ATTEMPT TO DEMONSTRATE STANDING FAILED BECAUSE THE SUBMITTED AFFIDAVIT DID NOT MEET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE; AFFIDAVIT SUBMITTED IN REPLY PAPERS CANNOT BE CONSIDERED.

The Second Department determined plaintiff loan service did not demonstrate standing to bring this foreclosure action. The affidavit submitted by the plaintiff did not meet the requirements of the business records exception to the hearsay rule. An affidavit submitted with the reply papers could not be considered: “…[T]he plaintiff relied on the affidavit of Jaclyn Holloway, an assistant secretary of Nationstar Mortgage, LLC (hereinafter Nationstar). Holloway alleged that, after the action was commenced, the plaintiff delivered the note to NationStar. She alleged that, ‘pursuant to the business records of [the plaintiff],’ the plaintiff had physical possession of the note when it commenced the action. However, the plaintiff failed to demonstrate the admissibility of the records relied upon by Holloway under the business records exception to the hearsay rule (see CPLR 4518[a]) since Holloway did not attest that she was personally familiar with the record-keeping practices and procedures of the plaintiff ... . Consequently, Holloway’s allegations based on those records were inadmissible ... , and, therefore, insufficient to meet the plaintiff’s prima facie burden to establish its standing ... . The plaintiff could not rely on the affidavit of its vice president to meet its prima facie burden since the affidavit was improperly submitted for the first time in its reply papers ...”. . Aurora Loan Servs., LLC v. Baritz, 2016 N.Y. Slip Op. 07154, 2nd Dept 11-2-16

A.G. Schneiderman Announces Nearly $13 Million In Awards For Cities To Combat Vacant And Zombie Homes

A.G. Schneiderman will forward approximately $350,000 to NYC to help combat "Zombie Homes". These grants are awarded under the Zombie Remediation and Prevention Initiative. Under the passage of the Abandoned Property Neighborhood Relief Act in June 2016, banks are now required to register any properties abandoned by their customers with the Department of Financial services. If you've ever lived next to an abandoned property you'll surely appreciate this act. Unfortunately there are now approximately 16,000 Zombie homes across New York State. So, odds are you've either seen them in your neighborhood or unfortunately live next door to one. 

http://www.ag.ny.gov/press-release/ag-schneiderman-announces-nearly-13-million-awards-cities-combat-vacant-and-zombie

New Legislation Allows Defendant Participating In Foreclosure Settlement to File Late Answer

A new rule will be put in place starting December 20, 2016 that will significantly help home owners in foreclosure. Borrowers will now be permitted to file an answer (late) after their time to answer has expired. An "answer"  (in response to the summons and complaint) is required to be filed in writing within a certain amount of days according to how the summons and complaint was served (delivered) to the borrower. If delivered by process server the answer must be filed within 20 days. Delivered in any other way and the borrower gets an additional 10 days (30 days total). The new rule will give borrowers 30 days to answer AFTER the first Foreclosure Conference (court hearing). At the first Foreclosure Conference the court will provide the borrower with a 'Consumer Bill of Rights" handbook.       

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JP Morgan Chase (JPMC) commenced this residential mortgage foreclosure action on June 8, 2016, and while Hernandez did not answer, she appeared at all five subsequent foreclosure settlement conferences. The case was released from the settlement conference part March 15, 2016, and she filed an answer March 30, 2016, but JPMC rejected the answer on April 8, 2016. But, the court noted that effective this coming December 20, 2016 under CPLR 3408, mandatory settlement conference in residential foreclosure will be amended. The court sated the intent of the new legislation was to allow defendants in foreclosure actions—who were usually pro se litigations—to answer and participate in the foreclosure litigation. It stated here, Hernandez was served with the summons and complaint on June 18, 2016, and she fully participated in the foreclosure settlement process. Also, the court noted that within 15 days of the case being released from the foreclosure part, Hernandez filed her answer. Thus, the court stated based on the intent evidenced by the new legislation, the fact Hernandez participated in the litigation, and JPMC would not suffer any prejudice in permitting her to file a late answer, her motion to file the late answer was granted, and her answer deemed served.

Click HERE for full decision.

Recent Efforts to Speed Up Foreclosure Proceedings in N.Y.

New York now boasts one on the longest time-frames to foreclose in the country. It now takes  an average of 1,061 days to foreclose. Seems part of the delay may be cause by re-defaults of those borrowers whose loans were modified. It appears though that the Foreclosure Settlement process may be helping somewhat. Part of the reason appears to be now borrowers are "required" to bring all of their financials to the first court appearance. This will give the bank a quick view of the borrower's finances to see if a modification is possible. The best part of this, at least for the banks anyway, seems to be that vacant properties can now move quicker through the foreclosure process. This in turn will allow the banks to sell these properties sooner. If you've ever lived next to a "Zombie Home" this is welcome news.

THE FULL ARTICLE CAN BE FOUND HERE: http://www.newyorklawjournal.com

MOTION TO DISMISS RPAPL ARTICLE 15 ACTION SEEKING DECLARATION MORTGAGE INVALID DENIED

Plaintiffs owners commenced this RPAPL Article 15 suit seeking judgment declaring the mortgage of record held by defendant was invalid and unenforceable and barred by expiration of the six-year statue of limitations. Defendant moved to dismiss the complaint based on a defense of documentary evidence and failure to state a cause of action on the grounds plaintiffs' hardship affidavit served to re-start the statute of limitations and defendants stopped the limitations period running upon revocation of its election to accelerate plaintiffs' loan by its de-acceleration letter. The court found defendant improperly sought to rely on the de-acceleration letter as a letter was not documentary evidence, nor was the court persuaded it conclusively established a defense. The hardship affidavit also failed as it did not conclusively establish a defense to this Article 15 action—it did not conclusively establish the foreclosure action was not barred by the statute of limitations. As the affidavit did not utterly refute plaintiffs' claim that any effort by defendant to foreclose plaintiffs' underlying mortgage obligation would be barred by the limitations period, and defendant failed to establish a defense warranting dismissal of the complaint. Defendant's motion was denied.

