MORTGAGE FORECLOSURE - RPAPL 1306 DEFECT NOT A DEFENSE

HSBC Bank USA, N.A. v Ahmad, 2019 NY Slip Op 50252(U), Decided on March 7, 2019 ,Supreme Court, Suffolk County:

"CPLR 2001 ALLOWS COURT TO IGNORE ERROR IN RPAPL § 1306 FILING

Although there are only a few cases that deal with errors in RPAPL § 1306 filings, this court has previously dealt with the issue of apparent errors made in RPAPL § 1306 certificates in two other cases, Castle Peak 2012-1 Loan Trust Mortg. Backed Notes, Series 2012-1 v Connor, 2018 NY Slip Op 31131 (U) (Sup Ct, Suffolk Co., 2018), Bank of New York Mellon v Dougherty, 58 Misc 3d 1212 (A), 2018 NY Slip Op 5064 (U) (Sup Ct, Suffolk Co., 2018) finding that errors in the filing with either the NYS Banking Department ("Banking Dept."), or the Division of Financial Services ("DFS"), could be considered an error or irregularity that could be disregarded by the court as a substantial right of defendant has not been prejudiced (CPLR 2001). In Aurora Loan Services, LLC v Weisblum, 83AD3d 95, at 107-108 (2d Dept 2011), the court declined to express an opinion when, if ever, a defect or irregularity in the content of a notice might be so minimal as to warrant the exercise of the court's discretion under CPLR 2001 to avoid dismissal of an action, making it clear that there could be possible circumstances under which a defect or irregularity in the strict compliance required by RPAPL Article 13 may be so de minimus as to warrant ignoring it in an exercise of the court's discretion under CPLR 2001.

Defendant's argument that "strict" compliance is mandated and requires dismissal exalts form over compliance with the intent and purpose of the statute. Unlike RPAPL §§ 1303 and 1304 which were intended by the Legislature to provide borrowers/potential defendants with substantive notice of their rights and the availability of legal and counseling services to avoid foreclosure or to assist in their defense, RPAPL § 1306 was not intended to provide borrowers with any assistance or rights. The purpose for plaintiff, or its servicer, filing the certificate reflected in the versions of the statute in effect at the time of the mailings on July 19, 2011 and the date of the filing on July 20, 2011 is stated in RPAPL § 1306 (4):

All such information shall be used by the superintendent exclusively for the purposes of monitoring on a statewide basis the extent of foreclosure filings within this state, to perform an analysis of loan types which were the subject of a pre-foreclosure notice and directing as appropriate available public and private foreclosure prevention and counseling services to borrowers at risk of foreclosure. The superintendent may share information contained in the database with housing counseling agencies designated by the division of housing and community renewal as well as with other state agencies with jurisdiction over housing, for the purpose of coordinating or securing help for borrowers at risk of foreclosure.

This does not provide any right or advantage to a borrower/potential defendant, it only [*8]was to be a source of statistics for the state to analyze the types of residential loans going into default so that resources could be properly apportioned and assigned to help prevent future foreclosures. To accomplish this purpose it is totally irrelevant whether both borrower defendants had separate filings made, filing for either one would provide the state with the statistical information it needed to evaluate future allocation of public and private resources to address the "foreclosure crisis." By plaintiff's then servicer failing to file an RPAPL § 1306 certificate with the Banking Department that mentioned both defendants, or to file one for each defendant individually, and instead filing one that provided all the required information but only listed Shakil Ahmad did not deprive the State of the information it needed, nor did it prejudice defendant by depriving her of any substantial right. Therefore, under these facts, this court finds that the failure to file an RPAPL § 1306 certificate as to defendant is an error, omission or irregularity which should be disregarded by the court pursuant to CPLR 2001 as a substantial right of defendant has not been prejudiced. To do otherwise would exalt form over substance. Defendant's claim that a failure to comply with the requirements of RPAPL § 1306 requires dismissal of the action against her is dismissed, and that portion of her motion to dismiss made at the close of all the evidence is denied."