LIEB BLOG

Legal Media Analysts

Showing posts with label Foreclosure. Show all posts
Showing posts with label Foreclosure. Show all posts

Thursday, December 09, 2021

Lenders May Soon Be Forced to Maintain Vacated Foreclosed Residential Property at the Start of a Foreclosure Action

A bill (S1579A) awaiting Gov. Hochul's signature will amend section 1307 of New York Real Property Actions and Proceedings Law ("RPAPL") & require plaintiffs, lenders, assignees, or mortgage loan servicers in a residential mortgage foreclosure action to maintain vacated foreclosed property at the commencement of a foreclosure action. 


Currently, section 1307 of the RPAPL imposes a similar duty on plaintiffs to maintain vacated foreclosed property after obtaining a judgment of foreclosure and sale through the time ownership of the vacated foreclosed property has been transferred to another party. 


It is not uncommon for residents who fall behind on their mortgage to leave or abandon their homes. As a result, lenders will commence a foreclosure action, but may delay in taking control of the vacated or abandoned property, resulting in unmaintained and deteriorating property. 


As we all know, the foreclosure process in New York State can be quite lengthy and, in many instances, it can take years for a plaintiff or lender to obtain a judgment of foreclosure and sale. 


Requiring plaintiffs or lenders to maintain abandoned or vacated foreclosed property at the start of a foreclosure proceeding ensures that the foreclosed property will not deteriorate due to lack of maintenance and upkeep and will ensure that the future owner of the foreclosed property will have a home that is in adequate, or even pristine condition, at the time of closing. 


On the other hand, plaintiffs and lenders will likely argue that this amendment places an undue burden on them since they now have to maintain a vacated property at the start of a foreclosure action, rather than towards the tail end of it. 


This could cause lenders to either: 

  1. Move quickly in a foreclosure action rather than take their time, or 
  2. Delay or limit foreclosure actions altogether in order to avoid the burden of maintaining a vacant or abandoned residential home at the start of a foreclosure proceeding. 


Regardless, aren't there going to be disputes as to whether a property was abandoned and whether the lender was trespassing? Would you want a lender going into your home, even if they were maintaining it, as obligated? 


Lenders would be wise to seek court orders confirming that property is abandoned and they can enter prior to acting under this bill, if it becomes law. Otherwise, they should expect to be counterclaimed for trespassing as they don't have any legal right to the property until the foreclosure proceeding is concluded. 


Stay tuned to see if Gov. Hochul signs this bill into legislation...




Wednesday, November 10, 2021

Foreclosure Alert - Lenders Required to Provide Single Point of Contact to Borrowers

Starting January 2, 2022, borrowers negotiating a loan modification have a right to a single point of contact at their lender.


On November 3, 2021, Governor Hochul signed BillS671 into law, which amends Section 6-o to the banking law, and starting on January 3, 2022, upon written request by the borrower, lenders will be required to provide borrowers with a single point of contact who must provide accurate account and other information related to the foreclosure process and loss mitigation efforts.


This is huge because many mortgage modifications are functionally blocked by a lack of access to lenders rather than based upon qualification criteria. As the foreclosure moratorium is coming to an end on January 15, 2022 and a wave of foreclosures are about to hit New York State, this is a needed law for borrowers, and their attorneys, to settle cases.




Thursday, September 02, 2021

NYS Eviction Ban Has Been Extended to January 15, 2022 – What Should Landlords Do Now?

The NYS Legislature passed Senate Bill 50001 and 50002, extending the state’s eviction / foreclosure moratoria to January 15, 2022, and both bills were signed by Governor Kathy Hochul on September 2, 2021.

What’s in the Law?
Briefly, the laws:
  • Extend residential and commercial eviction and foreclosure moratoria to January 15, 2022;
  • Expand eviction protections for tenants under the COVID-19 Emergency Rental Assistance Program (CERAP);
  • Create a due process mechanism for a landlord to challenge a tenant’s Hardship Declaration;
  • Direct judges to require residential tenants to apply for CERAP if their hardship claim is determined to be valid;
  • Extend the period covered by the Tenant Safe Harbor Act to January 15, 2022; and
  • Increase funding for CERAP, Hardship Fund, and legal services for tenants facing evictions.

Moving Forward:
Landlords should demand hearings and challenge their tenants’ hardship claims, which is the trigger for the moratoria to apply. Unlike the prior version of the law, which was overturned by the U.S. Supreme Court in Chrysafis v. Marks, a tenant can no longer decide for himself / herself whether the law is applicable. Specifically, landlords may now file a motion with an attestation of the landlords’ good faith belief that the tenant has not experienced a hardship. Then, the court will schedule a hearing to determine whether the tenant’s hardship claim is valid. If it’s deemed invalid by the court, then the eviction proceeding can proceed. If it’s deemed valid by the court, then the eviction is stayed until January 15, 2022, but the court will order the tenant to apply for CERAP so that the landlord is paid rent.

What is CERAP?
Tenants may apply for CERAP voluntary, or under court order. Under CERAP, Landlords receive up to 12 months of rental arrears and up to 3 months of future rent.

Eligible tenants are:
  1. Tenants or occupants obligated to pay rent in their primary NYS residence;
  2. Individuals who have qualified for unemployment or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due – directly or indirectly – to the COVID-19 outbreak;
  3. Tenants who demonstrate a risk of experiencing homelessness or housing instability; AND
  4. Tenants who have a household income at or below 80% of the area median income, adjusted for household size.

