Read your loan documents and learn about “conditions precedent”.
A recent case decided by the Appellate Division of the Supreme Court has upheld a lower court decision dismissing a foreclosure case because the bank did not prove that it complied with the terms of its own mortgage.
In Wells Fargo v. Eisler, decided on June 25th, the court ruled against the bank and in favor of the homeowner.
Wells Fargo started a foreclosure case, and subsequently filed a motion for summary judgment. The defendant homeowner filed a cross-motion to dismiss the case. The homeowner argued that the mortgage stipulated that before the bank could sue for foreclosure, it was required to mail a notice of default and allow time for the homeowner to cure the default.
Wells Fargo submitted an affidavit from a bank officer saying that the notice of default was sent “in accordance with the terms of the mortgage”. The Supreme Court judge hearing the case held that this affidavit was not sufficient to grant the bank judgment, and also not sufficient to overcome the defendant’s cross-motion to dismiss.
The bank appealed, and the Appellate Division upheld the lower court’s ruling in favor of the homeowner. The court noted that the bank’s affidavit was “unsubstantiated and conclusory”. In other words, the affidavit did nothing more than claim that a proper notice was properly sent as required by the terms of the mortgage. The affidavit did not contain or refer to any actual proof that this was true. The mortgage, which formed a contract between the parties, required that the notice be sent by first class mail to the address given by the borrower for such purposes.
The defendant, unlike the bank, provided a detailed affidavit that convinced the court that he did not actually receive any default notice before being served with the foreclosure summons and complaint.
This pre-foreclosure default notice was a “condition precedent” to foreclosure, meaning that it was a condition that had to take place before the bank filed a lawsuit against the borrower. No default notice meant no foreclosure.
Since Wells Fargo did not prove that it complied with this necessary condition, not only could it not obtain summary judgment in its favor, but its entire case was dismissed. Now Wells Fargo must start the entire process over again, starting with a proper default notice, sent as required by the mortgage, with proof that it was done.
The take-away for all property owners with a mortgage is: know the terms of your mortgage and other loan documents. There is more in those documents than just an interest rate and a monthly payment amount. The more you know, the better you can hold your lender to its contractual and legal responsibilities.
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Levy & Nau P.C. / attorneys at law
844-LEVY-LAW or 718-622-8150
854 Fulton Street, Brooklyn NY 11238