No Fracking Way - New York to ban fracking based on adverse health data (lawsuits likely to follow)

The Department of Environmental Conservation (DEC) will issue a legally binding findings statement to prohibit High-Volume Hydraulic Fracturing (HVHF) in the State of New York.

New York's move should motivate the Erin Brokoviches of this world to start their lawsuits against companies involved in fracking based on the plethora of adverse health data exposed.

This DEC's statement comes on the heels of the Acting Department of Health Commissioner recommending that fracking should not move forward in the State.

According to the Commissioner "I have considered all of the data and find significant questions and risks to public health which as of yet are unanswered,". The review by the Department of Health, entitled "A Public Health Review of High Volume Hydraulic Fracturing for Shale Gas Development", is the basis for the DEC's decision to ban fracking.

The review states, in pertinent part, that "there are significant uncertainties about the kinds of adverse health outcomes that may be associated with HVHF, the likelihood of the occurrence of adverse health outcomes, and the effectiveness of some of the mitigation measures in reducing or preventing environmental impacts which could adversely affect public health."

The review summarizes "some of the environmental impacts and health outcomes potentially associated with HVHF activities:
• Air impacts that could affect respiratory health due to increased levels of particulate matter, diesel exhaust, or volatile organic chemicals.
• Climate change impacts due to methane and other volatile organic chemical releases to the atmosphere.
• Drinking water impacts from underground migration of methane and/or fracking chemicals associated with faulty well construction.
• Surface spills potentially resulting in soil and water contamination.
• Surface-water contamination resulting from inadequate wastewater treatment.
• Earthquakes induced during fracturing.
• Community impacts associated with boom-town economic effects such as increased vehicle traffic, road damage, noise, odor complaints, increased demand for housing and medical care, and stress."

Today is a bad day to own a fracking company. Yet, so many lives will be bettered as a result of this new rule.

ALERT - Throw Out Your Old Form Leases Immediately

Residential leases are now required to contain a notice to tenant(s) concerning the existence of sprinkler systems.

“Sprinkler system” shall mean a system of piping and appurtenances designed and installed in accordance with generally accepted standards so that heat from a fire will automatically cause water to be discharged over the fire area to extinguish it or prevent its further spread.
See Executive Law 155-a.

Read the new law at Real Property Law 231-a.

The law specifically requires:

• Notice in bold face type;
• Notice that a maintained and operative sprinkler system in the leased premises is in - EXISTENCE OR NON-EXISTENCE; &
• The last date of maintenance and inspection of any EXISTING sprinkler system.

The Bill's Justification states that "According to the Fire Sprinkler Initiative, the availability of smoke detectors, coupled with a maintained and operative sprinkler system installed in a residence, decreases the risk of dying in a fire by over 80%."

As a person that is into living, that statistic is jaw-dropping in support of the existence of sprinklers in residential housing. At the least, this new law provides tenants with the knowledge to make an informed choice as to whether to live in a premises without a sprinkler system. 

Real estate professionals should now immediately throw out any of their old leases and make sure to have a new residential lease prepared that complies with Real Property Law 231-a. Also, cooperative boards must not forget that they are leasing property as well. So, cooperatives that amend their proprietary leases must comply with RPL 231-a or risk the lease being held void. 

First Town in U.S. to Require Digital Carbon Monoxide Detectors

In New York, the Town of Brookhaven has become the first Town in the United States to require digital carbon monoxide detectors in every residential property. 

This new law comes after a fatal carbon monoxide exposure incident involving a restaurant manager in Huntington Station this past February. 

This new law amends Chapter 30 of the town’s code which previously mandated all buildings with human occupants to have carbon monoxide detecting devices or systems. The newly amended law maintains this mandate but now requires all homes to have carbon monoxide detectors or devices with digital outputs. While conventional detectors only sound an alarm when the carbon monoxide level has reached a dangerous level, the digital detectors display the amount of carbon monoxide gas present even at very low levels. This change in the law is significant because even low levels of carbon monoxide exposure can lead to health problems.  

