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In Mae v. Janczak, Superior Court of Pennsylvania,  January 21, 2021, 245 A3rd 1134, the Superior Court, No. 3175 EDA 2019,  held that the plain language of the Federal National Mortgage Association Charter empowers the corporation commonly known as Fannie Mae to sue only in its corporate name, which is the Federal National Mortgage Association.

Christopher Janczak appealed from the order, entered in the Court of Common Pleas of Chester County, granting summary judgment in favor of appellee Fannie Mae on its action in ejectment. Same was reversed by the Superior Court.  Two issues were brought to the Superior Court – 1. Whether the court below had subject matter jurisdiction over Fannie Mae’s lawsuit because it used its fictitious name in this ejectment action while failing to comply with the Act and 2. Whether the Fictitious Name Act is preempted by the Federal National Mortgage Association Charter, a federal law, to give it standing to sue notwithstanding the Act.   The Fictitious Name Act provides that “[n]o entity which has failed to register a fictitious name as required by this chapter shall be permitted to maintain any action in any tribunal of this Commonwealth until such entity shall have complied with the provisions” of the Act. 54 Pa.C.S.A. § 331(a). The purposes of the Act are: (1) to protect persons giving credit in reliance on the fictitious name; and (2) to establish definitely the identities of those owning the business for the information of those who have dealings with the entity. Lamb v. Condon, [ ] 276 Pa. 544, 120 A. 546 ([Pa.] 1923); Ross v. McMillan, [ ] 172 Pa.Super. 298, 93 A.2d 874, 875 ([Pa. Super.] 1953). 

Janczak argued that Fannie Mae “had no right to file a lawsuit in the name of ‘Fannie Mae’ without complying with the [Act, as the Act] provides that an entity which has failed to re[gister] its fictitious name shall not be permitted to maintain any action” in the courts of this Commonwealth. Janczak further asserts that the Act is not preempted by the Federal Charter of the Federal National Mortgage Association (“FNMA Charter”) because the Act “in no way conflicts with federal law concerning [Fannie Mae’s] Federal Charter or its legal corporate name[,] which is the Federal National Mortgage Association.”  Essentially, claims that Fannie Mae could not sue in their colloquial name.

The Court found, that under the plain language of the FNMA Charter, Fannie Mae is only empowered to “sue and be sued, and to complain and to defend” in its corporate name. 12 U.S.C. § 1723a(a).  Although the corporation regularly conducts business under the name “Fannie Mae,” the name of the corporate entity is plainly and unambiguously stated as “Federal National Mortgage Association” throughout the empowering legislation. 12 U.S.C. § 1716b.  Thus the Court concluded that the trial Court erred in granting summary judgment in “Fannie Mae”.

For more information on this decision please contact Director of Operations, Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.

In Deutsche Bank National Trust Company v. Bucicchia,  Supreme County, Appellate Division, Second Department, NY April 7, 2021 (2021 Slip Op.  02132), the Appellate Court found that the judgment of foreclosure and sale be reversed as appealed from, some affirmative defenses reinstated, and plaintiffs’ motion to confirm referee’s report and judgment be denied.

The Supreme Court found that the plaintiff had proved their prima facie requirements as to standing.  A copy of the note indorsed in blank as included as an exhibit to the Summons and Complaint at commencement which was affirmed by the Appellate Court.

However, the Appellate Division found that the Supreme Court should has dismissed the complaint as to providing the necessary proof as to RPAPL 1304. RPAPL 1304(1) provides that, “at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, … including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower” (see U.S. Bank N.A. v. Pierre, 189 A.D.3d 1309, 139 N.Y.S.3d 221). RPAPL 1304 requires that the notice be sent by registered or certified mail, and also by first-class mail to the last known address of the borrower (see RPAPL 1304[2]; see also U.S. Bank N.A. v. Pierre, 189 A.D.3d 1309, 139 N.Y.S.3d 221; Deutsche Bank Natl. Trust Co. v. Crimi, 184 A.D.3d at 710, 126 N.Y.S.3d 197). Strict compliance with RPAPL 1304 notice to the borrower is a condition precedent to the commencement of a foreclosure action, and the plaintiff has the burden of establishing satisfaction of the condition precedent.  It is required that plaintiff establish the proof of regular mailing and certified mailing with personal knowledge.  Here, the plaintiff relied upon the testimony of its sole witness, who testified as to the standard office mailing procedure of the plaintiff’s prior and present loan servicer, but did not and could not attest to the practices and procedures of Walz Group, a third-party entity that was hired to undertake the requisite service of the notices on the defendants in accordance with the requirements of the mortgage agreement and RPAPL 1304. The plaintiff’s witness expressly testified that she did not have familiarity with Walz Group’s mailing practices “outside of their communications with” the loan servicer. In addition, the witness attested that she never mailed anything through Walz Group, was never employed by Walz Group, and was never trained by Walz Group in their procedures for mailing notices. Further, she testified that she could not say if Walz Group mailed the notices by first-class mail.