If a tenant is approved for rental assistance under CERAP, the money goes directly to the landlord. However, landlords who accept CERAP payments, must:
  • Not use any prior arrears as a basis for a nonpayment eviction proceeding;
  • Waive late fees;
  • Not increase monthly rent due 1 year from the date the first CERAP payment is received; and
  • Not evict based on an expired lease for a period of 12 months after the first CERAP payment is received, UNLESS the property is in a building with 4 or fewer units, and in which case, the landlord may decline to extend the lease only if the landlord or his immediate family intends to immediately occupy the unit for personal use as a primary residence.

Nonetheless, landlords who accept CERAP may still commence evictions against tenants who:
  • Intentionally cause significant damage to the property;
  • Persistently and unreasonably engage in behavior that substantially infringes on the use and enjoyment of other tenants or occupants; or
  • Causes a substantial safety hazard to others.

What should landlords do now?
Start an eviction proceeding and challenge the hardship, which will either result in CERAP money or permission to continue the eviction process. Alternatively, if a landlord does not have a good faith basis to challenge the hardship or does not want to be restricted by the program’s requirements, then, a landlord should bring a breach of contract lawsuit in NYS Supreme Court against their non-paying tenants, as explained by the federal courts in Elmsford Apartment Associates LLC v. Cuomo.



Tuesday, August 24, 2021

Leslie Mendoza, Esq. quoted in Newsday Article about Foreclosure Moratorium

Take a read of Maura McDermott's latest article in Newsday, "NY's COVID-19 foreclosure ban is set to expire, but homeowners can still get help," where she quotes our very own Leslie Mendoza, Esq.


Leslie explains that while the "[t]he state’s temporary foreclosure ban 'merely delays any kind of discussion between the borrower and the lender in terms of resolving the delinquencies,' the CFPB rule should help many homeowners get a modified loan, as long as they qualify for one."


To learn more about whether you qualify, read the article and always speak to a great lawyer.




Friday, July 02, 2021

New Foreclosure Rule from CFPB

On June 28, 2021, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending Regulation X of the Real Estate Settlement Procedures Act (RESPA) which aims to assist mortgage borrowers with a COVID-19 related hardship in seeking loss mitigation options and delaying foreclosure proceedings to encourage resolution of delinquencies through loan modification.
This Rule is going to make it harder for lenders to foreclose and cause more homeowners to enter a modification thereby avoiding foreclosure.

The Rule has 5 key parts:

  1. It imposes additional requirements before a mortgage servicer may make the first notice or filing required to commence a foreclosure proceeding due to default.
    • However, this requirement is only applicable if:
      • The borrower’s mortgage payment became more than 120 days delinquent on or after March 1, 2020; and
      • The statute of limitations applicable to the potential foreclosure action expires on or after January 1, 2022.
    • If the rule is applicable, mortgage servicers may commence a foreclosure only if:
      • The borrower has submitted a completed loss mitigation application and either:
        • The borrower is ineligible for any loss mitigation options and the borrowers’ appeal, if applicable, has been denied;
        • The borrower rejects all available options; or
        • The borrower fails to perform terms of an agreement on a loss mitigation option;
      • The subject property is abandoned as defined, under state or municipal law; or
      • The servicer has conducted specified outreach and the borrower is unresponsive to such outreach.
    • This requirement expire on January 1, 2022, and thus, mortgage servicers shall be free to commence foreclosure proceedings after such date.
  2. It provides specific limitations for loan modifications, including:
    • A modification may not cause an increase in mortgage principal and interest payments, and may not extend the life of the loan by more than 480 months from the date of the loan modification;
    • A loan modification may not charge or accrue interest on deferred payments, which are not due until the mortgage loan is refinanced, the property is sold, the loan modification matures, or the mortgage insurance is terminated (if the loan is insured by FHA);
    • Modification MUST be made available to borrowers experiencing COVID-19 related hardships;
    • Borrower’s acceptance of a permanent modification, after a trial modification plan, ends any preexisting delinquency on the mortgage; and
    • No fees may be charged in connection with a modification and all existing late charges, penalties, stop payment fees, or similar charges incurred on or after March 1, 2020, shall be waived.
  3. Imposes additional live contact early intervention obligations on servicers to discuss specific COVID-19 related relief:
    • Applies to:
      • A borrower who is not in a forbearance program; or
      • A borrower who is near the end of a forbearance program based on a COVID-19 related hardship.
      • These requirements expire on October 1, 2022.
  4. Requires the servicer to contact the borrower, within 30 days before the end of the forbearance period, if the borrower remains delinquent, and inquire if the borrower wants to complete a loss mitigation application.
  5. Defines COVID-19-related hardship to mean “a financial hardship due, directly or indirectly, to the national emergency for the COVID-19 pandemic declared in Proclamation 9994 on March 13, 2020 (beginning on March 1, 2020) and continued on February 24, 2021, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)).”

The Rule does not take effect until August 31, 2021. That being said, borrowers should be aware that the CFPB foreclosure moratorium expired on June 30, 2021 and the CDC foreclosure moratoriums for FHA, HUD, VA, Fannie Mae, and Freddie Mac loans ends on July 31, 2021 and to contact their mortgage servicers as soon as possible to inquire about available loss mitigation options.