Failure to comply with the Town Code may result in substantial fines and criminal charges. Additionally, homeowners who fail to update their carbon monoxide detection system may be held responsible for injuries or fatalities on their property related to exposure.

Per the amended Code, new homes are required to immediately install digital carbon monoxide detectors and existing homes must install digital carbon monoxide detectors by August 1, 2021.

The Home Affordable Modification Program has been Extended

If you are a struggling homeowner and have defaulted or are at risk of default on your mortgage loan, an application for the Home Affordable Modification Program (HAMP) may be your best chance of obtaining an affordable loan modification.

Previously set to expire in December 2015, the Home Affordable Modification Program has recently been extended by the Obama Administration through December 2016. This federal loan modification program has been successful in providing reductions in monthly mortgage payments for millions of homeowners nationwide. Unlike Lender-based modifications, this program has two tiers, one of which requires a debt-to-income of 31% in its modification terms and another which requires a 10% reduction in monthly mortgage payments. If a homeowner is not eligible for Tier 1, then he or she will be reviewed for Tier 2, thus giving homeowners two chances to obtain lower, affordable monthly mortgage payments in their application for HAMP.

Oftentimes, Lenders that have their own loan modifications will only add the arrears to the principal balance without changing any other terms of the loan, thus creating monthly mortgage payments that are, in fact, higher than the original payments. Struggling homeowners often cannot accept a modification with higher payments because their hardships are long term or even permanent.

HAMP, however, requires affordable mortgage payments as part of its program and now will continue through the remaining term of the Obama Administration.

Real Estate Broker Record Retention - Proposed Regulatory Change

Did you know that there are laws about keeping real estate brokerage records?

Currently, the applicable law reads:

§175.23 Records of transactions to be maintained 

(a) Each licensed broker shall keep and maintain for a period of three years, records of each transaction effected through his office concerning the sale or mortgage of one- to four-family dwellings. Such

records shall contain the names and addresses of the seller, the buyer, mortgagee, if any, the purchase price and resale price, if any, amount of deposit paid on contract, amount of commission paid to broker or gross 

profit realized by the broker if purchased by him for resale, expenses of procuring the mortgage loan, if any, the net commission or net profit realized by the broker showing the disposition of all payments made by 

the broker. In lieu thereof each broker shall keep and maintain, in connection with each such transaction a copy of (1) contract of sale, (2) commission agreement, (3) closing statement, (4) statement showing 

disposition of proceeds of mortgage loan.  

(b) Each licensed broker engaged in the business of soliciting and granting mortgage loans to purchasers of one to four family dwellings shall keep and maintain for a period of three years, a record of the name 

of the applicant, the amount of the mortgage loan, the closing statement with the disposition of the mortgage proceeds, a copy of the verification of employment and financial status of the applicant, a copy of the inspection and compliance report with the Baker Law requirements of FHA with the name of the inspector. Such records shall be available to the Department of State at all times upon request.

----

However, much of the currently applicable law makes no sense as often a broker does not have a contract of sale in his / her possession and often the broker keeps all records electronically. 

Now, there is a proposal to change the law to reflect reality and the new law would read as follows (underlines being additions to the law):

§175.23 Records of transactions to be maintained 
(a) Each licensed broker shall keep and maintain for a period of three years, paper and/or electronic records of each transaction effected through his or her office concerning the sale [or mortgage] of one- to four-family dwellings. In some transactions, the broker may not be provided a copy of the document required.  In such instances, the broker will not be found to have violated this regulation if said document is not kept and maintained. Records to be kept and maintained shall contain:

 (1) the names and addresses of the seller[,] and the buyer, [mortgagee, if any,] (2) the broker prepared purchase contract or binder, or if the purchase contract is not prepared by the broker, then the purchase price [and resale price, if any,] and the amount of deposit (if collected by broker) [paid on contract], (3) the amount of commission paid to broker, (4) [or g]the gross profit realized by the broker if purchased by him or her for resale, [expenses of procuring the mortgage loan, if any, the net commission or net profit realized by the broker showing the disposition of all payments made by the broker. In lieu thereof each broker shall keep and maintain, in connection with each such transaction a copy of (1) contract of sale, (2) commission agreement, (3) closing statement, (4) statement showing disposition of proceeds of mortgage loan.] (5) any document required under Article 12-A of the Real Property Law and (6) the listing agreement or commission agreement or buyer-broker agreement.  

