CPLR 2001 Can Cure Minor RPAPL 1304 Counseling-List Mislabeling; Referee’s Computations Must Rest on Admissible Business Records

Introduction

In Bank of America, N.A. v. Barnett, 2025 NY Slip Op 04861 (Appellate Division, Second Department, Sept. 10, 2025), the court addressed two recurring issues in New York residential mortgage foreclosure litigation:

• How strictly courts should police technical errors in the statutory 90-day pre-foreclosure notice required by RPAPL 1304, particularly the mandated list of local housing counseling agencies; and
• What evidentiary showing is necessary to confirm a referee’s computation of the amount due under CPLR 4403.

The plaintiff-lender, Bank of America, N.A., sued to foreclose on a Mount Vernon property. After the Supreme Court (Westchester County) granted summary judgment against borrowers June Barnett and Donovan Whyte, appointed a referee to compute, and later confirmed the referee’s report, the borrowers appealed from the resulting order and judgment of foreclosure and sale.

The Appellate Division affirmed the lender’s standing and rejected the borrowers’ attack on RPAPL 1304 based on a minor clerical error in the counseling-agency list, holding the error curable and non-prejudicial under CPLR 2001. But it reversed the judgment because the referee’s computation relied on an affidavit that failed the business-records foundation under CPLR 4518 and referenced unidentified, unproduced records—rendering the figures inadmissible hearsay. The case was remitted for a new computation and further proceedings under CPLR 4403.

Summary of the Opinion

• RPAPL 1304 compliance: The required 90-day notice included at least five housing counseling agencies that actually served the property’s county. One agency was mistakenly labeled with the wrong county, though its phone number and ZIP code were correct. The court held this clerical mislabeling could be disregarded under CPLR 2001 because it did not prejudice a substantial right of the borrowers.
• Standing: The bank established standing by demonstrating physical possession of the note at commencement, via an allonge specially endorsing the note to the bank that was annexed to the summons and complaint. The validity of a separate mortgage assignment was irrelevant once note-holder status was shown.
• Referee’s report: The Supreme Court erred in confirming the referee’s report. The referee relied on an affidavit from a servicer’s officer that did not demonstrate personal knowledge of recordkeeping practices and that drew on unidentified and unproduced business records—an inadmissible hearsay basis. Because the computation lacked admissible evidentiary support, confirmation was improper.
• Disposition: The order and judgment of foreclosure and sale was reversed with costs, the referee’s report rejected, and the matter remitted for a new report computing the amount due followed by CPLR 4403 proceedings and entry of an amended judgment.

Analysis

Precedents Cited and Their Influence

• RPAPL 1304 strict compliance
  • U.S. Bank N.A. v Gordon, 202 AD3d 872, 874: Reaffirmed that strict compliance with RPAPL 1304 is a condition precedent and the plaintiff bears the burden. Barnett quotes Gordon for the strict compliance rule, but distinguishes the present clerical labeling error as curable under CPLR 2001, signaling that strict compliance does not foreclose disregarding a non-prejudicial irregularity.
  • Aurora Loan Servs., LLC v Weisblum, 85 AD3d 95, 99-100: A leading Second Department case emphasizing strict compliance with RPAPL 1304. Barnett cites Weisblum “cf.” to show that, despite strict compliance principles, CPLR 2001 can excuse a harmless, non-substantive defect in the counseling-agency list.
• Standing and note-holder status
  • Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361-62: The Court of Appeals holds a foreclosing plaintiff has standing if it was the holder or assignee of the note at commencement; the mortgage follows the debt. Barnett applies Taylor to confirm that once the plaintiff shows it held the note, the mortgage assignment’s validity is irrelevant.
  • Lakeview Loan Servicing, LLC v Swanson, 231 AD3d 801, 802-03; HSBC Bank USA, NA v Thoppil, 227 AD3d 1056, 1057; U.S. Bank N.A. v Haber, 230 AD3d 530, 532; Ocwen Loan Servicing, LLC v Schacker, 185 AD3d 1041, 1043; Deutsche Bank Natl. Trust Co. v Smartenko, 199 AD3d 643, 644-45; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754: These cases collectively reinforce that producing the note (with allonge) and showing possession at commencement establishes prima facie standing; “holder” is the person in possession of an instrument payable to it; and the mortgage passes with the note.
• Referee’s report, business records, and hearsay
  • Bank of N.Y. Mellon v Glasgow, 232 AD3d 754, 755; U.S. Bank N.A. v Jong Shin, 224 AD3d 933, 936: A referee’s report should be confirmed if substantially supported by the record, but computations resting on unidentified and unproduced records are inadmissible hearsay. Barnett relies on these to reject the referee’s computation.
  • IndyMac Fed. Bank, FSB v Vantassell, 187 AD3d 725, 726-27; Federal Natl. Mtge. Assn. v Marlin, 168 AD3d 679, 681: The business-records foundation must be laid by someone with personal knowledge of the maker’s practices. Referees’ findings are advisory; the court is the ultimate arbiter. Barnett applies these rules, finding the affidavit insufficient and the reliance on unproduced records fatal.
  • U.S. Bank N.A. v Kaur, 177 AD3d 1016, 1018: Cited “cf.” to distinguish scenarios where an error could be harmless; here, the lack of admissible proof was not harmless.

