Wells Fargo Bank has lost a judgment directing the foreclosure and sale of a Long Island property after a New York appellate court found that the bank failed to prove strict compliance with the state’s pre-foreclosure notice requirements.
The Appellate Division, Second Department, reversed the judgment against defendant Walter Curtis because Wells Fargo did not establish that at least five of the 17 housing counselling agencies listed in its 90-day notice served the region where Curtis resided. The regional requirement appeared in the version of Real Property Actions and Proceedings Law Section 1304 in effect when the action began.
The ruling removes the judgment authorising the property’s sale but does not dismiss the foreclosure action. Curtis also failed to establish that the listed agencies did not serve Long Island, leaving neither party entitled to summary judgment on the disputed notice requirement.
Wells Fargo commenced the mortgage foreclosure action in August 2010 over property in Selden, New York. Curtis answered the complaint and asserted several affirmative defences.
In February 2019, the bank sought summary judgment on its complaint and an order appointing a referee to calculate the amount due. Curtis cross-moved for summary judgment dismissing the complaint, arguing that Wells Fargo had failed to comply with RPAPL 1304.
The Supreme Court in Suffolk County granted the relevant parts of Wells Fargo’s motion in September 2019 and denied Curtis’s request for dismissal. It also referred the matter to a referee.
Wells Fargo later moved to confirm the referee’s initial report and obtain a judgment of foreclosure and sale. That application was denied in June 2023, and the matter was returned to the referee for a new report.
After the referee produced a replacement report, the bank renewed its application. In September 2024, the Supreme Court confirmed the report and directed the sale of the property. Curtis appealed from that order and judgment.
The Second Department has now reversed the foreclosure judgment, denied the parts of Wells Fargo’s earlier motion seeking summary judgment and an order of reference, and denied its subsequent application to confirm the referee’s report as academic.
RPAPL 1304 makes proper service of a compliant 90-day notice a condition precedent to commencing a covered mortgage foreclosure action.
The statute requires the notice to be sent by registered or certified mail and separately by first-class mail to the borrower’s last known address. When Wells Fargo commenced this action, the law also required the notice to include at least five housing counselling agencies designated by the relevant state authority that served the region where the borrower lived.
Wells Fargo relied on an affidavit from Shae Smith, a vice president of loan documentation for the bank. Smith stated that the notice had been mailed to Curtis on April 14, 2010 and attached a copy containing a list of 17 “HUD Approved Housing Counseling Agencies.”
The number of agencies did not establish compliance by itself. Wells Fargo also needed evidence showing that at least five of those organisations served Curtis’s region.
The appellate court found that the bank’s submissions did not make that connection. Wells Fargo therefore failed to establish, at the outset, its entitlement to summary judgment.
That failure meant the bank’s motion should have been denied without considering whether Curtis’s opposing evidence was sufficient. A party seeking summary judgment must first establish its own prima facie entitlement to relief; deficiencies in the opposing party’s response cannot repair a failure to meet that initial burden.
Wells Fargo argued that the issue could be disregarded under CPLR 2001, which allows courts to overlook certain mistakes, omissions, defects or irregularities.
The Second Department rejected that argument. Relying on its earlier decision in U.S. Bank, N.A. v Gordon, the court said failure to provide the list required by the statute is not a defect that may be disregarded under CPLR 2001.
The decision nevertheless stops short of finding that Wells Fargo’s notice was conclusively noncompliant. Its holding is narrower: the bank’s evidence did not establish that the notice satisfied the regional counselling-agency requirement.
That distinction explains both parts of the result. Wells Fargo could not retain its foreclosure judgment, but Curtis did not secure dismissal of the case.
Curtis argued that the complaint should be dismissed because Wells Fargo had not complied with RPAPL 1304. The Second Department agreed that the bank had failed to prove compliance, but it held that Curtis had not affirmatively proved noncompliance.
According to the court, Curtis did not submit evidence demonstrating that the agencies on the list failed to serve the Long Island region. He also did not establish that he had contacted the organisations and been refused assistance because the property was located there.
The competing motions imposed separate evidential burdens. Wells Fargo’s failure to satisfy its burden did not automatically establish Curtis’s entitlement to judgment in his favour.
The Supreme Court therefore correctly denied Curtis’s cross-motion for summary judgment dismissing the complaint, even though it should not have granted Wells Fargo summary judgment.
The ruling removes the existing judgment directing the sale of the Selden property. It does not decide whether Wells Fargo ultimately has a right to foreclose, determine the amount owed under the mortgage or dismiss the bank’s complaint.
It also does not establish that fewer than five agencies listed in the notice served Long Island. The court decided only that Wells Fargo had not submitted evidence sufficient to prove the required regional coverage and that Curtis had not submitted evidence sufficient to disprove it.
The decision applies the Second Department’s existing approach to strict compliance with RPAPL 1304 rather than announcing a new legal test. Its practical significance lies in the evidential distinction it draws: including numerous counselling agencies in a notice is not necessarily enough to obtain summary judgment when the statute requires a specified number to serve the borrower’s region.
For parties involved in comparable foreclosure proceedings, the ruling demonstrates that the contents of the notice and the evidence used to prove statutory compliance are separate questions. A notice may contain more agency names than the statute requires, yet the foreclosing party can still fail at summary judgment if its evidence does not establish the necessary geographic connection.
