Adam Friedman

Massachusetts’s pause on evictions expired on October 17, 2020. When the state moratorium expired, a federal moratorium established by the Centers for Disease Prevention and Control (CDC) became effective in Massachusetts. Through July 31, 2021, the CDC moratorium prevents residential evictions for non-payment for qualified tenants who submit a written declaration to their landlord. Courts will accept filings and process cases and may enter judgments but will not issue an order of execution (the court order that allows a landlord to evict a tenant) until after the expiration of the CDC order. Protection is limited to households who meet certain income and vulnerability criteria.

In addition, the Trial Court has changed its procedures to provide for a two-tier process that will enable tenants and landlords to access resources and mediate their disputes in order to preserve tenancies.

A state law enacted in December of 2020 added new requirements for notices to quit issued by landlords and made additional changes to court processes. Chapter 257 of the Acts of 2020, An Act providing for eviction protections during the COVID-19 pandemic emergency, as amended by sections 12 to 17 of chapter 20 of the Acts of 2021 requires landlords to provide a form containing certain information related to residential tenant’s rights and available resources when giving a written notice to quit to a residential tenant for nonpayment of rent. The Act also requires EOHED (mass.gov/noticetoquit) to (1) develop the accompanying form that a landlord will provide when given a residential tenant a written notice to quit for nonpayment of rent; and (2) receive from landlords electronic copies of any such notices to quit. This change remains in effect until January 1, 2023.

The Chief Justices of the Housing Court, District Court, and Boston Municipal Court departments each issued a standing order outlining procedures applicable in their respective court departments for summary process (eviction) cases following the expiration of the Massachusetts eviction moratorium.

To wit: “Accordingly, it is hereby ORDERED, pursuant to my authority as set forth in G.L. c. 211B, § 9, that to the extent any provisions of Trial Court Rule I: Uniform Summary Process Rules are inconsistent with the individual standing orders issued by the Chief Justices of the Housing Court, District Court, and Boston Municipal Court departments, those provisions of Trial Court Rule I: Uniform Summary process Rules are suspended until further order.

This Administrative Order is effective as of June 15, 2021 and will remain in effect until further order. This Administrative Order is temporary and may be modified or rescinded at any time, as necessary.”

We continue to monitor change and will update according.  For any questions, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.

In recent case US Bank National Association v. Davis,  Supreme Court Appellate Division, 2^nd Dept., New York, 2021 WL 2816725, 2021 NY Slip Op. 04251,  decided July 7, 2021,  the Court found that the Judgment of foreclosure and sale was reversed plaintiff’s motion to confirm the referee’s report and for a judgment of foreclosure and sale is denied, cross motion of the defendants Ray Osborn Davis and 964–966 Myrtle, LLC, which was pursuant to CPLR 3215(c) to dismiss the complaint insofar as asserted against the defendant 964–966 Myrtle, LLC, as abandoned is granted, and the order dated June 14, 2017, was modified.

On July 19, 2010, the plaintiff commenced this action against, Davis and 964-966 Myrtle LLC, alleging, that Davis had defaulted on his mortgage by failing to make the payment due October 1, 2009, and all payments due thereafter. Davis filed a form answer, pro se, and thereafter, an answer and counterclaim by his attorney.  Plaintiff agreed to accept pursuant to a stipulation. Myrtle LLC failed to answer the complaint or otherwise appear in the action. In August 2013, filed for summary judgment on the complaint insofar as asserted against Davis, to strike his answer, and for an order of reference. Davis opposed the motion.

On December 17, 2015, the Supreme Court granted the plaintiff’s motion for summary judgment and appointed a referee to calculate the amount due to the plaintiff.  In September 2016, the plaintiff moved to confirm the referee’s report and for a judgment of foreclosure and sale. The defendants opposed the motion and cross-moved to dismiss the complaint.  The defendants sought dismissal of the complaint against Myrtle LLC pursuant to CPLR 3215(c) based upon the plaintiff’s failure to move for leave to enter a default judgment against it within one year of its default in answering.

In an order dated June 14, 2017, the Supreme Court granted the plaintiff’s motion and denied the defendants’ cross motion, finding that the excuse offered by the plaintiff for its failure to timely move for leave to enter a default judgment against Myrtle LLC was reasonable. In a judgment of foreclosure and sale dated June 28, 2017, the court directed the sale of the subject property. The defendants appealed.

A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that, when the action was commenced, it was either the holder or assignee of the underlying note (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361, 12 N.Y.S.3d 612, 34 N.E.3d 363). “Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident” (U.S. Bank, N.A. v. Collymore, 68 A.D.3d 752, 754, 890 N.Y.S.2d 578; see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d at 361–362, 12 N.Y.S.3d 612, 34 N.E.3d 363; Citimortgage, Inc. v. Laupot, 190 A.D.3d 680, 135 N.Y.S.3d 889).

