment, it needs to show care with verifying that the defendant was properly served at their correct address.

d) Where Service of Process Issues May be Waived – The Issue of defective service of process is a powerful issue that can be asserted by a defendant at any time in a litigation. The issue essentially questions whether the Court has jurisdiction over the defendant because the defendant was not properly served. But there are situation where the Court may find that that the defense was waived.
-Failure to Make a Motion to Dismiss Within 60 Days of the Answer – The defendant cannot simply assert an affirmative defense of defective service of process in their answer and not move to dismiss, based on the alleged defective service within 60 days of the answer. Statutorily the service of process defense is waived in such a situation.
-Notice of Appearance – Where the defendant has asserted themselves with a notice of appearance but has not moved to dismiss.
–Appearance at Settlement Conference – Some courts have ruled, while others have differed, that an appearance at settlement or status conferences can waive service.
–Default without Any Reasonable Excuse – If the defendant can show reasonable excuse they usually can reassert the defense of defective process. Therefore, to prevail on waiving the service of process defense, the plaintiff would want to show that the default was without any reasonable excuse and that there is no question whether the defendant was properly served.

6) GOOD FAITH EFFORTS AT RESOLUTION / NEGOTIATION – The Courts informally and formally encourage the parties to negotiate in good faith and seek a settlement. By law the Courts require and organize Foreclosure Settlement Conferences and Status Conferences where they try to assess the situation with the foreclosure and whether settlement options are possible and are being pursued. In many cases prior to the foreclosure the borrower pursed a resolution or modification and claims that the lender misled them or dealt with them unfairly.

a) Court Conferences Requiring Good Faith Settlement Efforts – There are several types of Court Conferences in a foreclosure proceeding, in all of them settlement can be discussed and negotiated efforts between the parties are encouraged.
–foreclosure settlement conferences – which are usually in the beginning of the foreclosure proceeding and encourage settlement discussions in terms of seeking a modification. The whole purpose of the settlement conferences is to see if modification is possible and the judge, court law clerk or magistrate usually administers these conferences in order to assess the defendant’s ability to modify and to encourage the lender to consider modification for qualified defendants.
–foreclosure status conferences – which are usually in the middle of a foreclosure proceeding and seek to ascertain the status of the foreclosure process, discourage inactivity and encourage settlement discussions, where they are possible.
–preliminary conferences – are usually before a trial or evidentiary hearing to discuss its procedure, timing and other procedural elements, but are another forum where settlement is encouraged.
–covid conferences – these were special hearings during the period of the foreclosure moratorium during the Covid-19 pandemic. The goal of these conferences was to assess the defendant’s Covid hardship and to encourage negotiations between the parties.

b) General Duty of Good Faith Negotiations – There is a general obligation to try to settle litigations with good faith negotiations. There are several government agencies overseeing the issue of banking regulations and the conduct of lenders in general. The NYS Department of Financial Services is a governmental agency which takes and processes complaints when lenders are alleged to have acted in bad faith in terms of reviewing a defendant’s modification application.

c) The Pandemic Causing Additional Efforts at Settlement – The Covid-19 pandemic has caused additional efforts to help those who fell behind with their mortgage due to Covid related hardships. During the moratorium on foreclosures in New York State which lasted from March 2020 until January 15, 2022, the Court system encouraged those affected by Covid hardship to file a Covid Hardship Form that prevented foreclosure proceedings against them during the moratorium. During this period, New York State passed a Forbearance Statute, Banking Law Section 9-x which requires forbearance up to 180 days for borrowers in financial hardship due to Covid related hardships, during the period starting March 7, 2020. At the end of the forbearance period, Section 9-x(3)(a-d) gives several specific options including extending the loan term for the period of the forbearance, a payment plan, or a modification. If these are not possible Section 9-x allows forbearance arrears to be deferred at the end of the mortgage loan.

%%%7) ERRORS BY THE LENDER IN GIVING THE LOAN OR IN CLOSING ON THE LOAN – – The Lender, in giving and closing on residential mortgage loans, is under many regulatory obligations in terms of disclosures, notices and procedures that are designed to protect consumers borrowing on a residential mortgage. Violations and potential violations such as predatory lending, failure to provide various forms and/or notices required by New York State and/or the federal government may be issues later in a foreclosure litigation. Other errors can be the borrowers mental disability or incompetence at the time of loan, such as if an elderly person with dementia obtains a reverse mortgage.