The full text decision can be found here: http://www.newyorklawjournal.com/id=1202766377597

The New 90-Day Notice Rules: A Potential Morass for Lenders

New changes are headed our way. Changes that could help New York  borrowers delay the beginning of the foreclosure process. After the collapse of the mortgage markets in 2008 various new pieces of legislation were put  into place to help and protect homeowners. One of the more outstanding was the "90 Day" requirement notice. The 90 Day Notice is more like a pre-foreclosure notice or warning letter. The main idea here was to "wake up" the borrower and tell them they had 90 Days to get it together and work out a deal with their lender or the foreclosure process would begin. Here's a quick overview of the new changes:

-Notice to be provided in the borrower's native language (provided that it falls within the six most common languages spoken in New York)

- Notice will now state the borrower can remain in the property until a court order states you must leave (this was always the case)

- A new notice is required if a borrower makes the loan current and then stops paying again

- Lastly, and more importantly the new 90 Day Notice states that the foreclosure process can only begin if the borrower did nothing during the 90 day period to resolve the missing payments. 

The full article can be found here: http://www.newyorklawjournal.com

NY's Statute of Limitations and Mortgage Foreclosures: How to Revoke Acceleration

The good news for borrowers is that banks have only a certain amount of time to foreclose in New York (six years). The bad news? Seems bankers and their attorneys may have figured out a way to extend this time. What can bankers do? They can simply "take back" or revoke their request to have the borrower pay the entire loan in full (acceleration of the loan) by sending a letter to the borrower stating just that.

The full article can be found here: http://www.newyorklawjournal.com

Thinking About Filing For Bankruptcy?

There are many pitfalls to avoid when filing for bankruptcy that consumers need to be aware of and understand . To help avoid these problems you should hire only a competent attorney specializing in bankruptcy law.  Because one small error or misstep may cause your case to be dismiss (instead of discharged). 

Did you know your credit score takes a major hit when there are judgments and liens? In fact, it stays on your credit for seven years! This alone should be a reason to avoid judgment and liens. Consider too that because of the ding on your credit you may also pay a  higher interest rate when borrowing for mortgages, car loans/leases, etc.

If you have two mortgages (on the same property) and you're home is financially under water (you owe more than what your home is worth) filing for bankruptcy may help to eliminate (or "strip away") your second mortgage. Here's something else to think about. Did you know you could file for bankruptcy and still lose your home? Most people don't.  Just another reason why you need a competent bankruptcy attorney. 

Bankruptcy is not the answer to all financial problems. There are certain judgments and liens where bankruptcy may not help. This may include IRS liens, NYS tax warrants, mechanic liens and domestic support judgments. Most taxing authorities will allow you to work out a payment plan. It may be worth a shot to try and work out a deal as opposed to doing nothing and having a tax lien/warrant.

Should you ever be in the position where you need the guidance of a bankruptcy attorney be certain to hire a competent one who's expertise is bankruptcy. This is not the time to hire a "jack of all trades" attorney. Like foreclosure defense (consumer law), bankruptcy law is a very specific area of law. 

Is That Really a Debt Collector on the Phone?

How it Works:

A debt collector is someone who regularly collects debts owed to others. It could be a collection agency, a lawyer, or a company that buys delinquent debts and then tries to collect them. On the other hand, it could be a fake debt collector! Armed with sensitive information he coaxes from you, the criminal could charge your credit cards or open new accounts, take out loans in your name, write fraudulent checks and more.

What You Should Know:

A debt collector might be a fake if the person is trying to collect on a loan you don’t recognize, refuses to give you a mailing address or phone number, asks you for sensitive information, or uses threats to try to scare you into paying.

What You Should Do:

• Tell the caller you refuse to discuss the debt unless you receive a written notice that includes the debt amount, the name of the creditor, and your rights under the federal Fair Debt Collections Practices Act.

• Don’t give the caller sensitive information. Never give out or confirm personal financial or other sensitive information unless you know whom you’re talking to. This includes your bank account number, credit card, or Social Security number.

• If the debt is legitimate, but you think the collector may be a fake, contact your creditor about the calls.

• If you get a call like this, report it to the Federal Trade Commission and warn others on the Fraud Watch Network Scam-tracking map.


Report calls to the FTC here: https://www.ftc.gov/

Warn others of scams by clicking here: https://action.aarp.org/site/SPageNavigator/FraudMap.html


Article Courtesy of: http://www.aarp.org/money/scams-fraud/fraud-watch-network/

New Foreclosure Law in NY Boosts Consumer Protection

ALBANY -- A new law in New York will require that foreclosed-on properties not be allowed to lie vacant for long and that more protections be built into the foreclosure process for consumers.

The changes were approved in the last hours of the state Legislature's regular 2016 session and represent, sponsors say, the latest attempt to protect consumers against losing their homes due to nonpayment of mortgages and to neighborhoods and to whole communities hit by the approximately 1 million foreclosure filings in New York state since the recession of the late 2000s.

Provisions of the legislation (A10741/S8159) provide for:

• Creation of a Consumer Bill of Rights to state homeowners' rights in the foreclosure process. Specifically, the declaration must inform property owners that they have a right to stay in their homes during the foreclosure process until they are formally notified by a court that they must vacate the premises.

• A mandate that the crucial notifications that lenders are required to make to borrowers be in a language the borrower is proficient in.

• Creation of a Community Restoration Fund within the State of New York Mortgage Agency as a vehicle to provide for the purchase of defaulted mortgage notes, in some instances, to revise repayment terms and to allow some homeowners to hold onto dwellings.