[(b) Each licensed broker engaged in the business of soliciting and granting mortgage loans to purchasers of one to four family dwellings shall keep and maintain for a period of three years, a record of the name of the applicant, the amount of the mortgage loan, the closing statement with the disposition of the mortgage proceeds, a copy of the verification of employment and financial status of the applicant, a copy of the inspection and compliance report with the Baker Law requirements of FHA with the name of the inspector. Such records shall be available to the Department of State at all times upon request.]

Notate the addition of the sentence "any document required under Article 12-A of the Real Property Law" at the end of the second paragraph. This is a catchall that includes such items as an Agency Disclosure Form and any other document later added to the law.

So, keep an eye on the DOS's Regulatory Activity page to determine when this Recent Proposal will become a Recent Adoption and hence, applicable law, or just keep an eye on the Lieb Blog for simple updates when real estate events happen. 

New Tax Laws And Its Impact On Estate Planning

Updates to the tax laws of New York are available here and are effective as of April 1, 2014!

New changes in tax laws that affect a person’s estate that you should be aware of:

1. Changes on estate tax exclusions rising substantially (to eventually match federal estate tax exclusion). See NY Tax Law section 952(c);
2. Reforms on gifts given prior to death. See NY Tax Law section 954(a); and
3. Repeal of the New York Generation Skipping Transfer tax. See Part X, Section 8, repealing article 26-b).

On March 31, 2014, Governor Cuomo signed legislation that makes broad changes to the New York State Estate and Gift Tax Laws, as well as some technical changes to certain trust income tax rules. 

Pursuant to New York Tax Law §952(c), estate tax exclusions will be rising dramatically each year from the current New York State amount of One Million Dollars ($1,000,000.00) to Five Million Two Hundred Fifty Thousand Dollars ($5,250,000.00) by 2017, which is the current federal estate tax exemption amount. Estate tax exclusion means the dollar amount a person’s estate can pass free from New York Estate Tax. More specifically, for individuals dying on or after April 1, 2014, and before April 1, 2015, the estate tax exclusion amount will be Two Million Sixty Two Thousand Five Hundred Dollars ($2,062,500.00). For individuals dying on or after April 1, 2015, and before April 1, 2016, the estate tax exclusion amount will be Three Million One Hundred Twenty Five Thousand Dollars ($3,125,000.00). For individuals dying on or after April 1, 2016, and before April 1, 2017, the estate tax exclusion amount will be Four Million One Hundred Eighty Seven Thousand Five Hundred Dollars ($$4,187,500.00). Lastly, for persons dying on or after April 1, 2017, and before January 1, 2019, the estate tax exclusion amount will be Five Million Two Hundred Fifty Thousand Dollars ($5,250,000.00).

Pursuant to New York Tax Law §954(a), gifts made by a New York resident within three (3) years of that person’s death on or after April 1, 2014, and before January 1, 2019, will be added back into that person’s estate. Bringing these gifts back into the deceased person’s estate will now increase that person’s gross estate and this may make those gifts subject to the New York Estate Tax now, depending on the size of the estate, as discussed in the previous paragraph.

Pursuant to Part X, Section 8 of the new tax laws, the New York State Generation Skipping Transfer Tax is repealed. Prior to its repeal, this tax imposed a generation-skipping transfer tax on outright gifts to persons who are two (2) or more generations below the transferor, or on distributions from certain trusts that are held solely for the benefit of said persons.

