Legal Analysts

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

Friday, January 20, 2023

Foreclosure Statute of Limitations Laws Changed - No More Deaccelerations - More Dismissals Coming

In 2023, Foreclosure Law is changed forever.

Previously, a foreclosing plaintiff could sue whenever they wanted without worry about statute of limitations constraints so long as payments remained due under the loan. When they sued, they'd accelerate the loan and declare the entire amount due for purposes of the lawsuit. However, if something went wrong in the lawsuit, they'd deaccelerate the loan and then, start the process again without fear of the 6 year statute of limitations on foreclosure actions blocking their case and having the lien removed?

Simply, plaintiff had the unilateral authority to deaccelerate the loan. No more. 

Now, CPLR 203(h) clarifies "that upon accrual of a cause of action, the aggrieved party - meaning
the party with the right to commence an action and interpose a claim may not unilaterally extend its own time to assert its own claim."

This is a game changer - there are going to be a lot of cases dismissed on statute of limitations grounds moving forward in New York State. 

Tuesday, November 22, 2022

New Mortgage Default Law as New York Home Prices Tumble

On November 22, 2022, Governor Hochul signed A3081 into law, which immediately prohibits the registration of mortgages in default prior to the filing of a notice of pendency. This is on the same day that the homepage of Newsday reads "Long Island homebuyers see highest rate of price cuts since 2019." It seems like foreclosures are on everyone's mind this Thanksgiving season. 

The new law can be found at Real Property Actions and Proceedings Law section 1393 and it basically cuts against the trend of local towns and villages enacting laws that require lenders to maintain foreclosed property - for example, here is the one in Smithtown New York. Specifically, it restricts these laws, which are problematic because they often required action on defaulted mortgages that were not yet in suit. Now, this new law requires a notice of pendency to have first been filed in a court before these laws can be effective. Smart.

Regardless, this is the beginning of the new focus on foreclosure trend that will be coming to all of us soon when we all start paying our heating bills.

Happy Thanksgiving.


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.

Wednesday, June 30, 2021

New Foreclosure Compliance Rules in Town of Southampton

The Town of Southampton has issued a new compliance protocol (Town Code at Chapter 262) for Foreclosure Plaintiffs in response to an increase in crime and deterioration in property appearance. 

The new law sets forth a Registration Scheme with new maintenance obligations:

  • Homes are to kept free and clear of weeds, overgrown brush, trash, dead vegetation, debris, etc.
  • No graffiti
  • Requirements for watering, irrigation, cutting and mowing of lawn
  • Pools and spas to be clear of pollutants and debris
Properties subject to foreclosure must be properly secured in order to avoid unauthorized access:

  • Locked windows, doors, and gates
  • Repairs to broken windows, doors, and gates
  • Designation of a property manager to maintain and perform necessary work

Penalties & Fines include:

  • $1,000 fine or up to 15 days in jail (or both), for each violation
  • $1,000-$5,000 fine or up to 15 days in jail (or both) for a second or subsequent violation
  • $150 for first day of violation, $250 for second day of violation, $500 for third day of violation and continuing.
Will the new registration requirements really increase the value of neighborhoods and decrease crime and deterioration? 

Monday, June 14, 2021

Tenant's Rights During Foreclosure - New Law

A new NYS law permits tenants who did not occupy a foreclosure premises at the time of the commencement of the foreclosure lawsuit to remain in occupancy for the remainder of their lease term, up to a maximum of 3 years. 

This new law gives tenants greater protection in the event that they happen to occupy a home subject to a foreclosure action, prior to their possession. The ongoing COVID-19 pandemic has caused so much chaos, disruption, and hardship to families across this nation (and the world for that matter) and the ability for families to be able to remain in a rental dwelling that is being foreclosed upon for at least the remainder of their lease and up to a maximum of 3 years, can give these families some relief and afford them a little more time to figure out their next move. 

On the other hand, this law could create delays in the purchase and sale of residential homes due to a tenant's ability to remain at a foreclosed home as referenced above. 

Would you even want to buy a house from foreclosure anymore? 

Do you support the new law that gives tenants additional rights during foreclosure? 

How much of an impact will this new bill have on future purchase and sales on foreclosed homes? 

