A recent appeal presented an issue of first impression before this Court as to whether a plaintiff in a foreclosure action may satisfy the requirements of RPAPL 1304 by mailing a 90-day notice jointly addressed to two or more borrowers. In Wells Fargo Bank, N.A. v. Yapkowitz decided September 29, 2021, the Court held that this practice was insufficient to satisfy the requirements of RPAPL 1304, and that the plaintiff is required to mail a 90-day notice addressed to each borrower in separate envelopes as a condition precedent to commencing the foreclosure action.
On or about January 1, 2009, the defendants defaulted on their mortgage payments. On January 22, 2009, Wilshire Credit Corporation mailed separate 30-day notices of default to each of the defendants. The 30-day notices advised each of the defendants that they were obligated to pay the sum of $6,189.30 by February 26, 2009, and that the failure to make payment by that date could result in acceleration of the entire indebtedness of the loan and the commencement of a foreclosure action. The file was then service transferred several times, Wilshire to BAC Home Loans Servicing, LP. ; from BAC to Bank of America, N.A.; BANA to Nationstar Mortgage, LLC. Argent assigned the mortgage to the plaintiff.
The plaintiff commenced this foreclosure action against the defendants. In their answer, the defendants asserted affirmative defenses. In June 2017, the plaintiff moved for summary judgment on the complaint. In support of the motion, the plaintiff submitted, a copy of a 90-day notice pursuant to RPAPL 1304 sent by BANA via certified and first-class mail to the defendants’ address, and a certified mail receipt for the 90-day notice signed for by “F. Yapkowitz.” The 90-day notice was jointly addressed to both of the defendants. The plaintiff also submitted an affidavit from Edward Hyne, a litigation resolution analyst for Nationstar. Hyne’s affidavit affirmed that Nationstar’s business records, which incorporated the records of the prior loan servicer, BANA, reflected that “90-day pre-foreclosure notices . . . were sent, via certified and first class mail, to Defendants,” that “each 90-Day Notice was sent in a separate envelope from any other mailing,” and that “F. Yapkowitz” “signed for and accepted the delivery of the . . . 90-DayNotice.” Hyne also indicated that “each 90-DayNotice listed in the upper left-hand corner the name of the recipients (the Borrowers), the recipient’s address . . . and the specific Mortgage Loan number.” In opposition to the plaintiff’s motion, the defendants submitted, an affidavit from both of them, that “[n]either of us remembers receiving and reading any 90-day notice of default,” or “whether the 90-day notice . . . addressed to both of us, . . . and signed for by Fred [Yapkowitz,] . . . was ever shown to Elaine [Yapkowitz].” The defendants’ attorney argued, that the plaintiff failed to establish its strict compliance with RPAPL 1304, a condition precedent to the commencement of the foreclosure action, since the 90-day notice submitted by the plaintiff was addressed to both defendants jointly, and the plaintiff only presented a certified mail receipt signed by “F. Yapkowitz.” Thus, the defendants’ attorney asserted that apparently “only one 90-day notice was mailed, rather than single notices addressed to each of the defendants individually and in separate envelopes, as required by RPAPL 1304.” On September 26, 2017, the Supreme Court denied the plaintiff’s motion and found that the plaintiff failed to establish its prima facie entitlement to judgment as a matter of law by relying on the affidavit of Hyne, who had no personal knowledge of the mailing of the 90-day notice, and relied on inadmissible hearsay. At a pretrial conference on February 7, 2018, the parties stipulated to the submission of papers in lieu of testimony on the issue of whether the plaintiff complied with RPAPL 1304. Thereafter, the plaintiff submitted, an affidavit from Jamie Turner, assistant vice president of BANA, the former loan servicer. Turner attested that BANA’s business records reflected that “BANA sent 90-day pre-foreclosure notices . . . via certified and first class mail to Defendants . . . in accordance with BANA’s established and routinely followed business practices and procedures designed to ensure that documents are properly addressed and mailed,” and that the 90-day notice was signed for by “F. Yapkowitz.” Turner added that “each 90-Day Notice listed in the upper left-hand corner the names of the recipients (Defendants), the recipients’ mailing address . . . and the specific Mortgage Loan number.”
