Foreclosure Defense Attorney in Riverdale, NY (Served with Papers? Start Here)

Riverdale, Fieldston and North Riverdale hold some of the most valuable single-family housing in the Bronx, and a portion of it is financed outside the banking system: a bridge loan from a private investor while an estate is settled, a hard-money loan against a house to fund a business, a jumbo loan from a non-bank lender that sold it to a fund, or a loan from a relative or business associate secured by the home. These lenders tend to assume that foreclosure law was written for banks and does not reach them. It reaches them completely. RPAPL 1304 defines a home loan by the borrower's occupancy and the loan's purpose, not by the lender's charter, and a private lender that never mailed the 90-day notice or filed under RPAPL 1306 has not satisfied a condition precedent to suit, which is the most common defect I see on Riverdale private-lender files.

The additional rules are where private lenders are most exposed. New York requires anyone making residential mortgage loans in the state to be licensed as a mortgage banker or exempt under Banking Law Article 12-D, and an unlicensed lender faces penalties and, in some circumstances, limits on enforcement. New York's civil usury cap is 16 percent, and a loan under $250,000 that exceeds it is void, principal and interest; the criminal usury cap is 25 percent, and a loan under $2.5 million above that rate is unenforceable as a matter of public policy, a defense the First Department has applied to hard-money mortgages. Points, fees and default interest are counted toward the rate in the usury analysis. Private loans also frequently omit the disclosures federal law requires, are documented on forms that do not comply with New York's mortgage requirements, and are serviced by the lender itself with no accounting a court would accept. The Riverdale homeowner facing a private lender has more defenses than the homeowner facing a bank, not fewer.

Usury is the defense private lenders fear most, because the consequence is not a reduced rate but a lost loan. General Obligations Law 5-501 and Banking Law 14-a set the civil rate at 16 percent, and General Obligations Law 5-511 provides that a loan above it is void, with the lender forfeiting principal as well as interest; the civil defense is unavailable on loans of $250,000 or more, which excludes many Riverdale first mortgages but reaches second mortgages, bridge loans and business-purpose loans secured by the home. Penal Law 190.40 sets the criminal rate at 25 percent on loans under $2.5 million, and a loan above it is unenforceable in a civil action regardless of the borrower's sophistication, a rule the Court of Appeals confirmed in 2021 and the First Department applies to mortgages on Bronx homes. Corporate borrowers cannot raise civil usury but can raise criminal usury, which matters where a lender required the Riverdale home to be placed in an LLC before lending.

The calculation is where these cases are won. Hard-money lenders charge three to five points, a broker fee, a processing fee and a default rate of 24 percent that begins the day after a missed payment, and on a twelve-month bridge loan the effective annual rate on the sum actually advanced routinely exceeds 25 percent even when the note says 12. Prepaid interest held back at closing, fees paid to entities the lender controls, and mandatory extension fees are all counted. Where the analysis shows usury, the answer pleads it as an affirmative defense and counterclaims to cancel the mortgage of record, and the lender that sued to take a Riverdale house finds itself defending a claim that it is owed nothing. Where the rate is high but lawful, the same review usually turns up an RPAPL 1304 failure, a licensing problem or a standing defect, because lenders who charge these rates rarely run a compliant operation.

The Grand Concourse courthouse in the Bronx sees fewer private-lender foreclosures than bank foreclosures, and its justices look at them carefully, because the paperwork is frequently deficient and the borrowers are frequently owed something. I have practiced foreclosure defense for 27 years, and a Bronx justice presented with a hard-money note, a fee schedule and an annualized rate calculation showing 27 percent has, in my experience, stopped listening to the lender's arguments about the borrower's sophistication and started asking about the usury statute.

The court attorney referees in the conference part run the CPLR 3408 conferences for owner-occupied Riverdale homes, and a private lender must attend them and negotiate in good faith like any other plaintiff, which private lenders are poorly equipped to do because they have no loss mitigation programs; a lender that appears and offers nothing is recorded for it. The assigned justices decide standing, RPAPL 1304 and 1306, licensing, usury, the six-year statute of limitations and the amount due. Appeals from the Bronx go to the Appellate Division, First Department, which requires strict RPAPL 1304 compliance and has enforced the criminal usury bar against mortgage lenders. A contested Riverdale case runs two to four years from the summons to any auction, which is long enough to refinance a private loan with a conventional one once the case is defended. An unanswered case reaches auction in about a year, and on a Riverdale house that is a great deal of equity handed to a lender who may have had no right to it.

