What's happening
This bill expands foreclosure requirements and defenses to cover all mortgages, not just high-cost or subprime home loans.
Why it matters
Broader homeowner protections. By applying foreclosure requirements and defenses to all mortgages, the bill gives more homeowners legal tools to challenge improper foreclosures, not just those with high-cost or subprime loans.
Potential for increased litigation. Mortgage holders (including banks and servicers) will now need to meet stricter legal standards in every foreclosure case, possibly resulting in more legal disputes or delays if borrowers raise new defenses.
Greater lender accountability. Lenders must confirm they own the mortgage and have followed all required procedures for every foreclosure, which could reduce wrongful or fraudulent foreclosures statewide.
Impacts on the mortgage market. The expanded requirements may change how lenders assess risk, originate new loans, or pursue foreclosures, potentially affecting loan availability, servicing practices, and costs for all borrowers.
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Who cares
Headline styles
Expand Foreclosure Safeguards
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to housing, construction and community development
- Referred to housing, construction and community development
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Expand Foreclosure Complaint Rules
Assembly Floor Calendar · Sponsor Helene Weinstein
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5928
2017-2018 Regular Sessions
IN SENATE
May 8, 2017
Introduced by Sen. AVELLA -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development
AN ACT to amend the real property actions and proceedings law, in relation to foreclosure of mortgages
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 1302 of the real property actions and proceedings law, as amended by chapter 472 of the laws of 2008, is amended to read as follows:
§ 1302. Foreclosure of [high-cost home loans and subprime home loans] mortgages. 1. Any complaint served in a proceeding initiated pursuant to this article [relating to a high-cost home loan or a subprime home loan, as such terms are defined in section six-l and six-m of the banking law, respectively,] must contain an affirmative allegation that at the time the proceeding is commenced, the plaintiff:
(a) 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 and holder of the subject mortgage and note; and
(b) has complied with all of the provisions of section five hundred ninety-five-a of the banking law and any rules and regulations promulgated thereunder, section six-l or six-m of the banking law, and section thirteen hundred four of this article.
2. It shall be a defense to an action to foreclose a mortgage [for a high-cost home loan or subprime home loan] that the terms of the home loan or the actions of the lender violate any provision of section six-l or six-m of the banking law or section thirteen hundred four of this article.
§ 2. This act shall take effect on the first of January next succeeding the date on which it shall have become a law and shall apply to actions commenced on or after such date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02864-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the real property actions and proceedings law, in relation to foreclosure of mortgages
Summary of provisions of bill
Section 1: Amends section 1302 of RPAPL to require that foreclosing plaintiffs plead ownership of the note and mortgage applicable to all homeowners instead of limited to only homeowners with subprime and high-cost home loans.
It also ensures that RPAPL 1302 defenses are applicable to all homeowners instead of limited to just homeowners with subprime and high-cost home loans.
Section 2: Sets the effective date on the first of January after it shall have become law.
Justification
There has been a nationwide increase in foreclosures throughout the country. However, many of the foreclosure actions initiated by lenders and trusts to obtain the securitized debt obligation (the property)," have called into question the inherent legality of the proceedings, due to the plaintiffs lack of "standing" and in many cases it is simply not clear who actually owns the mortgage or debt. Despite the fact that in order to have an appropriate foreclosure proceeding the filing party must legally have "standing to commence a foreclosure action" against a mortgagor or borrower, many lenders and trusts alike continue to move forward with bringing a legal action against borrowers when many of these lenders don't even own the debts in the first place.
In New York, numerous court decisions have held that if the borrower doesn't raise standing upon answering the foreclosure action, the defense of standing is waived for the borrower. See, HSBC Bank USA v Dammond, 59 AD3d 679 (2nd Dept 2009). Unfortunately, many times the borrower often has no way of knowing who owns the loan, and despite the clear requirement that the plaintiff own the note, if the defendant borrower does not raise the issue initially in an answer or pre-answer motion to dismiss up front, they may never be able to raise it again. In this situation, an entity foreclosing can foreclose on a home they don't have any legal right to foreclose on.
The proposed bill would require plaintiffs in a foreclosure action to plead ownership of the note and mortgage for all home loans and would enable all homeowners to avail the statutory defenses to protect their homes, as opposed to just those homeowners with subprime or high-cost home loans.
Legislative history
2016: A.10373 -A.Rules
Fiscal implications for state and local governments
None.
Effective date
First of January after it shall have become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.