Court Holds Inclusion of Concise, Relevant Information in Pre-Foreclosure Notice Can Be Proper

Recently, the New York Court of Appeals, New York’s highest court, held that the inclusion of concise, relevant information added to a pre-foreclosure notice does not void the notice nor bar foreclosure action. 

New York law requires that lenders send a pre-foreclosure notice 90 days before commencing foreclosure action on a borrower.  The law also lists several pages of specific text that must be included in the notice.  As an additional qualification for the notice, it must also be sent “in a separate envelope from any other mailing or notice.”  This provision was included to address communication issues that might arise between a lender and borrower, and to provide an avenue for the parties to perhaps find an alternative to foreclosure. 

In this case, a borrower who was in default received a pre-foreclosure notice as required by the law, but an additional page of text was added to the end of the notice.  The page included a disclaimer that the notice was not an attempt to collect debt if the borrower was already in bankruptcy proceedings, but instead was purely informational.  The text also recommended that military members or spouses should contact the lender’s Military Assistance Team.  This information, while relevant, was not included in the list of specific text that the law required be sent in a separate envelope.  The borrower argued that because the law stated that the notice be sent in a “separate envelope” than any other communication, that the additional information had violated this provision therefore invalidating the notice.  The court disagreed.

The court reasoned that it was not the legislative drafters’ intent to invalidate a lender’s right to foreclose, but instead to enhance communications so that alternatives to foreclosure may be explored.  Further, the law states that the notice “shall include” the listed language.  The law does not say that the notice must “only include” the list.  Additionally, the court considered the word “include” to suggest that more could be added to the notice, as long as the notice was inclusive of the required language.

As to the separate envelope requirement, the court interpreted the provision to bar mailings or notices of a different kind from being paired with the pre-foreclosure notice.  Because this additional page of information was not some other type of notice or statement and was still relevant to the matter, it did not fall under that forbidden category.

For these reasons, the Court of Appeals reversed the lower court’s summary judgment ruling in favor of the borrower and remitted the case back to the lower court for further proceedings.