Cambria Heights, Queens Foreclosure Defense Lawyer: Protecting Queens Homeowners

The reverse mortgage was sold to Cambria Heights seniors as a loan they would never have to pay, and the monthly payment part of that is true. What the sales pitch underplayed is that the borrower remains responsible for the property taxes, the homeowner's insurance, any flood insurance, and the upkeep of the house, and that a lapse in any of them is a default the servicer treats like a missed mortgage payment. When a borrower on a fixed income cannot cover a New York City tax bill or lets the insurance lapse, the servicer pays it, the loan balance grows by that amount, and after enough of these advances the servicer sends a due and payable notice and files in Jamaica.

HUD, which insures most of these loans, has recognized that tax and insurance defaults were pushing elderly borrowers out of their homes, and its guidance now requires servicers to evaluate a living borrower for a repayment plan before calling the loan due, with plans of up to 60 months permitted where the borrower's income supports them. Servicers must also consider an at-risk extension, which defers foreclosure for borrowers of advanced age with a critical circumstance such as a terminal illness or long-term disability. A servicer that skipped those steps and filed anyway has a case with a hole in it. The first thing I do on a Cambria Heights reverse mortgage file is reconstruct exactly what the servicer advanced, when, and what it offered the borrower before suing.

Most Cambria Heights reverse mortgage defaults I see are small relative to the equity in the home, a few thousand dollars in advanced taxes and a lapsed insurance premium, and they are curable if the borrower knows the options. Full repayment restores the loan to good standing and the servicer must accept it. Where the borrower cannot repay in one sum, HUD's guidance directs the servicer to evaluate a repayment plan, with the monthly amount set against the borrower's surplus income and a term of up to five years, and the foreclosure is held while the plan performs. Where the borrower is very elderly or seriously ill and cannot afford even a plan, the at-risk extension defers the case year by year on a physician's certification.

The longer-term fix is reducing the bills that caused the default. Cambria Heights seniors are frequently paying full property tax on a home that qualifies for the senior citizen homeowners' exemption, the disabled homeowners' exemption or enhanced STAR, any of which can cut the bill by hundreds or thousands a year, and the Department of Finance accepts late applications in some circumstances. Homeowner's insurance can be shopped; a lapsed policy replaced by the servicer's force-placed coverage costs two to three times the market rate, and getting a private policy back in force stops that bleeding. At the CPLR 3408 conference on Sutphin Boulevard, the court attorney referee expects the servicer to document the HUD steps it took, and a servicer that cannot is recorded as failing good faith. Heirs' rights after death, the 95 percent payoff and the non-recourse rule, are a separate subject; this page is about the borrower who is still home.

Reverse mortgage cases fill a noticeable share of the Sutphin Boulevard conference part's calendar, and its court attorney referees know the HUD servicing rules well enough to ask a servicer whether it offered a repayment plan and to note the answer. I have practiced foreclosure defense for 27 years, and I bring Cambria Heights borrowers to the first conference in person, with a family member if they want one, because a referee who meets an 80-year-old homeowner facing an auction over a lapsed insurance premium tends to hold the servicer to every step.

The conference part is where these cases resolve: a repayment plan approved, a cure funded by family, an at-risk extension documented, or an exemption application that shrinks the tax bill going forward. Where the servicer refuses to follow HUD's guidance, the case goes to the assigned justice, and Queens justices have denied summary judgment to reverse mortgage servicers that could not document their pre-foreclosure compliance and have tolled interest where servicers stalled. A contested Cambria Heights case runs two to four years from the summons to an auction, which for an elderly borrower is a long time to stay housed while the problem is solved. An unanswered case reaches auction in about a year, and an elderly homeowner who never opened the summons is the case the auction was built for.

New York amended RPAPL 1304 to make clear that the 90-day notice applies to reverse mortgages, with a modified notice form for them, and the Second Department requires strict compliance proven by a witness with personal knowledge of the mailing or of a standard practice actually followed. Reverse mortgage servicers, many of them specialty firms, have been slow to adapt, and their notices are frequently in the wrong form, sent to a deceased co-borrower, or unsupported by competent proof of mailing. RPAPL 1306 adds a second condition: an electronic filing with the Department of Financial Services within three business days, which the Cambria Heights plaintiff proves with its confirmation.

The HUD compliance question is separate and often stronger. Where the servicer called the loan due for a tax or insurance default without first offering the repayment plan HUD's guidance requires, or without considering an at-risk extension for a qualifying borrower, the acceleration itself is challengeable, and the Cambria Heights borrower's answer pleads that failure as a defense. Where either state statute fails, the case is dismissed without prejudice and the servicer must restart. On a reverse mortgage first called due in an earlier action that was abandoned, the restart may face the six-year limit of CPLR 213(4), and the Foreclosure Abuse Prevention Act, effective December 30, 2022, prevents the lender from claiming the acceleration was revoked. I review the HUD servicing notes and the state notices together on every reverse mortgage file.

Reverse mortgage defaults land on borrowers who are, by definition, at least 62 and often much older, and the summons is frequently found by a son or daughter weeks after it was served. The deadline does not pause for that. A default judgment eliminates the HUD compliance defense along with standing, notice and limitations, and the case reaches auction in about a year. An answered case runs two to four years and puts the servicer to its proof on every element, including whether it ever offered the repayment plan it was required to offer.

Who answers depends on the borrower's capacity. A competent Cambria Heights borrower answers personally, through counsel. An agent under a durable power of attorney may retain counsel and answer for the borrower. Where the borrower lacks capacity and no power of attorney exists, a family member may need to seek appointment as guardian under Article 81 of the Mental Hygiene Law, and the court can appoint a guardian ad litem in the foreclosure meanwhile; the lender cannot take a default against a defendant it knows to be incapacitated. The answer must raise standing first or it is waived, plead CPLR 213(4), assert the RPAPL 1304 and 1306 conditions precedent in their reverse mortgage form, and plead the servicer's HUD noncompliance. Nothing said to the servicer extends the deadline; a written stipulation from the plaintiff's attorney does, and I obtain one while the family organizes.

The reverse mortgage borrower has more protection than a conventional borrower in one respect: the loan is non-recourse, so whatever happens to the house, the borrower and the estate owe nothing beyond it. That removes the fear of a deficiency from the calculation and lets the family focus on the house itself. For a Cambria Heights borrower who wants to stay, the cures are the ones above, and the conference part on Sutphin Boulevard is where the servicer is held to offering them. Family members can fund a cure, and a set-aside for future taxes and insurance can sometimes be built into a refinanced reverse mortgage so the default does not recur.

For a borrower ready to move, a market sale while the case is pending pays the reverse mortgage at closing and leaves the equity, which in Cambria Heights is usually substantial, with the borrower; the notice of pendency does not prevent the sale. The auction is the outcome to avoid, because it produces a discounted price and leaves any surplus with the Queens County Clerk until an RPAPL 1361 claim is filed, and because an elderly borrower removed through a Housing Court proceeding after a sale loses the home on the worst possible terms. A lapsed insurance premium or an unpaid tax bill should never end that way, and with the HUD rules enforced it does not have to.