Requires a recording officer not to record or accept a transfer or assignment of interest in a mortgage unless accompanied with a mortgage ownership assignment

BILL NUMBER:S1278

Title of bill

An act to amend the real property law, in relation to the recording of a transfer or assignment of a mortgage interest

Purpose of bill

To require parties to record an ownership transfer document with the County Clerk or City Register when there is an assignment or transfer of the ownership of the mortgage note which convey the right to receive mortgage payments.

Summary of provisions of bill

This bill amends the Real Property Law by adding a new section 291-k. This bill requires any recording of a mortgage or assignment of a mortgage made to a non-natural person affecting land in the state to be accompanied by a mortgage ownership transfer document. Further, this bill contains the "mortgage ownership transfer document" and creates a civil penalty of $250 for failure to record a mortgage or assignment.

Justification

The recording statutes have been eclipsed by the passage of time and no longer contain a complete public record of the ownership of real property. The changing business practices of the mortgage industry have led to the free trading of the legal instruments which represent the right to collect the stream of mortgage payments from real property borrowers. Private record keeping entities keep a real time record of such transactions to facilitate real time trading. However, the recording statutes have been interpreted by the courts as not requiring parties to record ownership interests. Thus, borrowers can no longer ascertain the identity of the owner {s) of their promissory notes through simple access to the public record. This prevents ready communication between the homeowner and the owner of their legal instruments. In this time of turmoil in housing and mortgage lending, this inability to contact the actual owner of their mortgage note leaves a distressed borrower unable to contact their note owner. This situation requires an update to the recording statutes so they can once again perform their purpose of recording the ownership interests of real property.

In order for these amendments to be meaningful, each new owner of the legal instruments will be required to record their name - whether business or personal, the address and current phone number on the transferor assignment form. Any agent of such new owner who physically records such interest must record the assignment or transfer in the name of the actual owner.

Legislative history

2013-2014 - S.44 2011-12: S.667-B 2009 - Referred to Judiciary

Fiscal implications for state and local governments

Undetermined.

Effective date

Ninety days after becoming law.