THE COURT OF APPEALS AND RPAPL 1306

CIT BANK NA v. Schiffman, 2021 NY Slip Op 1933 - NY: Court of Appeals March 30, 2021:

"The second certified question asks whether RPAPL 1306 requires that a lender's filing include information about all borrowers on a multi-borrower loan. RPAPL 1306 provides that as a "condition precedent" to commencing a foreclosure action, "[e]ach lender, assignee or mortgage loan servicer" file with the superintendent of financial services "within three business days of the mailing of the [section 1304 notice] . . . the information required by subdivision two" (RPAPL 1306[1]). Subdivision two directs, in relevant part, that "[e]ach filing . . . shall be on such form as the superintendent shall prescribe and shall include at a minimum, the name, address, last known telephone number of the borrower, and the amount claimed as due and owing on the mortgage . . .." (RPAPL 1306[2]). In this case, defendants do not dispute that CIT submitted the electronic filing—nor do they dispute that it was made within three days of the purported date of the mailing of the 90-day notices. Instead, defendants contend that the copy of the filing statement supplied by CIT was insufficient to establish compliance because it listed only Pamela Schiffman, and not Jerry Schiffman, as a borrower—arguing that the statute requires a lender to include "up to two, not only one" borrower on a multi-borrower loan. CIT asserts that only one borrower must be listed on an RPAPL 1306 filing in light of the plain language of the statute, which refers to "the borrower" in singular form, and the statute's primary purpose to provide data on defaulting loans to a state agency, which is satisfied by listing one borrower on the filing. We agree with CIT.

Whether the statute requires the lender to list the names of each individual or entity liable on a loan is a matter of statutory interpretation. "[O]ur primary consideration is to ascertain and give effect to the intention of the [l]egislature" (Samiento v World Yacht Inc., 10 NY3d 70, 77-78 [2008], quoting Matter of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653, 660 [2006]). Because "the clearest indicator of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself" (Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583 [1998]), with due consideration given to the statutory purpose and history, including the objectives the legislature sought to achieve through its enactment (see Abood v Hospital Ambulance Serv., 30 NY2d 295, 298 [1972]; Matter of Hernandez v Barrios-Paoli, 93 NY2d 781, 786, 788-789 [1999]; Riley v County of Broome, 95 NY2d 455, 463-464 [2000]).

Although the statute does not specify whether information must be supplied concerning each party when there are multiple individuals or entities on a single loan, a plain reading indicates that RPAPL 1306 is satisfied as long as one borrower is listed. The statute states that the filing must contain information about "the borrower," referring to the party in singular form—unlike RPAPL 1304, which references the "borrower, or borrowers." To be sure, words in the singular may generally be interpreted to encompass the plural, if doing so is consistent with the context and legislative intent (see General Construction Law § 35; Matter of Toys "R" Us v Silva, 89 NY2d 411, 421 n 2 [1996]). But it is significant that, despite using the singular and plural form in section 1304, the legislature chose to reference only the singular "borrower" in RPAPL 1306, a closely related statute.

Moreover, the conclusion that information relating to one borrower suffices is consistent with the primary purpose of the filing, which is expressed in the plain language of the statute. RPAPL 1306(4) provides that the data collected via the filing "shall be used by the superintendent [of financial services] exclusively for the purposes of monitoring on a statewide basis the extent of foreclosure filings within this state" with the ultimate purpose to "perform an analysis of loan types" at risk of foreclosure and to "direct[] as appropriate available public and private foreclosure prevention and counseling services to borrowers at risk of foreclosure" (RPAPL 1306[4] [emphasis added]). This provision shows that the principal objective of the filings is to provide statistical data permitting DFS to accurately track and analyze loans at risk of foreclosure and properly allocate foreclosure counseling resources statewide in order to combat the mortgage crisis—an aim also reflected in the legislative history (Governor's Program Bill, 2009 Mem, Bill Jacket, L 2009, ch 507 at 9, 11). This objective is fulfilled by a filing that references at least one borrower. Indeed, it appears that DFS—the agency charged with developing the filing form and database and otherwise implementing the statute—views RPAPL 1306 as requiring the listing of only one borrower (see Pre-foreclosure Information Form FAQs, NYS Department of Financial Services, available at https://www.dfs.ny.gov/apps_and_licensing/mortgage_companies/pre-foreclosure_filing_guide_faqs [last accessed Mar. 19, 2021] [RPAPL 1306 "does not specifically anticipate multiple borrowers" and "do(es) not believe RPAPL § 1306 should be interpreted as requiring the reporting of more than two Borrowers"]).

To be sure, the statutory text permits the agency to share information from the filing with certain housing counseling agencies that coordinate help for distressed borrowers, and DFS may use the information "to facilitate a review of whether the borrower might benefit from counseling or other foreclosure prevention services" (RPAPL 1306[2], [4]). But such ancillary uses of the data do not compel the conclusion that the statute is violated if each liable individual is not listed on the filing. In most instances, an electronic filing containing one borrower's information would not impede these downstream uses of the data. Indeed, in many cases the inclusion of additional information about a second borrower would be redundant—as reflected here, where the borrowers are married, reside at the subject property together, and their interests are aligned (as is evident from their joint representation by the same counsel). To read the statute as defendants urge would give an overly specific interpretation to "borrower," unsupported by the language of the statute or the primary legislative objective—to provide DFS with statewide data on properties at risk of foreclosure through a filing containing information about the loan and the "borrower." Thus, a filing that includes information about only one borrower is sufficient under the statute."

MORTGAGE FORECLOSURE - A RPAPL 1306 DEFENSE FAILS

Bank of Am., N.A. v Colagrande, 2019 NY Slip Op 03020, Decided on April 24, 2019, Appellate Division, Second Department:

"On May 13, 2004, the defendant Mario Colagrande (hereinafter the defendant) executed a note in favor of Countrywide Home Loans, Inc. (hereinafter Countrywide), promising to repay a loan of $306,000, and executed a mortgage in favor of Mortgage Electronic Registration Systems, Inc., as nominee of Countrywide, to secure the loan. The defendant allegedly defaulted on the loan in 2010. On May 20, 2013, the plaintiff, which had obtained possession of the original note with blank endorsement in 2004, commenced this action to foreclose the mortgage. The defendant moved for summary judgment dismissing the complaint insofar as asserted against him, contending that the plaintiff failed to comply with RPAPL 1306. The Supreme Court denied the motion, and the defendant appeals.

RPAPL 1306(1) requires that lenders or assignees "file with the superintendent of financial services (superintendent) within three business days of the mailing of the notice required by [RPAPL 1304]" certain information about the borrower and the mortgage loan. Here, contrary to the defendant's contention, the fact that the plaintiff filed the required information one day before the mailing of a RPAPL 1304 notice did not constitute a failure to comply with RPAPL 1306. The plaintiff complied with RPAPL 1306 because it filed the required information and its filing was made before the three-day time limit expired (cf. TD Bank, N.A. v Leroy, 121 AD3d 1256, 1259). This filing served the purposes of RPAPL 1306, which include monitoring the extent of foreclosure filings in the state and "identify[ing] distressed homeowners as soon as possible" in order to "target counseling help effectively and expeditiously" (Governor's Program Bill Mem, Bill Jacket, L 2009, ch 507 at 11; see RPAPL 1306[4]; TD Bank, N.A. v Leroy, 121 AD3d at 1259)."

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."