Tuesday, May 04, 2021

Legislation Extending Eviction & Foreclosure Moratoriums to August 31, 2021 Signed by Governor

On May 4, 2021, the New York State Senate and Assembly passed legislation (A.7175) that extends the eviction and foreclosure moratoriums on both residential and commercial properties from May 1, 2021 to August 31, 2021. The legislation is now on the Governor’s desk for signature. UPDATE: The Governor signed the legislation on May 5, 2021.

If signed, eviction and foreclosure proceedings shall be stayed until August 31, 2021 for tenants and foreclosure defendants who submit a hardship declaration pursuant to the COVID-19 Emergency Eviction and Foreclosure Prevention Act and the COVID-19 Emergency Protect Our Small Businesses Act.

Also passed is legislation which expands the COVID-19 Emergency Protect Our Small Businesses Act to small businesses with up to 100 employees, or up to 500 employees if the business was shut down by Executive Order or Health Department directives for at least 2 weeks between May 15, 2020 and May 1, 2021 (A.7127).

As a result, landlords should resort to bringing breach of contract lawsuits against non-paying tenants as explained by the federal courts in Elmsford Apartment Associates LLC v. Cuomo. Do you think suing for a money judgment could result in a settlement where your non-paying tenant surrenders & leaves your property? Should the legislature block this too?

Thursday, March 11, 2021

New Commercial Mortgage Foreclosure Relief Law Signed

On March 10, 2021, Governor Cuomo signed the COVID-19 Emergency Protect our Small Businesses Act of 2021 (“Act”). The Act provides additional relief to commercial tenants from evictions and to owners of commercial property from foreclosure proceedings. In summary, the Act provides owners of commercial properties with an opportunity to submit a Hardship Declaration as published by the Office of Court Administration which effectively stays the enforcement or commencement of commercial foreclosure proceedings until May 1, 2021.

  • The Act applies to owners or mortgagors of commercial properties who:
    • owns 10 or fewer commercial units (directly or indirectly; units may be in more than 1 property or building as long as total units are occupied or available for rent);
    • is a business that is a resident in New York State;
    • is independently owned and operated;
    • is not dominant in its field; and
    • employs 50 or fewer persons.
  • The Act does not apply to mortgage loans backed by a state corporate governmental agency.

Hardship Declaration
  • The Act requires the Court or the foreclosing party (depending on the status of the foreclosure proceeding) to provide the borrower with a statement of protections available under the Act in 14-point type (“Hardship Declaration”).
  • More importantly, the borrower must complete the Hardship Declaration and provide it to the foreclosing party to be afforded relief under the Act, if the borrower is suffering a financial hardship including, but not limited to:
    • a significant loss of revenue;
    • a significant increase in necessary expenses related to providing protective equipment to prevent transmission of COVID-19;
    • moving expenses and difficulty securing alternative property; or
    • a commercial tenants’ default on a significant amount of rent since March 1, 2020,
  • The borrower’s submission of the Hardship Declaration is a rebuttable presumption of a financial hardship for purposes of establishing a defense.

New Commercial Foreclosure Proceedings
  • If the borrower provides a Hardship Declaration to the foreclosing party/foreclosing party’s agent, the foreclosing party is prohibited from commencing any foreclosure proceeding until May 1, 2021.
  • If the borrower does not provide a hardship affidavit, the lender is required to file the following to commence a foreclosure proceeding:
    • affidavit of service of the Hardship Declaration in; and
    • affidavit of the foreclosing party / foreclosing party’s agent attesting that the foreclosing party or his agent did not receive a Hardship Declaration from the Borrower.
  • If the Court determines that the foreclosing party failed to provide the Hardship Declaration to the borrower, the court shall stay the foreclosure for at least 10 days to allow the borrower to complete the Hardship Declaration.

Pending Commercial Foreclosure Proceedings / Pre-Judgment
  • Refers to proceedings commenced before March 7, 2020 or commenced within 30 days of March 10, 2021.
  • Stayed for at least 60 days to May 9, 2021, or to such later date the Court deems necessary to provide borrower time to complete and submit the hardship declaration.
  • Court shall issue stay and mail copy of the Hardship Declaration to the borrower.
  • If the borrower provides a completed Hardship Declaration to the court or lender, the foreclosure proceedings are stayed until May 1, 2021.

