The Duration of the 90-Day Notice
That holders of defaulted mortgages are beset with problems and a surfeit of statutory roadblocks to prosecuting foreclosure actions is hardly a cause for widespread sympathy. Nor is there any outcry to rescue lenders facing foreclosure durations of three and four years, with the resultant accrual of interest, costs and protective advances for insurance and taxes, then rendering losses as certain. Nonetheless, it may be reasonable to urge that there should still not be confusion or uncertainty interpreting foreclosure statutes in such a way as to impose yet further detainment.
A particular case in point is RPAPL §1304, which requires that where the subject is a home loan,1 a certain 90-day notice must be sent to the borrower before a foreclosure action can begin. This notice mandate has been widely discussed and its details need not be further explored here.2
But there is an aspect of the 90-day imperative which does merit remedial analysis, RPAPL §1304(4), which provides that:
The notice and the ninety day period required by subdivision one of this section need only be provided once in a twelve month period to the same borrower in connection with the same loan.
What this means was immediately manifest to experienced practitioners and represented a welcome avoidance by the Legislature of abusive borrower shell games. When the 90-day notice is sent, should the borrower cure the default, as in remitting the sums in arrears for example, then of course the mortgage is reinstated. If, however, a month thereafter the borrower defaults again, the mortgage holder need not send a new 90-day notice as a prerequisite to foreclosure. This then averts the bizarre exercise of a default followed by a 90-day hiatus, followed by cure, then another notice with concomitant three month delay, all repeated ad nauseam. Such a scenario would effectively change the payment requirements of the mortgage loan and permit wily borrowers to constantly, indeed interminably, postpone payment obligations.
So, any subsequent default within a year does not elicit a notice obligation. If, however, the borrower has cured and more than a year has passed, then it is simply a new situation and a notice would be required.
This is quite different, though, from saying that if a year has gone by and the borrower has ignored the notice, the mortgage holder is obliged to send the notice yet again in order to initiate a foreclosure. The statute does not say that, although it readily could have done so. In other words, a 90-day notice never cured does not lose its efficacy merely with the passage of time.
Nevertheless, there is some prevailing view in the wind that if a foreclosure is not begun within a year of the notice, initiating the action is barred unless a new 90-day notice is sent and has expired. Indeed, the Department of Financial Services takes this position, in a desultory fashion. The issue of this subdivision, however, has never been interpreted by the courts.
While it might be surmised that mortgage holders would surely institute their home loan foreclosures the moment the 90 days expired, there are any number of circumstances which can impede such exactitude, a few among them: (a) difficulties in obtaining information to support the now cancelled attorney affirmation required by Administrative Order 548/10, as amended by AO 431/11 or by the new certificate of merit obligation of CPLR §3012-b; (b) governmental imposition of rules or suits as to the foreclosure process; (c) compelling pressures to settle or compromise mortgage defaults.
Faced with such demands and impositions, some foreclosure actions may just not be ready for more than a year after the notice has expired. Must the now poised mortgage holder first send a new notice and wait yet another 90 days, or is it free to proceed? We posit here that the second path is correct, because:
• The Legislature could readily have stated that the notice expired after one year, but did not do so.
• The statute is not ambiguous and statutory construction dictates that it must be interpreted as written.