OPINION: Recent Efforts to Speed Up Foreclosure Proceedings in N.Y.

Legislation Update
October 25, 2016

As a result of governmental intervention, New York boasts one of the longest foreclosure timelines in the country, taking an average of 1,061 days from the date of the filing of the foreclosure action to the sale of the property at auction, which is almost double the national average of 625 days.1Most of these foreclosure cases are not contested, and those that see battle are based on technicalities to prolong the case while the borrower lives in the home for free.

The delay effects both lender and borrower as well as the public at large. First, as a result of burdening statutes and the lengthy foreclosure timeline, a number of lenders have left the residential foreclosure market making for less places to go shopping for a loan. Second, borrowers that surrender their homes relatively quickly will not be saddled with a judgment against them so large that it makes it impossible to start over on the road to buying another home. Third, the longer the foreclosure proceeding, the less homes there will be for sale on the market for buyers who can afford them, therefore, limiting the number of sales and raising home prices unjustifiably. It is a frequent occurrence that a modification made on a loan is quickly defaulted upon—thus providing further delay unnecessarily.

The state Legislature and the state courts have taken action to expedite foreclosure proceedings. This article discusses some of these changes and how they will affect the New York foreclosure process.

Weapon #1 for Borrowers

Borrower’s attorneys have their favorite weapons to delay and prolong foreclosure proceedings. The number one weapon of choice is establishing lender proof of compliance with the 90-day pre-foreclosure notice requirement imposed by RPAPL §1304. This past Spring, the Appellate Division, Second Department put an arrow through this defense in part.

RPAPL §1304 provides that, at least 90 days before commencement of a residential mortgage foreclosure action, a lender, its assignee, or mortgage loan servicer is required to mail to the borrower the form notice provided in the statute (the “90-day notice”).2

The purpose of the 90-day notice is to provide a borrower with notice of his or her default and an opportunity during the 90-day time period to “attempt to reach a mutually agreeable resolution” with the lender.3

RPAPL §1304 sets forth detailed requirements for the 90-day notice, including the exact manner in which the notice must be mailed, however, there is no express requirement in the statute for the lender to submit an affidavit of service or an affidavit of mailing of the notice.4

In U.S. Bank v. Carey5 and Flagstar Bank v. Jambelli,6 the Appellate Division, Second Department reversed, on the law, two lower court decisions, denying the plaintiffs’ motions to have a referee appointed to compute the amount due and owing under the loan.7

In both Carey and Jambelli, the defendant borrowers did not appear or answer the complaint, and did not oppose the motion to have a referee appointed.8 Further, the plaintiffs in both actions established their entitlement to the appointment of a referee by submitting the mortgage, the unpaid note, and evidence of the borrowers’ default.9

Despite these facts, both lower courts denied the plaintiffs’ motions on the sole ground that the plaintiffs failed to establish compliance with the RPAPL §1304 90-day notice requirement, even though the borrowers failed to appear and raise the defense.10

In reversing the lower courts’ decisions, the Second Department held in each case that “failure to comply with RPAPL 1304 is not jurisdictional…Rather, it is a defense which may be raised at any time…”11

Stated otherwise, failure to comply with the 90-day notice requirement does not deprive the court of its ability to preside over the foreclosure action.12 Statutorily, failure to comply with the 90-day notice requirement is merely a defense that may be raised by a borrower to a residential foreclosure action.13

The Second Department further held that in cases where the borrower has not raised the defense of failure to comply with RPAPL §1304, “the plaintiff [is] not required to disprove that defense.”14

The holdings in Carey and Jambelli make clear that a plaintiff does not need to affirmatively demonstrate compliance with RPAPL §1304 in actions where the defense has not been raised.

Open Issue

Still remaining as an open issue is the type of proof required to demonstrate that the 90-day notice was mailed to the borrower in compliance with RPAPL §1304 in an action where the defense was raised by an appearing borrower.

A review of recent lower court decisions confirms that there is a divide among the lower courts on the type of proof required.

Some lower courts hold that an affidavit of service of the 90-day notice from the person, who physically mailed the notice, is required to establish strict compliance with RPAPL §1304,15 while other lower courts hold that an affidavit based on business records from the plaintiff confirming that the 90-day notice was mailed, together with copies of the 90-day notice containing either the tracking number for the certified mailing or certified mailing receipt, is sufficient to establish compliance with RPAPL §1304.16

As stated above, there is no express requirement in RPAPL §1304 for the lender to submit an affidavit of service of the 90-day notice.

This summer, Governor Andrew Cuomo signed into law Chapter 73 of the Laws of New York, which, inter alia, includes several technical and substantive amendments to RPAPL §1304.17

Notably, RPAPL §1304 was not amended to add a requirement for the lender to submit an affidavit of service of the 90-day notice, despite the vast case law on this issue and divide among the lower courts.18

Moreover, as is established by the holdings in Carey and Jambelli, mailing of the 90-day notice is not something which must be done in order for courts to have the ability to preside over a foreclosure action.19

Accordingly, it is wholly unreasonable to require plaintiffs to provide an affidavit of service from the person who physically mailed the 90-day notice in order to establish compliance.