  • In any foreclosure proceeding in which a judgment of sale has already been issued, execution is stayed until the court holds a status conference with the parties.
  • If the borrower provides a Hardship Declaration, the execution of the warrant is stayed until May 1, 2021.

Tuesday, February 16, 2021

Housing Price Plummet Delayed to June 30, 2021

The headlines are in - the federal foreclosure / eviction moratoriums are extended to June 30, 2021 from March. This extension applies to 70% of single family home mortgages.

The subtext is that we have a foreclosure / eviction crisis on the horizon. According to the White House "1 in 5 renters is behind on rent and just over 10 million homeowners are behind on mortgage payments." 

If you just use a little deduction, you will quickly realize that almost every block across America is going to see foreclosures and evictions. In the micro, this will result in firesales, which will reduce comparable home prices across the board. In the macro, it will decrease property upkeep and maintenance, which will create a secondary impact on the greater community's desirability and pricing. 

That's the bad. 

The good is that it's going to be a buyer's market soon.

We need to start thinking about strategies to Purchase Property Post-Pandemic. 

What's your strategy? 

Wednesday, February 10, 2021

You Know That Your Mortgage Payoff # Is Wrong - What Should You Do?

Here is the scenario - You are trying to sell a property and you order a payoff from your mortgage company, but that payoff quote comes in much higher than you believe that it should. 

You are in a real bind. 

You need to sell, but you don't want to overpay. What should you do?

This is particularly problematic where you are in default on your mortgage and the lender has started tacking on exorbitant penalties and attorneys' fees.

The answer is that you better protest the payoff, in writing, while requesting an itemization and then, you should pay it anyway. 

If you do, you can then file a motion for an accounting and ask the court to compute the appropriate fees, charges, expenses, and other payments due under the mortgage. 

If you don't, your motion to the court for an accounting will probably be denied in light of the voluntary payment doctrine, equitable estoppel, and waiver bar the accounting.

Again, protest and pay is the strategy based upon the appellate court decision in US Bank v. Cordero

Are you selling a house in foreclosure? If so, pay attention. 

Wednesday, December 30, 2020

No NYS Residential Foreclosures Until May – New Law

On 12/28/2020, the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 became law. 

This law effectively stops all residential foreclosures in NYS until May 1, 2021, but it does nothing about the borrower's obligation to repay their loan.  


Do you think that makes sense?

Isn’t that just delaying the inevitable foreclosure crisis?

Shouldn't something be done about the loan too? 


Here is how the law works – a homeowner needs to submit a hardship declaration to their lender and magic, no more foreclosure until May.


The Details:

o   Either the court or lender (depending on foreclosure status) must provide the borrower with a statement explaining the law.

o   To qualify, a borrower must be suffering a financial hardship including, such as

§  A significant loss of household income;

§  Increase in necessary expenses;

§  Childcare responsibilities;

§  Moving expenses; and/or

§  Other circumstances negatively affecting the borrower’s ability to find meaningful employment.

o   Sample hardship declarations will be available on the Office of Court Administration website.

o   New Foreclosures – If the borrower does not provide the declaration, the lender is required to file all sorts of documents to commence a foreclosure proceeding, including:

§  Affidavit of Service of the Hardship Declaration in English and in the borrower’s primary language.

§  Affidavit of Service of RPAPL 1303 and 1304 notices; and

§  Affidavit of the Petitioner/Petitioner’s agent attesting that the Petitioner or his agent did not receive a Hardship Declaration from the Borrower.

o   Existing Foreclosures – Paused (stayed) for at least 60 days to provide the borrower time to complete and submit the hardship declaration.

o   This also stops foreclosure sales if the case already was decided by the court in a judgment.


Make no mistake, this new law does NOT excuse borrowers from paying the mortgage. 

So, what is the point? 

Isn’t it misleading borrowers into digging an even bigger financial hole?

What do you think? 