These are only a few changes to the current New York State laws that are affecting estate planning in the future. To summarize, these new laws will narrow and ultimately eliminate the estate tax exclusion gap between the New York and Federal estate tax exclusion amounts. For the next five years, however, as the tax estate exclusion amount increases and the taxable gift laws apply, estate planning will become more complex.

See all the recent changes in the New York State laws, effective April 1, 2014, on page 488. 

Title Insurance Reform in NYS Budget

Accordingly to a Press Release entitled, Governor Cuomo and Legislative Leaders Announce Passage of 2014-15 Budget, NYS now has significant changes to our title insurance industry.

Title insurance insures against defects in title to real property and is required if a purchaser obtains an institutional mortgage as part of their purchase of the real property. Some private lenders do not require title insurance. However, its always a good idea to not only get title insurance in the form of a lender's policy, but also to obtain a fee or homeowner's policy as well because purchasing property is quite expensive in this State and insuring that you own what you thought you bought is a great idea.

According to the Press Release, the Title Insurance Reform coming to NYS is as follows:

The Budget includes measures to provide stronger oversight for the title insurance industry, which will help better protect consumers and lower costs for New York homeowners. The Budget provides the Department of Financial Services (DFS) with authority to issue licenses to title insurance agents for the first time, just as it licenses all other insurance agents and brokers. Licensing will require agents to meet qualification standards and undergo regular training. DFS will also have the authority to monitor abuse by agents and to revoke licenses accordingly, as well as help root out conflicts of interest that drive up costs for homeowners. Together with other measures including regulations DFS will soon issue on title insurance, these reforms are expected to result in a 20 percent reduction in title insurance premiums and closing costs for new home purchases and a more than 60 percent reduction in costs on refinancing transactions.

The 2 keys in this reform is:

1. Licensing requirements for title closers
2. Reduced costs of title insurance

As the Department of Financial Services issues the applicable Regulations we will update this blog with more information. 

Stay tuned. 

DECISION: The Alleged Effects of Mold on Human Health

The alleged effects of mold on human health has been addressed by New York’s highest court, the Court of Appeals, on March 27, 2014 in Cornell v. 360 W. 51^st St. Realty, LLC.

The facts of the case were that Ms. Cornell resided in an apartment from 1997 to 2003, after which time she vacated the property due to alleged health issues allegedly caused by mold and dampness in her apartment. She claimed to be dizzy, asthmatic and congested and was unable to function or sleep properly while in the apartment.

51^st Street Corporation opposed her claim, arguing that Cornell was unable to prove a cause-effect relationship between mold and disease. Relying on a clinical immunologist as an expert, 51^st Street Corporation demonstrated that the scientific community generally accepts that mold can cause disease through specific channels; however, none of Cornell’s symptoms can be directly linked to mold exposure.

In dismissing the complaint, the Court held: “Studies that show an association between a damp and moldy indoor environment and the medical conditions that [Plaintiff’s Expert] attributes to Cornell’s exposure to mold…do not establish that the relevant scientific community generally accepts that molds cause these adverse health effects.”

Brokers, keep this case in mind as you work with clients who have fears about the effects of mold on human health when they refuse to enter a property claiming to smell mildew.

As the Court explained, mold exposure is not established by the scientific community to create toxic effects, except for cases of ingestion. It only is shown to cause an immune response in allergic individuals. 

Mortgage Finance Reform Advances in the Senate

The Senate is currently formulating its bipartisan plan to overhaul Fannie Mae and Freddie Mac in the Committee on Banking, Housing, and Urban Affairs. Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) have been working together to craft legislation that shifts the mortgage market to the private sector and creates the Federal Mortgage Insurance Corporation (FMIC) that will protect taxpayers from having to bear the costs if another housing bubble bursts in the future. FMIC will be an independent agency that supervises servicers and guarantors and provides insurance on mortgaged-backed securities. It will also create a mortgage insurance fund that funds insurance claims but only after the private sector absorbs the initial risk. The government will remain a guarantor of mortgages as a last resort.