• Authorization of a new civil penalty of up to $25,000 to be imposed by courts to punish instances where plaintiffs are not negotiating in "good faith" in preforeclosure hearings.

• Authorization for courts to award attorney fees and expenses to defendants where plaintiffs are found not to be negotiating in good faith.

• Imposition of a new preforeclosure duty on banks and lending services to maintain vacant and abandoned properties.

• Requirement that the entity obtaining a foreclosure move to auction within 90 days of receiving the judgment and to take actions to ensure that the property be reoccupied within 180 days.

The foreclosure and "zombie" property legislation was signed into law by Gov. Andrew Cuomo on June 23.

Cuomo and state Attorney General Eric Schneiderman praised the bill, in particular, for its focus on so-called zombie properties, those vacant or abandoned homes that lie dormant before, during or after foreclosure. Municipal leaders throughout the state complain that these properties have been allowed to deteriorate, thereby degrading nearby properties or even entire neighborhoods.

Paul Lewis, an assistant to Chief Administrative Judge Lawrence Marks, said court officials believe the bill could impact the courts in two ways: Through the introduction of the new penalties for plaintiffs found to be negotiating with property owners in bad faith and through more frequent court declarations, at the behest of municipal officials, that properties are abandoned.

He said court officials are studying the new statute to determine if it gives court referees and court attorneys, the authorities who now preside over the preforeclosure conferences the state has required in foreclosure cases since 2010, the power to impose civil penalties on bad-faith negotiators.

THE FULL ARTICLE CAN BE FOUND HERE: http://www.newyorklawjournal.com/id=1202763416142?keywords=stashenko&publication=New+York+Law+Journal

Residential Foreclosures: Legislative Changes to Settlement Conference Law

Finally, courts across New York will now have uniform guidelines to help homeowners in foreclosure! 

Since 2009 many homes were lost to foreclosure due to variations in how courts dealt with borrowers during FCP conferences (Foreclosure Conference Part). Obviously, unproductive settlement conferences were surely to blame as well. 

One of the more important revisions revolves around "bad faith". Now that the courts have somewhat addressed this issue and provided some much needed direction we can hopefully see both parties (especially the banks) come to the table ready to settle.  And, surprisingly it is sometimes the borrower who behaves as if they do not want to save their homes. I believe though, this is more due to frustration than anything else. Most of these "bad faith" issues revolve around lenders sending in per diem attorneys to conferences with little to no information regarding the case. Along with the banks invoking the famous  "phantom investor restrictions" excuse. Clearly, this makes it impossible to settle. A tactic long used by the banking industry. Which when you think about it makes no sense. Aren't banks in the business of collecting money, not properties?? 

And, finally the most problematic issue we see is the failure to answer the summons and complaint. Unfortunately, many borrowers mistakenly believed that showing up in court and providing the bank with loan modification documents is the same as filing a written answer.  The problem here is the borrower usually discovers after their case is removed from FCP that they failed to file an answer. Thankfully, the court will now address this problem by advising the homeowner at the first conference of the need to file an answer. Time to answer is limited though to 30 days from the initial FCP appearance. Clearly, the borrower must have a valid reason for not answering the summons and complaint.  

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Since their inception in 2009, settlement conferences under New York's judicial residential foreclosure conference process, the mandatory mediation program New York enacted in response to the foreclosure crisis, have allowed thousands of New York homeowners to achieve settlements and loan modifications, thereby averting foreclosures and sparing New York's communities their adverse effects. But many homes have been needlessly lost to foreclosure because of unproductive settlement conferences, with erratic implementation of the law leading to dramatic variations in the efficacy of the conferences (see Divergent Paths: The Need For More Uniform Standards and Practices in New York State's Residential Foreclosure Conference Process (New Yorkers for Responsible Lending), available at http://www.legalservicesnyc.org/storage/PDFs/divergent paths.pdf).

Legislation enacted in the waning hours of the 2016 session included significant changes to the foreclosure conference process. These amendments fill many of the gaps that the original legislation left open, so there is now hope that the settlement conference law will be more rigorously implemented in all jurisdictions, with uniform consequences to deter its violation, and the legislature's intent to prevent avoidable foreclosures and encourage home-saving loan modification solutions more effectively implemented across New York State. The amendments clarify the courts' obligation to ensure a meaningful negotiation process that prevents avoidable foreclosures by clarifying the obligations to appear with required information and authority, defining the good faith negotiation standard, detailing the remedies when the negotiation process is subverted, and preserving homeowners' ability to defend foreclosure actions on the merits, among other changes.

Settlement Conferences

CPLR 3408 was enacted in 2008 and amended in 2009. It provides for mandatory residential foreclosure settlement conferences at which the parties are encouraged to negotiate, at face-to face court-supervised settlement conferences, foreclosure-avoiding solutions such as loan modification agreements (CPLR 3408(a), (f)). It requires parties appearing at conferences to appear with authority to dispose of the case (CPLR 3408(c)), and requires the courts to provide notice to the parties of the scheduling of the conference and the documents to be brought to the conference (CPLR 3408(e)).

Although CPLR 3408(f) presently expresses a preference for home-saving loan modifications, specifying that "the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible," for some homeowners other options such as "deeds in lieu of foreclosure" or "short sales" are more viable.

Some courts denied defendants settlement conferences based on a determination that the homeowners could not qualify for a loan modification, depriving homeowners of the opportunity to avoid foreclosure with a negotiated settlement as the Legislature intended. The amendments clarify that other loss mitigation options, not just loan modifications, are proper subjects of settlement conferences (CPLR 3408(a)).

