New York Supreme Court Holds That Borrower’s Failure to Properly Serve Appeal on Loan Service Negated RESPA Protections

The Supreme Court of New York, Suffolk County, recently held that a mortgagor who did not properly file a notice of appeal of a loan servicer’s rejection of a loss mitigation plan due to a typo in the email address was foreclosed from staying the foreclosure sale pursuant to the Real Estate Settlement Procedures Act (“RESPA”).  See Emigrant Sav. Bank-Long Island v. Berkowitz, 25 N.Y.S.3d 862 (N.Y. Sup. Ct. 2016).  Pursuant to Regulation X of RESPA, if a servicer receives a loss mitigation application from a mortgagor more than 37 days before a foreclosure sale, it must evaluate all loss mitigation options and inform the borrower in writing of its determination regarding the same.  12 CFR 1024.41(c).  If the application is denied, a borrower may appeal the determination within 14 days.  12 CFR 1024.41(h).  A servicer may not conduct a foreclosure sale while either a properly-filed application or a properly-filed appeal is pending.  In this case, after the servicer obtained a final judgment of foreclosure, a borrower submitted a loss mitigation application.  The servicer rejected the application and informed the borrower of the procedure to appeal.   The borrower then filed a motion to stay the sale, in which it claimed that it had appealed the servicer’s determination and had not received a response yet.  The servicer opposed the motion, arguing that it had not received an appeal within 14 days and wanted to proceed with the sale.  The Court denied the motion, finding that the information submitted in support of the mortgagor’s claim did not demonstrate that the mortgagor had properly appealed.  Specifically, it found that the mortgagor had a typo in the servicer’s email address to which it sent the notice and the mortgagor further did not proffer any physical address to which it mailed its notice.  Therefore, because Regulation X requires “strict compliance with its notification mandate in order for a party to claim protection under its rule,” the court denied the motion and allowed the sale to go forward. 

For a copy of the decision, please contact Michael O’Donnell at