In a news release, Mike Crapo explained, “This agreement moves us closer to ending the five-year status quo and beginning the wind down of Fannie and Freddie while protecting taxpayers with strong private capital, building the components for a stable secondary market and avoiding repeating the mistakes of the past. Government control of Fannie and Freddie with no private capital to protect taxpayers against losses is unacceptable.”

This legislation is only in its early stages, focusing on the necessity of a smooth and efficient transition to private lending and the continuing availability of the affordable 30-year mortgage. Brokers, change is coming to the mortgage market, and it is essential that you are knowledgeable every step of the way to a final bill. This legislation directly affects your occupation and your clients, so keep your eyes open for more advances in legislation.

Click here to read more on the Housing Finance Reform legislation. You may also follow S. 1217’s progress here on govtrack.us.  

Case Escalations: Power to the Homeowner

Have you applied for a loan modification and felt that your servicer did not properly review you for HAMP and other Making Home Affordable programs? Perhaps your servicer lost your documents or failed to provide you with the proper update on your file? Well, what are you waiting for? Escalate your case today and demand your servicer to be in accordance with the MHA guidelines!

Homeowners may contact the MHA Hotline at 888-995-HOPE to request assistance in the escalation of their cases. The MHA Support Center, acting as an intermediary between the homeowner and servicer, ensures that the servicer is complying with the MHA guidelines and is reviewing homeowners’ case escalations in a timely fashion. However, homeowners may also contact their servicers directly or authorize their attorneys to go through the HAMP Solution Center (HSC) to seek resolution. No matter what route is taken, it may take up to 30 or more days for an escalated case to be reviewed and resolved, so homeowners should act immediately if they believe to have been wrongly denied a MHA Program.

Case escalations give power to the homeowner and keep disorganized servicers in check. Please go here if you would like to know how to escalate your case today!

Supplemental Directive 13-09 to Take Effect in Two Days

The time has come! Supplemental Directive 13-09 to the Making Homes Affordable handbook will take effect in two days on January 10, 2014.

As discussed in a previous entry, this Supplemental Directive makes the loss mitigation process easier, clearer, and more efficient. It is an alignment with the final Consumer Finance Protection Bureau (CNPB) Mortgage Servicing Regulations, which prohibit high risk lending and will also take effect on January 10, 2014. 

Servicers must review documents and submit Incomplete Information Notices in tighter timeframes than ever before. This makes sense because most borrowers submit incomplete initial packets anyway and should be advised of missing documents immediately to move forward from the initial stage. By contacting the borrowers earlier and responding to them quicker, servicers are now able to maximize borrower protection in their review of loan modification applications.

The Department of the Treasury and the Department of Housing and Urban Development did not want to completely overhaul the Making Homes Affordable guidebook because they did not want to alter or destroy the integrity of the programs. All changes to the Making Homes Affordable handbook were kept to a minimum and in accordance with the final CFPB Mortgage Servicing Regulations. Remember, the CFPB regulations are the bare bones of requirements for servicers, so when servicers review borrowers for HAMP, they still must consider the Making Homes Affordable handbook and state laws as well.  

Also, HAMP still remains top priority even though CFPB regulations require borrowers to be considered for all loss mitigation options at the same time. If the servicer participates in the HAMP program and the borrower is eligible for HAMP, the borrower must be given HAMP over other in-house loan modifications. 

The Closing Disclosure Replaces the HUD-1 in Real Estate Transactions in 2015

According to the Consumer Financial Protection Bureau, the new form, "The Closing Disclosure form replaces the current form used to close a loan, the HUD-1, which was designed by HUD under RESPA. It also replaces the revised Truth in Lending disclosure designed by the Board under TILA."