Following amendment in 2009, the law imposed an affirmative obligation to negotiate "in good faith" to achieve such loan modifications, if possible (CPLR 3408(f)), but the law left "good faith negotiation" undefined, and prescribed no remedies when that standard is violated, leaving the courts to devise their own, sometimes idiosyncratic, definitions of good faith and to craft remedies when parties did not fulfill the mandate to negotiate in good faith. The recent amendments fill some of the gaps left by the original law.

The amendments adopt a good faith definition evolved from case law, stating that it "shall be measured by the totality of the circumstances." Courts determining good faith shall now consider: (1) compliance with the requirements of CPLR 3408 and applicable court rules, orders or directives of the court or its designees; (2) compliance with applicable mortgage servicing laws, rules or regulations and loss mitigation standards; and (3) conduct consistent with efforts to reach a mutually agreeable resolution, including avoiding unreasonable delay, appearing at conferences with authority to settle, avoiding prosecution of foreclosure proceedings while loss mitigation applications are proceeding (known as "dual tracking"), and providing accurate information to the court and parties (CPLR 3408 (f)).¹ In light of some courts' reluctance to consider conduct preceding the formal start of settlement conferences when assessing good faith, the reference to dual tracking is significant, because it by definition authorizes consideration of conduct preceding the settlement conference process.

The amendments provide additional guidance about other settlement conference requirements. CPLR 3408(c) clarifies that any party's representative at the conference must appear with authority to dispose of the case. In the past, plaintiffs routinely appeared by per diem lawyers or representatives lacking required authority or information needed for meaningful negotiations. As a result, the settlement conference process is often needlessly protracted. See Stalled Settlement Conferences: Banks Frustrate New York's Foreclosure Settlement Conferences, April 29, 2014, available at http://nylawyer.nylj.com/adgifs/decisions14/050214report.pdf.

The amendment revises the language to make the appearance with authority requirement applicable to all representatives appearing at conferences. Also, while the original statute allowed only plaintiff's representative to appear telephonically or by video conference, as amended, either party's representative may be permitted to appear by video or telephone.

The amendments also add stronger language concerning the obligation to bring required information needed for meaningful settlement negotiations to conferences, for both defendants and plaintiffs (CPLR 3408(e). The amendments require plaintiffs' representatives to appear with a summary of the status of the plaintiffs' evaluation of any pending loan modification or loss mitigation applications, including a list of outstanding items required for completion of the application; an expected date for completion of the review of the application; and, if the application was denied, a denial letter or other document explaining the basis for denial and documentation supporting denials.

Plaintiffs' invocation of phantom investor restrictions, and refusals to seek waiver of such restrictions as is required by the federal Home Affordable Modification Program (HAMP) governing most loan servicers, has been an impediment to settlements and has led to much litigation concerning failure to negotiate in good faith,² so the requirement that plaintiffs supply this back-up for modification denials provides greater transparency and should prevent litigation on these issues.

Adjudicating Disputes

Addressing the statute's failure to specify a remedy for violation of the statute,³ the amendments provide a process for adjudicating disputes under the statute and enumerate prescribed remedies for its violation. A new section, CPLR 3408(i), empowers the court to determine good faith and order remedies either on motion or sua sponte, on notice, and also provides that referees, judicial hearing officers or other court staff may hear and report findings of fact and conclusions of law, and may make reports and recommendations for relief to the court. New subsections (j) and (k) enumerate remedies when both plaintiffs and defendants fail to negotiate in good faith.

CPLR 3408(j) mandates that when plaintiffs fail to negotiate in good faith, the court shall, at a minimum, toll interest and fees during any undue delay caused by the plaintiff, codifying the most commonly granted remedy under the case law construing CPLR 3408(f).⁴ The court may also compel production of documents requested during conferences, impose a civil penalty not to exceed $25,000, and award any other relief deemed just and proper (CPLR 3408(j)).

For defendants who fail to negotiate in good faith, CPLR 3408(k) specifies that the court shall remove the case from the conference calendar, but cautions that the court shall take into account "equitable factors," including whether the defendant was represented by counsel. This is important recognition of the disparity in bargaining power at settlement conferences, where foreclosing lenders are among the world's largest financial institutions and are always represented by counsel, while defendants are among the most vulnerable, and often are left to fend for themselves without access to counsel or understanding of the court proceedings in which they find themselves.

Assistance for Homeowners

Foreclosure actions historically proceeded on default in most cases, with no homeowner defendant participation. With the advent of settlement conferences, defendants have become participants in the process, as homeowners lacking access to counsel or the wherewithal to answer a complaint are nonetheless able to—and do—appear in court for settlement conferences when they receive notice from the court of a scheduled conference date.⁵ But homeowners who have participated in conferences and believed they had "answered" by attempting to negotiate a settlement in court and complying with onerous application processes and documentation requests from their mortgage servicers have, upon exhaustion of settlement conferences, been prevented by the courts from submitting answers and litigating their cases on the merits.⁶ The amendments address that unintended problem.

CPLR 3408(l) now obligates the court, at the first settlement conference, to advise the defendant of the requirement to answer the complaint, to explain what "answering" a complaint entails, that the ability to contest the foreclosure and assert defenses may be lost if an answer is not interposed, and to provide information about available resources for assistance. Also, a new Section 3-a of RPAPL 1303 directs the Department of Financial Services to publish a Consumer Bill of Rights detailing the rights and responsibilities of parties to foreclosure proceedings, which the court must provide to foreclosure defendants at the first settlement conference, pursuant to CPLR 3408(l).

A new subsection (m) of CPLR 3408 overrules much of the appellate case law effectively barring non-answering defendants who participated in settlement conferences from vacating defaults and interposing late answers, providing that a defendant who has defaulted in answering but appears at settlement conferences is presumed to have a reasonable excuse for the default and shall be permitted to serve and file an answer, without any substantive defenses deemed waived, within 30 days of the initial appearance at a settlement conference, and with the defendant's default being deemed vacated upon service of such late answer (CPLR 3408(m)). This will spare the courts adjudication of motions for leave to vacate defaults and serve late answers, which currently flood the dockets of both the trial and intermediate appellate courts and will better implement the preference of disposition of cases on the merits.

