New York Court of Appeals Issues Decision Clarifying RPAPL Notice and Compliance Requirements for Residential Foreclosures
Last year, the United States Court of Appeals for the Second Circuit certified two questions to the New York Court of Appeals regarding predicate notices in residential foreclosure actions, specifically, a lender's compliance with New York Real Property Actions and Proceedings Law ("RPAPL") §§ 1304 and 1306.
RPAPL § 1304 requires lenders to send borrowers notices that include statutory language advising the borrower of the amounts owed, the availability of housing counselors in the county, and that failure to remit payment within 90 days could result in commencement of a residential mortgage foreclosure action. Within three business days of mailing the notices, RPAPL § 1306 requires lenders to file a certification of completion of the § 1304 mailing with the Superintendent of the New York State Department of Financial Services.
In CIT Bank N.A. v. Schiffman, the Second Circuit certified the following two questions to New York Court of Appeals:
(1) Where a foreclosure plaintiff seeks to establish compliance with RPAPL § 1304 through proof of a standard office mailing procedure, and the defendant both denies receipt and seeks to rebut the presumption of receipt by showing that the mailing procedure was not followed, what showing must the defendant make to render inadequate plaintiff's proof of compliance with § 1304?
(2) Where there are multiple borrowers on a single loan, does RPAPL § 1306 require that a lender's filing include information about all borrowers, or does § 1306 require only that a lender's filing include information about one borrower?
On March 30, 2021, the New York Court of Appeals issued its decision in Schiffman. The Court affirmed the borrower's heightened standard to rebut the presumption of receipt of the RPAPL § 1304 notice and affirmed a lender's compliance with RPAPL § 1306 where the certification identifies at least one of the multiple borrowers.
Specifically, with respect to the borrower's heightened standard to rebut the presumption of mailing of the § 1304 notice, "there must be proof of a material deviation from an aspect of the office procedure that would call into doubt whether the notice was properly mailed, impacting the likelihood of delivery to the intended recipient." That is, the borrower(s) must establish that “the routine office practice was not followed or was so careless that it would be unreasonable to assume that the notice was mailed.” See Decision, page 7-8.
As to compliance with RPAPL § 1306, a lender's filing is compliant if it includes information about one borrower. The primary purpose of the § 1306 filing is to monitor the extent of foreclosure filings within the state and this "objective is fulfilled by a filing that references at least one borrower."
The ruling clarifies the standards that the trial courts must apply when hearing challenges to a lender's compliance with RPAPL §§ 1304 and 1306.
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Philip Rosen practices in New York and New Jersey, is a member of the firm’s management committee and the chair of the firm’s New Jersey creditors’ rights group. Phil’s diverse practice includes mortgage-related litigation, foreclosures, title and real estate disputes, bankruptcy matters and assisting investors in their acquisition of performing and defaulted loan portfolios. He is seasoned in foreclosure law having foreclosed millions of dollars in commercial and residential mortgages for banks, private equity firms and securitized servicers. For questions regarding this article, please contact Phil at firstname.lastname@example.org.
Daniel Park is an associate of ZEK and a member of the firm’s Litigation Department. Daniel’s practice focuses on banking, complex commercial, and mortgage-related litigation. For questions regarding this article, please contact Daniel at email@example.com.