8) ERRORS BY THE LENDER IN THE MORTGAGE DOCUMENTS, DEED, AND/OR PROPERTY DESCRIPTION – These technical issues need to be corrected but the statute of limitations on loan reformation may have run its course over a six year period of time.

Defective Mortgage Documents/Filing
SOL on Restoration
Defective Loan Documents
Failure to File Mortgage/ Incorrect Satisfaction

9) ERRORS AND/OR QUESTIONABLE DECISIONS BY THE LENDER IN SERVICING THE LOAN – The Lender and/or their Servicer are required to accurately account for the loan in terms of payments received and their allocation and if the Lender escrows for taxes and insurance it needs to accurately account for escrows. Errors in accounting, in escrows, in crediting payments and in dealing with the allocation of funds where there is a crisis driven interruption or reduction in payments can lead to issues in a foreclosure litigation.

10) ERRORS AND/OR QUESTIONABLE DECISIONS BY THE LENDER IN THE DECISION TO COMMENCE AND IN THE MANNER OF COMMENCING THE FORECLOSURE PROCEEDING – If there was an ongoing understanding or agreement with the borrower in default, the lender should not commence a foreclosure proceeding. For example if the lender is entertaining the borrowers efforts to avoid foreclosure, and those efforts appear to be moving forward to an agreement or understanding to prevent the foreclosure and the lender moves at the same time forward with foreclosure efforts there is a doctrine that prevents “dual tracking” or the lender’s simultaneous moving forward with both settlement and foreclosure.

11) FULL OR PARTIAL PAYMENT OR ERROR WITH DEFAULT DATE – The lender may accept payments that make the complaint inaccurate and the amount sought as wrong or the date of the mortgage default as in error.

 

12) FAILURE TO JOIN AN INDISPENSABLE OR NECESSARY PARTY – The lender suing in foreclosure should join all parties with an interest in the property including joint owners, owners in common, husbands/wives, tenants, any lien holders, any junior mortgages and anyone with a legal or equitable interest in the property or the loan.

 

13) FAILURE TO PROSECUTE OR ABANDONMENT OF A FORECLOSURE LITIGATION – In some cases the plaintiff in a foreclosure matter has failed to prosecute or has abandoned the foreclosure for a prolonged time. Whether the defendant can move for dismissal is very fact specific and depends on many factors. The plaintiff is required to move within one year for dismissal if the

Long Lapses by Lender
Use to Reduce Judgment Amount
Abandonment?
Dismissal Due to Lack of Prosecution

14) FAILURE TO PROSECUTE OR ABANDONMENT OF A FORECLOSURE LITIGATION – State is six (6) years from the date of the acceleration of the mortgage loan. The acceleration usually occurred in a previous litigation that was dismissed either by the court or voluntarily by the lender. Therefore if a foreclosure matter has been pending for a long time and has been subject to more than one foreclosure litigation, a potential statute of limitation issue may be present. However this issue is complex and made complicated by arguments by the plaintiff against the statute of limitations including any payments by the borrower, alleged “de-acceleration” by the plaintiff, whether the initial plaintiff had standing and a “safe harbor” provision that would toll the statute of limitations for an extra six (6) months. However the statute of limitations safe harbor generally does not apply to actions dismissed on the merits and/or to actions dismissed by voluntary discontinuance, failure to obtain personal jurisdiction over the defendant or upon neglect to prosecute the action. The statute of limitations defense has been been recently narrowed by the New York State Court of Appeals which ruled that a voluntary dismissal by a plaintiff/lender has the effect of “de-accelerating” the statute of limitations.

