Failure to comply with the requirement to mail pre-foreclosure notices, pursuant to RPAPL § 1304, is one of the most litigated defenses in New York foreclosure practice. Generally, in order to prevail on summary judgment, a mortgagee must demonstrate that it complied with RPAPL § 1304 by submitting proof of mailing and an affidavit describing adherence to its mailing procedures. See Citimortgage v. Espinal, 134 A.D.3d 876 (2d Dept. 2015) (holding that a presumption of proper mailing can be established by either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that items are properly addressed and mailed). While lenders have refined their procedures and records detailing proof of mailing, establishing compliance with RPAPL § 1304 remains a contentious issue. However, in CIT Bank N.A. v. Schiffman, No. 11, 2021 WL 1177940 (N.Y. Mar. 30, 2021), the New York Court of Appeals issued a decision outlining an elevated standard that a borrower would need to meet to rebut the presumption of a lender’s compliance with RPAPL § 1304.
In order to defeat the presumption of proper mailing, a borrower would always need more than a simple denial of receipt. See HSBC Bank USA v. Rahman, 2014 NY Slip Op 33116(U) (N.Y. Sup. Ct. Sep. 29, 2014). However, in addition, under the standard set in Schiffman, provided a lender clearly describes its office mailing procedures, in order to rebut the presumption of proper mailing, a borrower would need to submit “proof of a material deviation from an aspect of the office procedure that would call into doubt whether the notice was properly mailed, impacting the likelihood of delivery to the intended recipient.” New York’s high court clarified that a minor deviation would be of little consequence, providing guidance to trial courts to look for evidence of a defect that would show a “routine office practice was not followed or was so careless that it would be unreasonable to assume that the notice was mailed,” citing to Nassau Ins. Co. v. Murray, 46 NY2d 828 (1978). The ruling in Schiffman recognizes that it’s not practical for commercial entities processing significant volumes of mail to document every single aspect of the mailing process. Accordingly, provided the lender maintains proof such as computerized records, certified mailing labels, and detailed office procedures it will be difficult for a borrower to demonstrate a material deviation and prevail on a RPAPL § 1304 defense.
Interestingly, Schiffman also addressed issues regarding RPAPL § 1306, which requires the lender to file the name and contact information of the borrower. Proof of filing documents, pursuant to RPAPL § 1306 frequently list information describing one borrower, even on a loan with two obligors where separate 1304 notices were sent to each individual borrower. The court in Schiffman reviewed whether RPAPL § 1306 requires a lender’s proof of filing to include information about all borrowers on a multi-borrower loan. In short, the court found that compliance with RPAPL § 1306 only requires naming and listing information as to one of the borrowers based on a plain reading of the statute, which refers to “borrower” in the singular form unlike the closely related statute, RPAPL § 1304, which specifically stated “borrower, or borrowers.” Further, the court found that since the legislative purpose of RPAPL § 1306 was primarily for collecting data to monitor the extent of foreclosures in New York, and to better target foreclosure counseling resources, it was not necessary to include information regarding all borrowers on each loan since those individuals generally reside at the subject property together, and such data would be redundant.
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