In the majority of contested residential foreclosure actions prosecuted by the authors’ law firm, the borrowers had no valid defenses to the actions, had failed to make a loan payment for years, and used any means possible to prevent and delay the progression of the action, including raising the defense of failure to comply with RPAPL §1304.

Since the receipt of the notice is not a statutory requirement, a borrower does not have to allege that he did not receive the notice. He only has to allege that the notice was not properly sent. This is why defense counsel would not allege that the borrower never received the notice.

Thus, requiring an affidavit of service of the 90-day notice from the person who physically mailed the notice (i) places an unnecessary and undue burden on lenders, and (ii) accomplishes the borrowers’ goal of delaying and preventing the progression of the action that, resultantly, prolongs the time that the borrowers are able to reside at the mortgaged premises, essentially, “for free” in actions where there is no defense for their failure to pay.

Settlement Conference

The mandatory foreclosure settlement conference requirement imposed by CPLR §3408 is one of the leading causes of delay in residential foreclosure actions, taking approximately nine months to complete.20

The purpose of the settlement conference is to provide the borrower with an opportunity to negotiate with their lender in order to determine whether “the parties can reach a mutually agreeable resolution to help the defendant [borrower] avoid losing his or her home…”21

In the majority of residential foreclosure actions prosecuted by the majority of New York law firms, the borrowers have no intention of, or lack the financial ability to, settle the action.

Instead, the borrowers use the settlement conference requirement solely as a means of delaying the action by, among other tricks, (i) failing to timely submit a loan modification application and additionally requested documents, (ii) submitting misleading and/or incomplete financial information, and (iii) requesting multiple adjournments of the conference(s).

In the majority of cases where a settlement is reached, it is in the form of a loan modification application, which the borrowers frequently default under within several months, putting the plaintiff lender back to square one.

In a seeming attempt to address this issue, CPLR §3408 was recently amended by Chapter 73, to, inter alia, now require that the borrower bring documents to the initial conference including “information on current income tax returns, expenses, property taxes and previously submitted applications for loss mitigation; benefits information; rental agreements or proof of rental income….”22

As a result of this amendment, the plaintiff and presiding judge or referee will be able to review the documentation provided by the borrower at the initial conference to determine whether a loan modification, reinstatement, or payoff are viable settlement options.

Prior to the amendment, CPLR §3408 provided that the borrower “should” bring documentation to the initial conference, which seldom happens.23

As a result, borrowers lacking the financial means to modify were submitting loan modification applications, thereby unduly delaying the settlement conference process.

While the recent amendment will not guard against all situations causing undue delay in the settlement conference process, it should, hopefully, at least provide some relief by removing loan modification as a possible means of settlement in clear cut cases.

Further, in cases where it appears that loan modification may be a potentially viable option, and where a loan modification application was previously submitted by the borrower, the plaintiff will be able to use the previous application as a potential means to ensure that misleading or inaccurate financial information is not provided by the borrower in any newly submitted loan modification application.

Vacant Properties

As of May 19, 2016, 3,352 of the residential properties actively in the foreclosure process in New York are vacant and abandoned.24 Chapter 73 has created new laws regarding vacant and abandoned properties, and aims to “curb the threat posed to communities by these ‘zombie properties.’”25

One component of the new law provides for expedited foreclosure proceedings. When a property is deemed vacant and abandoned, RPAPL §1309 creates an expedited application by which plaintiffs will now be able to move by order to show cause directly seeking a judgment of foreclosure and sale, without first moving for an order of reference, in all counties. As the borrower in the abandoned property cases typically or almost never appears in the action, the proceeding can go directly to judgment and removes the standard and lengthy requirement of having a referee appointed to compute the amount due and owing to the lender.26 This statute should work in shaving months off the foreclosure process allowing the lender to recapture the residence and the community to have a new homeowner instead of a blighted property.

Chapter 73 adds RPAPL §1308, which extends a lenders obligation to maintain vacant and abandoned properties to the time at which the lender “has a reasonable basis to believe that the residential real property is vacant and abandoned…”27

If a lender fails to maintain the property, the lender could, inter alia, be fined up to $500 per day that the violation continues, or a lender could be sued by the Department of Financial Services and forced to take action to take care of the property.28


Although the newly enacted vacant home expedited foreclosure process law and the recent case law defeating one disingenuous argument from the debtor’s defenses, as well as requiring informed settlement conferences, are all positive steps toward efficient results for all, much more needs to be done to expedite foreclosure proceedings, so that lenders continue to lend, and more home buyers have the chance to find affordable homes when more properties are available for purchase.

Source: Real Estate Weekly



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.