Additionally, most HUD mortgages contain a paragraph that likely creates a condition precedent to foreclosure. Paragraph 9(a) of a typical HUD mortgage provides: “Default. Lender may, except as limited by the regulations issued by the Secretary, in the case of payment defaults, require immediate payment in full of all sums secured by this security instrument if : (1) Borrower defaults by failing to pay in full any monthly payment required by this security instrument prior to or on the due date of the next monthly payment…”(emphasis added). The language in bold type mandates that before the servicer can commence foreclosure it must be in compliance with HUD regulations.
Recently, the Appellate Division for the Third Department addressed the issue of whether a foreclosing Plaintiff must comply with HUD regulations prior to accelerating and foreclosing on a HUD insured mortgage. See Green Planet Serv., LLC v. Martin, 141 AD3d 892 (3rd Dept 2016). In that case, the court held that compliance with HUD regulations was a condition precedent to acceleration and foreclosure. Id. at 893. The court also held that where the defendant’s answer alleges non-compliance with such condition precedent in accordance with the pleading requirement of CPLR Section 3015(a), the plaintiff-lender has the burden of demonstrating the occurrence of the condition precedent as part of its prima facie case. Id. at 893. The court went on to hold that the plaintiff-lender was not entitled to summary judgment because its moving papers were “wholly devoid of any proof, explanation or argument” regarding the plaintiff-lender’s compliance with the face-to-face meeting requirement. Id. at 893.
Failing to raise these defenses may seriously limit the homeowner's chances of prevailing in a foreclosure action; consequently, it is imperative that the homeowner consult with an experienced foreclosure attorney. Every defense matters and failing to raise just one defense can make all the difference.