Killing the “Zombies”:
Recent Changes to New York State’s Foreclosure Laws
By Richard A. Klass, Esq.
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© 2017 Richard A. Klass
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Published January 2017
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Summary
With New York State still experiencing reverberations from the 2008 Great Recession, the State government passed legislation designed to ameliorate the recessive impacts through changes in mortgage foreclosure laws. On June 23, 2016, Governor Andrew Cuomo signed into law Chapter 73 of the Laws of New York 2016. This new legislation addresses several areas concerning housing retention and foreclosure, including (a) moving “zombie” properties through a quicker foreclosure process; (b) making foreclosure settlement conferences more meaningful to spur settlements; and (c) ensuring that homeowners in foreclosure receive better notice of their rights.
“Zombie” Properties
Across New York State, many homeowners who faced spiraling debts, foreclosures, and negative equity in their homes decided to walk away from their properties, leaving abandoned homes strewn around the state. While foreclosure cases take years to complete, these abandoned homes, known as “zombie” properties, sit vacant, becoming blights on their communities, bringing down the value of other homes, lowering the tax base, fostering criminal acts or unsafe conditions and removing housing stock from available inventory to potential buyers. Several changes to the foreclosure laws were enacted to specifically address this problem.
A. Real Property Actions and Proceedings Law Section 1308 (“RPAPL Section 1308”)
Section 1308: “Inspecting, securing and maintaining vacant and abandoned residential real property” was added to impose new duties on mortgagees to address persistent problems with vacant and abandoned properties early in the foreclosure process in order to prevent them from becoming “zombies” in their communities. RPAPL Section 1308 imposes new obligations on first lien mortgage holders on 1-4 family residential properties, including:
- Inspections of Property
The mortgagee or loan servicer must inspect the house within 90 days of a borrower’s delinquency to determine whether it is occupied. So long as the loan remains delinquent, the mortgagee must repeat the inspection every 25 to 35 days, and at different times of the day.
- Posting Notice
Within seven days of determining the house is vacant or abandoned, the mortgagee must post a notice on an easily-accessible part of the property providing contact information and requesting that the homeowner contact the servicer.
- Securing and Maintaining the Property
If there is no response to the notice within seven days and the servicer has a reasonable basis to believe the house is vacant or abandoned, or if there is an emergent property condition that could damage or harm the property, the servicer must secure and maintain the property. Maintenance would include providing basic utilities, winterizing the plumbing and heating systems and repairs to broken doors and windows. These duties continue until one of several conditions occurs.
- Protection of Mortgagor’s Personal Property
The mortgagee may not remove personal property from the house unless it poses a significant risk to health and safety, or if a government entity has ordered removal and such order has not been contested.
- Good Faith Immunity
A mortgagee who peacefully enters a vacant and abandoned property in order to comply with RPAPL Section 1308 will be immune from liability if it made reasonable efforts to comply.
- Enforcement
The Department of Financial Services (DFS) has authority to issue rules and regulations, as well as the right to enforce violations of RPAPL 1308. If it appears by a preponderance of the evidence that a mortgagee has violated RPAPL 1308, a judicial hearing officer or court may issue a civil penalty of up to five hundred dollars ($500.00) per day per property for each day that the violation persisted.
- Preemptions by law
RPAPL Section 1308(10) provides that “The provisions of this section are subject to federal laws, court orders and investor and insurer guidelines.”
B. Expedited Application for Judgment of Foreclosure of Sale
New RPAPL Section 1309 allows a mortgagee to move for an immediate judgment of foreclosure and sale on the ground that the property is vacant and abandoned. Section 1309 is to be utilized for a quick foreclosure of “vacant and abandoned residential property.” Section 1309(5)(a) sets forth some exceptions to this relief, where the defendant answers the complaint or otherwise demonstrates “an intention to contest the foreclosure action.”
Summary of Procedural and Evidentiary Requirements
- The motion cannot be made until the defendant’s time to answer the complaint has expired. The motion must be served on the defendant, regardless of whether she/he has defaulted in appearing in the action.
- The application for an expedited judgment of foreclosure and sale must be supported by an affidavit and other proof, including but not limited to:
- proof of ownership of the mortgage and the note;
- bold notice on the motion papers regarding the request for expedited relief;
- photographs evidencing that the subject property is vacant and abandoned;
- if available, utility company records or other documentation evidencing the vacant and abandoned status of the premises;
- the sums alleged to be due and owing upon the subject mortgage and note, including the current principal balance and a detailed and itemized account of each fee, each cost, and a calculation of interest accrued, supported by documentary evidence.
- The court will send its own notice to the defendant to advise her/him that the plaintiff has filed an application to expedite the foreclosure and sale on the grounds that the property is vacant and abandoned.
- The court may require the plaintiff to appear in court and provide testimony.
- The court must make written findings of fact as soon as practicable as to whether the property to be foreclosed is vacant and abandoned, including setting forth:
- the evidence relied upon by the court in finding that the property is vacant and abandoned;
- the evidence showing that the plaintiff is the owner and holder of the subject mortgage and note, or has been delegated the authority to institute a mortgage foreclosure action by the owner of same;
- the sums due and owing upon the subject mortgage and note after a review of the detailed and itemized account of each fee, each cost, and a calculation of interest accrued.
C. Statewide Vacant and Abandoned Property Electronic Registry
New RPAPL Section 1310 requires Department of Financial Services (DFS) to maintain a statewide vacant and abandoned property registry. The information provided to DFS will be treated as confidential, except that certain information may be released to public officials if it is in the best interest of the public. DFS is authorized to adopt regulations regarding the manner and frequency of registration, as well as access to the information to be provided by the servicer or mortgagee. DFS must also establish a toll-free hotline for community residents to report vacant and abandoned properties.
Help Getting to “Yes”
In 2009, New York began to require court conferences concerning all mortgage foreclosure cases (as opposed to merely those concerning “high cost or high interest” loans) early in the mortgage foreclosure process, where mortgage lenders and homeowners could meet and confer in an effort to resolve the delinquency and get the homeowners back on track through loan modifications or reinstatements. Many times, these conferences have been unproductive, either due to lenders sending attorneys or representatives with no knowledge of the case, lenders losing documentation from borrowers necessary to complete the loan modification request (with constant requests for “fresh” documents to replace “stale” ones), borrowers showing up to court with no understanding of what needed to be brought for review, and court personnel being unable to bring the parties to a reasonable settlement because of the limited parameters of the settlement conference and available settlement options.
Changes to Mandatory Foreclosure Settlement Conferences
Section 3408 of the CPLR was extensively amended to provide certain clarifications and to impose certain additional duties on both foreclosing plaintiffs and defendant/homeowners.
Summary of Changes
- Scope of Negotiations
Expands the scope of negotiations at foreclosure settlement conferences to include several workout options including loan modification, short sale, deed in lieu of foreclosure, any other loss mitigation option, or “whatever other purpose the court deems appropriate.”
- Appearances by parties
Requires that both the plaintiff and defendant or their respective representatives must appear at the conference.
- Plaintiff’s Duty to Submit Documents
It is now mandatory that the plaintiff provide (i) payment history; (ii) itemization of amounts needed to cure or pay off the loan; (iii) copies of the note and mortgage; (iv) standard application forms for loss mitigation options; and (v) any other documents required by the presiding judge.
- Additional documentation
If the plaintiff has evaluated or is evaluating the defendant’s eligibility for a home loss mitigation program or other options, the plaintiff shall also provide a summary of status of the evaluation and a list of outstanding items. If loss mitigation is denied, the plaintiff must provide either the denial letter or a written document providing the reasons for the denial, the values used in the net present value evaluation, and documentary evidence of any investor restrictions under any pooling or servicing agreement.
- Defendant’s Duty to Submit Documents
The defendant must also provide documents, including information on current income tax returns, expenses, property taxes, previously submitted loan mitigation applications, proof of rental income and any other document required by the presiding judge.
- Determination of Good Faith
Compliance with the obligation to negotiate in good faith will be measured by the “totality of the circumstances,” including compliance with court rules, statute requirements and other loss mitigation and servicing rules. Also, the court will look at whether either side created unreasonable delay, failed to have proper authority or information at conferences or failed to provide accurate information to the court and parties.
