“The absence of a necessary party in a foreclosure action leaves that party’s rights unaffected by the judgment and sale, and the foreclosure sale may be considered void as to the omitted party.” 6820 Ridge Realty LLC v. Goldman, 263 A.D.2d 22, 26 (2d Dept. 1999).
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CPLR 3216 Dismissal Demands Compliance from All – Courts Included
By Andrew Messite & James N. Faller on
As vaccination rates increase, holds on foreclosure actions expire, and the courts slowly return to addressing their largely frozen foreclosure dockets, we can expect some familiar concerns to reappear. One common concern is the threat of dismissal pursuant to CPLR 3216 for unreasonable neglect to proceed. Given the severe disruption to mortgage litigation caused by the COVID-19 pandemic, and its effects on the staffing and continuity of many firms whose main focus is residential foreclosures, it would not be surprising to see an uptick in CPLR 3216 notices and/or CPLR 3216 dismissals. As with any dismissal, this poses a serious threat to lien enforceability and could lead to complete loss of the lien if, by the time of dismissal, the foreclosure is beyond or approaching six years since acceleration. Fortunately, the threat posed to mortgage liens is mitigated somewhat by the strict requirements imposed by the statutory language of CPLR 3216 and controlling case law.…
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To Forgive or Not to Forgive a CPLR 3215(c) Violation in a Residential Mortgage Foreclosure
By Andrew Messite & Kerren Zinner on
CPLR 3215(c) requires a plaintiff to take proceedings for entry of judgment within one year of default or face dismissal of the action as abandoned, except where sufficient cause is shown why the complaint should not be dismissed. The purpose of this provision is to prevent a plaintiff from taking advantage of a defendant’s default where the plaintiff has also been guilty of inaction. See Myers v. Slutsky, 139 A.D.3d 2d 709 (2d Dep’t 2012).
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The Appellate Courts Look at the Waiver of Standing Defenses post-RPAPL § 1302-a
By Andrew Messite & Natsayi Mawere on
Prior to the enactment of Real Property Actions and Proceeding Law (“RPAPL”) § 1302-a, defendants waived their affirmative defense of standing in a residential foreclosure action by failing to raise that defense in an answer or a pre-answer motion to dismiss. See, e.g., JP Morgan Chase Bank, Nat’l Ass’n v. Butler, 129 A.D.3d 777, 780 (2d Dep’t 2015). However, since the enactment of RPAPL § 1302-a, which became effective on December 23, 2019, defendants can raise a standing defense at any time in a residential foreclosure action. This issue arises both where the borrower defaulted in the foreclosure action and seeks to vacate that default to assert a standing defense and where an answer was filed but no standing defense was initially asserted. The Second Department has recently issued decisions addressing both the interplay between the new statute and a borrower’s default in answering and an answering defendant’s ability to amend to assert a standing defense after summary judgment was granted. In addition, the Court of Appeals has recently clarified application of the statute in the context of an appeal of an order entered prior to the enactment of RPAPL § 1302-a.
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Recent Developments in Demonstrating Standing to Foreclose in New York as the Court of Appeals Weighs Back In
By Andrew Messite & Michael V. Margarella on
In JPMorgan Chase Bank, N.A. v Caliguri, 36 N.Y.3d 953 (2020), the Court of Appeals recently clarified how a lender establishes standing in a foreclosure action. Prior to this recent pronouncement, the standard set by that Court had been that a plaintiff evidences standing to foreclose by demonstrating that it possessed the original note agreement at commencement of the foreclosure action. Aurora Loan Servs., LLC. v. Taylor, 25 N.Y.3d 355 (2015). In Aurora, the lender demonstrated standing by averring, in an affidavit in support of a summary judgment motion, that it possessed the original note since prior to commencement, while attaching accompanying business records supporting such testimony, including the loan servicing agreement and records demonstrating that the note had been transferred to the plaintiff. Id., at 356. The Court in Aurora further held that a plaintiff need not demonstrate possession of the original mortgage at the time of commencement as the mortgage follows the note. Nor was it necessary for a foreclosing plaintiff to detail how it came into possession of the original note, only to demonstrate possession of such at the time of commencement.
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RPAPL Arguments May be Waived: Case of Appellate First Impression
In a case of appellate first impression in New York, the Appellate Division, Second Department, held that a mortgagor cannot make a Real Property Actions and Proceedings Law (“RPAPL”) 1304 argument in opposition to a motion for Judgment of Foreclosure and Sale – even if that was pled as a defense in the mortgagor’s Answer – where the prior summary judgment motion was unopposed.
In Wells Fargo Bank, N.A. v. Harrigan,[1] after the lender commenced a foreclosure action in Suffolk County against the mortgagor, the mortgagor filed an Answer, containing an RPAPL 1304 compliance defense, specifically that a 90-day notice was not properly mailed. The lender moved for summary judgment and the mortgagor failed to oppose that motion, apparently because of some unspecified law office failure. Thereafter, the lender moved for Judgment of Foreclosure and Sale and the mortgagor cross-moved for vacatur of the summary judgment order and dismissal of the action based on the lender’s purported failure to demonstrate RPAPL 1304 compliance.…
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Appellate Division Rejects MacPherson Mortgage Acceleration Argument in Case of First Impression
By Diane Bettino & Michael V. Margarella on
In a case of appellate first impression in New York, the Appellate Division, Second Department held that a mortgage is accelerated upon a lender’s election to do so, notwithstanding an optional reinstatement clause in a mortgage. In the Dieudonne matter,[1] the Second Department rejected the “MacPherson Argument,” first pronounced by the Supreme Court, Suffolk County[2] and affirmed the dismissal of the lender’s foreclosure complaint as time-barred. The MacPherson Argument reasons that a mortgage with an optional reinstatement clause is not accelerated until judgment enters, as the borrower has an continuous right to reinstate until that point.
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