Plaintiff argued and Court found that by submitting copies of excerpts from the PSA, and its attached mortgage loan schedule, which included the subject mortgage loan, the plaintiff established, prima facie, that, as of July 1, 2006, the plaintiff, as trustee under the PSA, was an assignee of the mortgage loan and owner of the note.  Thus, it had standing to commence this action on July 19, 2010.

In opposition, the defendants failed to raise a triable issue of fact. Their assertions that a subsequent assignment of mortgage was invalid, and that the PSA did not prove the physical delivery of the note, were found irrelevant considering the proof of assignment by the terms of the PSA.

Pursuant to CPLR 3215(c), “[i]f the plaintiff fails to take proceedings for the entry of judgment within one year after [a defendant’s] default, the court shall not enter judgment but shall dismiss the complaint as abandoned … unless sufficient cause is shown why the complaint should not be dismissed.” “The language of CPLR 3215(c) is not,  discretionary, but mandatory, inasmuch as courts ‘shall’ dismiss claims (CPLR 3215[c]) for which default judgments are not sought within the requisite one-year period, as those claims are then deemed abandoned. Failure to take proceedings for entry of judgment may be excused if the plaintiff to demonstrates that it had a reasonable excuse for the delay in taking proceedings for entry of a default judgment and that it has a potentially meritorious action.  The determination is in the sound discretion of the Court.

In this case, the plaintiff served its complaint on Myrtle LLC after which Myrtle LLC failed to answer or otherwise appear in the action. Thus, Myrtle LLC was in default as of August 21, 2010. However, it was not until August 13, 2013, that the plaintiff moved, for summary judgment on the complaint insofar as asserted against Davis, and for leave to enter a default judgment.  In its opposition to the defendants’ cross motion to dismiss the complaint, the plaintiff argued that it had a reasonable excuse for not moving for leave to enter a default judgment within a year of Myrtle LLC’s default. On appeal, the plaintiff abandoned that argument and, for the first time on appeal, alleged that the cross motion was properly denied because the plaintiff had moved for summary judgment in 2013, demonstrating its intent not to abandon this case.  Additionally, the settlement conference delays ended August 2011, two years before August, 2013, when the plaintiff moved, for leave to enter a default judgment.  As far as the FEMA declaration delay, from October 2012 to March 2013, the Court found that vague and unsubstantiated.

The plaintiff’s argument, raised for the first time on appeal, that, by moving for summary judgment and leave to enter a default judgment in August 2013, the plaintiff had “manifest[ed] its intent not to abandon this case” was not supported.  Here,  the plaintiff moved for summary judgment and an order of reference almost two years after the default, when the statutory time within which to enter a default had long since expired, thus it was too late for the plaintiff to “manifest an intent not to abandon the case so as to avoid dismissal of the complaint insofar as asserted against Myrtle LLC pursuant to CPLR 3215(c). 

The many delays that were occurring during this action did not give plaintiff a sufficient argument to avoid noncompliance with CPLR 3215c.   For further information regarding this case, please contact Deborah Gallo at dgallo@friedmanvartolo.com.

On June 29, 2021, by a 5-4 majority the Supreme Court declined to vacate the CDC eviction moratorium.  The majority decision did not opine on their reason for declining to vacate the stay, however Justice Kavanaugh, who joined the majority, drafted a concurrence.  Justice Kavanaugh joined the majority because of his opinion that the remainder of the moratorium, which is scheduled to end on July 31, 2021, is brief and “will allow for additional and more orderly distribution of the congressionally appropriated rental assistance funds” by the Department of the Treasury.  However, he noted that he did agree with the petitioners’ opinion that the CDC had exceeded its authority in issuing the foreclosure moratorium and cautioned that any extension of the stay beyond July 31, 2021, would, in his opinion, require “clear and specific congressional authorization (via new legislation).”

Kavanaugh’s statement is significant as it indicates that, under the right circumstances, he would likely join the minority justices (Thomas, Alito, Gorsuch, and Coney-Barrett) in denying future moratoriums of this type.  The future implications of this decision are unknown at this time, however Kavanaugh’s statement could be read as an implicit invitation to challenge future foreclosure and eviction stays issued by Federal agencies without the explicit authorization of Congress.  For any questions regarding this announcement please contact Richard O’Brien, Esq. at robrien@friedmanvartolo.com or Deborah Gallo, Esq.  at dgallo@friedmanvartolo.com. 

Governor Larry Hogan has issued Executive Order Number 21-06-15-01 (“New Executive Order”) which effective August 15, 2021 will rescind the restrictions imposed under Emergency Order 20-12-17-02 (“Initial Executive Order”). As a reminder, the Initial Executive Order established certain limitations on initiating and proceeding with foreclosure and eviction actions in Maryland.  More specifically, the Initial Executive Order restricted the ability to send a Notice of Intent and required lenders to offer special forbearance programs. The recission of the Initial Executive Order will remove the Notice of Intent restriction and, beginning on August 16, 2021, Notices of Intent may again be set on all loans without requiring the loan holder to offer a special forbearance. A review of the restrictions lifted under the new rule is provided for your review and a copy of the New Executive Order is attached to this correspondence.

