Garden City, NY Foreclosure Defense Lawyer: Protecting Nassau County Homeowners

Estate planning attorneys across Garden City routinely advise clients to deed the house into a revocable trust to avoid probate, and the advice is sound. The trouble starts when the loan later goes into default and the servicer, looking at a deed in the name of a trust, decides it is not dealing with its borrower anymore. I have seen servicers refuse to discuss the account with the trustee who is also the borrower, deny a modification because the property is trust-held, and in one Garden City file declare the loan in default because of the transfer itself years after it happened.

Every one of those positions is wrong. Garn-St Germain protects the transfer, and the federal servicing rules define a successor in interest to include a person who receives an interest in the property through a transfer into an inter vivos trust in which the borrower is and remains a beneficiary. Once the trustee provides the trust instrument and the deed, the servicer must treat the trustee as it would the borrower, including for loss mitigation. Nassau referees at the CPLR 3408 conferences in Mineola understand this and will hold a servicer to it. The trust also has to be handled correctly on the court side: if title is in the trust, the trustee must be named and served, and the trustee answers for the trust while the borrower answers on the note. Neither the trust nor the borrower loses a single defense because of the arrangement.

The pleading side of a trust case is where lenders stumble. A foreclosure extinguishes the interests of the parties named in it, so a plaintiff that sues the individual borrower and ignores the trust holding title has not brought a case that can produce a clean judgment, and a plaintiff that names the trust but serves it improperly, for example by nailing papers to the door for a trustee who lives elsewhere, invites a motion to dismiss. I examine the caption and every affidavit of service on a Garden City trust file before anything else.

Where the trustee and the borrower are the same person, which is the common arrangement, that person answers in both capacities, and the answer pleads the full set of defenses: lack of standing, which is waived if not raised at the outset, the CPLR 213(4) statute of limitations, the RPAPL 1304 and 1306 conditions precedent, any Garn-St Germain violation, and any failure to recognize the trustee as a successor in interest. Where a successor trustee has taken over after the borrower's death or incapacity, that trustee answers for the trust and asserts the trust's rights to loss mitigation on the same footing as an heir. Nothing said to the servicer extends the deadline; a written stipulation from the plaintiff's attorney does, and I obtain one when the trust documents need to be assembled.

The courthouse is closer to Garden City than most residents' offices, and I ask clients to attend the first CPLR 3408 conference in person. A trustee who can explain the trust arrangement directly to the court attorney referee, and show the trust instrument, cuts through the servicer's confusion faster than any letter. I have appeared in that courthouse on foreclosure matters since 1999, and the Nassau foreclosure part is practical about trusts and estates.

The referees who supervise the conferences record whether the servicer is engaging with the trustee, whether it has processed a complete application inside the 30 days the federal rules allow, and whether its document requests are legitimate or repetitive. Those notes are what the assigned justice reads when the lender later moves for summary judgment, and Nassau justices have tolled interest and denied fees where a servicer stalled a compliant application. They have also denied summary judgment where the trust holding title was not properly joined or served. A contested Garden City case runs two to four years from the summons to an auction, and a trustee who uses that time to complete a modification or sell the home on the family's schedule arrives at the end in control. An unanswered case reaches auction in about a year, trust or no trust.

The Second Department requires strict compliance with RPAPL 1304, and the plaintiff must prove the mailing through a witness with personal knowledge of it or of a standard practice the witness actually follows. Trust-held Garden City loans produce a specific problem: servicers that coded the account as a non-borrower transfer sometimes stopped sending borrower communications, including the 90-day notice, or sent it addressed to the trustee in a form the statute does not contemplate. Either way, the notice the borrower was entitled to receive did not arrive in the form required.

The usual defects appear too: notices to two borrowers in one envelope, extra collection language, a counselor list for another county, or a mailing affidavit that recites the statute without describing the practice. RPAPL 1306 requires the electronic filing with the state within three business days of mailing, proven by the confirmation. Where either statute fails, the case is dismissed without prejudice and the lender must start over. On a Garden City loan first accelerated in an earlier action that was abandoned, the restart may not fit within the six years allowed by CPLR 213(4), and the Foreclosure Abuse Prevention Act, effective December 30, 2022, prevents the lender from claiming the acceleration was revoked. I check the notice history against the trust transfer date on every one of these files.

The most common damage a servicer does to a Garden City trust file is delay: months spent insisting that the house be deeded back out of the trust before any application is considered, or that the trustee produce documents the servicer already has. Deeding the house out of the trust is rarely necessary and undoes the estate planning the family paid for; the servicing rules require the servicer to accept the trust instrument and deed as confirmation of the trustee's status and proceed. At the settlement conferences, the court attorney referee will direct a servicer to evaluate a confirmed successor's complete application within 30 days and will note a refusal as a failure of good faith.

Where the family is leaving, the trustee sells. A listing while the case is pending is routine; the notice of pendency means the buyer takes subject to the action until the lender is paid at closing and releases its lien, and the proceeds pass into the trust for distribution under its terms. An auction in Mineola would instead produce a discounted price, subtract years of default interest and fees, and leave any surplus with the Nassau County Treasurer until the trustee files an RPAPL 1361 claim. On a rare underwater Garden City loan, a short sale requires the lender's consent and a written waiver of any deficiency under RPAPL 1371, which otherwise the lender may seek by motion within 90 days of the deed against the borrower personally. The trust protects the family's plan; the defense protects the trust's asset.

A revocable trust that becomes irrevocable at the borrower's death is doing exactly what it was designed to do: the successor trustee takes over without a Surrogate's Court proceeding and can act immediately. Servicers nevertheless often refuse to speak with the successor trustee, demand letters testamentary that a trust does not generate, or sit on the account until foreclosure counsel files. The federal servicing rules require the servicer to respond to a potential successor in interest, identify what documents it needs, and confirm the successor's status promptly, and a trust instrument naming the successor trustee plus a death certificate is what it needs.

Once confirmed, the successor trustee can pursue the same paths a living borrower could. If a beneficiary lives in the Garden City home and can carry a payment, the trustee applies for a modification and the beneficiary's income is evaluated. If the family is selling, the trustee lists the house and closes with the lender paid from the proceeds, avoiding the discount and the surplus proceeding an auction would produce. On a reverse mortgage the heirs' right to satisfy the loan at 95 percent of appraised value and the non-recourse rule apply, and the servicer must allow time for a sale or refinance before filing. In court, the plaintiff must name and serve the successor trustee, and a case that proceeds against a deceased borrower alone is a nullity. The trustee who answers on time keeps every option; the one who waits for the servicer to become reasonable does not.