By decision dated May 21, 2018, the Supreme Court determined, that “Turner possesse[d] the requisite knowledge of BANA’s standard office practices and procedures to attest that BANA properly sent the 1304 Notice and . . . substantiate[d] the mailing with documentary proof” (Wells Fargo Bank, N.A. v Yapkowitz, 59 Misc 3d 1227[A], 2018 NY Slip Op 50726[U], [Sup Ct, Rockland County]). Nevertheless, the court determined that the plaintiff failed to establish its strict compliance with RPAPL 1304, which “requires a separate notice to each borrower in a separate envelope” (Wells Fargo Bank, N.A. v Yapkowitz, 59 Misc 3d 1227[A], 2018 NY Slip Op 50726[U], and thus, the foreclosure action must be dismissed. The court rejected the plaintiff’s contention that it could be presumed that Fred J. Yapkowitz informed his wife, Elaine M. Yapkowitz, of his receipt of the RPAPL 1304 notice, since the lender cannot “shift[ ] its responsibility to provide the 1304 Notice to both borrowers from itself . . . [to] the borrower who signed for the certified mailing or opened the first-class mailing” (Wells Fargo Bank, N.A. v Yapkowitz, 59 Misc 3d 1227[A], 2018 NY Slip Op 50726[U].
The plaintiff moved pursuant to CPLR 4404(b) to set aside the decision. On July 23, 2018, the Supreme Court denied the plaintiff’s motion. In a judgment dated July 23, 2018, upon the decision, the Supreme Court dismissed the complaint insofar as asserted against the defendants based upon the plaintiff’s failure to establish its strict compliance with RPAPL 1304.
The plaintiff appealed from (1) the order dated September 26, 2017; (2) the decision dated May 21, 2018; (3) the order dated July 23, 2018; and (4) the judgment dated July 23, 2018. The appeals from the orders dated September 26, 2017, and July 23, 2018, must be dismissed because the right of direct appeal therefrom terminated with the entry of the judgment.
An RPAPL 1304 notice is a notice pursuant to the Home Equity Theft Prevention Act (Real Property Law § 265-a), “the underlying purpose of which is ‘to afford greater protections to homeowners confronted with foreclosure’” Since RPAPL 1304 notice must be sent at least 90 days prior to the commencement of an anticipated foreclosure action, its manifest purpose is to aid the homeowner in an attempt to avoid litigation. Strict compliance with RPAPL 1304 notice to the borrower or borrowers is a condition precedent to the commencement of a foreclosure action and the plaintiff has the burden of establishing satisfaction of this condition (Aurora Loan Servs., LLC v Weisblum, 85 AD3d at 106). The statute requires, that (1) the 90-day notice be sent by registered or certified mail, and also by first-class mail, to both (a) “the last known address of the borrower” and (b) “the residence that is the subject of the mortgage”; and that (2) “[t]he notices required by this section” be sent “in a separate envelope from any other mailing or notice” (RPAPL 1304[2]).
In Aurora Loan Servs., LLC v Weisblum (85 AD3d 95), the Appellate Court addressed the issue of whether each of the married borrowers was entitled to a 90-day notice pursuant to RPAPL 1304. In that case, the plaintiff addressed the 90-day notice to only one of the two individuals who agreed to pay the amounts due under a consolidated note. The Court determined that since each of those individuals was a “borrower” (Aurora Loan Servs., LLC v Weisblum, 85 AD3d at 105) each was “entitled to receive notice 90 days prior to commencement of the action”. The Court rejected that contention that failure to serve the 90 day was inconsequential because the spouse would notify the other, holding that the purpose of RPAPL 1304 was to provide notice to the borrowers prior to the commencement of the foreclosure action “in an attempt to avoid litigation” Moreover, this Court determined that the failure to send a RPAPL 1304 notice to each of the borrowers was not a “minor irregularity” that could be disregarded in the absence of prejudice, but rather “the condition sought to be disregarded [by the plaintiff] is a mandatory condition precedent”
While it was apparent from this Court’s decision in Weisblum that each borrower is entitled to be sent notice at least 90 days prior to the commencement of the foreclosure action pursuant to RPAPL 1304, no appellate court in New York had determined whether each borrower is entitled to receive an individually addressed 90-day notice in a separate envelope from a 90-day notice sent to the other borrower(s). The issue has been addressed by the Supreme Court in several decisions, there is some disagreement among those decisions as to whether RPAPL 1304 requires a separate 90-day notice to be mailed to each borrower. In U.S. Bank Natl. Assn. v Diaz (2018 NY Slip Op 30436[U] [Sup Ct, Queens County]), the plaintiff’s submissions indicated that only one 90-day notice, addressed to both of the defendant borrowers, was mailed to them. The Supreme Court determined that such notice was insufficient to establish “proper service of the RPAPL 1304 notice on each of the borrowers”. Similarly, in Deutsche Bank Natl. Trust Co. v Jimenez(62 Misc 3d 811, 812 [Sup Ct, Suffolk County]), the Supreme Court determined that a single “joint notice” sent to two borrowers was insufficient to satisfy the requirements of RPAPL 1304 . In that case, the Supreme Court noted that RPAPL 1304(1) was amended to add a plural reference to “borrowers” with respect to the commencement of a foreclosure action, whereas