MORTGAGE FORECLOSURE - RPAPL 1304 DEFENSE DOES NOT RUN WITH THE LAND

In this case, an investor company bought the property after the homeowner defaulted but before the foreclosure action was begun.

Citimortgage, Inc. v Etienne, 2019 NY Slip Op 03564, Decided on May 8, 2019, Appellate Division, Second Department:

"Turning to the merits, OKL contends that the Supreme Court should not have awarded the plaintiff summary judgment because the plaintiff failed to establish, prima facie, that it gave proper notice to the borrower in strict accordance with RPAPL 1304. However, the borrower is the only mortgagor and the only person named on the note. Although OKL, as the current owner of the subject property, is a proper party to this foreclosure action, as it may be "subject to the mortgage lien and may have [its] rights in the property cut off due to a default on the mortgage" (PHH Mtge. Corp. v Davis, 111 AD3d 1110, 1111; see generally 2 Bergman on New York Mortgage Foreclosures § 12.04), it does not necessarily follow that OKL may properly assert, either in its own right or on behalf of the borrower, any defense that was or could have been asserted by the borrower. Rather, as relevant here, the notice requirements of RPAPL 1304 were enacted for the benefit and protection of borrowers who are "natural person[s]" (RPAPL 1304[6][a][1][i]; see generally Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 107). The statutory defense created by RPAPL 1302(2) for noncompliance with RPAPL 1304 is a "personal defense" which could not be raised by OKL, a stranger to the note and underlying mortgage (Greene v Rachlin, 154 AD3d 814, 816; see Ekelmann Group, LLC v Stuart, 108 AD3d 1098, 1100; see also NYCTL 1996-1 Trust v King, 13 AD3d 429, 430; Home Sav. of Am. v Gkanios, 233 AD2d 422, 423; accord Ashkenazy Acquisition Corp. v Rela Realty Corp., 296 AD2d 332, 333; Matter of Lee v Maltais, 250 AD2d 951, 953; Vincent v Seaman, 152 AD2d 841, 843). Accordingly, contrary to OKL's contention, it lacked standing to raise the issue of compliance with RPAPL 1304 as a defense and the merits of that issue are not properly before this Court."