Legal Reasoning

The court’s reasoning proceeds in three steps.

1. RPAPL 1304(2) counseling-agency list and CPLR 2001
   RPAPL 1304(2) requires the 90-day notice to include a current list of at least five housing counseling agencies serving the property’s county, with last-known addresses and phone numbers, drawn from the Department of Financial Services’ (DFS) most recent listing. Here, the list contained five agencies that actually served Westchester County. One agency was mistakenly labeled with the wrong county, but the phone number and ZIP code were correct. Invoking CPLR 2001—allowing courts to disregard a “mistake, omission, defect or irregularity” that does not prejudice a substantial right—the court held the mislabeling non-prejudicial and therefore curable. This reading harmonizes strict compliance with practical administration: when the statutory purpose (directing borrowers to accessible counseling resources) is fulfilled, a minor clerical misdescription may be disregarded.
2. Standing via possession of the specially endorsed note
   Because defendants placed standing in issue, the bank needed to prove it held the note when suit began. The summons and complaint annexed the note with an allonge specially endorsing it to Bank of America, establishing physical possession at commencement. That sufficed to show standing as the “holder.” Given the settled principle that the mortgage follows the debt, the defendants’ challenges to the mortgage assignment did not undermine standing.
3. Referee’s computation: business records and hearsay
   The Supreme Court erred in confirming the referee’s report because the computation was not “substantially supported by the record.” The referee relied on an affidavit from Tom Croft, an “SVP of default” at Carrington Mortgage Services, LLC, acting as the bank’s attorney-in-fact. The affidavit failed on two fronts:
   • Foundation: It did not attest to Croft’s personal familiarity with the record-keeping practices and procedures of Carrington (his employer) or the plaintiff. CPLR 4518(a) requires such an attestation to admit business records.
   • Hearsay: The computations were based on unidentified, unproduced business records. Without producing the records or adequately describing and authenticating them, the figures were inadmissible hearsay with no probative value.
   The lack of admissible proof was not harmless; there was no alternative evidentiary basis in the record. Consequently, the confirmation had to be denied, the report rejected, and a new computation ordered.