- Sanctions for Plaintiff
If the court finds that the plaintiff failed to negotiate in good faith, the court can: (1) toll the accumulation of interests, costs and fees during any undue delay; (2) compel production of documents; (3) award actual damages, including attorneys’ fees and expenses; (4) assess a civil penalty sufficient to deter repetition of the conduct in an amount not to exceed twenty-five thousand dollars ($25,000.00); and (5) any other relief the court deems proper.
- Sanctions for Defendant
If the court finds that the defendant failed to negotiate in good faith, the court “shall, at a minimum, remove the case from the conference calendar.”
- Defendant’s Automatic Extension to Answer
A defendant who does not serve an answer, but appears at the foreclosure settlement conference, is to be informed by the court that she/he is to answer the complaint. The defendant is presumed to have a reasonable excuse for the default and will have an automatic 30-day extension in which time the defendant shall file an answer to the complaint.
- Abeyance of motions
Any motions submitted while the settlement process is ongoing will be held in abeyance pending the outcome of the conference.
Getting out the Word: PreForeclosure Notices
Sections 1303 and 1304 of the RPAPL were amended to update the written disclosures to homeowners in foreclosure and impose certain additional duties on foreclosing plaintiffs.
Summary of Changes
- Right to Remain in Mortgaged Premises
The disclosures required by 1303 and 1304 were amended to include notice that the defendant has the right to remain in the mortgaged premises until the property is sold at auction or a court order directs the defendant to leave.
- Duty To Mail to All Addresses of Record
In addition to mortgaged premises, notices are to be sent to the homeowner’s last known address of record, if different.
- Housing Counseling Agencies
The list of at least five housing counseling agencies serving the county in which the property is located is to be included with the RPAPL 1304 notice from the most-recent DFS listing available.
- Effect of Bankruptcy Filing
Clarifies that the 90-day waiting period of RPAPL 1304 shall not apply, or shall cease to apply, if the borrower has “filed for bankruptcy protection under federal law.” Regardless of whether the 90-day waiting period applies, the RPAPL 1304 notice must still be served.
- Cure and Re-Default Within 12 Months
If, after the RPAPL 1304 90-day notice is served, the defendant cures the default and re-defaults again, the plaintiff must serve a new RPAPL 1304 notice, even if it is within the same twelve-month period.
- Non-English Speakers
For any borrower known to have limited English proficiency, the RPAPL 1304 notice must be in the borrower’s native language (or a language in which the borrower is proficient), provided that the language is one of the six most common non-English languages spoken by individuals with limited English proficiency in the state of New York, based on United States census data. Also, DFS shall post the notice on its website in the six most common non-English languages spoken by individuals with limited English proficiency in the state of New York, based on the United States census data.
Turning Over the Soil: Getting Foreclosed Houses to Market Quicker
In an effort to prevent mortgage lenders from warehousing properties and waiting to sell the foreclosed houses until whenever they deem the ‘perfect time’ (which could also generate “zombie” properties), the foreclosure laws were amended to push the lenders to move housing stock quicker once the foreclosure process has concluded.
A. Deadline to Conduct Foreclosure Sale Following Judgment
RPAPL 1351 was amended to provide that the foreclosure sale must occur “within ninety days of the date of the judgment.” It does not specify whether this means the date the judgment is executed or the date the judgment is entered. This will inevitably result in additional motion practice due to court delays and late bankruptcy filings.
B. Deadlines for Marketing REO Properties
RPAPL 1353 was amended to provide that if a plaintiff (or its affiliate) is the purchaser at the foreclosure sale, it must place the property back on the market for sale or occupancy within 180 days of the execution of the deed or within 90 days of the reasonable completion date of renovations or repairs. The sanctions for violations are not specified.
If you would like the assistance of an attorney, please contact Richard A. Klass, Esq. with questions.
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A10741 Summary:
BILL NO: A10741
SAME AS: SAME AS S08159
SPONSOR: Farrell
COSPNSR: Weinstein, Robinson, Glick, Pretlow
MLTSPNSR
Amd §§606 & 42, Tax L; amd §§425, 520 & 1306-a; RPT L; amd §207, RWB L; amd §1, Chap 53 of 2016; amd §3614-c, Pub Health L; amd §11, Chap 710 of 1988; amd §1678-a, Pub Auth L; amd §3, Chap 549 of 1994; amd §1, Chap 55 of 2016; amd §34, Chap 91 of 2002; amd §17, Chap 345 of 2009; add §2590-r-1, amd §§355 & 2851, Ed L; add §§1308, 1309 & 1310, amd §§1303, 1304, 1351 & 1353, RPAP L; amd R3408, CPLR
A10741 Actions:
BILL NO A10741
06/17/2016 referred to ways and means
06/17/2016 reported referred to rules
06/17/2016 reported
06/17/2016 rules report cal.557
06/17/2016 substituted by s8159
S08159 AMEND= FLANAGAN
06/17/2016 REFERRED TO RULES
06/17/2016 ORDERED TO THIRD READING CAL.2010
06/17/2016 MESSAGE OF NECESSITY – 3 DAY MESSAGE
06/17/2016 PASSED SENATE
06/17/2016 DELIVERED TO ASSEMBLY
06/17/2016 referred to ways and means
06/17/2016 substituted for a10741
06/17/2016 ordered to third reading rules cal.557
06/17/2016 message of necessity – 3 day message
06/17/2016 passed assembly
06/17/2016 returned to senate
06/22/2016 DELIVERED TO GOVERNOR
06/23/2016 SIGNED CHAP.73
6 PART Q 7 Section 1. The real property actions and proceedings law is amended by 8 adding a new section 1308 to read as follows: 9 § 1308. Inspecting, securing and maintaining vacant and abandoned 10 residential real property. Notwithstanding any other provision of law to 11 the contrary, the following subdivisions of this section shall only 12 apply to vacant and abandoned one to four family residential real prop- 13 erty, and any duties and responsibilities so prescribed by this section 14 shall only apply to the first lien mortgage holder. Vacant and abandoned 15 residential real property shall be defined pursuant to section thirteen 16 hundred nine of this article. For each calendar year this section shall 17 not apply to state or federally chartered banks, savings banks, savings 18 and loan associations, or credit unions which: (1) originate, own, 19 service and maintain their mortgages or a portion thereof; and (2) have 20 less than three-tenths of one percent of the total loans in the state 21 which they either originate, own, service, or maintain for the calendar 22 year ending December thirty-first of the calendar year ending two years 23 prior to the current calendar year. For any state or federally chartered 24 banks, savings banks, savings and loan associations, or credit unions 25 which originate, own, service and maintain between three-tenths of one 26 percent and five-tenths of one percent of the total loans in the state 27 which they either originate, own, service, or maintain for the calendar 28 year ending December thirty-first of the calendar year ending two years 29 prior to the current calendar year, the application of this section 30 shall be prospective only. 311. Subject to bankruptcy filings, cease and desist orders, threats of 32 violence, or active loss mitigation efforts, within ninety days of a 33 borrower's delinquency, the servicer authorized to accept payment of the 34 loan shall complete an exterior inspection of the subject property to 35 determine occupancy. Thereafter, throughout the delinquency of the loan, 36 the servicer shall conduct an exterior inspection of the property every 37 twenty-five to thirty-five days, at different times of the day. 38 2. If a borrower is delinquent and subject to property inspections 39 pursuant to subdivision one of this section, the servicer shall secure 40 and maintain the residential real property pursuant to subdivisions 41 three, four, five, six, and seven of this section where the servicer has 42 a reasonable basis to believe that the residential real property is 43 vacant and abandoned, as defined in section thirteen hundred nine of 44 this chapter, and is not otherwise restricted from accessing the proper- 45 ty. 46 3. Within seven business days of determining that the property is 47 vacant and abandoned based on the criteria set forth in subdivision two 48 of this section, the servicer shall post a notice on an easily accessi- 49 ble part of the property that would be reasonably visible to the borrow- 50 er, property owner or occupant, and monitor the property for any change 51 in occupancy or contact with the borrower, property owner or occupant, 52 and monitor to ensure that the notice remains posted so long as the duty 53 to maintain applies. The posted notice shall provide the servicer's toll 54 free number or similar contact information.
