New York Real Property Actions and Proceedings Law §1304 requires a lender, assignee, or mortgage loan servicer to mail a notice advising the borrower(s) that his or her home is at risk of foreclosure. The notice must be mailed at least 90-days prior to the commencement of a foreclosure action and it is only applicable to home loans. This notice is commonly referred to as the "90-day notice" and it has become a controversial issue in residential foreclosure actions. RPAPL §1304.

The purpose of the 90-day notice was to provide borrowers with the information necessary to seek adequate assistance in order to avoid foreclosure proceedings. However, it appears that the 90-day notice has become a homeowner's ammunition to attempt to stall or even destroy a foreclosure action, rather than the source to obtain the proper information to protect borrowers' homes, thereby, defeating the legislative intent.

One of the most powerful defenses to a residential mortgage foreclosure action is the claim that a lender failed to establish strict compliance with the 90-day notice requirement pursuant to RPAPL §1304.

The 90-day notice defense is so powerful that it can be raised at any time and at any point of the litigation. Citimortgage v. Espinal, 134 A.D.3d (2d Dept. 2015); Bank of NY Mellon v. Weber, 169 A.D.3d 981 (2d Dept. 2019). Notably, doctrines such as res judicata and law of the case do not prevent a court from entertaining a borrower's claim that a lender-plaintiff did not strictly comply with the statute or that the borrower was never served with the 90-day notice. Wells Fargo Bank, N.A. v. Merino, 173 A.D.3d 491 (1st Dept. 2019). However, it is important to note that this mega defense is personal to the borrower and cannot be raised by a party who is a stranger to the note and mortgage, even if said party has an interest in the subject property. Bank of NY Mellon Trust Co., N.A. v. Obadia, 2019 NY Slip Op 07561 (2d Dept. 2019).

Similarly, even if a borrower files for bankruptcy protection, a lender will not be excused from its obligation under the statute; as such, if a borrower has previously filed for bankruptcy, a lender must still mail the notice prior to the commencement of a foreclosure action. However, a lender does not have to wait 90-days as the 90-day period does not apply, but again the lender is not relieved from sending the 90-day notice. Marchai Props., L.P. v. Fu, 171 A.D.3d 722 (2d Dept. 2019).

Furthermore, it is firmly established that compliance with the 90-day notice is a condition precedent to a foreclosure action. Aurora Loan Servs. v. Weisblum, 85 A.D.3d 95 (2011) (overruled in party by Citibank, N.A. v. Conti-Scheurer, 172 A.D.3d 17 (2d Dept. 2019)). Hence, the lender-plaintiff has the burden to establish that it strictly complied with the statute. Nevertheless, the absence of the condition precedent is not a jurisdictional defect and, therefore, it does not deprive a court of jurisdiction. Thus, if the defense is never raised by the borrower, a lender-plaintiff is not required to disprove the defense. U.S Bank N.A. v. Carey, 137 A.D.3d 894 (2d Dept. 2016).

In the past years, case law in connection with the compliance of the 90-day notice has drastically evolved and the New York courts are constantly ruling on this issue, specifically the Second Department. So how does a lender-plaintiff establish its prima facie case that it strictly complied with the statute?

In recent cases, it has been noted that there is nothing that requires a plaintiff from relying on any particular set of business records as long as the lender-plaintiff satisfies the admissibility requirement of CPLR 4518(a), the business records exception to the hearsay rule. Accordingly, a lender-plaintiff may rely upon different documentary evidence, to establish actual mailing, provided that the documents are admissible evidence under CPLR R. 4518 (a), and the records themselves actually evince the facts for which they are relied upon. HSBC Bank USA, N.A. v. Ozcan, 154 A.D.3d 822 (2d Dept. 2017); U.S. Bank N.A. v. Goldberg, 171 A.d.3d 981 (2d Dept. 2019).

As the courts continue to review what is sufficient to demonstrate compliance with the 90-day notice, recent decisions indicate that there are three key pieces of documentary evidence that assist a lender-plaintiff to establish strict compliance with the statute. Wells Fargo Bank, N.A. v. Mandrin, 160 A.d.3d 1014 (2 Dept. 2018). First, the preferable method: an affidavit of mailing from the individual who actually served the notices upon the borrower(s). Second, submission of proof of mailing by the post office such as domestic return receipts, from the U.S. postal office service, with attendant signatures—the receipts must show issuance by U.S. the postal office, and they must be dated and signed. Wells Fargo Bank, N.A. v. Trupia, 150 A.D.3d 1049 (2d Dept. 2017); Nationstar Mtge. v. LaPorte, 162 A.D.3d 784 (2d Dept. 2018); HSBC Bank USA v. Rice, 155 A.D.3d 443 (1st Dept. 2017). Lastly, an affidavit from someone with personal knowledge of standard office mailing practices and procedures designed to ensure that items are properly addressed and mailed.

