Lender’s foreclosure bid fails after court finds gaps in paperwork and notice—see what tripped them up
A New York appeals court tossed a foreclosure after the lender failed to prove it had standing and didn’t strictly follow required notice rules.
On October 15, 2025, the Appellate Division, Second Department, issued its decision in Onewest Bank FSB v Thomas. The case began in February 2014, when Onewest Bank FSB started a foreclosure action against Jaimon Thomas and Mary Thomas over a property in Yonkers, New York. The Thomases responded by raising defenses, including that Onewest Bank lacked standing and did not comply with the required preforeclosure notices under New York law and the mortgage agreement.
A nonjury trial was held in January 2017. The Supreme Court found in favor of Onewest Bank, concluding that the bank had established its standing to bring the foreclosure and had complied with the notice provisions. Based on these findings, the court granted the bank’s motion for an order of reference, denied the Thomases’ cross-motion to dismiss the complaint as abandoned, and appointed a referee to compute the amount due.
Onewest Bank later moved to confirm the referee’s report and for a judgment of foreclosure and sale. On August 1, 2024, the Supreme Court granted the motion, confirmed the referee’s report, and directed the sale of the property. The Thomases appealed, arguing that Onewest Bank had not proven its standing and had not strictly complied with the statutory and contractual notice requirements.
The Appellate Division reviewed the trial record and found that Onewest Bank failed to establish its standing to foreclose. The court noted that, in a foreclosure action, the plaintiff must prove it was the holder or assignee of the note at the time the action was commenced. The bank’s witness testified that the allonges, which were supposed to show Onewest Bank’s right to enforce the note, were not stapled to the original note and that he did not know when the allonges were executed or attached. The court found this insufficient to establish standing.
The court also examined whether Onewest Bank had strictly complied with the notice requirements of RPAPL 1304 and the mortgage agreement. RPAPL 1304 requires that a 90-day notice be sent to the borrower by both registered or certified mail and first-class mail before starting a foreclosure action. The mortgage agreement also required a default notice to be mailed or delivered. The bank’s witness did not have knowledge of the mailing practices of the entity that sent the notices, and the business records submitted did not show the required mailings or delivery had actually occurred.
Because Onewest Bank failed to prove both standing and strict compliance with the notice requirements, the Appellate Division reversed the lower court’s order and judgment of foreclosure and sale. The court denied the bank’s motions and dismissed the foreclosure complaint against the Thomases.
For mortgage professionals, this decision highlights the importance of having clear proof of standing and strict adherence to statutory and contractual notice requirements before proceeding with foreclosure. The outcome shows that courts will closely scrutinize whether all legal steps have been followed, and that missing documentation or unclear procedures can result in dismissal of a foreclosure action.
This case is a reminder for lenders and their representatives to ensure that all paperwork is in order and that every required notice is properly sent and documented before starting foreclosure proceedings. Even when a case has moved through the courts for years, failure to meet these requirements can lead to a complete reversal and dismissal, as seen here.
