Banking Law § 6-l Recoupment Defenses in Assignee Foreclosures Are Not Time-Barred; “High-Cost Home Loan” Threshold Requires Evidentiary Proof

1. Introduction

Case: Deutsche Bank Natl. Trust Co. v Arrigo, 2026 NY Slip Op 02102 (Appellate Division, Second Department, Apr. 8, 2026).
Parties: Plaintiff-respondent Deutsche Bank National Trust Company (foreclosure plaintiff/assignee); defendant-appellant Susan M. Arrigo (individually and, after substitution, as administrator of the estate of Michael E. Arrigo); other defendants not central to the appeal.
Background: In 2006, Susan M. Arrigo and Michael E. Arrigo executed a $296,000 note secured by a mortgage on residential property in Bay Shore. In 2015, the plaintiff commenced a mortgage foreclosure action. The borrower asserted affirmative defenses alleging noncompliance with RPAPL 1304 (pre-foreclosure notice), RPAPL 1306 (filing with DFS), and Banking Law § 6-l (high-cost/predatory lending protections).

Key issues on appeal:

  • Whether the plaintiff established compliance with RPAPL 1304 and RPAPL 1306 as a matter of law (and thus could strike those defenses).
  • Whether the plaintiff established compliance with Banking Law § 6-l as a matter of law—and whether the defense was time-barred.
  • Whether certain Supreme Court statements about CPLR 205(a) were appealable (aggrievement/standing and dicta).

2. Summary of the Opinion

The Second Department largely affirmed the plaintiff’s proof on statutory foreclosure prerequisites (RPAPL 1304 and RPAPL 1306) but held the plaintiff failed to eliminate triable issues under Banking Law § 6-l. Specifically:

  • RPAPL 1304: Plaintiff proved proper mailing via a servicer affidavit, office procedures, and certified/first-class mail evidence; the borrower’s denial of receipt did not raise an issue of fact where a certified mail receipt bore the defendant’s signature.
  • RPAPL 1306: Plaintiff proved compliance by submitting a DFS proof of filing statement.
  • Banking Law § 6-l: The court found the defense was not time-barred in an assignee foreclosure because § 6-l(13) permits “any claims in recoupment and defenses” without time limitations. The plaintiff also failed to establish prima facie compliance; there were triable issues whether the loan was a “high-cost home loan” (points and fees exceeding 5%).
  • Relief: The order was modified to deny summary judgment and an order of reference because the Banking Law § 6-l defense remained in the case.
  • Appealability/aggrievement: The appeal by Susan M. Arrigo individually was dismissed for lack of aggrievement. The appeal from Supreme Court’s CPLR 205(a) statements was dismissed because the statements were dicta and thus did not aggrieve the appellant.

3. Analysis

3.1. Precedents Cited

RPAPL 1304—Condition precedent; methods of proving mailing

  • U.S. Bank Trust, N.A. v Mohammed, 197 AD3d 1205: Cited for the rule that “proper service of RPAPL 1304 notice ... is a condition precedent” to commencing a residential foreclosure action. This frames compliance as a threshold requirement the plaintiff must prove to obtain foreclosure relief.
  • Citibank, N.A. v Conti-Scheurer, 172 AD3d 17: Provided the evidentiary roadmap for proving mailing—domestic return receipts, proof of standard office procedure, or an affidavit from someone with personal knowledge of the mailing. The court relied on this framework to hold the plaintiff’s combined documentary proof (envelopes/receipt) and servicer affidavit was enough, and that a bare denial of receipt was insufficient to defeat summary judgment.

Business-record foundation using loan servicer records and prior servicer records

  • Bank of N.Y. Mellon v Gordon, 171 AD3d 197: Supported admission/reliance on records received from another entity when the recipient shows either personal knowledge of the maker’s practices or that the records were incorporated and routinely relied upon. This underpinned acceptance of the Ocwen-related affidavit testimony about merged prior-servicer records.

RPAPL 1306—Proof of filing

  • U.S. Bank Trust, N.A. v Chiramannil, 205 AD3d 966: Cited for the proposition that compliance with RPAPL 1306 is established by submitting a DFS proof of filing statement.
  • Wilmington Sav. Fund Socy., FSB v Hershkowitz, 189 AD3d 1126: Reinforced the same evidentiary sufficiency point for RPAPL 1306 proof.

Banking Law § 6-l—High-cost threshold; triable issues on points and fees

  • Goshen Mtge., LLC v Giertl, 180 AD3d 651: Used to support the conclusion that disputes about whether points and fees exceed the statutory threshold can present triable issues, defeating summary judgment and precluding an order of reference.

Aggrievement, dicta, and appealability

  • Mixon v TBV, Inc., 76 AD3d 144: Cited on the requirement that only an “aggrieved” party may appeal (CPLR 5511). The court used this to dismiss Susan Arrigo’s appeal in her individual capacity.
  • Laffey v Laffey Fine Homes Intl., LLC, 192 AD3d 878: Cited for the proposition that dicta does not aggrieve a party; therefore, it does not create appellate standing.
  • Naula v Utokilen, LLC, 180 AD3d 1058, quoting Pennsylvania Gen. Ins. Co. v Austin Powder Co., 68 NY2d 465: Reinforced that adverse “language or reasoning” alone does not confer standing to appeal when it does not affect the party’s rights.

