The Second Department Issues Significant Rulings Regarding Compliance With RPAPL 1304

The Appellate Division, Second Department recently issued two impactful decisions – Bank of America, N.A. v. Kessler (2d Dept. December 15, 2021) and Citimortgage, Inc. v. Dente (2d Dept. December 29, 2021) – regarding compliance with RPAPL 1304.

In Kessler, the Second Department held that no other mailings or additional language can be included with the 1304 notice, with the exception of the list of at least five housing

counseling agencies serving the county where the property is located. As a result, the Second Department affirmed the Lower Court’s dismissal of the action as a result of the plaintiff’s failure to strictly comply with RPAPL 1304 by including two additional notices pertaining to the rights of a debtor in bankruptcy and in military service in the same envelope as the 1304 notice.

In Dente, the Second Department held that the plaintiff failed to comply with RPAPL 1304 by including additional language on the second page of the notice and cites to its decision in Kessler. In this case, the Second Department reversed the Lower Court’s order, which granted plaintiff motion for judgment of foreclosure and sale and denied the defendants’ motion for summary judgment seeking dismissal of the complaint.

The consequences were harsh for the plaintiffs in both Kessler and Dente, and highlight the importance of ensuring that all notices are fully compliant with the language as set forth in RPAPL 1304. We strongly encourage all lenders and servicers to continually verify with their legal advisors in New York that the notices being served are the most recent versions and are accurate. Additionally, the New York Department of Financial Services provides updated notices in the required languages, which can be accessed at:  https://www.dfs.ny.gov/apps_and_licensing/mortgage_companies/hetpfnotice

The impact of these decisions will be significant on both pending actions as well as those that are yet to be commenced. It seems clear that the Second Department is going to continue to issue decisions in line with its holding in Kessler, much to the chagrin of lenders and their counsel, who in some cases, will have no choice but to proceed with pending actions, and risk defendants making a claim under RPAPL 1304 at some point. Additionally, as a result of these rulings, we expect there will be significant wave of litigation in pending cases, which will cause further delay and backlog in the Unified Court System, which has already been tremendously affected by the COVID-19 pandemic.

A copy of the Second Department’s Decision:  Bank Of America, N.A, V. Kessler

A copy of the Second Department’s Decision:  Citimortgage, Inc., V. Dente