The First Department, whose rulings bind the Bronx, requires strict compliance with RPAPL 1304 and places the burden on the plaintiff to prove the mailing through a witness with personal knowledge of it or of a standard office practice the witness actually follows. A private lender that mailed the notice at all usually mailed it once, by regular mail, without the counselor list, in ordinary type, and cannot prove even that; a hard-money lender that reads the statute for the first time when the answer arrives has a case it cannot win without starting over. Notices sent to two borrowers in a single envelope, notices without the Bronx counselor list, notices in the wrong type size and mailing affidavits from people with no knowledge of the mailing have all defeated lenders on appeal. In 2023 the Court of Appeals held that additional language in the notice envelope does not by itself void it, so the defense turns on the mailing, the contents and the counselor list rather than on extra text.

RPAPL 1306 requires the electronic filing with the Department of Financial Services within three business days of the mailing, proven by the filing confirmation, and private lenders almost never register for the filing system, let alone file. Lenders answer that the loan was a business loan, and the statute answers back: a loan is a home loan if the borrower occupies the property as a principal dwelling and the proceeds were used primarily for personal, family or household purposes, and a bridge loan to buy a Riverdale house, or a loan against the family home to pay tuition or medical bills, qualifies regardless of what the broker wrote on the application. Where either statute fails, the case is dismissed without prejudice and the lender must restart the 90-day process, and a private lender that accelerated years ago may find the restart barred by the six years CPLR 213(4) allows, with the Foreclosure Abuse Prevention Act preventing any claim that the acceleration was revoked.

Private lenders count on speed, and a Riverdale borrower who treats the summons as a negotiation opening rather than a deadline loses the leverage the law gives. The answer pleads standing first or it is waived, the six-year limitations period as an affirmative defense, the RPAPL 1304 and 1306 conditions precedent, a specific denial of the amount claimed with the lender's fees itemized and challenged, usury as an affirmative defense with the annualized rate calculation, and the lender's failure to hold a license under Banking Law Article 12-D where that applies. It counterclaims for cancellation of a usurious mortgage under RPAPL 1501 and for the return of usurious interest paid, and it states that the borrower occupies the Riverdale home so the CPLR 3408 conference is mandatory. Where the loan was placed in an LLC at the lender's insistence, the answer explains why the corporate form does not defeat the criminal usury defense.

Substituted service is complete ten days after the affidavit is filed and the 30 days run from then; a written stipulation from the plaintiff's attorney extends the deadline and a promise from the lender does not, and private lenders are quick to promise. A default is what a hard-money lender hopes for, because a default judgment forecloses every one of these defenses and delivers a Riverdale house worth several times the loan. A missed deadline is addressed by a CPLR 3012(d) or 5015 motion with a reasonable excuse and a meritorious defense, and usury is a meritorious defense that Bronx justices have allowed a late answer to raise, but the motion is a second chance the homeowner should not need.

For most Riverdale homeowners with a private or hard-money loan, the goal is to get out of it, and the defended foreclosure is what makes that possible. A conventional refinance is difficult while a foreclosure is pending and a payoff is disputed, but a lender facing a usury counterclaim, an RPAPL 1304 failure or a licensing problem will negotiate a discounted payoff and a discontinuance to avoid the risk of losing the loan entirely, and that agreed figure is what a refinancing lender or a family loan pays off. Where the loan is void for usury, the counterclaim seeks cancellation of the mortgage and the return of interest, and the Riverdale house is freed of the lien altogether; lenders facing that outcome settle for a fraction of the note.

Where the loan is lawful and the household simply fell behind, the ordinary options apply: a reinstatement, a payment plan, or a modification through the CPLR 3408 conference part on Grand Concourse, which a private lender must attend even though it has no program to offer. For the owner who is selling, Riverdale houses sell at prices that clear almost any loan, and a sale while the case is pending pays the lender at closing on a payoff figure that has been tested against the note, the usury statutes and the fee limits, with the equity kept. The auction is the outcome to avoid: a discounted price, default interest at the lender's rate and its fees deducted first, and any surplus deposited with the Bronx County Clerk until an RPAPL 1361 claim is filed. A deficiency requires an RPAPL 1371 motion within 90 days of the deed and is rare on Riverdale property. Private lenders make their money on borrowers who do not fight; the ones who do usually keep the house or the equity in it.