Wilmington Savings Fund Society, FSB v. Duran
Attorneys and Parties
Brief Summary
Residential mortgage foreclosure; standing to foreclose; strict compliance with RPAPL 1304 [90-day pre-foreclosure notice by registered or certified mail and also by first-class mail to the borrower’s last known address and the property address]; applicability of federal FHA servicing regulations (12 CFR 1024.39; 24 CFR 203.602, 203.604, 203.605, 203.606) [federal regulations applicable to FHA-insured loans that can operate as conditions precedent to foreclosure].
Denied plaintiff’s summary judgment and motion to strike defendants’ amended answer; granted defendants’ cross-motion for summary judgment dismissing the complaint based on alleged noncompliance with federal FHA-related regulations.
The grant of defendants’ cross-motion for summary judgment dismissing the complaint.
Although the plaintiff failed to establish standing and RPAPL 1304 compliance (warranting denial of its motion), it raised triable issues of fact as to whether it was exempt from the FHA regulations, precluding summary judgment for defendants.
Background
Defendants Luz Duran and Jovini Sanchez executed a note and mortgage on Queens real property. Plaintiff Wilmington Savings Fund Society, FSB commenced foreclosure. Defendants answered and amended their answer, asserting lack of standing, failure to comply with RPAPL 1304 [90-day pre-foreclosure notice requirements], and noncompliance with federal FHA-related servicing regulations (12 CFR 1024.39; 24 CFR 203.602, 203.604, 203.605, 203.606). Plaintiff moved for summary judgment and to strike the amended answer; defendants opposed and cross-moved for summary judgment dismissing the complaint based on the federal regulations.
Lower Court Decision
The Supreme Court, Queens County (Muir, J.), denied plaintiff’s motion for summary judgment and to strike the amended answer, and granted defendants’ cross-motion for summary judgment dismissing the complaint as against them for failure to comply with federal FHA-related servicing regulations.
Appellate Division Reversal
Modified, on the law, by denying defendants’ cross-motion for summary judgment; otherwise affirmed. The plaintiff failed to establish standing because it submitted two different versions of the note without explaining the discrepancy, and failed to prove RPAPL 1304 compliance where it offered no first-class mailing proof, uncertified/unsigned return receipts, and an affidavit lacking a detailed mailing procedure. However, defendants were not entitled to dismissal because, although the FHA regulations are conditions precedent for FHA-insured loans, the plaintiff raised triable issues of fact as to whether it was exempt from complying with those regulations.
Legal Significance
The decision reinforces that a foreclosing plaintiff must prove standing at commencement through consistent note evidence and must strictly comply with RPAPL 1304 [90-day pre-foreclosure notice and specific mailing methods], supported by either actual mailing proof or detailed evidence of standard office mailing practices. It also clarifies that while FHA servicing regulations can operate as conditions precedent to foreclosure for FHA-insured loans, summary judgment for borrowers is improper where there are triable issues about a lender’s exemption from those requirements.
In New York mortgage foreclosures, inconsistent note documentation defeats standing and failures in RPAPL 1304 mailing proof bar plaintiff’s summary judgment, but borrowers cannot obtain dismissal on FHA regulatory grounds when exemptions present triable issues of fact.