A decade-old foreclosure action just got tossed—because the notice was sent in one envelope instead of two. Here's why mortgage servicers should take note
A foreclosure case that began more than a decade ago came to a halt last week after a New York appeals court ruled that the mortgage holder didn’t follow a key pre-foreclosure rule. The June 4 decision from the Appellate Division, Second Department, reversed a foreclosure judgment against Brooklyn homeowner Esther Welz because of a technical slip-up involving how notice was sent before the lawsuit began.
Wells Fargo Bank, N.A. originally filed the foreclosure action in November 2013 against Esther and Marvin Welz over a residential property in Brooklyn. Esther Welz filed her answer in November 2019. The loan was later transferred—first to Wilmington Savings Fund Society, FSB, and then to 1900 Capital Trust II.
Wilmington moved for summary judgment on the complaint as asserted against Esther, to strike her answer, and for an order of reference. In August 2022, the Supreme Court, Kings County, granted those motions and appointed a referee to compute the amount due. After Wilmington transferred the interest, 1900 Capital moved to confirm the referee’s report and obtain a judgment of foreclosure and sale. That relief was granted in an order and judgment dated April 27, 2023.
Esther Welz appealed, arguing that Wells Fargo failed to meet the requirements under RPAPL 1304, which governs how lenders must notify borrowers before starting a foreclosure action.
Under the law, the lender must send a 90-day notice by both certified and first-class mail to the borrower’s last known address. And importantly, if there are multiple borrowers, each must receive a separate notice in its own envelope.
That’s where the case fell apart. The lender had sent one envelope jointly addressed to both Esther and Marvin Welz. That method didn’t satisfy the statute’s strict notice requirements.
The appeals court cited prior case law making it clear that joint notices are not sufficient. Because 1900 Capital acknowledged that the notice to Esther was not sent separately, the court found the notice invalid and reversed the lower court’s judgment.
The appellate panel denied Wilmington’s earlier motions for summary judgment, to strike the answer, and for an order of reference. It also denied 1900 Capital’s motions to confirm the referee’s report and for a judgment of foreclosure and sale. One bill of costs was awarded to Esther Welz.
For mortgage professionals, the ruling highlights the importance of verifying mailing practices, especially when more than one borrower is involved. Even when notices are sent by both certified and first-class mail—as required—sending them in a shared envelope can void the process altogether.
With institutions like Wells Fargo and Wilmington Savings Fund Society involved, the case serves as a reminder that procedural missteps can unwind years of litigation. As foreclosure activity continues to shift, ensuring strict compliance with notice requirements remains essential for servicers and legal teams operating in New York.