Subsection (m) of CPLR 3408 also codifies existing practice under the Uniform Court Rules (Uniform Rules for the Supreme Court and the County Court §202.12-a (c) (7)) specifying that motions shall be held in abeyance while the settlement conference process is ongoing, except for motions concerning compliance with CPLR 3408 or its implementing rules. This makes clear that parties participating in the settlement conference process have redress for violations of the settlement conference law even if other motion practice pertaining to the case is held in abeyance (and even if they have not answered the complaint).

The full article can be found here: http://www.newyorklawjournal.com/id=1202763914888/Residential-Foreclosures-Legislative-Changes-to-Settlement-Conference-Law?mcode=0&curindex=0&curpage=ALL

Notice Provisions of RPAPL §1304 Inapplicable Where Borrower Deceased

US Bank moved for summary judgment and an order of reference in this mortgage foreclosure action. The now-deceased borrower, Eisenman, failed to make payments, but defendant opposed the motion arguing dismissal was warranted due to bank's failure to serve the estate of Eisenman with notice of default under RPAPL §1304. The court found bank established prima facie entitlement to summary judgment and an order of reference noting defendant failed to raise an issue of fact precluding summary judgment in bank's favor. It found defendant's laches argument meritless, as was the claim bank failed to comply with the notice provisions of §1304. Also, contrary to defendant's claim, the Jan. 30, 2012 dismissal of a prior action against Eisenman was not dismissed on the merits, and was not res judicata barring this action. The court stated prior courts found §1304 was inapplicable where the borrower was deceased. Therefore, as Eisenman, the borrower, was deceased, there could no longer be notice given to the borrower, and accordingly, the notice provisions of RPAPL §1304 did not apply. Hence, bank's motion for summary judgment, and an order of reference was granted.

Full article and decision can be found here: http://www.newyorklawjournal.com/id=1202763984389?slreturn=20160715094217

Pols say new foreclosure buyback program will help Queens families stay in their homes

A group of Queens pols is touting a new program to help people living in foreclosed homes turn their fortunes around.

Council members representing southeast Queens gathered Tuesday morning to unveil the new Foreclosure Buyback Program, also known as the City Restoration Program.

They said the initiative is the first in the country of its kind, and would allow nonprofits to purchase distressed mortgages throughout New York City from the Federal Housing Association.

More than 40 so-called “zombie homes” across New York City have been selected for the pilot program, which has partnered with a number of nonprofits to purchase distressed mortgages.

Once these are bought back from the FHA, the nonprofits will work with families to restructure their mortgages and give them the opportunity to remain in their homes.

Councilman I. Daneek Miller, who spearheaded the program, called it a response to the foreclosure crisis that has disproportionately struck areas like southeast Queens.

"Communities are redlined," Miller said, referring to the discriminatory practice of banks rejecting mortgages for residents of certain areas.

"You can't go through a traditional bank to get a traditional mortgage, and then we become very vulnerable and susceptible to predatory lenders."

The full article can be found here: http://www.nydailynews.com

ISSUES RAISED IF MODIFICATION ENTERED INTO REVOKING ACCELERATION BAR SUMMARY JUDGMENT

U.S. Bank moved for summary judgment, striking Azad's answer and dismissing the counterclaims and defenses in this foreclosure action. Bank alleged a loan modification was entered into and that the holder of the mortgage and underlying debt defaulted under their terms by failing to make monthly payments due. As such, bank elected to accelerate the entire debt, moving for summary judgment and an order of reference. After obtaining an order of reference and a judgment of foreclosure and sale, bank vacated the judgment and twice discontinued the action, commencing a third foreclosure suit that was dismissed in 2013. Azad raised, as an affirmative defense, that the action was barred by the statute of limitations—foreclosure actions were governed by a six-year limitations period. The debt was accelerated in Oct. 2008, and the suit not commenced until Nov. 2014, making it time-barred if lender took no other affirmative action to revoke its election to accelerate all sums due. The loan modification would act as a revocation, but Azad denied entering to such one, thus, there was a question of fact if she entered into one, raising an issue of fact if there was a revocation of the accelerated debt and if the action was timely. Summary judgment and order of reference was denied.

The Full Article can be found here: http://www.newyorklawjournal.com

Bamboozled: Bank unlawfully breaks into home, lawsuit says

Steven Kenner came home to a nasty surprise after a two-week vacation in Florida. Papers were strewn about the house. Cabinets were left open. Cigarette butts were ground into the floor. A lock on the door to the laundry room had been tampered with. Kenner, 71, thought his East Hanover home had been burglarized. But what actually happened may have been worse.

It wasn't a burglar. Instead, Kenner's mortgage lender hired subcontractors to break into Kenner's home as part of efforts to see if the home was vacant or abandoned, according to a lawsuit filed by Kenner against Citizens Bank, Citizens One Home Mortgage, subsidiaries of the bank and its subcontractors. The suit was filed in May in Morris County Superior Court.

While subcontractors broke into his home, Kenner was in touch with the bank about a pending mortgage modification and no one reported anything was amiss, he said. And the bank even knew he was away on vacation, Kenner said. Citizens Bank said it doesn't comment on ongoing litigation.

Before it all happened, Kenner said, he broke a bone in his back and was unable to work. In January 2015, he fell behind on the mortgage payments for his home, which he had owned for nearly 40 years.

He contacted his lender to request a mortgage modification.

