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67 effect, specifically those affecting the statute of limitations and the Second Department's recent interpretation of the RPAPL § 1304. Key considerations for triaging a loan should include: » e current stage of the proceedings » Whether the matter is contested or uncontested » e date of default » A review of any claims raised in the action » Whether statute of limitations issues exist WHERE DOES THE CASE LAW LEAD? Many loans are affected by the decisions rendered by the New York Appellate Division for the Second Department in Bank of America v. Kessler, 2021 N.Y. Slip Op. 06979 and Citimortgage v. Dente, 2021 N.Y. Slip. Op. 07538. In Kessler, the Second Department examined the statutory intent and language of RPAPL § 1304(2), which requires that the statutorily mandated 90-day notice be sent in a "separate envelope from any other mailing or notice." In affirming the trial court's dismissal of the foreclosure action where the 90-day notices included an additional "disclosure" sheet notifying the borrower of additional rights under the Servicemembers Civil Relief Act (SCRA) and Fair Debt Collection Practices Act (FDCPA), the Appellate Division created a "bright-line rule" that the inclusion of any additional material with the 90-day notice violates the "separate envelope" requirement of RPAPL § 1304. e Second Department subsequently expanded its decision in Dente when it reversed a foreclosure judgment finding that the inclusion of a FDCPA disclosure at the top of the 90-day notice constituted a violation of RPAPL § 1304. It's important to note that non-compliance with RPAPL § 1304 is a defense which may be raised by a borrower in foreclosure proceedings at any time prior to the entry of a final judgment of foreclosure and sale. Because a proper 90-day notice is a condition precedent for foreclosure, where it is found that the 90-day notice is defective that case is subject to dismissal. For loans that are not time-barred, mortgage servicers can take advantage of the landmark decision rendered by the New York Court of Appeals last year in Freedom Mortgage Corporation v. Engel, 37 N.Y.3d 1 (2021). In Engel, the Court of Appeals determined that a voluntary discontinuance, occurring within the six-year statute of limitations, constitutes an affirmative act of revocation. e decision in Engel was a win for the servicing industry in that the Court of Appeals rejected the line of Appellate case law that held that a voluntary discontinuance was insufficient to establish a revocation of a prior acceleration where the discontinuance did not indicate that the lender would accept installment payments from the borrower. e Court of Appeals has now adopted a "clear rule" that where an acceleration of the loan occurred by virtue of the filing of a complaint in a foreclosure action, the noteholder's voluntary discontinuance of that action within the six-year statute of limitations alone is sufficient to de-accelerate a loan. In response to Engel, two anti-Engel bills were introduced into New York's Legislature [NYS Senate bill (S. 5473) and NYS Assembly bill (A. 7737)]. ese bills seek to overturn the effect of Engel by limiting lenders' ability to recommence a foreclosure action if a prior action is determined to be defective or subject to dismissal by altering lenders' rights afforded under the CPLR and RPAPL. Such amendments, if passed, would leave lenders little protection in the collection of defaulted mortgage debt or recovery of mortgaged property. Mortgage servicers should track the progress of these bills and the interplay with Engel in assessing whether a foreclosure action may be time-barred and when developing strategies for affected loans. While there have been many changes since the enactment and expiration of the EEFPA, and while borrowers and tenants are still afforded some protection under NYHAF, TSHA, and ERAP, one thing is certain: foreclosure and eviction proceedings are finally allowed to proceed in New York. Mikelle V. Bliss serves as Managing Member of the New York City Office and focuses her practice on defense of consumer protection and lender liability claims in state and federal courts. Bliss has more than 20 years' experience counseling clients on mortgage servicing quality control and the constantly changing New York regulatory landscape. Margaret J. Cascino is Of Counsel is Of Counsel in McGlinchey's Commercial Litigation and Consumer Financial Services Litigation practice groups. A seasoned litigator who has served financial services clients for the better part of two decades, Cascino handles all types of matters relating to consumer and commercial lending in state and federal courts. Two anti-Engel bills were introduced into New York's Legislature seeking to limit lenders' ability to recommence a foreclosure action if a prior action is determined to be defective or subject to dismissal.

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