15) STATUTE OF LIMITATIONS AS TO FORECLOSURE –
Engels Narrows SOL for F. Action – de-acceleration for voluntary discontinuance
SOL not present if 1st Action Settled
But SOL Still Present for Old Payments that Are Over 6 Years Old
Waiving/reducing SOL on case:
accepting mod, not asserting as defense, bankruptcy intervention

The New York Court of Appeals in February of 2021 decided four consolidated cases that together defined the six (6) year statute of limitations in foreclosure cases by deciding:
1) “Acceleration” – What starts the foreclosure clock in terms of acceleration is an “unequivocal overt act” which is a very clear, immediate and forthright demand for the entire loan principal (this was the holding based on two of the cases, Wells Fargo Bank vs. Ferrato and Vargas vs. Deutsche Bank; and
2) “De-Acceleration” – What stops the foreclosure clock in terms of “de-acceleration” is the voluntary dismissal of the foreclosure action by the lender (this was the holding based on the other two cases in the consolidated decision, Freedom Mortgage Corp. vs. Engel and Ditech Financial vs. Naidu). See, https://www.jdsupra.com/legalnews/new-york-clarifies-mortgage-loan-3232779/ 

 

16) QUIET TITLE FOR THE MORTGAGE LIEN – This is a separate action or defense often, but not necessarily based on the statute of limitations, which asserts that a lien on the property should be voided. In the case of the statute of limitations the argument is that the mortgage if no longer enforceable due to the statue of limitation should be avoided.

Quiet Title Actions
Failure to File Satisfaction
Sol successful
Lost Loan
Judgment expired/incorrect

Federal Foreclosure Litigation –

While the vast majority of foreclosure litigation is handled in the New York State Supreme Courts, with an occasional appeal to the Appellate Division, some cases do proceed in Federal Court. Occasionally foreclosure cases move forward in federal courts where cases can proceed either in the federal district court or sometimes in the bankruptcy court where, for example, a mortgage/foreclosure related issue is raised in objecting to a claim of a mortgage holder in a bankruptcy case. Sometimes the lender decides for strategic reasons that they want to pursue federal litigation but that they do not wish to disclose the reason for their pursuit of federal litigation. Sometimes the it is the defendant in a state court foreclosure who seeks to pursue federal litigation. The basis of federal jurisdiction is either diversity jurisdiction (which is often present between the lender and borrower) or subject matter jurisdiction (over matters like RESPA and TILA statutes that apply to consumer protections in residential mortgages, and/or the Fair Debt Collection Practices Act, which applies to debt collection in general and potentially to a narrow range of foreclosure collection activities that were not in the ordinary course). For either party pursuing federal litigation has advantages and disadvantages in that it starts a new case in a forum where the litigation opponent may be unfamiliar, and where there is an potential opportunity for fresh new litigation, apart from the litigation or potential litigation in state court. To the extent the suit brings on new issues and facts it can proceed, but to the extent it seeks to re-litigate issues that were raised or could have been raised in a state court, the issues may be blocked under the Rooker-Feldman Doctrine which does not allow the federal courts to be a forum to reargue or appeal motion practice from the state court.

How Has Covid-19 Affected Foreclosure Defense Law and Practice?

Moratoriums imposed by the New York State governor , the state Court system and FHA had essentially temporarily shut down the ability of lenders to foreclose. In addition the New York State Courts were closed till May 4, 2020 and even when they had reopened, the Courts initially refused to file any foreclosure action documents and treated foreclosures and evictions different than any other actions. Presently, the Courts require a hearing to determine that a defendant is not facing Covid-19 related hardships before allowing a foreclosure action to continue to go forward. These moratoriums and other measures have given reprieve to borrowers unable to make mortgage payments during a period of national crisis and have given households facing mortgage challenges an opportunity to recover. However, the remedy of a moratorium on all foreclosures has been a broad one and by including foreclosures that were not caused by Covid-19, the moratorium has created a backlog of problematic mortgage situations where lenders during more normal times would have been more able to move forward with foreclosure process. This mandated pause in the foreclosure legal process has given an opportunity for borrowers to try to either reinstate, modify or otherwise resolve their mortgage arrears issues. Where a resolution is not forthcoming, the foreclosure moratorium and economic downturn will effectively give foreclosure defendants new litigation options to gain time, catch momentum and settlement opportunities. 