Kenner entered into a trial plan in December 2015. If he paid the agreed monthly payment on time and in full for January, February and March of 2016, he would enter a mortgage modification that would start in April.

Citizens took automatic monthly payments from Kenner's bank account, and payments were on time for the trial period, Kenner said.

While Kenner was on the two-week trip in late February and early March, he said, he called the lender to check on the status of the modification, and the lender said his payments were not received.

But that wasn't so, Kenner said, and he arranged for his bank to send the proof to Citizens.

When he next spoke to Citizens, Kenner said, he was told there had been an error and yes, his payments were on time. Kenner qualified for the modification, he said he was told, and he was instructed to look for packages with all the paperwork he needed to sign when he returned from vacation.

When Kenner got back to his East Hanover home on March 14, Kenner said he entered the way he usually does: through an unoccupied first floor apartment where his mom used to live.

"The lights were on. Cabinets were open and there were papers all over the place," Kenner said. "I didn't know if I was robbed or what. I didn't know what was happening."

He next entered the home proper through a laundry room that's next to the apartment.

The inside of the laundry room showing the removed lock and the messy floor as it was found when Steven Kenner came home from his vacation.

The laundry room has a door with two locks. Kenner said one of the locks was removed and a round cylinder was placed to cover the space where the lock was.

"They must have put their hand around the round opening to open the other lock to enter my home," Kenner said.

Next, Kenner entered the main house, he said.

More lights were on, more cabinets were open, and cigarette butts were all over, he said.

He called police.

When officers arrived, they proceeded as if there was a burglary, Kenner said. They dusted for fingerprints and took photos, and they asked Kenner to see if anything was missing.

As officers searched the home, Kenner opened the front door, looking for the packages he was expecting from the mortgage company.

That's when he saw a "6" -- Kenner's house number -- written on the outside of the door with some kind of marker. And then they saw a sticker affixed to the door.

"This property has been determined to be vacant/abandoned," the sticker said.

Police called the number on the sticker and learned it was all a mistake by Kenner's mortgage company, Kenner said.

That's some mistake.

"The police said they were told that the mortgage company more or less made a mistake," Kenner said. "The mortgage company had contracted with the company that broke into my home to see if the home was vacant."

But the home was not vacant, nor had the bank ever started any foreclosure proceedings, said Kenner's attorney, Philip Vinick.

Vinick said the New Jersey Supreme Court adopted amendments to court rules governing the foreclosure of vacant and abandoned residential properties in December 2012.

If a lender brings a foreclosure action and it believes a property is vacant or abandoned, the lender can ask for a quicker judgment from the court so it can take steps to maintain the property. For that to work, the lender must prove that at least two of 14 conditions must be present at the property, such as overgrown or neglected vegetation, disconnected utilities, the accumulation of mail or newspapers and the absence of window treatments.

None of the 14 conditions applied to Kenner's home, the attorney said.

"In Mr. Kenner's case the lender did not even institute a foreclosure action much less prove that Mr. Kenner's house was vacant, which it obviously was not," Vinick said.

Even after Citizens was made aware of the error, the bank's subcontractors continued to contact Kenner, the homeowner said. One wanted to come into the home. Another wanted to shut off his water.

And two days after Kenner returned home, Kenner's son passed the home and saw workers on property, according to a statement provided to Kenner's attorney. The son said he asked the workers what they were doing, and they said they were hired by the mortgage company to remove some shrubs. The workers then called the mortgage company, which in turn told them to leave the property, the statement said.

And, Kenner realized, the cylinder that replaced the lock on the laundry room door could be removed by anybody at any time.

At first he moved a washing machine in front of the door. Now a table blocks the passageway.

"I've been very upset," Kenner said, noting that he doesn't feel comfortable in his own home. "I'm thinking very seriously of selling because of what happened to me."

After the suit was filed, Citizens offered to settle, but Kenner's attorney called the amount "insufficient" to "compensate him for his physical and psychological damages, including being embarrassed and having to explain to his neighbors what happened."

"The laws were bypassed or disregarded. It will eventually be left up to jury to determine how much Mr. Kenner's nightmare is worth," Vinick said. 

The full story can be found here: http://www.nj.com

PLAINTIFF FAILS TO ESTABLISH STANDING, DENIED SUMMARY JUDGMENT AND ORDER OF REFERENCE

Wells Fargo Bank moved for summary judgment and appointment of a referee to compute. Defendants cross-moved for dismissal of the complaint in this foreclosure mortgage action alleging lack of standing. The court stated an electronic note signed electronically by the mortgagor was a "transferable record," noting a person having control of a transferable record was the holder. An affidavit from Wilson, Vice President Loan Documentation for plaintiff, stated plaintiff was in possession of the promissory note, an electronic note, and was the current controller. Yet, the court found Wilson did not expressly state she examined the note holder registry or identify the source from which she determined plaintiff was controller of the electronic note. It ruled in the absence of factual details as to the transfer of the electronic note to plaintiff, including the transfer date, it could not be established that plaintiff controlled the electronic note on the date this action was commenced. Hence, plaintiff failed to establish standing as part of its prima facie case, and its motion was denied. Also, as defendant failed to submit sufficient proof plaintiff was not the holder of the electronic note at the time the action was commenced, the cross-motion to dismiss was denied.

The full decision can be found here

BANK FAILS TO ESTABLISH STANDING TO SUE WITHOUT DETAILS OF NOTE'S PHYSICAL DELIVERY

U.S. Bank moved to strike defendants' answer, defenses and counterclaim, and granting it summary judgment in this foreclosure proceeding. It produced a copy of the mortgage, and written assignment of same, among other things, proffering an affidavit of Wilde, who asserted defendants defaulted on the loan and bank was in physical possession of the note. Defendants asserted they never received correspondence regarding foreclosure settlement conferences, seeking to have the matter remanded to the settlement part. They also challenged bank's standing to sue herein. Wilde's affidavit averred only that before the action was commenced it was verified that bank was in physical possession of the note, but he did not provide factual details regarding the physical delivery of the note, or that he personally inspected the original note. The court stated absent such further details, bank failed to establish prima facie it was holder of the note before commencement of this action, and thus, was insufficient to establish bank's standing without details concerning the physical delivery. Given that defendants resided at the property, only missed an initial recent conference date and public policy considerations, the court referred the matter to the foreclosure settlement conference part.