A. 10741 28
1 4. If the posted notice is not responded to or persists for seven 2 consecutive calendar days without contact with the borrower, property 3 owner or occupant indicating that the property is not vacant or aban- 4 doned, or if an emergent property condition that could reasonably 5 damage, destroy or harm the property arises, the servicer shall: 6 (a) in cases where the property contains two or more points of ingress 7 or egress, replace no more than one door lock to provide subsequent 8 access to the property; 9 (b) secure, replace or board up broken doors and windows; 10 (c) secure any part of the property that may be deemed an attractive 11 nuisance including, but not limited to, a water feature that could 12 create a drowning risk, refrigerator or freezer units, outbuildings, 13 wells or septic tanks; 14 (d) take reasonable measures to ensure that pipes, ducts, conductors, 15 fans and blowers do not discharge harmful gases, steam, vapor, hot air, 16 grease, smoke, odors or other gaseous or particulate waste directly upon 17 abutting or adjacent public or private property or that of another 18 tenant; 19 (e) where appropriate, winterize the applicable plumbing and heating 20 systems; 21 (f) provide basic utilities including, but not limited to, water, 22 electricity, natural gas, propane and sewer service, as appropriate and 23 when allowed by the local utility provider, that are needed for the 24 operation of a sump pump or dehumidifier, or when there are jointly 25 owned or shared utilities with adjoining properties or units, except for 26 turning off water service to prevent flooding or water leaks in the 27 property, or when other utility service could reasonably create a hazard 28 to the property or an unauthorized occupant or person entering the prop- 29 erty; 30 (g) remove and remediate any significant health and safety issues, 31 including outstanding code violations; 32 (h) take reasonable measures to prevent the growth of harmful mold; 33 (i) respond to government inquiries regarding property condition, 34 subject to restrictions regarding financial privacy; and 35 (j) ensure that the notice required to be posted in subdivision three 36 of this section remains posted on an easily accessible part of the prop- 37 erty that would be reasonably visible to the borrower, property owner or 38 occupant so long as the duty to maintain applies. 39 5. At no time shall a servicer remove personal property from the prop- 40 erty unless: 41 (a) the personal property poses a significant health and safety issue; 42 or 43 (b) there is an uncontested order to do so by a governmental entity. 44 6. A servicer who has determined a property to be vacant and abandoned 45 and who has secured the same shall take reasonable and necessary actions 46 to maintain the property until the earlier of the following events: 47 (a) an occupant of the property has asserted his or her right to occu- 48 py the property, or the servicer or its agents have received threats of 49 violence; 50 (b) the borrower has filed for bankruptcy; 51 (c) a court has ordered the servicer to stop any maintenance of the 52 property; 53 (d) a homeowners' association or cooperative has prevented the servi- 54 cer from gaining access to or maintaining the property; 55 (e) the property has been sold or transferred to a new owner;
A. 10741 29
1 (f) the servicer or investor subject to the provisions of this section 2 has released the lien on the property; or 3 (g) the mortgage note has been assigned, transferred or sold to anoth- 4 er servicer. 5 7. Reasonable and necessary actions to maintain the property include, 6 but are not limited to: 7 (a) ensuring that the property remains secure pursuant to subdivisions 8 four, five and six of this section; and 9 (b) maintaining property in a manner consistent with the standards set 10 forth in sections 301, 302 (excluding 302.2, 302.6 and 302.8), 304.1, 11 304.3, 304.7, 304.10, 304.12, 304.13, 304.15, 304.16, 307.1, and 308.1 12 of the New York property maintenance code, to the extent that the mort- 13 gage servicer or its agents are able to obtain necessary or required 14 permits or approvals. 15 8. (a) Violations of this section may be heard before a hearing offi- 16 cer or a court of competent jurisdiction. If it shall appear to the 17 satisfaction of the hearing officer or the court, based on the prepon- 18 derance of the evidence, that the mortgagee or agent of a mortgagee has 19 violated this section, a civil penalty may be issued by the hearing 20 officer or the court in the amount of up to five hundred dollars per day 21 per property for each day the violation persisted. 22 (b) The superintendent of financial services may, as appropriate and 23 in his or her sole discretion, pursue any suspected violation of this 24 section. Before taking such action, the superintendent shall give the 25 lender, assignee or mortgage loan servicer at least seven days' notice 26 of the violation. 27 (c) In addition to the authority granted to the department of finan- 28 cial services, the municipality in which such residential real property 29 is located, shall have the right to enforce the obligations described in 30 this section in any court of competent jurisdiction after at least seven 31 days' notice to the lender, assignee or mortgage loan servicer, unless 32 the property requires emergency repairs to address a threat to public 33 health, safety or welfare, in which case the municipality may enter and 34 maintain the property to cure the emergency, provided however, notice 35 shall be provided to the lender, assignee or mortgage loan servicer as 36 soon as practicable. Any municipality acting pursuant to this subdivi- 37 sion shall have a cause of action in any court of competent jurisdiction 38 against the lender, assignee or mortgage loan servicer to recover costs 39 incurred as a result of maintaining the property. Such entity shall 40 provide the department of financial services with written notice at 41 least ten days prior to bringing an action pursuant to this subdivision; 42 provided, however, that failure to comply with this notice requirement 43 shall not be a defense to the entity proceeding pursuant to this subdi- 44 vision. The authority provided by this subdivision shall be in addition 45 to, and shall not be deemed to diminish or reduce, any rights of the 46 parties described in this section under existing law against the mortga- 47 gor of such property for failure to maintain such property. Any civil 48 penalty imposed pursuant to paragraph (a) of this subdivision in an 49 action brought by a municipality pursuant to this paragraph shall be 50 retained by such municipality. 51 (d) The department of financial services is authorized and empowered 52 to adopt such rules and regulations as may, in the judgment of the 53 superintendent of financial services, be necessary for the effective 54 implementation, administration, operation and enforcement of this 55 section.
A. 10741 30
1 9. A servicer who peacefully enters a vacant and abandoned property in 2 order to maintain pursuant to this section shall be immune from liabil- 3 ity when such servicer is making reasonable efforts to comply with the 4 statute. 5 10. The provisions of this section are subject to federal laws, court 6 orders and investor and insurer guidelines. 7 11. For all state or federally chartered banks, savings banks, 8 savings and loan associations, credit unions, or servicers for which the 9 provisions of this section do not apply, pursuant to the opening para- 10 graph of this section, any agreement between such state or federally 11 chartered banks, savings banks, savings and loan associations, credit 12 unions, or servicers and the department of financial services that is 13 associated with the maintenance and repair of vacant and abandoned prop- 14 erty shall remain in full force and effect between the aforementioned 15 parties for so long as the terms and conditions of such agreement remain 16 in effect. 17 12. The department of financial services shall issue such rules and 18 regulations necessary to implement the terms of this section, including 19 but not limited to rules and regulations pertaining to the reporting of 20 financial information that state or federally chartered banks, savings 21 banks, savings and loan associations, or credit unions must provide to 22 implement this section. 23 13. No local law, ordinance, or resolution shall impose a duty to 24 maintain vacant and abandoned property as defined in section thirteen 25 hundred nine of this article in a manner inconsistent with the 26 provisions of this section that are related to maintenance as provided 27 under subdivisions three, four, five, six and seven of this section, or 28 establish related penalties nor other monetary obligations, with respect 29 to a state or federally chartered bank, savings bank, savings and loan 30 association or credit union that originates, owns, services or maintains 31 a mortgage related to such property. 32 No local law, ordinance, or resolution shall impose a duty to maintain 33 vacant and abandoned property upon any state or federally chartered 34 bank, savings bank, savings and loan association or credit union that 35 originates, owns, services or maintains a mortgage related to such prop- 36 erty for which the provisions of this section, pursuant to the opening 37 paragraph of this section, do not apply. 38 § 2. Rule 3408 of the civil practice law and rules, as added by chap- 39 ter 472 of the laws of 2008, subdivision (a) as amended by chapter 306 40 of the laws of 2013, subdivisions (d), (e), (f), (g) and (h) as added by 41 chapter 507 of the laws of 2009, is amended to read as follows: 42 Rule 3408. Mandatory settlement conference in residential foreclosure 43 actions. (a) In any residential foreclosure action involving a home 44 loan as such term is defined in section thirteen hundred four of the 45 real property actions and proceedings law, in which the defendant is a 46 resident of the property subject to foreclosure, plaintiff shall file 47 proof of service within twenty days of such service, however service is 48 made, and the court shall hold a mandatory conference within sixty days 49 after the date when proof of service upon such defendant is filed with 50 the county clerk, or on such adjourned date as has been agreed to by the 51 parties, for the purpose of holding settlement discussions pertaining to 52 the relative rights and obligations of the parties under the mortgage 53 loan documents, including, but not limited to: 1. determining whether 54 the parties can reach a mutually agreeable resolution to help the 55 defendant avoid losing his or her home, and evaluating the potential for 56 a resolution in which payment schedules or amounts may be modified or
A. 10741 31