Due to the substantial number of defaults combined with mortgage servicer transfers of loans, the most commonly used method to demonstrate compliance with the statute is an affidavit of standard office mailing practices and procedures to establish its compliance with the statute. Borrowers heavily attack the submission of this type of affidavit by alleging that the affiant does not attest as to having personal knowledge of the mailing practices or procedures of the lender or loan mortgage servicer; or the affiant was not familiar with the practices and procedures of the company that issued and mailed the notices such as a prior mortgage loan servicer; or that the affidavit lacks the proper foundation in order to be admissible under CPLR 4518(a). U.S. Bank N.A. v. Offley, 170 A.D.3d 1240 (2d Dept. 2019); U.S. Bank N.A. v. Henderson, 163 A.d.3d 601 (2d Dept. 2018).

However, an affidavit of standard office mailing practices and procedures meets the requirements of CPLR 4518(a) when the affiant attests as to his personal knowledge of the mailing practices and procedures of the lender or mortgage loan servicer and explains in detail the practices and procedures in place to ensure that the 90-day notices are properly addressed and mailed. Additionally, the affidavit must be supported by the business records—such as correspondence or mailing logs reviewed by the affiant—that demonstrate that the 90-day notice was actually mailed together with copies of the notice. Pennymac Holdings v. Lane, 171 A.D. 3d 774 (2d Dept. 2019); CitiMortgage v. Osorio, 174 A.D.3d 496 (2d Dept. 2019); Citimortgage v. Banks, 155 A.D.3d 936 (2d Dept. 2017); Nationastar Mtge. v. Durane-Bolivard, 2019 NY Slip Op 06502 (2d Dept. 2019).

Once a lender-plaintiff submits sufficient evidence to establish proof of mailing, a presumption of receipt arises. Bank United v. Connor, 2019 N.Y. Misc. LEXIS 740 (2d Dept. 2019); Aurora Loan Servs. v. Vrionedes, 167 A.D.3d 829, (2d Dept. 2018). A borrower's bare denial of receipt of the 90-day notice is insufficient to demonstrate that the condition precedent was not fulfilled. U.S. Bank, N.A. v. Nathan, 2019 N.Y. App. Div. LEXIS 4921 (2d Dept. 2019); Deutsche Bank Natl. Trust Co. v. Starr, 173 A.D.3d 836 (2d Dept. 2019); Deutsche Bank Natl. Trust Co. v. Spanos, 102 A.D.3d 909 (2d Dept. 2013).

In Citibank, N.A. v. Conti-Scheurer, 172 A.D.3d 17 (2d Dept. 2019), the Second Department reversed, in part, a line of cases that stemmed from Aurora Loan Servs. v. Weisblum, 85 A.D.3d 85, which held that a borrower can establish her or his prima facie entitlement of judgment as a matter of law simply by submitting an affidavit denying receipt of the 90-day notice. The Conti-Scheurer court specifically stated that "a simple denial of receipt, without more, is insufficient to establish prima facie entitlement to judgment as a matter of law dismissing the complaint for failure to comply with the requirements of RPAPL §1304." The Second Department reasoned that there was ample case law supporting the proposition that a simple bare-bone denial is insufficient to succeed in motion practice. The court also remarked that a party cannot succeed in a motion for summary judgment merely by "pointing out gaps in the opposition party's case." Consequently, in order to be successful, a borrower who is seeking dismissal of the complaint pursuant to RPAPL §1304 must tender more than just his or her word that the 90-day notice was never received.

Undoubtedly, the 90-day notice is now one of the most contested topics in residential mortgage foreclosure actions. As the dramatic litigation of the 90-day notice continues to increase, it is important that lenders, mortgage loan servicers and law firms representing the financial industry maintain an adequate record keeping practice and establish the proper procedures to be able to demonstrate actual mailing of the 90-day notice.

The 90-day notice is a powerful defense that can result in dismissal of a residential foreclosure action. The law, however, is rapidly changing. Lenders are under pressure to prove, through admissible evidence, that they strictly complied with RPAPL §1304, but the courts now are requiring borrowers to come forward with more than a terse denial that "I never received the 90-day notice."

Evelyn P. Flores is an associate with Berkman Henoch Peterson Peddy & Fenchel, P.C. in Garden City, N.Y. Steven J. Peddy is the managing partner of the firm.