Wednesday, October 21, 2020

Commercial Eviction and Foreclosure Moratoriums Extended through January 1, 2021

Through Executive Order 202.70, Governor Cuomo extended the moratoriums for the initiation of a proceeding or enforcement of an eviction of any commercial tenant for nonpayment of rent or a foreclosure of any commercial mortgage for nonpayment of such mortgage to January 1, 2021. This means that no eviction or foreclosure proceeding may be commenced against commercial tenants for nonpayment of rent or mortgage until such date. However, commercial tenants may still be evicted through holdover eviction proceedings or sued under breach of contract theories for missed rent.

There are no moratoriums in place for residential properties by Executive Order but residential evictions based on non-payment are governed by the Tenant Safe Harbor Act. Courts may be prohibited issuing a warrant of eviction or judgment of possession against a residential tenant experiencing COVID-19-related financial hardship, if the tenant raises it as an affirmative defense and the Court determines that the tenant is suffering such hardship. Listen to our podcast HERE for what this means to residential landlords.

Monday, October 05, 2020

Federal Eviction and Foreclosure Moratoriums Invite Litigation

Andrew Lieb published the article in The Suffolk Lawyer, Federal Eviction and Foreclosure Moratoriums Invite Litigation. This article discusses issues that will be litigated if an eviction moratorium is raised as a defense to an eviction proceeding.

Monday, September 21, 2020

Commercial Eviction and Foreclosure Moratoriums Extended through October 20, 2020

By Executive Order 202.64, Governor Cuomo extended the moratoriums for the initiation of a proceeding or enforcement of an eviction of any commercial tenant for nonpayment of rent or a foreclosure of any commercial mortgage for nonpayment of such mortgage to October 20, 2020. This means that no eviction or foreclosure proceeding may be commenced against commercial tenants for nonpayment of rent or mortgage until such date.

There are no moratoriums in place for residential properties by Executive Order. Irrespective of Governor Cuomo’s Executive Orders, court directives are still in place whereby landlords and lenders are permitted to initiate residential and commercial evictions and foreclosures not based on nonpayment but such proceedings remain suspended until further notice. You can read more about these court directives HERE and HERE. Further, residential evictions remain governed by the Tenant Safe Harbor Act as well, which prohibits courts from issuing a warrant of eviction or judgment of possession against a residential tenant experiencing COVID-19-related financial hardship, among others.

Friday, August 21, 2020

Commercial Eviction and Foreclosure Nonpayment Proceedings Stayed Until September 20, 2020

On August 20, 2020, Governor Cuomo signed Executive Order 202.57 which, among others, extended Executive 202.48 and 202.28. Per the Executive Order, the following are stayed until September 20, 2020: 

  1. Commencing a commercial eviction proceeding against any commercial tenant for the nonpayment of rent;
  2. Commencing a foreclosure of any commercial mortgage for nonpayment of such mortgage; and
  3. Enforcing of such eviction or foreclosure.

As to #3, the Executive Order is unclear as to what is actually prohibited in terms of enforcing an eviction or foreclosure, but it could mean that executing a warrant of eviction or conducting a foreclosure sale are currently prohibited. Stay tuned should future Executive Orders or Court Administrative Orders provide clarification.

As to holdover eviction proceedings, the Executive Order does not specifically address them, thus residential and commercial holdover eviction proceedings may be commenced but they remain suspended per Administrative Order 160/20.

As a reminder, for proceedings commenced prior to March 17, 2020, the execution of the warrant of eviction for residential properties is stayed until October 1, 2020. For properties outside New York City, you can read more about the current eviction rules HERE.

In New York City, the execution of the warrant of eviction for residential properties is stayed until October 1, 2020 and until September 4, 2020 for commercial properties. For properties in New York City, you can read more about the current eviction rules HERE and HERE.

Thursday, August 06, 2020

Mortgage Lender Warning - No Consideration Deed

The Appellate Division recently reminded us of the importance of investigating a no consideration deed prior to issuing a mortgage to the titleholder. 

In 2386 Hempstead, Inc. v. 182 St., Inc., the Appellate Division held that the no consideration deed constituted notice of a potential previous fraud in the title spurring a duty to make inquiry concerning the circumstances of the transaction at issue. 

By failing to make such inquiry, the lender lost its status as a bona fide encumbrancer for value and therefore, jeopardized its status as a prior lienholder, who gets paid first in a foreclosure action. 

Tuesday, July 21, 2020

Foreclosure Tsunami Coming - Litigation Checklist

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.