1 other workout options may be agreed to, [and for] including, but not 2 limited to, a loan modification, short sale, deed in lieu of foreclo- 3 sure, or any other loss mitigation option; or 2. whatever other purposes 4 the court deems appropriate. 5 (b) At the initial conference held pursuant to this section, any 6 defendant currently appearing pro se, shall be deemed to have made a 7 motion to proceed as a poor person under section eleven hundred one of 8 this chapter. The court shall determine whether such permission shall be 9 granted pursuant to standards set forth in section eleven hundred one of 10 this chapter. If the court appoints defendant counsel pursuant to subdi- 11 vision (a) of section eleven hundred two of this chapter, it shall 12 adjourn the conference to a date certain for appearance of counsel and 13 settlement discussions pursuant to subdivision (a) of this section, and 14 otherwise shall proceed with the conference. 15 (c) At any conference held pursuant to this section, the plaintiff and 16 the defendant shall appear in person or by counsel, and [if appearing by 17 counsel, such counsel] each party's representative at the conference 18 shall be fully authorized to dispose of the case. [The defendant shall 19 appear in person or by counsel.] If the defendant is appearing pro se, 20 the court shall advise the defendant of the nature of the action and his 21 or her rights and responsibilities as a defendant. Where appropriate, 22 the court may permit a representative of the plaintiff or the defendant 23 to attend the settlement conference telephonically or by video-confer- 24 ence. 25 (d) Upon the filing of a request for judicial intervention in any 26 action pursuant to this section, the court shall send either a copy of 27 such request or the defendant's name, address and telephone number (if 28 available) to a housing counseling agency or agencies on a list desig- 29 nated by the division of housing and community renewal for the judicial 30 district in which the defendant resides. Such information shall be used 31 by the designated housing counseling agency or agencies exclusively for 32 the purpose of making the homeowner aware of housing counseling and 33 foreclosure prevention services and options available to them. 34 (e) The court shall promptly send a notice to parties advising them of 35 the time and place of the settlement conference, the purpose of the 36 conference and the requirements of this section. The notice shall be in 37 a form prescribed by the office of court administration, or, at the 38 discretion of the office of court administration, the administrative 39 judge of the judicial district in which the action is pending, and shall 40 advise the parties of the documents that they [should] shall bring to 41 the conference. 42 1. For the plaintiff, such documents [should] shall include, but are 43 not limited to, (i) the payment history[,]; (ii) an itemization of the 44 amounts needed to cure and pay off the loan[, and]; (iii) the mortgage 45 and note or copies of the same; (iv) standard application forms and a 46 description of loss mitigation options, if any, which may be available 47 to the defendant; and (v) any other documentation required by the 48 presiding judge. If the plaintiff is not the owner of the mortgage and 49 note, the plaintiff shall provide the name, address and telephone number 50 of the legal owner of the mortgage and note. For cases in which the 51 lender or its servicing agent has evaluated or is evaluating eligibility 52 for home loan modification programs or other loss mitigation options, in 53 addition to the documents listed above, the plaintiff shall bring a 54 summary of the status of the lender's or servicing agent's evaluation 55 for such modifications or other loss mitigation options, including, 56 where applicable, a list of outstanding items required for the borrower
A. 10741 32
1 to complete any modification application, an expected date of completion 2 of the lender's or servicer agent's evaluation, and, if the 3 modification(s) was denied, a denial letter or any other document 4 explaining the reason(s) for denial and the data input fields and values 5 used in the net present value evaluation. If the modification was denied 6 on the basis of an investor restriction, the plaintiff shall bring the 7 documentary evidence which provides the basis for the denial, such as a 8 pooling and servicing agreement. 9 2. For the defendant, such documents [should] shall include, but are 10 not limited to, [proof of current income such as the two most recent pay 11 stubs, most recent tax return and most recent property tax statements] 12 if applicable, information on current income tax returns, expenses, 13 property taxes and previously submitted applications for loss miti- 14 gation; benefits information; rental agreements or proof of rental 15 income; and any other documentation relevant to the proceeding required 16 by the presiding judge. 17 (f) Both the plaintiff and defendant shall negotiate in good faith to 18 reach a mutually agreeable resolution, including but not limited to a 19 loan modification, short sale, deed in lieu of foreclosure, or any other 20 loss mitigation, if possible. Compliance with the obligation to negoti- 21 ate in good faith pursuant to this section shall be measured by the 22 totality of the circumstances, including but not limited to the follow- 23 ing factors: 24 1. Compliance with the requirements of this rule and applicable court 25 rules, court orders, and directives by the court or its designee 26 pertaining to the settlement conference process; 27 2. Compliance with applicable mortgage servicing laws, rules, regu- 28 lations, investor directives, and loss mitigation standards or options 29 concerning loan modifications, short sales, and deeds in lieu of fore- 30 closure; and 31 3. Conduct consistent with efforts to reach a mutually agreeable 32 resolution, including but not limited to, avoiding unreasonable delay, 33 appearing at the settlement conference with authority to fully dispose 34 of the case, avoiding prosecution of foreclosure proceedings while loss 35 mitigation applications are pending, and providing accurate information 36 to the court and parties. 37 Neither of the parties' failure to make the offer or accept the offer 38 made by the other party is sufficient to establish a failure to negoti- 39 ate in good faith. 40 (g) The plaintiff must file a notice of discontinuance and vacatur of 41 the lis pendens within [one hundred fifty days] ninety days after any 42 settlement agreement or loan modification is fully executed. 43 (h) A party to a foreclosure action may not charge, impose, or other- 44 wise require payment from the other party for any cost, including but 45 not limited to attorneys' fees, for appearance at or participation in 46 the settlement conference. 47 (i) The court may determine whether either party fails to comply with 48 the duty to negotiate in good faith pursuant to subdivision (f) of this 49 section, and order remedies pursuant to subdivisions (j) and (k) of this 50 section, either on motion of any party or sua sponte on notice to the 51 parties, in accordance with such procedures as may be established by the 52 court or the office of court administration. A referee, judicial hearing 53 officer, or other staff designated by the court to oversee the settle- 54 ment conference process may hear and report findings of fact and conclu- 55 sions of law, and may make reports and recommendations for relief to the
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1 court concerning any party's failure to negotiate in good faith pursuant 2 to subdivision (f) of this section. 3 (j) Upon a finding by the court that the plaintiff failed to negotiate 4 in good faith pursuant to subdivision (f) of this section, and order 5 remedies pursuant to this subdivision and subdivision (k) of this 6 section the court shall, at a minimum, toll the accumulation and 7 collection of interest, costs, and fees during any undue delay caused by 8 the plaintiff, and where appropriate, the court may also impose one or 9 more of the following: 10 1. Compel production of any documents requested by the court pursuant 11 to subdivision (e) of this section or the court's designee during the 12 settlement conference; 13 2. Impose a civil penalty payable to the state that is sufficient to 14 deter repetition of the conduct and in an amount not to exceed twenty- 15 five thousand dollars; 16 3. The court may award actual damages, fees, including attorney fees 17 and expenses to the defendant as a result of plaintiff's failure to 18 negotiate in good faith; or 19 4. Award any other relief that the court deems just and proper. 20 (k) Upon a finding by the court that the defendant failed to negotiate 21 in good faith pursuant to subdivision (f) of this section, the court 22 shall, at a minimum, remove the case from the conference calendar. In 23 considering such a finding, the court shall take into account equitable 24 factors including, but not limited to, whether the defendant was repres- 25 ented by counsel. 26 (l) At the first settlement conference held pursuant to this section, 27 if the defendant has not filed an answer or made a pre-answer motion to 28 dismiss, the court shall: 29 1. advise the defendant of the requirement to answer the complaint; 30 2. explain what is required to answer a complaint in court; 31 3. advise that if an answer is not interposed the ability to contest 32 the foreclosure action and assert defenses may be lost; and 33 4. provide information about available resources for foreclosure 34 prevention assistance. 35 At the first conference held pursuant to this section, the court shall 36 also provide the defendant with a copy of the Consumer Bill of Rights 37 provided for in section thirteen hundred three of the real property 38 actions and proceedings law. 39 (m) A defendant who appears at the settlement conference but who 40 failed to file a timely answer, pursuant to rule 320 of the civil prac- 41 tice law and rules, shall be presumed to have a reasonable excuse for 42 the default and shall be permitted to serve and file an answer, without 43 any substantive defenses deemed to have been waived within thirty days 44 of initial appearance at the settlement conference. The default shall 45 be deemed vacated upon service and filing of an answer. 46 (n) Any motions submitted by the plaintiff or defendant shall be held 47 in abeyance while the settlement conference process is ongoing, except 48 for motions concerning compliance with this rule and its implementing 49 rules. 50 § 3. Subdivision (a) of rule 3408 of the civil practice law and rules, 51 as added by chapter 472 of the laws of 2008, is amended to read as 52 follows: 53 (a) In any residential foreclosure action involving a high-cost home 54 loan consummated between January first, two thousand three and September 55 first, two thousand eight, or a subprime or nontraditional home loan, as 56 those terms are defined under section thirteen hundred four of the real