Pandemic Issues
Covid Hardship Form – mailed to defendant?
Filed/returned by D?
Covid Conference During Moratorium Before Proceeded
Forbearance Offered/Taken?
Regulation X – NY Moratorium Statute

NY has $530M to help homeowners behind on their mortgage payments. Here’s how to apply

**DEFENSE**

 

 

 

 

 

 

 

Foreclosure Topics

Separate – Appeals

 

 

Obtaining a Stay of Sale Etc
OSC in Sup Ct
OSC in Appellate Div
Chapter 11 or 13
Chapter 7
Mod Application pending review – 37 days
Timing of Getting a Stay

 

 

Old Defenses
Robosigning
Show Me the Note

Attacking Order/Judgment/Decision/Sale
Appeal
Reargument
Renewal
Vacating Judgment/Order – 5015 Grounds
Violation of BK Stay
Violation of Pandemic Moratorium

 

Timing of Sale Issues When Judgment Much Earlier
Bardi Rule / 1 year
Andrew Cuomo Rule / 3 months
Stale Calculations and Referee Report old /inaccurate

 

Licensing of Lender to Do Business in NYS
Required if Lender regularly makes loans – issue for smaller lenders
Also Issue Where Lender Changes Names Forms New Entities

Attorney Fees Provision
Can Be Flipped Where Lender Incorrect/Prejudices

Issues At Summary Judgment Stage
Goal – show issues of fact; usually involving contradictions/problems in lenders facts, documents, agreements

ARTICLES

1.  
2. One Way Out: New York’s One-Action Rule
3. New York Clarifies Mortgage Loan Acceleration and De-Acceleration: Starting and Stopping the Limitations Clock
4. Diagram re Foreclosure Process in NYS https://nycourts.gov/Courthelp/pdfs/Foreclosureflowchart.pdf

5. New York Amends Its Foreclosure Laws
New York law now requires the lender to assert that it is the loan owner when starting a foreclosure and gives homeowners the chance to raise certain defenses to protect their homes.

The Potential Benefits of Foreclosure Defense and the Role of Our Law Office –

Defending the foreclosure action allows you the opportunity to assert any defenses, either technical or substantive, involving the foreclosure proceeding, the mortgage holder’s conduct and/or any issues that involve the mortgage itself. Unless these defenses are timely asserted, there is a risk that such defenses may be waived or lost to the defendant. Legal defenses can delay the foreclosure proceeding and allow more time to explore alternative solutions, and potentially threaten the dismissal of the foreclosure action. Many times, our firm can identify possible issues that would create a strong defense and threaten the dismissal of the foreclosure action. The best chance you have for success is to retain the services of our law firm immediately upon initiation of a foreclosure proceeding. Even if you think it is too late, it may not be. We may, if needed, make a motion to extend the time to file an answer in certain situations where the time has expired.

We initially file customized, detailed and comprehensive answers with counterclaims, as well as discovery demands and a notice of appearance in the foreclosure action. Even if you are past the 20-30 days available to answer after receipt of service of the Summons and Complaint, the Law Office of Ronald D. Weiss P.C. can move to enlarge such time under appropriate circumstances. We attend foreclosure conferences on your behalf and help coordinate the discussions and the documents given to the plaintiff’s attorneys at such conferences. As the foreclosure litigation progresses the Plaintiff’s other papers, including the Motion for Summary Judgment, can be opposed by our office. Moreover, even when the foreclosure proceeding is nearing an end, there are still available options such as preparing an Order to Show Cause in an attempt to stay the foreclosure sale and/or the transfer of the deed. If you are considering defending the foreclosure litigation, you need representation from a law firm, like the Law Office of Ronald D. Weiss, P.C. that is dedicated to this area of practice.

Foreclosure Defense can be involved and lengthy and requires special knowledge and expertise. The Law Office of Ronald D. Weiss, P.C. regularly represents its Long Island and New York clients in Foreclosure cases before the Supreme Court for the State of New York in both Suffolk County and Nassau County and can review with you issues relevant to defending your home from foreclosure.

Our consultations are free, the advice may be invaluable.

Please call us at (631) 271-3737, or e-mail us at [email protected] for a free consultation with an attorney, at our Melville, Long Island law office to discuss Foreclosure Defense options in greater detail.