Unfortunately this otherwise good news has been complicated by the recent issuance of the “2021 Mortgage Servicing COVID-19 Rule” by the CFPB.  This rule will impose a stay on the commencement of new foreclosures throughout the country beginning August 31, 2021 and expiring at the end of the calendar year.  While the original proposal included a blanket stay on all new foreclosures, the final rule included some important carve-outs.  Specifically, loans which have a delinquency date of November 1, 2019, or earlier are excluded from the stay, as are any loans which may be subject to a statute of limitations defense at any time prior to January 1, 2022.  This eliminates any aged loans which have otherwise been impacted by state or federal COVID stays and permits us to proceed upon them.  Therefore the new executive order means that we will be able to proceed on issuing NOIs and commencing foreclosure activity in Maryland on all loans with a default date of November 1, 2019 or earlier with no additional restrictions at the state level or under the new CFPB rule.

For loans with a more recent delinquency date, new actions may still be commenced if a lender can show that one of three “procedural safeguards” have been met:  1) the borrower, during their delinquency, submitted a complete loan modification application and the servicer made a determination on that modification; 2) the property is “abandoned” as defined under applicable law; OR 3) the borrower is unresponsive and the servicer is able to demonstrate that they made good faith efforts to communicate with the borrower.

On all such “recent delinquencies” in Maryland the CFPB stay will have to be complied with, absent evidence of the existence of one of the above procedural safeguards.  We are advising our clients to retain evidence of complete loan modification packets that resulted in denial as well as any evidence of good faith efforts to establish live contact with borrowers in order to qualify for one of the above “procedural safeguards” and avoid any further delays under the new CFPB rule.  Where one of the above procedural safeguards have been met we will be able to proceed with the issuance of the Notice of Intent upon the expiration of the Emergency Order on August 16, 2021.

Finally, an additional aspect of the CFPB rule is triggered by Maryland’s forbearance requirements.  While servicers will no longer be required to offer forbearance prior to the service of an NOI beginning on August 16, 2021, to the extent any previously issued forbearance is ongoing after 8/31, servicers are required to attempt live contact more than 10 days but less than 45 days prior to the expiration of the forbearance to 1) establish the end date of the forbearance; 2) describe available loss mitigation programs; and 3) provide information on how to obtain homeownership counseling services.  Servicers must retain evidence of this contact for the purposes of future litigation.  For any questions regarding this update, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.

In Wells Fargo Bank, NA. v. Zolotnitsky, Supreme Court, Appellate Division, Second Department, New York, 6/2/2021, 2021 WL 2214014, 2021 NY Slip Op 03482, a mortgage brought an action seeking foreclosure of a residential mortgage and to reform the mortgage to correct the description.  Mortgagor asserted varied affirmative defenses including lack of standing.  The mortgagee then assigned the mortgage.   The Appellate Division held that the assignee failed to establish ownership of the promissory note and failed to establish that reformation of the mortgage to the correct legal description was warranted based on mutual mistake.

By assignment of mortgage dated October 9, 2015, Wells Fargo assigned the mortgage to Wilmington Savings Fund Society, FSB.  In November 2016, Wilmington, successor in interest to Wells Fargo, moved for summary judgment on the complaint and asserted against defendant, to strike answer, reform mortgage, amend caption and correct legal description.  A lost note affidavit was included alleging that the note had been “inadvertently lost, misplaced, or destroyed.”  Defendant moved to renew her opposition to the summary judgment and plaintiff Wilmington moved to confirm oath and report and judgment.  The Court entered the Judgment of foreclosure and sale and defendant appealed.

UCC 3-804 provides a method of recovery for instruments that are lost, destroyed, or stolen, and plaintiff is required to submit “due proof of ownership, the facts that prevent production of the note, and its terms.  (Deutsche Bank Natl. Trust Co. v. Anderson, 161 A.D.3d 1043, 1044, 79 N.Y.S.3d 42, quoting UCC 3–804).  Based upon same, the Court found that the affidavit “failed to establish when the note was acquired and failed to provide sufficient facts as to when the search for the note occupied, who conducted the search, and how or when it was lost.

Further, the Court the standard to correct the legal description of the premises. A party seeking reformation of a contract by reason of mistake must establish, with clear and convincing evidence, that the contract was executed under mutual mistake or a unilateral mistake induced by the other party’s fraudulent misrepresentation” (Yu Han Young v. Chiu, 49 A.D.3d 535, 536, 853 N.Y.S.2d 575; see Chimart Assoc. v. Paul, 66 N.Y.2d 570, 573, 498 N.Y.S.2d 344, 489 N.E.2d 231; Gunther v. Vilceus, 142 A.D.3d 639, 640, 36 N.Y.S.3d 723.

Based upon the above, the Appellate Division held that the assignee failed to establish ownership of the promissory note and failed to establish that reformation of the mortgage to the correct legal description was warranted based on mutual mistake.  If you have any question, please contact Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.