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1 property actions and proceedings law, in which the defendant is a resi- 2 dent of the property subject to foreclosure, the court shall hold a 3 mandatory conference within sixty days after the date when proof of 4 service is filed with the county clerk, or on such adjourned date as has 5 been agreed to by the parties, for the purpose of holding settlement 6 discussions pertaining to the relative rights and obligations of the 7 parties under the mortgage loan documents, including, but not limited 8 to: 1. determining whether the parties can reach a mutually agreeable 9 resolution to help the defendant avoid losing his or her home, and eval- 10 uating the potential for a resolution in which payment schedules or 11 amounts may be modified or other workout options may be agreed to[, and 12 for] including, but not limited to, a loan modification, short sale, 13 deed in lieu of foreclosure, or any other loss mitigation option; or 2. 14 whatever other purposes the court deems appropriate. 15 § 4. The real property actions and proceedings law is amended by 16 adding two new sections 1309 and 1310 to read as follows: 17 § 1309. Expedited application for judgment of foreclosure and sale for 18 vacant and abandoned property. 1. The plaintiff in any foreclosure 19 proceeding may make an application by notice of motion or order to show 20 cause for a judgment of foreclosure and sale on the grounds that the 21 subject property is vacant and abandoned. The motion or order to show 22 cause shall include the last known address of the borrower and the prop- 23 erty address. Notwithstanding subdivision (m) of rule thirty-four 24 hundred eight of the civil practice law and rules no such application 25 may be made until the defendant's time to answer the complaint in the 26 foreclosure proceeding shall have expired. Such application shall be 27 served on defendant, regardless of whether a defendant has filed an 28 answer or appeared in the case. Such application shall: (a) state in 29 bold letters, on the first page of the notice of motion or order to show 30 cause: (i) "The plaintiff in this lawsuit has applied for an expedited 31 judgment of foreclosure and sale of your property on the ground that it 32 is vacant and abandoned"; (ii) "Your property may be foreclosed upon and 33 sold without any further proceedings if you do not respond to this 34 motion by or on the return date, which is ___"; (iii) "You have the 35 right to stay in your property until a court orders you to leave"; and 36 (iv) "You may respond to this motion by either submitting a written 37 document or by appearing in court on the return date."; (b) be supported 38 by affidavit and other proof, including but not limited to: (i) proof of 39 ownership of the mortgage and the note, (ii) photographs evidencing that 40 the subject property is vacant and abandoned as provided for under 41 subdivision two of this section, and (iii) if available, utility company 42 records or other documentation evidencing the vacant and abandoned 43 status of the premises; (c) set forth, supported by documentary 44 evidence, the sums alleged to be due and owing upon the subject mortgage 45 and note, including the current principal balance and a detailed and 46 itemized account of each fee, each cost, and a calculation of interest 47 accrued; and (d) request that the court confirm the sums due and owing 48 upon the subject mortgage and note without appointment of a referee. The 49 court shall promptly send a notice to the defendant of the plaintiff's 50 notice of motion or order to show cause for a judgement of foreclosure 51 and sale on the grounds that the subject property is vacant and aban- 52 doned. The notice shall advise the defendant that the lender is asking 53 the court to expedite a judgement of foreclosure and sale of his or her 54 property on the ground that it is vacant and abandoned and about the 55 time and place of the court date. The notice shall be in a form 56 prescribed by the courts, or, at the discretion of the courts.
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1 2. (a) As used in this section, "vacant and abandoned residential 2 property" means residential real property, as defined in section thir- 3 teen hundred five of this article, with respect to which the plaintiff 4 has proven, by preponderance of the evidence, that it has conducted at 5 least three consecutive inspections of such property, with each 6 inspection conducted twenty-five to thirty-five days apart and at 7 different times of the day, and at each inspection (i) no occupant was 8 present and there was no evidence of occupancy on the property to indi- 9 cate that any persons are residing there; and (ii) the residential real 10 property was not being maintained in a manner consistent with the stand- 11 ards set forth in New York property maintenance code chapter 3 sections 12 301, 302 (excluding 302.2, 302.6, 302.8), 304.1, 304.3, 304.7, 304.10, 13 304.12, 304.13, 304.15, 304.16, 307.1 and 308.1. 14 (b) Residential real property will also be deemed vacant and abandoned 15 if: 16 (i) A court or other appropriate state or local governmental entity 17 has formally determined, following due notice to the borrower at the 18 property address and any other known addresses, that such residential 19 real property is vacant and abandoned; or 20 (ii) Each borrower and owner has separately issued a sworn written 21 statement, expressing his or her intent to vacate and abandon the prop- 22 erty and an inspection of the property shows no evidence of occupancy to 23 indicate that any persons are residing there. 24 (c) Evidence of lack of occupancy shall include but not be limited to 25 the following conditions: (i) overgrown or dead vegetation; (ii) accumu- 26 lation of newspapers, circulars, flyer or mail; (iii) past due utility 27 notices, disconnected utilities, or utilities not in use; (iv) accumu- 28 lation of trash, refuse or other debris; (v) absence of window coverings 29 such as curtains, blinds, or shutters; (vi) one or more boarded, missing 30 or broken windows; (vii) the property is open to casual entry or tres- 31 pass; or (viii) the property has a building or structure that is or 32 appears structurally unsound or has any other condition that presents a 33 potential hazard or danger to the safety of persons. 34 (d) Residential real property will not be deemed vacant and abandoned 35 if, on the property: 36 (i) There is an unoccupied building that is undergoing construction, 37 renovation, or rehabilitation that is proceeding diligently to 38 completion; 39 (ii) There is a building occupied on a seasonal basis, but otherwise 40 secure; 41 (iii) There is a building that is secure, but is the subject of a 42 probate action, action to quiet title, or other ownership dispute of 43 which the servicer has actual notice; 44 (iv) There is a building damaged by a natural disaster and one or more 45 owner intends to repair and reoccupy the property; or 46 (v) There is a building occupied by the mortgagor, a relative of the 47 mortgagor or a tenant lawfully in possession. 48 3. In connection with an application for a judgment of foreclosure and 49 sale on the ground that the subject property is vacant and abandoned, 50 the court may require the plaintiff or an agent to appear to provide 51 testimony in support of the application. 52 4. The court shall make a written finding as soon as practicable as to 53 whether the plaintiff has proved that the property to be foreclosed upon 54 pursuant to this section is vacant and abandoned pursuant to subdivision 55 two of this section and, if the court determines that the property is 56 vacant and abandoned, it shall set forth: (a) the evidence relied upon
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1 by the court in finding that the property is vacant and abandoned; (b) 2 the evidence showing that the plaintiff is the owner and holder of the 3 subject mortgage and note, or has been delegated the authority to insti- 4 tute a mortgage foreclosure action by the owner of same; and (c) the 5 sums due and owing upon the subject mortgage and note after a review of 6 the detailed and itemized account of each fee, each cost, and a calcu- 7 lation of interest accrued. 8 5. With respect to foreclosure actions brought pursuant to this 9 section: 10 (a) A judgment of foreclosure and sale shall not be entered pursuant 11 to this section if the mortgagor or any other defendant has filed an 12 answer, appearance, other written objection that is not withdrawn, or 13 has otherwise demonstrated an intention to contest the foreclosure 14 action. 15 (b) A denial of a judgment of foreclosure and sale pursuant to this 16 section where the court does not find that the mortgaged property is 17 vacant and abandoned shall not be deemed to be on the merits for 18 purposes of any other proceeding with respect to such real property. 19 6. It shall be unlawful for a lender, assignee, mortgage loan servi- 20 cer, or a third party agent or other person acting on behalf of a lend- 21 er, assignee or mortgage loan servicer to enter residential real proper- 22 ty that is not vacant and abandoned for the purpose of forcing, 23 intimidating, harassing or coercing a lawful occupant of such residen- 24 tial property to vacate that property in order to render the property 25 vacant and abandoned, or to otherwise force, intimidate, harass, or 26 coerce a lawful occupant of residential real property to vacate that 27 property so that it may be deemed vacant and abandoned, provided howev- 28 er, a lender, assignee, mortgage loan servicer, or a third party agent 29 or other person acting on behalf of a lender, assignee or mortgage loan 30 servicer who peacefully enters a vacant and abandoned property in order 31 to render the property vacant and abandoned shall be immune from liabil- 32 ity when such lender, assignee, mortgage loan servicer, third party 33 agent or other person acting on behalf of a lender, assignee or mortgage 34 loan servicer is making reasonable efforts to comply with this section. 35 7. The chief administrative judge of the courts shall adopt such rules 36 as he or she deems necessary to expeditiously implement the provisions 37 of this section. 38 § 1310. Vacant and abandoned property; statewide vacant and abandoned 39 property electronic registry. 1. The department of financial services 40 shall maintain a statewide vacant and abandoned property registry in the 41 form of an electronic database. The department of financial services 42 may, in accordance with the applicable provisions of the state finance 43 law, retain a private contractor to administer such database for the 44 purposes of satisfying this requirement. The information provided to 45 the department of financial services pursuant to this section shall be 46 deemed and treated confidential, provided however, the superintendent of 47 financial services, in her or his sole discretion, may release the 48 information if it is in the best interest of the public. Any such 49 released information shall continue to be treated confidentially by the 50 parties. The department of financial services shall, upon written 51 request, provide public officials of any state district, county, city, 52 town or village with access to information specific to such public offi- 53 cial's district, county, city, town or village maintained on such data- 54 base to further the purposes of this section, section thirteen hundred 55 seven of this article or article nineteen-A of this chapter, or any 56 other related law, code, rule, regulation or ordinance.
