New York Court Holds That Deceased Borrower’s Executrix Was Not Entitled to Same Protections in Foreclosure Action as the Borrower

A New York court recently denied a motion to vacate the default entered against the borrower’s executrix, holding that the requirement that the mortgagee negotiate in good faith at a foreclosure conference only applied to mortgaged premises that are occupied by the borrower as his or her principal residence.  See Wells Fargo Bank, NA v. Balk, 50 Misc. 3d 1205(A) (N.Y. Sup. Ct. 2015).  In 2007, the executrix signed a note and mortgage as attorney-in-fact for the borrower, who died that same year.  In 2009, the loan went into default and the mortgagee initiated an action in 2010.  The Court scheduled a foreclosure conference pursuant to CPLR 3408, but at the conference, determined that the case was not eligible for the conference because the borrower was deceased and was not the occupier or resident of the mortgaged premises pursuant to RPAPL 1304.  Though the executrix appeared at the conference and conferred with the mortgagee, the mortgagee did not offer a modification.  The executrix then filed a motion to vacate the default that had been entered against her, arguing that her default was reasonable because (i) the mortgagee had failed to negotiate in good faith at the conference pursuant to CPLR 3408; and (ii) the executrix and the mortgagee had discussed modifications before the action had been filed.  The Court, however, denied the motion.  First, it held that a deceased borrower’s successors-in-interest are not entitled to the same protections as the borrower would have been, including the right to a conference under CPLR 3408.  Even if they had been entitled to a conference, a defendant’s participation in a conference would not constitute a reasonable excuse for default because they are always scheduled after the defendants’ answers are due.  Second, the Court held that it is “well-settled law that unsubstantiated claims of engagement in pre-action, out-of-court conversations with the plaintiff or its servicing agent that are purportedly aimed at securing a restructuring or other modification of a loan does not constitute a reasonable excuse within the contemplation” of the CPLR. For a copy of the decision, please contact Michael O’Donnell at