The moratorium on foreclosures expires on August 20th (EO 202.28) and a foreclosure tsunami is coming.

According to CNBC, "32% of U.S. households missed their July housing payments" based on a survey by Apartment List, which also advises that 17% of "homeowners [are] concerned about foreclosure."

To prepare for the tsunami, we are giving you our 10-Point Inspection Checklist to evaluate a foreclosure case. Whether we are representing the lender or the borrower, we utilize this list to evaluate the strength of the case, which, when coupled with an evaluation of the borrower's current mortgage terms (i.e., L/V ratio front end/back end, interest rate, principal, interest to date, penalties, attorneys' fees, months of missed payments, prior modifications/forbearances, etc.) is how we assess whether a modification, or other workout, should be considered.

10 Point Inspection Checklist:

1. Standing of plaintiff (owner / holder of note on date of commencement or authorized agent of such owner / holder pursuant to Pooling and Servicing Agreement or other agreement)
2. Record admissibility (swearing to business records of another entity; failure to attach business records to affidavits)
3. RPAPL 1303 / 1304 / 1305 / 1306 compliance
4. Acceleration / Deacceleration (statute of limitations) 
5. Notices tendered in satisfaction of note terms
6. Lis Pendens filing
7. Payment history for default calculations / date (requisite missed months for default requirement in note / aligned with notices / statute of limitations)
8. Default on Answer with time since settlement conference for late answer availability
9. Service / personal jurisdiction issues
10. Pleadings requirements (Certificate of Merit - CPLR 3012-B, RPAPL 1302)

In our upcoming Real Estate Investing shows, WRCN / FM 103.9 / Sundays at Noon, we will be breaking down this list into plain English and showing you how to litigate foreclosure cases whether you are the lender or the borrower.

If you are a NYS landlord, you MUST read the decision from the case Elmsford Apartment Associates LLC v. Cuomo if you want to be on the top of your game.

We aren't going to discuss the results, beyond saying the Court ruled that Governor Cuomo can legally suspend evictions and more during a pandemic.

We focus on these other gems given to us by the Court - Every property investor (landlord, property manager, broker, flipper, etc.) should read and accept this reality before getting into the investment game:

Evicting a tenant – especially a residential tenant – in New York is a slow, cumbersome and extremely tenant-favorable process, especially when compared to analogous procedures in other states.

Governor Cuomo did nothing to impede the commencement of holdover proceedings… Nor does EO 202.28 suspend[] the landlords’ right to initiate a common law breach of contract action in the New York State Supreme Court to redress a tenant’s failure to perform its payment obligations under his or her lease.

Tenants will continue to accrue arrearages, which the landlord will be able to collect with interest once the Order has expired.

One who chooses to engage in a publicly regulated business… by so doing surrenders his right to unfettered discretion as to how to conduct same.

The expected costs of foreseeable future regulation are already presumed to be priced into the contracts formed under the prior regulation

New York landlords do not enjoy a constitutional right to realize a profit from their rental properties – let alone all the profits contemplated in each of their individual rental agreements.

If the tenant uses the security deposit to pay a month’s rent, and the tenancy ends before the deposit is fully replenished, the landlord can obtain a judgment for the amount expended in repairs.

A special shout-out to the eviction explanation -

To secure an eviction warrant from the housing courts, a New York landlord must serve the tenant a notice of nonreceipt of payment, and give the tenant one final chance to pay by making a demand of payment within 14 days. If the landlord is still owed payment after two weeks have passed, he may commence what is known as a summary proceeding by filing a petition in the civil court, returnable by the tenant within 10 days. If the tenant does not respond in ten days, the court may (but rarely does) issue an eviction warrant immediately. However, if the tenant does respond, however, a trial is set for eight days hence. The trial may be adjourned up to ten additional days if the parties so require in order to produce their witnesses. If, after trial, a judgment is entered for the landlord and the court issues a warrant for eviction, the Sheriff must give the tenant 14 days’ notice in writing prior to execution. There are the usual provisions for appeal and stays issue routinely so that non-defaulting tenants are not evicted before their cases are fully reviewed. But even if the evidence supports a judgment for the landlord, the housing court is not required to order the tenant’s immediate eviction. A tenant may obtain a stay of the issuance of the warrant for up to one year by showing that ‘it would occasion extreme hardship to the tenant or the tenant’s family if the stay were not granted’. Such stays are far from uncommon.

Still think that being a landlord is for you?

This hasn't diminished our motivation to invest in real estate, but as the Court makes clear - we respect the rules and adjust our prices / reserves to account for more rules in the future.

Some years there are less rules and other years there are more, but we know that a keen understanding of the rules will make us profitable as property investors.

If you want profitability too, you need to increase your compliance budget immediately and respect the rules of the game because, as you can see, fighting the governor's office is a losing battle.

5-Step Plan to Reopen Your Long Island Business

2. The default or other event which caused the natural person to become personally liable for such obligation occurred between March 7, 2020 and September 30, 2020, inclusive.

1. Whether there is a contractual relationship;
2. Whether a change in law impairs that contractual relationship; and
3. Whether the impairment is substantial. U.S.C.A. Const. Art. 1, § 10, cl. 1; American Economy Ins. Co. v. State, 30 N.Y.3d 136 (2017).