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1 2. A lender, assignee or mortgage loan servicer shall submit or cause 2 to be submitted to the department of financial services information 3 required by the superintendent of financial services about any vacant 4 and abandoned residential real property, as that term is defined in 5 subdivision two of section thirteen hundred nine of this article, or as 6 the superintendent of financial services may otherwise define that term, 7 within twenty-one business days of when the lender, assignee or mortgage 8 loan servicer learns, or should have learned, that such property is 9 vacant and abandoned. Such information shall, at a minimum, include: 10 (a) the current name, address and contact information for the lender, 11 assignee or mortgage loan servicer responsible for maintaining the 12 vacant property; (b) whether a foreclosure action has been filed for the 13 property in question, and, if so, the date on which the foreclosure 14 action was commenced; and (c) the last known address and contact infor- 15 mation for the mortgagor(s) of record. 16 3. Where any of the information contained in a lender's, assignee's or 17 mortgage loan servicer's initial submission to the registry has mate- 18 rially changed since such submission, such lender, assignee or mortgage 19 loan servicer shall make an amended submission to the registry not later 20 than thirty days after the lender, assignee or mortgage loan servicer 21 learns, or reasonably should have learned, of the new or changed infor- 22 mation. 23 4. The department of financial services is authorized and empowered to 24 adopt such rules and regulations as may in the judgment of the super- 25 intendent of financial services necessary for the effective adminis- 26 tration and operation of such registry, including but not limited to 27 rules and regulations governing access to the registry and specifying 28 the manner and frequency of registration and the information that must 29 be provided. The superintendent of financial services may amend such 30 regulations from time to time as necessary to effectuate the purpose of 31 this section and section thirteen hundred seven of this article. 32 5. The department of financial services shall establish and maintain a 33 toll-free hotline that neighbors of real property that is, or appears to 34 be, vacant and abandoned residential real property, as such term is 35 defined in subdivision two of section thirteen hundred nine of this 36 article, and other community residents can use to report to the super- 37 intendent of financial services any hazards, blight or other concerns 38 related to such property. The department of financial services shall 39 include on its official public website information about such toll-free 40 hotline. 41 No local law, ordinance, or resolution shall impose a duty to register 42 vacant and abandoned property as defined in section thirteen hundred 43 nine of the article in a manner inconsistent with the provisions of this 44 section that are related to registration as provided under section thir- 45 teen hundred ten of this article or establish related penalties or other 46 monetary obligation, with respect to a state or federally chartered 47 bank, savings bank, savings and loan association or credit union that 48 originates, owns, services or maintains a mortgage related to such prop- 49 erty. 50 No local law, ordinance, or resolution shall impose a duty to maintain 51 vacant and abandoned property upon any state or federally chartered 52 bank, savings bank, savings and loan association or credit union that 53 originates, owns, services or maintains a mortgage related to such prop- 54 erty for which the provisions of this section, pursuant to the opening 55 paragraph of section thirteen hundred eight of this article, do not 56 apply.
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1 § 5. Subdivision 3 of section 1303 of the real property actions and 2 proceedings law, as amended by chapter 507 of the laws of 2009 and as 3 further amended by section 104 of part A of chapter 62 of the laws of 4 2011, is amended and a new subdivision 3-a is added to read as follows: 5 3. The notice to any mortgagor required by paragraph (a) of subdivi- 6 sion one of this section shall appear as follows: 7 Help for Homeowners in Foreclosure 8 New York State Law requires that we send you this notice about the 9 foreclosure process. Please read it carefully. 10 Summons and Complaint 11 You are in danger of losing your home. If you fail to respond to the 12 summons and complaint in this foreclosure action, you may lose your 13 home. Please read the summons and complaint carefully. You should imme- 14 diately contact an attorney or your local legal aid office to obtain 15 advice on how to protect yourself. 16 Sources of Information and Assistance 17 The State encourages you to become informed about your options in 18 foreclosure. In addition to seeking assistance from an attorney or legal 19 aid office, there are government agencies and non-profit organizations 20 that you may contact for information about possible options, including 21 trying to work with your lender during this process. 22 To locate an entity near you, you may call the toll-free helpline 23 maintained by the New York State Department of Financial Services at 24 (enter number) or visit the Department's website at (enter web address). 25 Rights and Obligations 26 YOU ARE NOT REQUIRED TO LEAVE YOUR HOME AT THIS TIME. You have the right 27 to stay in your home during the foreclosure process. You are not 28 required to leave your home unless and until your property is sold at 29 auction pursuant to a judgment of foreclosure and sale. 30 Regardless of whether you choose to remain in your home, YOU ARE 31 REQUIRED TO TAKE CARE OF YOUR PROPERTY and pay property taxes in accord- 32 ance with state and local law. 33 Foreclosure rescue scams 34 Be careful of people who approach you with offers to "save" your home. 35 There are individuals who watch for notices of foreclosure actions in 36 order to unfairly profit from a homeowner's distress. You should be 37 extremely careful about any such promises and any suggestions that you 38 pay them a fee or sign over your deed. State law requires anyone offer- 39 ing such services for profit to enter into a contract which fully 40 describes the services they will perform and fees they will charge, and 41 which prohibits them from taking any money from you until they have 42 completed all such promised services. 43 3-a. No later than sixty days after the effective date of this subdi- 44 vision, the department of financial services shall publish a Consumer 45 Bill Of Rights, in consultation with all stakeholders, which shall 46 detail the rights and responsibilities of the plaintiff and defendant in 47 a foreclosure proceeding. Such Bill of Rights shall be updated on an 48 annual basis and as appropriate. 49 § 6. Section 1304 of the real property actions and proceedings law, as 50 added by chapter 472 of the laws of 2008, subdivision 1 as amended and 51 subdivision 6 as added by chapter 155 of the laws of 2012, and subdivi- 52 sions 2 and 5 as amended by chapter 507 of the laws of 2009, and subdi- 53 vision 2 as further amended by section 104 of part A of chapter 62 of 54 the laws of 2011, is amended to read as follows: 55 § 1304. Required prior notices. 1. Notwithstanding any other 56 provision of law, with regard to a home loan, at least ninety days
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1 before a lender, an assignee or a mortgage loan servicer commences legal 2 action against the borrower, or borrowers at the property address and 3 any other address of record, including mortgage foreclosure, such lend- 4 er, assignee or mortgage loan servicer shall give notice to the borrower 5 in at least fourteen-point type which shall include the following: 6 "YOU [COULD LOSE YOUR HOME] MAY BE AT RISK OF 7 FORECLOSURE. PLEASE READ THE FOLLOWING NOTICE CAREFULLY" 8 "As of ___, your home loan is ___ days and ___ dollars in default. 9 Under New York State Law, we are required to send you this notice to 10 inform you that you are at risk of losing your home. [You can cure this 11 default by making the payment of _____ dollars by ____.] 12 [If you are experiencing financial difficulty, you should know that 13 there are several options available to you that may help you keep your 14 home.] Attached to this notice is a list of government approved housing 15 counseling agencies in your area which provide free [or very low-cost] 16 counseling. [You should consider contacting one of these agencies imme- 17 diately. These agencies specialize in helping homeowners who are facing 18 financial difficulty. Housing counselors can help you assess your finan- 19 cial condition and work with us to explore the possibility of modifying 20 your loan, establishing an easier payment plan for you, or even working 21 out a period of loan forbearance.] You can also call the NYS Office of 22 the Attorney General's Homeowner Protection Program (HOPP) toll-free 23 consumer hotline to be connected to free housing counseling services in 24 your area at 1-855-HOME-456 (1-855-466-3456), or visit their website at 25 www.aghomehelp.com. A statewide listing by county is also avail- 26 able at www.dfs.ny.gov. Qualified free help is available; watch out for companies or 28 people who charge a fee for these services. 