The full article and decision can be found here

Law Makes NY Lenders Maintain 'Zombie' Homes

New York is imposing new requirements on mortgage lenders to maintain abandoned houses before foreclosure.

The law, signed Thursday by Gov. Andrew Cuomo, threatens banks with civil penalties up to $500 a day for failing to maintain residential properties once they're aware of vacancies.

The old law required they take responsibility following a foreclosure judgment, which Cuomo said left hundreds of "zombie properties" across the state.

The signed legislation, A10741/S8159, also establishes an electronic statewide registry of abandoned homes, establishes a state hotline where neighbors can report them and requires notices to mortgage borrowers emphasizing their right to stay in houses until foreclosure.

"It brings together multiple strands that, combined, will help homeowners, neighborhoods and municipalities and New York State at large, move from crisis into recovery," said Kirsten Keefe, a senior attorney at the nonprofit law firm Empire Justice Center. "The settlement conference and notice improvements alone will have an immense impact. I look forward to seeing this new law put into action."

A related measure, A10730/S8141, establishes a State of New York Mortgage Agency fund to buy and sell abandoned properties at below-market rates and demolish those beyond repair.

THE FULL STORY CAN BE FOUND HERE

Emigrant Savings Bank Discriminated Against Minorities, Brooklyn Jury Says

A federal jury in Brooklyn found on Monday that the Emigrant Savings Bank had discriminated against eight minority homeowners by purposefully marketing to them subprime mortgages with what were described as predatory interest rates of as much as 18 percent a year.

In 2011, the homeowners — among them a home health aide, a library worker and a clinician at Rikers Island — filed a lawsuit against the bank in Federal District Court in Brooklyn, claiming that Emigrant Savings had targeted minority customers who had low credit scores with so-called no-income refinancing loans from 2005 to 2009, both before and after the subprime crash. Ending a monthlong trial, the jury’s verdict upheld the plaintiffs’ claim that the bank had “aggressively” sold the “highly abusive” loans specifically to minority families in violation of the Fair Housing Act, among other state and federal laws.

Six of the plaintiffs were awarded a total of $950,000 in damages in the case. Two others waived their claims after entering into a loan modification agreement with the bank. “Today’s verdict was a victory for borrowers seeking redress for Emigrant’s discriminatory and predatory lending practices,” said Rachel Geballe, a lawyer for Brooklyn Legal Services, which represented the plaintiffs.

One, Edith Saint-Jean, testified that she and her husband had refinanced their home in Brooklyn to pay off more than $30,000 in delinquent bills. Ms. Saint-Jean said that an independent broker had assured her that her monthly payments on the Emigrant Savings loan would go down within six months, but it did not happen. “They destroyed my life,” she said.

Officials for the bank had argued that the mortgages represented less than 5 percent of Emigrant Savings’ total assets and often allowed low-income clients, many of them black and Latino, access to the credit market when they had no other options.

“Emigrant loans were a ‘lifeline’ for these consumers — which is why more than 70 percent of the borrowers in this program succeeded and kept their homes,” the bank said in a statement on Monday. After promising to appeal the jury’s verdict, the statement added: “Each of the plaintiffs greatly benefited from their Emigrant loans when compared to any gain they would have realized from selling their homes earlier.”

Correction: June 27, 2016 

An earlier version of this article misidentified who Edith Saint-Jean had testified assured her that her monthly payments on a loan from Emigrant Savings Bank would go down after six months. It was an independent broker, not Emigrant Savings.

THE STORY CAN BE FOUND HERE

Legislation to clean up zombie properties signed into law

STATEN ISLAND, N.Y. -- Legislation to address the state's zombie properties -- 303 have been identified on Staten Island -- and to establish the Community Restoration Fund, was recently signed into law by Gov. Andrew Cuomo.

Sen. Diane Savino. (D-North Shore/Brooklyn), along with Bronx Sen. Jeffrey Klein, championed legislation to protect neighboring home values while ensuring the speedy rehabilitation of properties.

"This is a great day for the people of New York City, especially my constituents living in Staten Island and Brooklyn who've been dealing with this issue for far too long," said Savino.

The legislation comes on the heels of a new study that revealed that Staten Island is home to 303 zombie homes, which has resulted in plummeting property values of privately-owned homes in surrounding neighborhoods by $50.7 million.

The study, "The Next Great American Bank Robbery" -- launched by the Independent Democratic Conference (IDC) -- highlights financial and societal problems caused by zombie properties, which are those homes left to decay in the middle of the foreclosure process.

The zombie homes negatively affect property values of an estimated 9,311 neighboring properties.

"Just like every homeowner has a duty to maintain his or her property, banks need to do the same so that nearby residents aren't forced to deal with the blight of unmaintained properties and falling property values," said Assemblywoman Nicole Malliotakis (R-East Shore/Brooklyn).

"We've experienced a surge in this problem since the devastation of Sandy, adding to the frustration of so many people who worked so hard to get their homes back into shape," she added.

IS THERE A ZOMBIE IN YOUR NEIGHBORHOOD?

According to the study, the Staten Island zip code with the most zombie homes is 10306, where there are 47 abandoned properties, and the median house value is $449,400. The overall home depreciation in this zip code is $7.1 million.

