APPEAL by the defendants Alvin Silver and Pearl Silver, in an action to foreclose a mortgage, as limited by their brief, from so much of an order of the Supreme Court (Karen V. Murphy, J.), entered October 7, 2008, in Nassau County, as granted the plaintiff's motion, inter alia, for summary judgment on the complaint and to appoint a referee to compute, and, in effect, denied their cross motion, among other things, for summary judgment dismissing the complaint insofar as asserted against them.
The opinion of the court was delivered by: Florio, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
MARK C. DILLON, J.P., ANITA R. FLORIO, RUTH C. BALKIN and JOHN M. LEVENTHAL, JJ.
In this matter we are asked to determine an issue of first impression at the appellate level, that is, whether the failure to comply with notice requirements of the Home Equity Theft Prevention Act (Real Property Law § 265-a; hereinafter HETPA) must be raised as an affirmative defense or whether it can be raised at any time during an action. We hold that it can be raised at any time and, therefore, reverse, insofar as appealed from, the order of the Supreme Court granting the plaintiff's motion, inter alia, for summary judgment on the complaint and to appoint a referee to compute and, in effect, denying the cross motion of the appellants, Alvin Silver and Pearl Silver*fn1, among other things, for summary judgment dismissing the complaint insofar as asserted against them.
On April 9, 1999, the appellants borrowed $324,000 from M.L. Moskowitz & Co., Inc. They executed and delivered a promissory note to M.L. Moskowitz & Co., Inc., agreeing to repay that amount over 30 years. They also executed and delivered a mortgage on their home, as collateral security for the loan. The mortgage indicates that the premises is a one or two family dwelling, to be occupied by the borrowers (i.e., the appellants) as their principal residence. On April 14, 1999, the mortgage and note were assigned by M.L. Moskowitz & Co., Inc., to the plaintiff, First National Bank of Chicago, as trustee. On April 28, 1999, this mortgage was recorded in the County of Nassau and, on February 1, 2000, the assignment also was recorded there. There are no further assignments of this mortgage and note contained in the record.
Eventually, on October 17, 2007, the plaintiff filed a summons, unverified complaint, and notice of pendency to commence this foreclosure action, alleging that since July 1, 2007, the appellants had failed to make the required payments due pursuant to the promissory note and mortgage. The plaintiff does not allege, nor does the record reflect, that the required HETPA notice was delivered with the summons and complaint. In response, the appellants filed an answer, dated December 12, 2007. Significantly, their answer did not allege a failure to comply with HETPA.
By notice of motion dated March 12, 2008, the plaintiff moved, inter alia, for summary judgment on the complaint, to strike the appellants' answer, and to appoint a referee to compute the total amount due with respect to the subject loan. The plaintiff contended that it had established prima facie proof of its entitlement to judgment as a matter of law by submitting the mortgage, the unpaid note, and evidence of default. Thus, it contended that the burden shifted to the appellants to raise a triable issue of fact that payment was made.
In response, by notice of cross motion dated March 27, 2008, the appellants cross-moved, inter alia, for summary judgment dismissing the complaint insofar as asserted against them. In his affirmation, the appellants' counsel, among other things, citing HETPA, asserted that New York's public policy is to protect homeowners from foreclosure and, therefore, the Supreme Court should not look lightly upon the plaintiff's failure to meet its burden of proof. Counsel expanded upon this argument in a memorandum of law, which outlined the mandatory notice provisions required by HETPA*fn2. Counsel asserted that since the plaintiff failed to comply with said provisions, the action must be dismissed as a matter of law.
The plaintiff opposed the cross motion, arguing, inter alia, that HETPA is not relevant to the instant matter and is a red herring. The plaintiff did not contend that it was improperly raised.
On October 7, 2008, the Supreme Court issued an order granting the plaintiff's motion, and, in effect, denying the appellants' cross motion. On appeal, the appellants contend, inter alia, that the Supreme Court erred in granting the motion and, in effect, denying the cross motion because the ...