NEW YORK (LN) — The Appellate Division, Second Department, on Wednesday affirmed a lower court’s partial summary judgment in a putative class action against Nationstar Mortgage, LLC, ruling that the servicer violated Real Property Law § 274-a by charging a fee for providing a first mortgage payoff statement by facsimile.
Francesca Bloom, the plaintiff and owner of residential property encumbered by a mortgage, sued Nationstar in 2018, alleging violations of Real Property Law § 274-a and General Business Law § 349. The suit challenged the servicer’s practice of charging a fee for providing a mortgage payoff statement by facsimile.
The Supreme Court, Orange County, had previously granted class certification for two classes of plaintiffs under CPLR article 9. Following discovery, the court ruled on cross-motions for summary judgment, granting summary judgment to Nationstar on the General Business Law claim and decertifying Class Two, while granting summary judgment to Bloom on the Real Property Law claim and certifying Class One.
The appellate court affirmed the lower court’s decision, holding that the statute prohibits charging for the first payoff statement.
Under Real Property Law § 274-a, a mortgagee must deliver mortgage-related documents within 30 days of a bona fide written demand. The statute allows a mortgagee to charge not more than $20, or such amount as may be fixed by the superintendent of financial services, for each subsequent payoff statement provided.
The court held that Bloom established her prima facie entitlement to judgment by demonstrating that Nationstar charged a fee for providing a first mortgage payoff statement.
"Contrary to the defendant's contention, it was prohibited from charging a 'fax fee' for providing 'expedited delivery' of the first payoff statement by facsimile," the court wrote, citing prior precedent.
The court also rejected Nationstar’s argument that Bloom consented to pay the fee, stating that such consent does not constitute a defense to a violation of Real Property Law § 274-a.
However, the court affirmed the dismissal of the General Business Law § 349 claim. That claim was premised on an allegation that Nationstar violated 3 NYCRR 419.4(d), which prohibits a servicer from charging a fee for providing a payoff statement, except for a reasonable fee after issuing five or more payoff statements in a calendar year.
The court ruled that there is no implied private right of action under 3 NYCRR 419.4(d). Because the General Business Law claim did not allege any deceptive act independent of the regulatory violation, it could not be maintained.
Consequently, the decertification of Class Two, which was based on the regulatory violation, was warranted.
The parties' remaining contentions were found to be without merit.
The panel consisted of Justice Francesca E. Connolly, presiding, and Justices Valerie Brathwaite Nelson, Barry E. Warhit, and Lourdes M. Ventura.