A 16-year foreclosure reveals what heirs can’t argue in court
A New York appellate court has given mortgage servicers a sharp new tool for foreclosures involving inherited properties and deceased borrowers.
The Appellate Division, First Department, unanimously reversed a Bronx County trial court on October 15 and granted summary judgment to Wilmington Savings Fund Society in a foreclosure action that has wound through the courts since 2010.
The ruling turns on a narrow but practical question: when a borrower dies and their heir inherits the mortgaged property, can the heir challenge whether the lender properly mailed pre-foreclosure notices required by New York law?
No, the court said.
The backstory stretches back to 2008. The borrower took out a $458,000 mortgage with Wells Fargo Bank, N.A. By late 2009, the loan was in default, and Wells Fargo purportedly mailed the required RPAPL 1304 notice - a statutory pre-foreclosure warning New York lender must send before filing suit on a home loan - along with a contractual default notice. Wells Fargo filed the foreclosure action in January 2010.
The borrower died in 2014. His son was appointed estate administrator, and the property was deeded to the son in 2015. Wells Fargo assigned the mortgage and note to Wilmington Savings Fund Society in April 2016.
The lender’s first summary judgment motion, in October 2019, succeeded on every issue except whether the pre-foreclosure notices had actually been mailed. A second motion in May 2021 came with a strategic shift: the lender waived any deficiency claim against the father’s estate and discontinued the action against it entirely.
That changed the picture. The son was no longer defending as estate administrator. He remained in the case solely as the property’s current owner - someone who, as the court put it, is “a stranger to the note and mortgage instruments.”
The appellate court held that noncompliance with RPAPL 1304 is a “personal defense” that “may not be raised by parties who are strangers to the subject note and mortgage.” The son, as a transferee, stood in the same position as any other person who acquires property subject to someone else’s mortgage. The same logic applied to the contractual default notice.
For servicers and foreclosure teams working New York’s backlog of legacy loans involving deceased borrowers, the decision clarifies a practical path: discontinuing against the estate can remove the heir’s ability to raise the borrower’s notice defenses.
