August 8, 2017

by Bruce J. Bergman
Berkman, Henoch, Peterson, Peddy, & Fenchel, P.C. – USFN Member (New York)

A new case reveals, perhaps confirms, that if notice is required as a condition precedent to declaring the full mortgage balance due (acceleration), failure to prove compliance with the notice provision will defeat the foreclosure. [U.S. Bank National Association v. Singh, 147 A.D.3d 1007, 47 N.Y.S.3d 437 (2d Dept. 2017)].

Procedurally, a summary judgment was reviewed in the cited case — with the appellate court determining that “the [trial court] should have denied the plaintiff’s motion for summary judgment.” Although the decision did not say so, unless the foreclosing plaintiff is able to be more precise with proof at a trial on the issue, the entire action would be dismissed.

As an overview, there are three versions of pre-acceleration notice that might be required:
1. the 90-day notice mandated by statute (RPAPL § 1304) in a home loan foreclosure;
2. the 30-day notice imposed by the Fannie Mae/Freddie Mac form of mortgage (typically employed for the residential situation); or
3. a notice provision as part of a particular mortgage, possibly applicable to commercial loans.

In the instant case, it happened to be a situation of number 3 — the negotiated mortgage provision. The mortgage necessitated the sending of a notice before the balance could be accelerated. On appeal, the ruling was that “[t]he evidence did not establish that the required notice was mailed by first-class mail or actually delivered to the [borrower’s] ‘notice address’ if sent by other means, as required by the terms of the mortgage agreement. [Citations omitted.] The plaintiff’s failure to make a prima facie showing required the denial of its [summary judgment] motion...”

Had the notice been sent? It is not possible to tell. It may have been. Records must be maintained enabling the proving of the point.

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