Thus the Appellate Court found that personal knowledge of mailing practice of the third party mailer Walz Group was not provided and the business records that were submitted in evidence failed to show that the requisite first-class mailings of the RPAPL 1304 notices or the notices of default were actually made to the defendants or that the default notices were actually delivered to their “notice address.”   An example of the need to attest to business practices of the entity charged with the mailing of the notice.

For more information on this decision please contact Director of Operations, Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.

We are excited to share a recent decision on case handled by Friedman Vartolo, LLP.  In U.S. Bank National Association v. Gregory A. Jeffrey, et al,  2019-02039 AD3d, granted April 14, 2021,  defendants appealed from an order of the Supreme Court, dated September 17, 2018. The order, granted that branch of the plaintiff`s motion which was to strike the affirmative defense of those defendants alleging violations of the Banking Law and denied the cross motion of those defendants for summary judgment dismissing the complaint insofar as asserted against them. The Appellate Division that the order was affirmed insofar as appealed from, with costs.

The Court found that Defendants failed to establish that the plaintiff did not comply with RPAPL 1304 and 1306, or that the defendants were not in default on the mortgage loan, as they merely pointed to deficiencies in the plaintiff`s evidence. Court properly denied the defendants` cross motion for summary judgment.

The Appellate Court found that the Supreme Court properly determined that Banking Law § 6-l was inapplicable. “Banking Law § 6-l ‘imposes limitations and prohibits certain practices for high-cost home loans’”.   The statute had an exception for loans that were above the conforming loan amount.   The subject loan exceeded the statutory amount of $300,000.  Thus, the Banking Law regarding high cost home loans was inapplicable.  Further, the statute applied to loans originated after September 2008.  The loan originated in 2007.   Further, the defendants failed to establish that plaintiff did not comply with RPAPL 1304 and 1306.  Defendants merely pointed to deficiencies in evidence without providing evidence that the loan was not in default or that the RPAPL was not complied with.

Great work by Richard O’Brien, Esq. and Oran Schwager, Esq. of our firm!  For more information on this decision please contact Director of Operations, Deborah Gallo, Esq. at dgallo@friedmanvartolo.com.

New Jersey Assembly Bill 1063 has passed and will be enacted into law on September 1, 2021.  The bill enhances notification requirements for residential mortgage lenders.  Specifically the bill amends Section 3 of P.L.2019, c.64 to require a lender to inform a borrower that they are required to obtain the assistance of a foreclosure prevention and loss mitigation counselor to participate in mediation and that the homeowner is not required to pay any fees to avail themselves of the mediation process.  This notice is to be provided each time the lender serves a homeowner with a notice of intent to foreclose or files a foreclosure summons and complaint on a 1-3 family home which is occupied by the borrower as their primary residence. 

The passage of this bill is not a surprise and furthers New Jersey’s current goal of enhancing and spreading awareness of their foreclosure mediation program.  If you have any questions, please contact Richard O’Brien, Esq. at robrien@friedmanvartolo.com or Deborah Gallo, Esq.  Director of Operations at dgallo@friedmanvartolo.com.

Today the New Jersey Governor signed A5130, colloquially referred to as the New Jersey Foreclosure Prevention Act.  The Bill creates the “New Jersey Residential Foreclosure Prevention Program” and establishes and empowers the “New Jersey Housing and Mortgage Finance Agency” to run it.  Under the program the agency is permitted to use state funds to purchase distressed properties for the purposes of foreclosure prevention.

Specifically the program authorizes the agency to establish partnerships with non-profits to purchase residential properties from institutional lenders that are either classified as non-performing or which are already subject to a deed in lieu, tax foreclosure judgment, or judgment of foreclosure and sale.  The agency is then permitted to negotiate new agreements with the homeowners to make their payments more affordable and to allow them to remain in the home.  While certain specifics of how this will operate in practice are still unclear, lenders should expect the agency to be a player immediately as the act took effect upon its execution.

As part of this bill an additional $350 fee will be charged as part of every foreclosure sale.  This fee will be used to partially fund the agency.  This seems to be the most measurable effect upon foreclosure plaintiffs in the short term.  Clients are also urged to consider whether any assets may be suitable for this new program.  Assets which are severely underwater and upon which hopes of a full recovery are slim should be given special attention as this program may provide a more profitable and immediate method of recovery for lenders than that provided by other alternatives.

Should you have any questions, please contact Richard O’Brien,  Esq. (robrien@friedmanvartolo.com or Deborah Gallo, Esq. , Director of Operations (dgallo@friedmanvartolo.com).