3.2. Legal Reasoning

(a) RPAPL 1304: Mailing proof and the insufficiency of a bare denial

The court treated RPAPL 1304 as a strict condition precedent, but it emphasized that the plaintiff may prove compliance through documentary mailing evidence and/or competent affidavit testimony describing reliable office mailing procedures. Here, the affidavit from the servicer employee (with claimed familiarity with recordkeeping and mailing practices), combined with the actual certified mail receipt signed by the defendant and matching tracking numbers, satisfied the plaintiff’s prima facie burden.

Critically, the borrower’s “simple denial of receipt” did not create a factual dispute in the face of signed certified-mail proof. The decision thus reinforces that receipt-denial affidavits—without more—are weak opposition where the plaintiff produces objective mailing evidence tied to the statutory method.

(b) RPAPL 1306: DFS proof of filing as a sufficient prima facie showing

The court applied a streamlined evidentiary rule: a DFS proof of filing statement is enough to establish prima facie compliance. With no contrary evidence raising a factual dispute, the defense falls and the borrower is not entitled to dismissal on RPAPL 1306 grounds.

(c) Banking Law § 6-l: Two distinct holdings—timeliness and prima facie proof

The court’s most consequential reasoning concerns Banking Law § 6-l:

  1. No time limit for recoupment/defenses in assignee foreclosure: While § 6-l(6) imposes a six-year limit for a private action, § 6-l(13) expressly allows a borrower, in a foreclosure by an assignee, to assert “any claims in recoupment and defenses ... without time limitations” that could be asserted against the original lender. The court applied that text directly, holding the borrower’s affirmative defense was not time-barred.
  2. Failure of plaintiff’s prima facie showing; triable issue on “high-cost” status: The plaintiff did not establish compliance with § 6-l because it did not eliminate factual questions about whether the loan was a “high-cost home loan.” The statutory trigger at issue was whether “total points and fees exceed five percent of the total loan amount” (Banking Law § 6-l[1][g][ii]). The record presented triable issues on that calculation, requiring denial of summary judgment and, importantly, denial of an order of reference (since liability and entitlement to foreclosure were not established as a matter of law).

(d) Dicta and aggrievement: narrowing what can be appealed

The Second Department treated the lower court’s CPLR 205(a) discussion as nonbinding dicta and held that dicta cannot aggrieve a party for CPLR 5511 purposes. This portion of the decision acts as a procedural guardrail: appellate jurisdiction is tied to concrete effect on rights, not unfavorable commentary.

3.3. Impact

  • Strengthening borrower defenses under Banking Law § 6-l in assignee foreclosures: The decision underscores that borrowers can use § 6-l as a defensive tool “without time limitations” when facing foreclosure by an assignee, even if a standalone affirmative suit would be untimely. This invites more litigation over whether loans meet “high-cost” thresholds, especially in older-originated loans now held by trusts/assignees.
  • Higher evidentiary burden for plaintiffs seeking early foreclosure relief where § 6-l is pleaded: Plaintiffs moving for summary judgment and an order of reference should be prepared to affirmatively address § 6-l applicability—particularly points-and-fees calculations—rather than assuming the defense is time-barred or conclusory.
  • RPAPL 1304 practice point: The decision reaffirms that documentary mailing proof (e.g., signed certified receipt with matching tracking information) can be dispositive, and that a borrower’s denial of receipt will rarely suffice without evidence undermining mailing or authenticity.
  • Appellate practice point on standing: Parties should focus appeals on operative rulings that affect rights; challenging dicta or merely unfavorable reasoning risks dismissal for lack of aggrievement.

4. Complex Concepts Simplified

  • “Condition precedent” (RPAPL 1304): A legal prerequisite. If the required notice is not properly sent before filing the case, the foreclosure can be dismissed even if the borrower defaulted.
  • “Prima facie” showing: The moving party’s initial burden to present enough admissible proof that it should win unless the opponent raises a real factual dispute.
  • “Standard office procedure” proof: Instead of proving someone personally mailed a letter, a business can prove it routinely follows reliable mailing procedures designed to ensure proper addressing and mailing.
  • “Recoupment” under Banking Law § 6-l(13): A defensive claim used to reduce or defeat the plaintiff’s recovery in the same action, rather than seeking separate damages in a separate lawsuit. Here, the statute allows such defenses “without time limitations” in an assignee’s foreclosure.
  • “High-cost home loan” threshold (points and fees): Banking Law § 6-l applies only if the loan meets certain triggers—here, if total points and fees exceed 5% of the total loan amount. Disputes about how to calculate those amounts can create fact issues requiring a trial.
  • “Dicta”: Statements in a decision not necessary to the outcome. Dicta generally has no binding effect and typically cannot be appealed as an injury.
  • “Aggrieved” (CPLR 5511): Only someone whose legal rights were adversely affected by an order may appeal it; disagreement with a judge’s comments is not enough.

5. Conclusion

Deutsche Bank Natl. Trust Co. v Arrigo delivers a pointed clarification with practical consequences: while foreclosure plaintiffs can prevail on RPAPL 1304 and 1306 with well-supported mailing and filing proof, they cannot sidestep Banking Law § 6-l by invoking limitations where the borrower raises § 6-l defensively in an assignee foreclosure. By enforcing § 6-l(13)’s “without time limitations” language and recognizing factual disputes over the points-and-fees threshold, the Second Department ensures that “high-cost home loan” compliance remains a live, litigable issue capable of defeating summary judgment and delaying reference unless the plaintiff affirmatively proves statutory nonapplicability or compliance.