When The Borrower’s Lack Of Service Claim Is Waived

In assessing the state of mortgage foreclosure actions in New York, we are wont to observe on more than a few occasions that the most fertile arena for borrower protests is lack of service of process. (Without an empirical study we cannot say for sure that standing is not the most common defense nowadays, but at the very least, service of process is up there.)

It is always facile for a borrower (or other defendant) to allege lack of service and the nuances here – our alerts have regularly addressed some of these – are extraordinary.  Indeed, New York’s leading treatise on civil practice devotes no less than two full volumes to process service alone!  This is assuredly then a place for mischief and mishap so that lenders and servicers must be especially meticulous in pursuing process service.

Dangerous through this aspect assuredly is, the protesting borrower can nonetheless be hoisted on his own petard for want of his own (perhaps more accurately his lawyer’s) attention to detail.  Of two major principles applicable here (of course there are others) one is addressed by a new case and merits mention. [Wilmington Savings Fund Society, FSB v. Zimmerman, 157 A.D.3d 46, 69 N.Y.S.3d 654 (2d Dept. 2018)].

One place the borrower can be tripped up is neglecting to make a motion to dismiss for supposed lack of service.  This is a matter of practice statute in New York [CPLR 3211(e)] providing that if a pleading asserts lack of service, such as in an answer, that defense is waived unless the objecting party moves for judgment on that ground within sixty days after servicing the pleading.  So the borrower who neglects to make such a motion, even having inserted the defense in the answer, loses the ability to pursue it.

In the new case, the defendant had appeared in the action via notice of appearance, only much later trying to argue that he wasn’t served.  In rejecting that defense, the court ruled that the borrower had waived the defense of lack of personal jurisdiction by appearing in the action but without asserting an objection to jurisdiction by way of motion or in an answer.  That is the compelling principle.

Process service will remain an area of concern for foreclosing lenders, but there are, as noted, ways that borrowers objecting to service can undermine their own claim.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2018), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.