Background
Plaintiffs Frank Diaz and Shari Lemoi borrowed $214,656 from Long Beach Mortgage Company in 2006 and later defaulted on the loan. On August 22, 2022, Select Portfolio Servicing (the mortgage servicer) sent notice of default by certified mail. On February 16, 2023, the servicer’s counsel sent a notice of acceleration, followed by a foreclosure sale on April 26, 2023. The plaintiffs sued, alleging wrongful foreclosure based on alleged defects in the notice of default and notice of acceleration.
The plaintiffs argued that the August 22, 2022 notice failed to strictly comply with paragraph 22 of the mortgage contract in two respects: (1) the notice specified September 24, 2022 as the cure date, which is 33 days rather than the contractually required 30 days from the notice date (August 22 plus 30 days equals September 21), creating potential confusion about when the borrower’s right to cure expired; and (2) the notice of acceleration stated plaintiffs “may still have the right to reinstate,” using conditional language that allegedly overshadowed and negated the earlier notification of reinstatement rights, thereby violating strict compliance requirements.
The Superior Court granted summary judgment to the defendants, finding no genuine issues of material fact and that the notice complied with the mortgage. The plaintiffs appealed.
The Court’s Holding
The Rhode Island Supreme Court affirmed the judgment. The court reaffirmed its precedent from Woel v. Christiana Trust (228 A.3d 339 (R.I. 2020)) establishing that strict compliance with paragraph 22 notice requirements is a condition precedent to acceleration and valid foreclosure. However, the court held that the August 22, 2022 notice of default satisfied those requirements.
Regarding the cure date discrepancy, the court found the 33-day period (rather than 30 days) immaterial. The notice clearly displayed in bold font that the cure date was September 24, 2022, and a reasonable borrower would not have been misled. The court stated it looks to the content of the default notice itself, not the particular facts or concerns of the mortgagor, and found the notice unambiguous when read in its entirety.
Regarding the notice of acceleration, the court held it was not subject to strict compliance requirements—only the notice of default must strictly comply with paragraph 22. Because the notice of default had already clearly and unequivocally informed plaintiffs of their right to reinstate after acceleration, there was no requirement that this right be reiterated in the subsequent acceleration notice. The use of “may” in the acceleration notice did not negate the prior notification and caused no material misleading.
Key Takeaways
- Rhode Island requires strict compliance with mortgage paragraph 22 notice requirements as a condition precedent to foreclosure, but minor deviations that do not mislead a reasonable borrower do not invalidate a notice of default.
- The notice of default (not the notice of acceleration) bears the strict compliance requirement; subsequent communications from the servicer are held to a different standard.
- A cure date that is three days longer than contractually specified (33 days vs. 30 days) is not material when clearly displayed and would not confuse a reasonable borrower.
- Once a notice of default has clearly and unequivocally informed a mortgagor of reinstatement rights in strict compliance with the mortgage, subsequent notices using conditional language about those rights do not negate that prior notification or violate the strict compliance requirement.
Why It Matters
This decision provides Rhode Island mortgage servicers with important guidance on compliance with notice requirements. While the state maintains a strict-compliance standard to protect borrowers’ rights, the court’s analysis establishes that this requirement focuses on whether borrowers were actually informed of their key rights and whether the notice would mislead a reasonable borrower. The decision limits plaintiffs’ arguments that minor technical variations or subsequent communications can retroactively invalidate otherwise compliant notices.
For borrowers challenging foreclosures, the decision narrows potential grounds for attack. It confirms that strict compliance is mandatory but measured by content clarity and reasonableness rather than technical precision, and it clarifies that defects in later communications (like acceleration notices) cannot undo proper notice of default. The holding reflects a practical approach: if the initial default notice gave clear, bold notice of the cure deadline and reinstatement rights, downstream notices need not be perfect to complete a valid foreclosure process.