29 Housing counselors from New York-based agencies listed on the website 30 above are trained to help homeowners who are having problems making 31 their mortgage payments and can help you find the best option for your 32 situation. If you wish, you may also contact us directly at __________ 33 and ask to discuss possible options. 34 While we cannot assure that a mutually agreeable resolution is possi- 35 ble, we encourage you to take immediate steps to try to achieve a resol- 36 ution. The longer you wait, the fewer options you may have. 37 If [this matter is not resolved] you have not taken any actions to 38 resolve this matter within 90 days from the date this notice was mailed, 39 we may commence legal action against you (or sooner if you cease to live 40 in the dwelling as your primary residence.) 41 If you need further information, please call the New York State 42 Department of Financial Services' toll-free helpline at (show number) or 43 visit the Department's website at (show web address)["]. 44 IMPORTANT: You have the right to remain in your home until you receive 45 a court order telling you to leave the property. If a foreclosure action 46 is filed against you in court, you still have the right to remain in the 47 home until a court orders you to leave. You legally remain the owner of 48 and are responsible for the property until the property is sold by you 49 or by order of the court at the conclusion of any foreclosure 50 proceedings. This notice is not an eviction notice, and a foreclosure 51 action has not yet been commenced against you. 52 2. Such notice shall be sent by such lender, assignee (including 53 purchasing investor) or mortgage loan servicer to the borrower, by 54 registered or certified mail and also by first-class mail to the last 55 known address of the borrower, and [if different,] to the residence that 56 is the subject of the mortgage. Such notice shall be sent by the lender,
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1 assignee or mortgage loan servicer in a separate envelope from any other 2 mailing or notice. Notice is considered given as of the date it is 3 mailed. The notice shall contain a current list of at least five housing 4 counseling agencies [as designated by the division of housing and commu- 5 nity renewal, that serve the region where the borrower resides] serving 6 the county where the property is located from the most recent listing 7 available from department of financial services. The list shall include 8 the counseling agencies' last known addresses and telephone numbers. The 9 department of financial services [and the division of housing and commu- 10 nity renewal] shall make available on [their respective] its websites a 11 listing, by [region] county, of such agencies. The lender, assignee or 12 mortgage loan servicer shall use [either of these] such lists to meet 13 the requirements of this section. 14 3. The ninety day period specified in the notice contained in subdivi- 15 sion one of this section shall not apply, or shall cease to apply, if 16 the borrower has filed [an application for the adjustment of debts of 17 the borrower or an order for relief from the payment of debts,] for 18 bankruptcy protection under federal law, or if the borrower no longer 19 occupies the residence as the borrower's principal dwelling. Nothing 20 herein shall relieve the lender, assignee or mortgage loan servicer of 21 the obligation to send such notice, which notice shall be a condition 22 precedent to commencing a foreclosure proceeding. 23 4. The notice and the ninety day period required by subdivision one of 24 this section need only be provided once in a twelve month period to the 25 same borrower in connection with the same loan and same delinquency. 26 Should a borrower cure a delinquency but re-default in the same twelve 27 month period, the lender shall provide a new notice pursuant to this 28 section. 29 5. For any borrower known to have limited English proficiency, the 30 notice required by subdivision one of this section shall be in the 31 borrower's native language (or a language in which the borrower is 32 proficient), provided that the language is one of the six most common 33 non-English languages spoken by individuals with limited English profi- 34 ciency in the state of New York, based on United States census data. The 35 department of financial services shall post the notice required by 36 subdivision one of this section on its website in the six most common 37 non-English languages spoken by individuals with limited English profi- 38 ciency in the state of New York, based on the United States census data. 39 6. (a) "Home loan" means a loan, including an open-end credit plan, 40 other than a reverse mortgage transaction, in which: 41 (i) The borrower is a natural person; 42 (ii) The debt is incurred by the borrower primarily for personal, 43 family, or household purposes; 44 (iii) The loan is secured by a mortgage or deed of trust on real 45 estate improved by a one to four family dwelling, or a condominium unit, 46 in either case, used or occupied, or intended to be used or occupied 47 wholly or partly, as the home or residence of one or more persons and 48 which is or will be occupied by the borrower as the borrower's principal 49 dwelling; and 50 (iv) The property is located in this state. 51 (b) "Lender" means a mortgage banker as defined in paragraph (f) of 52 subdivision one of section five hundred ninety of the banking law or an 53 exempt organization as defined in paragraph (e) of subdivision one of 54 section five hundred ninety of the banking law. 55 [6.] 7. The department of financial services shall prescribe the tele- 56 phone number and web address to be included in the notice.
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1 § 7. Subdivisions 1, 2, 5 and 6 of section 1304 of the real property 2 actions and proceedings law, subdivision 1 as amended and subdivision 6 3 as added by chapter 155 of the laws of 2012, and subdivisions 2 and 5 as 4 added by chapter 472 of the laws of 2008, subdivision 2 and paragraph 5 (f) of subdivision 5 as further amended by section 104 of part A of 6 chapter 62 of the laws of 2011, are amended to read as follows: 7 1. Notwithstanding any other provision of law, with regard to a high- 8 cost home loan, as such term is defined in section six-l of the banking 9 law, a subprime home loan or a non-traditional home loan, at least nine- 10 ty days before a lender or a mortgage loan servicer commences legal 11 action against the borrower, including mortgage foreclosure, the lender 12 or mortgage loan servicer shall give notice to the borrower(s) at the 13 property address and any other address of record in at least fourteen- 14 point type which shall include the following: 15 "YOU [COULD LOSE YOUR HOME] MAY BE AT RISK OF 16 FORECLOSURE. PLEASE READ THE FOLLOWING NOTICE CAREFULLY" 17 "As of ___, your home loan is ___ days and ___ dollars in default. 18 Under New York State Law, we are required to send you this notice to 19 inform you that you are at risk of losing your home. [You can cure this 20 default by making the payment of _____ dollars by ____.] There may be 21 options available to you to keep your home. This may include applying 22 for a loan modification of your mortgage, or reinstating your loan by 23 making the payment. 24 [If you are experiencing financial difficulty, you should know that 25 there are several options available to you that may help you keep your 26 home.] Attached to this notice is a list of government approved housing 27 counseling agencies in your area which provide free or very low-cost 28 counseling. [You should consider contacting one of these agencies imme- 29 diately. These agencies specialize in helping homeowners who are facing 30 financial difficulty. Housing counselors can help you assess your finan- 31 cial condition and work with us to explore the possibility of modifying 32 your loan, establishing an easier payment plan for you, or even working 33 out a period of loan forbearance.] You can also call the NYS Office of 34 the Attorney General's Homeowner Protection Program (HOPP) toll-free 35 consumer hotline to be connected to free housing counseling services in 36 your area at 1-855-HOME-456 (1-855-466-3456), or visit their website at 37 www.aghomehelp.com/. A statewide listing by county is also avail- 38 able at http://www.dfs.ny.gov ... [Ed: edited URL] 39 Qualified free help is available; watch out for companies or 40 people who charge a fee for these services. 41 Housing counselors from New York-based agencies listed on the website 42 above are trained to help homeowners who are having problems making 43 their mortgage payments and can help you find the best option for your 44 situation. If you wish, you may also contact us directly at __________ 45 and ask to discuss possible options. 46 While we cannot assure that a mutually agreeable resolution is possi- 47 ble, we encourage you to take immediate steps to try to achieve a resol- 48 ution. The longer you wait, the fewer options you may have. 49 If [this matter is not resolved] you have not taken any actions to 50 resolve this matter within 90 days from the date this notice was mailed, 51 we may commence legal action against you (or sooner if you cease to live 52 in the dwelling as your primary residence.) 53 If you need further information, please call the New York State 54 Department of Financial Services' toll-free helpline at (show number) or 55 visit the Department's website at (show web address)".