Impact

• On RPAPL 1304 litigation: The decision refines the “strict compliance” doctrine by recognizing that CPLR 2001 can cure a technical, non-prejudicial error in the counseling-agency list where the statutory purpose is satisfied (at least five agencies actually serving the county; accurate contact information). Borrowers cannot invalidate a foreclosure merely by pointing to a benign clerical county mislabeling when the list functionally directs them to local resources. However, more substantive 1304 defects—e.g., failing to include five agencies, using an outdated DFS list, omitting required contact information, or failing to mail the notices as prescribed—remain uncured and remain fatal under the strict compliance framework.
• On proof at the referee stage: The Second Department reiterates that referees’ computations must be grounded in admissible evidence. Servicers’ affidavits must:
  • Establish personal knowledge of the relevant entity’s record-keeping practices;
  • Identify and produce the business records relied upon (e.g., loan payment histories, interest-rate change notices, escrow analyses, corporate advances ledgers); and
  • Demonstrate that the records were made in the regular course of business, at or near the time of the events recorded, and that it was the regular course of that business to make such records.
  Unsupported summaries or conclusory “computations” referencing unseen documents are hearsay and will not sustain confirmation under CPLR 4403.
• On case posture and remedies: Importantly, the court did not disturb the 2017 summary judgment on liability or the bank’s standing. The reversal concerns the amount due. On remand, the lender may cure by submitting a proper affidavit with admissible business records to support a fresh computation. This preserves judicial economy while enforcing evidentiary rigor at the damages stage.
• Practice pointers:
  • Lenders/servicers: Maintain and preserve a dated copy of the DFS counseling-agency list used for RPAPL 1304, and quality-check for accuracy. Minor labeling errors may be excused, but relying on CPLR 2001 is risky; aim for literal compliance.
  • When moving to confirm: Attach the loan history and all records supporting principal, interest, late fees, escrow advances, property preservation, and any interest rate changes. Use an affiant who can competently attest to the record-keeping of the entity whose records are offered (and, if incorporating prior servicers’ records, describe the integration and reliance practices).
  • Borrowers: Scrutinize the evidentiary basis of the referee’s computation. If the affidavit lacks the CPLR 4518 foundation or the underlying records are not produced or identified, object on hearsay grounds and challenge confirmation.

Complex Concepts Simplified

• RPAPL 1304 notice: Before suing to foreclose a home loan, the lender must mail a 90-day pre-foreclosure notice to the borrower. The notice must include a list of at least five local housing counseling agencies (from the DFS website), with addresses and phone numbers. Strict compliance is generally required.
• Counseling-agency “list” defect: A harmless typo or mislabel (e.g., a wrong county tag for one agency where contact info is correct and the agency does serve the borrower’s county) can be disregarded under CPLR 2001 if no substantial right is prejudiced.
• CPLR 2001: A procedural safety valve. Courts may correct or ignore a mistake, omission, or irregularity that does not prejudice a substantial right of a party.
• Condition precedent: A legal requirement that must be met before a lawsuit can proceed. RPAPL 1304’s notice is such a condition; failure to comply generally mandates dismissal.
• Standing via “holder” status: The plaintiff has standing if it possessed the original note when the case was filed. An “allonge” is a separate sheet attached to a note for endorsements. If the note is specially endorsed to the plaintiff and attached to the complaint, that typically proves possession at commencement.
• Order of reference and referee: After a lender wins summary judgment, the court often appoints a referee to compute the amount due. The referee’s findings are advisory; the court must ensure they are supported by admissible evidence.
• Business records (CPLR 4518): To admit a business record, a knowledgeable witness must attest that the record was made in the regular course of business, at or near the time of the event, and that making such records is a regular practice. Computations based on unidentified, unproduced records are inadmissible hearsay.
• CPLR 4403: Governs motions to confirm or reject a referee’s report. The court may accept, reject, or modify the report based on the record.

Conclusion

Barnett delivers two key messages. First, while RPAPL 1304 demands strict compliance, CPLR 2001 permits courts to disregard a truly minor, non-prejudicial clerical error in the counseling-agency list where the notice still fulfills its purpose—here, by providing at least five agencies that actually serve the borrower’s county with correct contact information. Second, and dispositively for this appeal, foreclosure judgments must be built on evidence: a referee’s computation cannot stand on conclusory affidavits that fail to lay a proper business-records foundation or that reference unproduced, unidentified records. The Second Department reaffirmed that referees’ reports are advisory and must be “substantially supported by the record.”

Practically, the ruling preserves the bank’s victory on liability and standing while insisting on evidentiary rigor for the amount due. Going forward, lenders should double down on record completeness and CPLR 4518 compliance at the confirmation stage, while borrowers should continue to test whether a foreclosure judgment rests on admissible, authenticated business records. The court’s calibrated approach to RPAPL 1304 clerical defects and its strict enforcement of evidentiary rules at the damages stage together promote both fairness and accuracy in foreclosure adjudications.

Note: This commentary is for informational purposes only and does not constitute legal advice.