House at 3428 Dryades Street, New Orleans in state of advanced decay, illustrating article by Richard Klass, Esq. about New York State foreclosure laws. Photo by anthonyturducken. https://www.flickr.com/photos/37338074@N00

Killing the “Zombies”:
Recent Changes to New York State’s Foreclosure Laws

By Richard A. Klass, Esq.

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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.create new email 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

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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  [regioncounty, 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.