New York Supreme Court Holds Mortgagee Does Not Need to Send 90-Day Foreclosure Notice if Mortgagee Is Not a “Lender, an Assignee, or a Mortgage Loan Servicer”

The Supreme Court of New York, Suffolk County, recently granted a foreclosing plaintiff summary judgment and held that plaintiff did not need to send a 90-day notice pursuant to RPAPL 1304 because plaintiff was not a lender, assignee, or mortgage loan servicer.  See NIC Holding Corp. v. Eisenegger, 59 Misc. 3d 1221(A) (N.Y. Sup. Ct. 2018).  In the case, one of plaintiff’s employees was relocating and defendant wanted to purchase the employee’s home.  In order to expedite the sale, plaintiff, who is “in the petroleum business and is not in the business of giving loans collateralized by mortgages for the purchase of residential homes,” agreed to provide the funds for defendant to purchase the home.  Defendant eventually defaulted, and plaintiff brought this foreclosure action.  Plaintiff moved for summary judgment and defendant opposed, arguing that plaintiff had not provided him with a 90-day notice before bringing the action pursuant to RPAPL 1304.

The Court rejected defendant’s argument and granted the motion for summary judgment.  RPAPL 1304 only requires “a lender, an assignee or a mortgage loan servicer” to send this notice.  A lender is further defined as either (i) a mortgage banker, which is “a person or entity who or which is licensed pursuant to [Banking Law § 591] to engage in the business of making mortgage loans in this state”; or (ii) an “exempt organization,” which is defined as:

any insurance company, banking organization, foreign banking corporation licensed by the superintendent or the comptroller of the currency to transact business in this state, national bank, federal savings bank, federal savings and loan association, federal credit union, or any bank, trust company, savings bank, savings and loan association, or credit union organized under the laws of any other state, or any instrumentality created by the United States or any state with the power to make mortgage loans . . .

In this case, plaintiff did not fit either of these definitions.  “Accordingly, where a private lender as mortgagee is not a lender, assignee, or mortgage loan servicer within meaning of statute governing mortgage foreclosure requirements, such mortgagee is not required to serve mortgagors with statutory 90-day notice prior to commencement of foreclosure action.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Dylan Goetsch at dgoetsch@riker.com.