What's happening
This bill allows defendants in home loan foreclosure cases to raise the defense of lack of standing at any time before a foreclosure sale, unless the sale followed their default.
Why it matters
Expands defendants' rights. By allowing the defense of "lack of standing" to be raised at any time before a foreclosure sale, the bill gives homeowners more flexibility to challenge whether the party suing them actually has the legal right to foreclose on their property.
Addresses common foreclosure issue. In many foreclosure cases, especially after mortgages are bundled and sold, the entity bringing the lawsuit may not actually own the loan. This change helps prevent wrongful foreclosures due to paperwork errors or fraudulent claims of ownership.
Limits on post-sale challenges. The bill still protects the finality of foreclosure sales by generally prohibiting standing challenges after a sale has occurred, unless the sale was based on the homeowner's default (i.e., they didn't defend themselves in court), aiming to balance fairness for homeowners with certainty for buyers and lenders.
Potential impact on foreclosure litigation. The law may increase litigation complexity and duration, as banks and mortgage servicers will need to be more diligent in proving their legal standing throughout the foreclosure process, potentially leading to more careful review and documentation.
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Who cares
Headline styles
Protect Homeowner Foreclosure Rights
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 26
1 Co-sponsor
History
- Signed chap.739
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading cal.250
- Substituted for A5619
- Referred to judiciary
- Delivered to assembly
- Passed senateVote 45–17
- Advanced to third reading
- 2nd report cal.
- 1st report cal.646
Show 1 earlier action
- 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.
Keep Foreclosure Defense Rights
Assembly Floor Calendar · Sponsor Helene Weinstein
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5160
2019-2020 Regular Sessions
IN SENATE
April 11, 2019
Introduced by Sen. KAVANAGH -- 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 the failure to raise the defense of lack of standing in a mortgage foreclosure action
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The real property actions and proceedings law is amended by adding a new section 1302-a to read as follows:
§ 1302-a. Defense of lack of standing; not waived. Notwithstanding the provisions of subdivision (e) of rule thirty-two hundred eleven of the civil practice law and rules, any objection or defense based on the plaintiff's lack of standing in a foreclosure proceeding related to a home loan, as defined in paragraph (a) of subdivision six of section thirteen hundred four of this article, shall not be waived if a defendant fails to raise the objection or defense in a responsive pleading or pre-answer motion to dismiss. A defendant may not raise an objection or defense of lack of standing following a foreclosure sale, however, unless the judgment of foreclosure and sale was issued upon defendant's default.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05992-01-9
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 the failure to raise the defense of lack of standing in a mortgage foreclosure action
Summary of provisions
Section 1 amends the Real Property Actions and Proceedings Law by adding a new section 1302-a, which would provide that any defense based on a plaintiff's lack of standing in a foreclosure proceeding related to a home loan cannot be waived by a defendant's failure to raise such a defense in a responsive pleading or pre-answer motion. A defendant would not be able to raise the defense after a foreclosure sale, unless the judgment of foreclosure and sale was issued upon the defendant's default.
Section 2 sets forth the effective date.
Justification
Beginning with the financial crisis in 2007 and in the subsequent decade, there has been a significant nationwide increase in foreclo- sures. However, in foreclosure actions initiated by lenders and trusts based upon securitized debt obligations, some have called into question the legality of the proceedings due to the plaintiffs' lack of standing and, in many cases, the ambiguity regarding who actually owns the mort- gage 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 a legal action against borrowers when they don't even own the debt.
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, the borrower often has no way of knowing who owns the loan, and despite the clear require- ment 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 can foreclose on a home they lack any legal right to foreclose on.
The proposed bill provides that the defense of standing is not waivable and can be raised throughout the foreclosure process. Absent the clar- ification provided under this proposal, mortgagees will continue to be able to foreclose solely because an otherwise viable standing defense was not timely raised.
Legislative history
2018: S6093 (Savino)/A1498 (Weinstein)- Referred to Housing, Construction, and Community Development/Passed Assembly 2017: S6093 (Savino)/A1498 (Weinstein)- Referred to Housing, Construction, and Community Development/Passed Assembly 2016: S5241 (Savino)/A247 (Weinstein)- Referred to Housing, Construction, and Community Development/Passed Assembly 2015: S5241 (Savino)/ A247 (Weinstein) - Referred to Housing, Construction, and Community Development/Passed Assembly 2014: A9911 - Ordered to third reading rules cal.108
Fiscal implications for state and local governments
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.