Establishes certain proof requirements for plaintiffs seeking summary judgment or a default judgment in a residential foreclosure proceeding

BILL NUMBER:S5636

Title of bill

An act to amend the civil practice law and rules, in relation to residential foreclosure actions; and to amend the real property actions and proceedings law, in relation to standing to commence an action to foreclose a mortgage

Purpose of bill

Establishes certain proof requirements for plaintiffs in mortgage foreclosure actions.

Summary of provisions of bill

Requires a mandatory settlement conference be held as a condition precedent to the granting of summary judgment motions in residential mortgage foreclosure proceedings; Creates standards for the granting of summary judgment and default judgments, including an affirmative showing that plaintiff has dealt with defendant in good faith as required by the implied covenant of good faith contained within the mortgage.

Effects of present law which this bill would alter

Amends CPLR 3212 (a); creates a new CPLR (j); amends CPLR 3215 (f); amends CPLR 3408 (a) and (f); amends RPAPL 1302; creates a new RPAPL 1302-a.

Justification

There exists in all contracts, and in all mortgages, an implied covenant to act in good faith and to deal fairly. Gordon v Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 437, cert denied 410 U.S. 931; Security Pacific National Bank v. Evans, 62 A.D.3d 512 (1st Dept 2009); DiBlanda v. ADC Pinebrook, LLC, 44 A.D.3d 702 (2nd; Dept 2007). Unfortunately, it would appear that numerous residential properties have been foreclosed upon without any showing that the foreclosing mortgagee has lived up to this requirement in law. Given that the great majority of foreclosure judgments result from either applications for summary judgment or default judgment, it is important that there be a demonstration to the Court that this covenant has been abided by. The bill would also clarify that the duty of all parties to negotiate in good faith at settlement conferences required by CPLR 3408 includes the duty to abide by the covenant of fair dealing, and that this obligation shall continue throughout the pendency of the action.

Likewise, numerous residential properties have been foreclosed without an adequate showing that the mortgagee-plaintiff owns and physically possesses the note and mortgage, and can demonstrate a chain of custody from mortgage inception through to the commencement of the action. This bill would require plaintiff in a mortgage foreclosure action to make such a showing.

This bill would also require that a plaintiff demonstrate standing and capacity to bring the action, and that plaintiff has attended the mandatory settlement conference required by CPLR 3408, all as a condition precedent to the entry of summary judgment, or a default judgment.

Finally, the bill would also require that standing and capacity be affirmatively demonstrated in order to successfully adjudicate a mortgage foreclosure action. Further, the bill would amend the CPLR to provide that failure to timely raise standing as a defense would not result in waiver of same.

Legislative history

New bill, 2011.

Fiscal implications for state and local governments

None.

Effective date

Immediately, except that portion of the bill which states requisites for the quantum of proof necessary in order to prevail in a mortgage foreclosure action shall become effective on the 90th day after the bill shall become law.