RPAPL 1304(2) continued to refer to a “borrower” in the singular with respect to mailing requirements, reflecting a recognition that “there is often more than one borrower/defendant” (Deutsche Bank Natl. Trust Co. v Jimenez, 62 Misc 3d at 828), but that “each borrower” must individually receive the RPAPL 1304 notice. Further, in HSBC Bank, USA N.A. v Patricola (62 Misc 3d 1209[A], 2019 NY Slip Op 50076[U] [Sup Ct, Suffolk County]), the Supreme Court again determined that each is entitled to a separate RPAPL 1304 notice, since it would be improper for the court to essentially rewrite the statute to substitute “borrowers” in the plural for “borrower” in the singular under RPAPL 1304(2). Likewise, in HSBC Bank USA v Hoffman (2019 WL 7559637, 2019 NY Misc LEXIS 6193, [Sup Ct, Westchester County]), the Supreme Court reiterated the principle that “not mailing notices to individual borrowers violates the mailing requirements of RPAPL § 1304.” However, in Hudson City Sav. Bank, FSB v D’Ancona (2017 NY Slip Op 31917[U], [Sup Ct, Suffolk County]), the Supreme Court determined that the mere fact that 90-day notices “were addressed to both borrowers” in a single mailing “does not violate the requirements of [RPAPL 1304]” since the mailing was signed for by one of the borrowers and “the post office does not require two signatures to serve such documents”. Similarly, in HSBC Bank USA, N.A. v Schneider (2020 NY Slip Op 30182[U] [Sup Ct, Suffolk County]), the Supreme Court, while determining that the plaintiff failed to establish, prima facie, its mailing of a RPAPL 1304 notice, stated in dicta that there was no basis to find “the notice is facially defective just because [the borrowers] are listed jointly as addressees” (HSBC Bank USA, N.A. v Schneider, 2020 NY Slip Op 30182[U]).
In this case, the Court held that the mailing of a 90-day notice jointly addressed to two or more borrowers in a single envelope is not sufficient to satisfy the requirements of RPAPL 1304, and that the plaintiff must separately mail a 90-day notice to each borrower as a condition precedent to commencing the foreclosure action. RPAPL 1304(1) provides that giving “notice to the borrower”, in the singular, at least 90 days prior to the commencement of the foreclosure action, is a prerequisite to commencement of the action “against the borrower, or borrowers”. By contrast, RPAPL 1304(2), which sets forth the mailing requirements for the 90-day notice, contains no reference to “borrowers” in the plural. RPAPL 1304(2) requires the 90-day notice to be sent by registered or certified mail, and also by first-class mail, to both (1) “the last known address of the borrower” and (2) “the residence that is the subject of the mortgage” (id.). Further, RPAPL 1304(2) provides that “[t]he notices required by this section shall be sent . . . in a separate envelope from any other mailing or notice.” While mailing a notice jointly addressed to multiple borrowers at the property which is the subject of the mortgage would clearly be sufficient to satisfy the requirement of sending the 90-day notice to “the residence that is the subject of the mortgage” such mailing would not also satisfy the separate requirement under RPAPL1304(2) to mail “[t]he notices required by this section . . . to the last known address of the borrower” (and to mail each such notice in a separate envelope from any other required notice).
Further, had the Legislature intended the mailing of a notice jointly addressed to two or more borrowers to satisfy the requirements of RPAPL 1304(2), it would have stated, as it did in RPAPL 1304(1) with regard to the commencement of a foreclosure action, that the 90-day notice must be mailed to “the last known address of the borrower or borrowers.” Ideally, when one of the borrowers receives a 90-day notice jointly addressed to two or more borrowers, he or she will inform the other borrower(s). However, this ideal scenario clearly will not always occur, and even a matter as urgently pressing as the receipt of a 90- day notice of foreclosure proceedings might not be communicated if, for instance, there is a breakdown of communication between the borrowers. Since the Legislature imposed strict mailing requirements aimed at ensuring notice and documenting the delivery of the 90-day notice, it would be difficult to imagine why the Legislature would not also require the simple measure of separately addressing a 90-day notice to each of the borrowers. To permit a single notice jointly addressed to two or more borrowers and mailed in a single envelope to serve in lieu of a separately mailed notice to each borrower would transform the requisite standard of compliance from “strict compliance” to “substantial compliance.”
In the matter at hand, it was undisputed that the 90-day notice to each of the borrowers was sent in the same envelope, thus the Appellate Court found that the plaintiff failed to establish its compliance with RPAPL 1304, a condition precedent to the commencement of the action. Accordingly, the Supreme Court properly denied the plaintiff’s motion for summary judgment on the complaint and properly dismissed the complaint. Thus, appeals from the decision and the orders were dismissed, and the judgment was affirmed.
Banks and servicers should be guided accordingly when reviewing their internal processes regarding the 90 day notice mandated under RPAP 1304. Should you have any questions, please contact Deborah Gallo, Esq., at dgallo@friedmanvartolo.com.