Prepared by Jason P. Dionisio, Esq. with Shapiro, DiCaro & Barack, LLC serving New York
2019 was a busy year for the default servicing legal community in New York State that culminated with an eventful month of December. As the year came to a close, state laws were enacted relating to marketing, origination, and management of reverse mortgage products that fall under HUD’s home equity conversion program for seniors; the right of the city, village, or town in which the property is located to commence a court proceeding to compel any mortgagees with completing foreclosure actions on abandoned or vacant properties; and standing defense in foreclosure actions.
On December 6, 2019, Governor Cuomo signed Assembly Bill A5626/NYS Senate Bill S4407, enacted as 2019 NY Laws Chap. 581, which amended the Real Property Law by adding Section 280-b. The law provides specific disclosures, notifications, and marketing language restrictions relating to reverse mortgages and aiming to protect borrowers from any lender’s unfair or deceptive practices. The law requires that a property inspection be completed before foreclosing on a mortgaged property based on the mortgagor’s failure to live at the property. Compliance with the requirements of the law is a condition precedent to a foreclosure action, and failure to comply is a complete defense to the foreclosure. Any person, injured by any violation of Section 280-b or any violation of the rules and regulations of HUD relating to the reverse mortgage, may sue to recover treble damages, plus the prevailing plaintiff’s reasonable attorney’s fees. The law will become effective on March 5, 2020, the 90th day after it became a law, but the NYS Department of Financial Services may immediately promulgate regulations to implement this law.
On December 18, 2019, New York State Assembly Bill A01859-A/NYS Senate Bill S05079A, entitled the Zombie Property Remediation Act of 2019, was signed into law, which adds Section 1392 to the Real Property Actions and Proceedings Law (RPAPL). On properties certified as abandoned or deemed vacant and abandoned under RPAPL § 1309, the city, village, or town in which the property is located may commence a proceeding in court to compel mortgagees to:
(1) commence a foreclosure action;
(2) if a foreclosure action has been commenced, to proceed with the next motion; or
(3) issue a certificate of discharge of the mortgage within three months and file a satisfaction of the mortgage with the appropriate local office.
Initially, the onus is on the applicable municipality to commence the action seeking to compel, at which point and only with the appropriate court order, mortgagees would be required to commence and/or proceed with the foreclosure action within the referenced timelines, or discharge the mortgage. The law became effective as soon as it was signed on December 18, 2019.
Both laws require internal process and documentation updates to ensure compliance.
Finally, on December 23, 2019, Governor Cuomo signed New York State Assembly Bill A05619/NYS Senate Bill S05610 into law as 2019 NY Laws Chap. 739, which amended the RPAPL to add section 1302-a. This law makes the lack of standing an unwaivable defense that can be raised at any time prior to the foreclosure sale. Per the language of the law, if a judgment of foreclosure and sale was issued upon default, the defendant can still raise the lack of standing defense post-sale. The law became effective immediately upon execution on December 23, 2019. Our firm anticipates an increase in litigation through the life of a foreclosure action regarding the standing defense.
If you have any questions or need guidance with navigating these new state foreclosure law updates, please contact the attorneys of Shapiro, DiCaro & Barack, LLC, John A. DiCaro at 585-770-2111 or email@example.com, Ellis M. Oster at 585-770-2148 or firstname.lastname@example.org , or Jason P. Dionisio at 585-770-2147 or email@example.com.
This blog post is provided for educational and informational purposes only and is not intended and should not be construed as legal advice or used as a substitute for competent legal advice. By using this information, you understand that there is no attorney-client relationships between you and the author of this post.