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1 IMPORTANT: You have the right to remain in your home until you receive 2 a court order telling you to leave the property. If a foreclosure action 3 is filed against you in court, you still have the right to remain in the 4 home until a court orders you to leave. You legally remain the owner of 5 and are responsible for the property until the property is sold by you 6 or by order of the court at the conclusion of any foreclosure 7 proceedings. This notice is not an eviction notice, and a foreclosure 8 action has not yet been commenced against you. 9 2. Such notice shall be sent by the lender or mortgage loan servicer 10 to the borrower, by registered or certified mail and also by first-class 11 mail to the last known address of the borrower, and [if different,] to 12 the residence which is the subject of the mortgage. Notice is considered 13 given as of the date it is mailed. The notice shall contain a current 14 list of [at least five] United States department of housing and urban 15 development approved housing counseling agencies, or other housing coun- 16 seling agencies [as designated by the division of housing and community 17 renewal, that serve the region where the borrower resides.] serving the 18 county where the property is located from the most recent listing avail- 19 able from the department of financial services. The list shall include 20 the counseling agencies' last known addresses and telephone numbers. The 21 department of financial services [and/or the division of housing and 22 community renewal] shall make available a listing, by [region] county, 23 of such agencies which the lender or mortgage loan servicer may use to 24 meet the requirements of this section. 25 [5.] 6. (a) "Annual percentage rate" means the annual percentage rate 26 for the loan calculated according to the provisions of the Federal 27 Truth-in-Lending Act (15 U.S.C. § 1601, et seq.), and the regulations 28 promulgated thereunder by the federal reserve board (as said act and 29 regulations are amended from time to time). 30 (b) "Home loan" means a home loan, including an open-end credit plan, 31 other than a reverse mortgage transaction, in which: 32 (i) The principal amount of the loan at origination did not exceed the 33 conforming loan size that was in existence at the time of origination 34 for a comparable dwelling as established by the federal national mort- 35 gage association; 36 (ii) The borrower is a natural person; 37 (iii) The debt is incurred by the borrower primarily for personal, 38 family, or household purposes; 39 (iv) The loan is secured by a mortgage or deed of trust on real estate 40 upon which there is located or there is to be located a structure or 41 structures intended principally for occupancy of from one to four fami- 42 lies which is or will be occupied by the borrower as the borrower's 43 principal dwelling; and 44 (v) The property is located in this state. 45 (c) "Subprime home loan" for the purposes of this section, means a 46 home loan consummated between January first, two thousand three and 47 September first, two thousand eight in which the terms of the loan 48 exceed the threshold as defined in paragraph (d) of this subdivision. A 49 subprime home loan excludes a transaction to finance the initial 50 construction of a dwelling, a temporary or "bridge" loan with a term of 51 twelve months or less, such as a loan to purchase a new dwelling where 52 the borrower plans to sell a current dwelling within twelve months, or a 53 home equity line of credit. 54 (d) "Threshold" means, for a first lien mortgage loan, the annual 55 percentage rate of the home loan at consummation of the transaction 56 exceeds three percentage points over the yield on treasury securities
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1 having comparable periods of maturity to the loan maturity measured as
2 of the fifteenth day of the month in which the loan was consummated; or
3 for a subordinate mortgage lien, the annual percentage rate of the home
4 loan at consummation of the transaction equals or exceeds five percent-
5 age points over the yield on treasury securities having comparable peri-
6 ods of maturity on the fifteenth day of the month in which the loan was
7 consummated; as determined by the following rules: if the terms of the
8 home loan offer any initial or introductory period, and the annual
9 percentage rate is less than that which will apply after the end of such
10 initial or introductory period, then the annual percentage rate that
11 shall be taken into account for purposes of this section shall be the
12 rate which applies after the initial or introductory period.
13 (e) “Non-traditional home loan” shall mean a payment option adjustable
14 rate mortgage or an interest only loan consummated between January
15 first, two thousand three and September first, two thousand eight.
16 (f) For purposes of determining the threshold, the department of
17 financial services shall publish on its website a listing of constant
18 maturity yields for U.S. Treasury securities for each month between
19 January first, two thousand three and September first, two thousand
20 eight, as published in the Federal Reserve Statistical Release on
21 selected interest rates, commonly referred to as the H.15 release, in
22 the following maturities, to the extent available in such release: six
23 month, one year, two year, three year, five year, seven year, ten year,
24 thirty year.
25 (g) “Lender” means a mortgage banker as defined in paragraph (f) of
26 subdivision one of section five hundred ninety of the banking law or an
27 exempt organization as defined in paragraph (e) of subdivision one of
28 section five hundred ninety of the banking law.
29 [6.] 7. The department of financial services shall prescribe the tele-
30 phone number and web address to be included in the notice.
31 § 8. Subdivision 1 of section 1351 of the real property actions and
32 proceedings law, as added by chapter 312 of the laws of 1962, is amended
33 to read as follows:
34 1. The judgment shall direct that the mortgaged premises, or so much
35 thereof as may be sufficient to discharge the mortgage debt, the
36 expenses of the sale and the costs of the action, and which may be sold
37 separately without material injury to the parties interested, be sold by
38 or under the direction of the sheriff of the county, or a referee within
39 ninety days of the date of the judgment.
40 § 9. Subdivision 1 of section 1353 of the real property actions and
41 proceedings law, as added by chapter 312 of the laws of 1962, is amended
42 to read as follows:
43 1. After the property has been sold, the officer conducting the sale
44 shall execute a deed to the purchaser. The plaintiff, or any other
45 party, may become a purchaser. If the plaintiff (or its affiliate, as
46 defined in paragraph (a) of subdivision one of section six-l of the
47 banking law) is the purchaser, such party shall place the property back
48 on the market for sale or other occupancy: (a) within one hundred eighty
49 days of the execution of the deed of sale, or (b) within ninety days of
50 completion of construction, renovation, or rehabilitation of the proper-
51 ty, provided that such construction, renovation, or rehabilitation
52 proceeded diligently to completion, whichever comes first, provided
53 however, a court of competent jurisdiction may grant an extension for
54 good cause.
55 § 10. No local law, ordinance, or resolution shall impose a duty to
56 maintain or register vacant and abandoned property as defined in section
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1 1309 of the real property actions and proceedings law in a manner incon-
2 sistent with the provisions of this act that are related to maintenance
3 as provided under subdivision 3, 4, 5, 6 and 7 of section 1308 of the
4 real property actions and proceedings law, or registration as provided
5 under section 1310 of the real property actions and proceedings law, or
6 establish related penalties or other monetary obligation, with respect
7 to a state or federally chartered bank, savings bank, savings and loan
8 association or credit union that originates, owns, services or maintains
9 mortgages related to such property.
10 No local law, ordinance, or resolution shall impose a duty to maintain
11 vacant and abandoned property upon any state or federally chartered
12 bank, savings bank, savings and loan association or credit union that
13 originates, owns, services or maintains mortgages related to such prop-
14 erty for which the provisions of this act, pursuant to the opening para-
15 graph of section 1308 of the real property actions and proceedings law
16 as added by section one of this act, do not apply.