Recent Decisions Regarding New York’s Pre-Foreclosure Requirements

Failure to strictly comply with two of New York’s recently enacted consumer protection statutes affecting residential foreclosures, RPAPL 1304 and RPAPL 1306, which require a 90-day notice to be sent to the borrower, and specific information contained therein to be filed with the New York State Department of Finance within three days thereafter, have recently been reviewed and interpreted by the New York courts.

RPAPL 1304 requires that a notice be sent to the borrower at least ninety (90) days prior to the commencement of any residential foreclosure advising the borrower that they are in default and providing the amount needed to cure the default along with a list of Credit Counselling Agencies that are available to assist.

RPAPL 1306 requires that certain specific information be electronically filed with the New York State Department of Financial Services (formerly known as the New York State Banking Department) within three (3) days of mailing the notice. In order to do so, a designated username and password must be obtained from the Department of Financial Services website in order to access their website.

These usernames and passwords, however, are only issued to licensed mortgage servicers, unless a waiver from the the Department of Financial Services has been obtained, or the party requesting the username and password is exempt from the licensing regulation (insurance companies, lending institutions, etc.).

Accordingly, it is imperative that a username and password be obtained prior to mailing the ninety (90) day notice required by RPAPL 1304 to ensure compliance with RPAPL 1306.

Two recent decisions involving a Plaintiff’s failure to strictly comply with these new statutes are found below:

In T.D. Bank, N.A. v. Leroy, 2014 NY Slip Op 07047(2014), the plaintiff served the required ninety (90) day notice properly, but filed the required information with the New York state Department of Financial Services three (3) months later, not within three (3) days, as required. The court held that the delay in filing was a failure to comply with the mandatory condition precedent required by RPAPL 1306, the delay could not be overlooked, and therefore dismissed the foreclosure!

In Pritchard v. Curtis, 2012 NY Slip Op 09112 [101 AD3d 1502], the defendant served an answer in which it did not raise the plaintiff’s failure to comply with RPAPL 1304 and RPAPL 1306 as a defense, and also opposed a summary judgement motion without raising this issue. The court found that by not raising these in a timely manner, the defendant had waived these defenses and allowed the foreclosure to proceed.

The lessons to be learned from these two cases? Make sure to meticulously comply with the requirements of RPAPL 1304 and RPAPL 1306 or hope the defendants serve an Answer and fail to raise the failure to comply with these statutes as a defense!