The zip code with the least amount of zombie properties was 10307, where there were six of these homes. The median house value in that zip code is $571,200, and the total depreciation due to abandoned homes is $1.2 million.

ADDRESSING ZOMBIE PROPERTIES

The new legislation calls for the following:

To address the zombie property blight, banks will now have to maintain vacant and abandoned properties.

A new toll-free hotline will allow people to report potentially vacant or abandoned sites, and an electronic database will provide streamlined access to information for affected communities.

An expedited foreclosure process will protect neighboring homes while improvements to mandatory settlement conferences will protect homeowners facing foreclosure.

The establishment of a Consumer Bill of Rights will inform property owners of their rights in foreclosure proceedings.

THE COMMUNITY RESTORATION FUND

Savino and Klein introduced the legislation to establish the New York State Community Restoration Fund. This will help those homeowners who are delinquent, at risk of entering default, or may have already fallen into foreclosure due to economic hardship, said Savino.

The fund authorizes the State of New York Mortgage Agency to utilize fund resources to rehabilitate distressed properties, demolish homes that are dilapidated beyond repair, and fund not-for-profit and affordable housing developers, in order to address the foreclosure crisis, repurpose or rehabilitate foreclosed or vacant properties into affordable housing, and keep families in their homes.

CLICK HERE FOR THE FULL STORY

Goldman, Barclays, 6 Others Ink $190M FDIC Deal Over Sour RMBS

Goldman Sachs & Co., Barclays Capital Inc. and six other financial institutions have agreed to pay the Federal Deposit Insurance Corp. $190 million to end mortgage-backed securities claims the agency brought on behalf of five failed banks, the FDIC said on Thursday.

The deal settles federal securities suits the FDIC filed as receiver for the failed banks to recover on their purchases of 21 Countrywide mortgage-backed securities. 

For the full-story click HERE

Today, we received a HAMP loan modification for one of our clients which  lowered the monthly payment from $2,205.81 to $ 1,010.90 – a savings of almost $1,200 a month!!!  See the worksheet below which contains the details. 

Bank Fails to Prove Standing, Not Entitled To Summary Judgment in Foreclosure Action

Plaintiff HSBC Bank moved for summary judgment against Murphy, among other things, in this foreclosure on a mortgage action against the subject real property. It alleged it was in possession of the original note with proper endorsement and/or allonge, thus, was the holder of the note and mortgage, stating Murphy defaulted by failing to make scheduled monthly payments. The court granted bank's motion to consolidate two actions, and for a default judgment against defaulting, non-answering defendants. Murphy alleged bank lacked standing arguing the copy of the original note and blank endorsement annexed to its motion and affidavits was invalid as it was on a separate, undated, otherwise blank page. The court agreed, finding the affidavit of Doublin, a document execution specialist for bank's servicer, attesting its physical possession of the original note endorsed in blank, was insufficient on its face. It stated the endorsement itself failed to contain any evidence it was "firmly affixed thereto as to become a part thereof." Doublin also offered no information as to the original note's condition, simply noting Nationstar, as bank's agent, received the original note Sept. 3, 2013, and remained in possession. Thus, bank was not entitled to summary judgment.

Read more: http://www.newyorklawjournal.com

Lender's Failure to Comply With RPAPL §1303 Requires Dismissal of Foreclosure Action

Plaintiff bank moved for summary judgment and an order of reference in this action to foreclose a mortgage on an owner-occupied, two-family dwelling. Mitchell cross-moved to dismiss the action alleging bank's failure to serve him with RPAPL §1303 notice. Bank's process server alleged he personally served Mitchell with the §1303 notice when he served the summons and complaint, stating same was effectuated at Mitchell's residence. Mitchell's affidavit averred he was never personally served with §1303 notice or the summons and complaint, stating at the time the process server allegedly served papers, Mitchell was more than one mile away from the home at a local store. The court stated as Mitchell submitted admissible proof controverting the process server's affidavit, the matter was referred for a traverse hearing, and the special referee concluded service of process was not properly effectuated on Mitchell. It found no merit to bank's claim Mitchell waived bank's noncompliance with §1303, noting a lender's failure to comply with §1303 was not an affirmative defense that a defendant to a foreclosure action was required to assert in an answer. Therefore, Mitchell's cross-motion to dismiss was granted and the motion denied.

Read more: http://www.newyorklawjournal.com

THE 90-DAY NOTICE REQUIREMENT EXTENDS THE STATUTE OF LIMITATIONS

New York’s RPAPL 1304 requires that prior to the commencement of a foreclosure action, a notice must be given to the borrower allowing 90 days to cure the default before the plaintiff is allowed to file the summons and complaint.

However, it is often the case that the Statute of Limitations is about to expire during this 90-day period, and servicers are often concerned that if they wait the 90 days to comply with the 90-day notice requirement imposed by RPAPL 1304, the Statute of Limitations will expire. Those who are unaware of CPLR 204A may, therefore, be tempted to initiate the action without first complying with RPAPL 1304.

This is a big mistake, as the failure to comply with RPAPL 1304 will cause the foreclosure to be fatally defective, and the action to be dismissed. (See my prior article - Recent Decisions Regarding New York’s Pre-Foreclosure Requirements).

New York’s CPLR 204A, however, expressly provides “Where the commencement of an action has stayed by a court or by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced.”  Furthermore, when New York State’s Court of Appeals, New York's highest court, decided the case Archer v. New York City Transit Authority, they expressly ruled that CPLR 204A extends the Statute of Limitations by the amount of time during which Plaintiff has stayed from commencing the action.

Accordingly, banks and servicers should meticulously comply with the requirements of RPAPL 1304, wait to file the summons and complaint until after the 90 days has expired, and take comfort in the extension granted by CPLR 204A. 

This Story is from Peter T. Roach & Associates, P.C. click here to view their blog.