Consumers must receive this form "at least three business days before the consumer closes on the loan." Strikingly, if many possible loan components are changed following the provision of The Closing Disclosure form, such as changing the product or adding a prepayment penalty, a "consumer must be provided a new form and an additional three-business-day waiting period after receipt".

Look forward to this final rule, which is effective on August 1, 2015.

Ocwen is Finally Accountable for its Actions

The Consumer Financial Protection Bureau (CFPB) and 49 states have signed a proposed court order requiring Ocwen to spend $2.1 billion on loan modification programs and relief to victims of foreclosure. 

Ocwen is the largest non-bank mortgage servicer in the United States. It was alleged by CFPB that for years, Ocwen has illegally delayed loan modifications, charged improper fees, provided incorrect updates to consumers who were applying for loan modifications, erroneously reviewed foreclosure documents, and inaccurately applied and tracked monthly mortgage payments. 

Like GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo, Ocwen is alleged to have deceived and abused the system for too long and must be punished for its illegal practices.

Under the Order, Ocwen is required to comply with the provisions of the 2012 National Mortgage Settlement and must comply with the new mortgage servicing rules that are taking effect January 2014. A knowledgeable, responsive single point of contact must be established for borrowers applying for relief, so that the loan modification process will be clearer and quicker than ever before. Instead of being sacrificed, borrowers will now be protected and given a fair shot at saving their homes.

Borrowers should be overjoyed that there will be more communication between servicer and borrower, and that borrowers who were improperly foreclosed on between 2009 and 2012 may receive compensation. It is a great step forward in the mortgage servicing world. 

Thank you to Lieb at Law's Assistant Case Manager, Jessica Vogele, for sharing this valuable information. 

Hotel Occupancy Tax on Expedia, are brokers next to be taxed for their rentals?

Last week, the Court of Appeals, NY's highest court, ruled that "Local Law 43, a hotel room occupancy tax applicable to online travel companies", is constitutional.

At issue before the Court was the legality of the City's "authority to tax the fees they collect from their customers" in Expedia v. City of NY Dept. of Finance where this fee represents an amount, which is larger than the amount actually paid the hotel for the actual occupancy of the room.

So the question before the Court was whether the brokerage fee, on hotel occupancy, was taxable? 

This decision is most interesting to real estate professionals because they always wonder why there are rules for transient (short-term) rentals of housing. As they can see from this decision, there are rules for establishments that offer transient housing such as hotels, motels & inns in the form of the imposition of a tax, among other rules. Further there are rules for companies that "broker" those deals whereas those "brokers" have to pay a tax on their commission, among other rules. Aren’t these websites, called “room remarketers” in the applicable tax, analogous to real estate brokerage companies for landlord / tenant rentals that aren’t transient? At the least, aren’t they analogous to Airbnb in the transient setting?

In opposition, the online travel companies argued that the City was taxing “a service fee under the guise of a tax on hotel rent” and therefore the tax was improper. The Court explained that the online travel companies were incorrect. The Court stated: “[u]nder the statute, the City may tax a ‘rent or charge,’ and it may collect the tax from a hotel ‘owner . . . or . . . person entitled to be paid the rent or charge’".  Further, “the City may tax any service fee that is a ‘condition of occupancy.’”

Aren’t brokerage fees on landlord / tenant a condition of occupancy? Maybe, but maybe not. Doesn’t a condition mean that its failure prevents the result? Can a broker prevent the result? No, therein is the difference between brokerage companies and travel sites. Real estate brokers often are cut out of deals and cannot prevent occupancy in order to get paid, but instead have a claim for commission that is separate from occupancy. In fact, no Lis Pendens is available to brokers and a mechanic’s lien is only available for a lease with a term of more than 3 years for non-residential property.

However, doesn’t Airbnb do just the same as Expedia? So, will companies like Expedia try to level the playing field next by lobbying that this tax is imposed on Airbnb as well? Right now, the cost of doing business for Airbnb just got cheaper and they now have a strategic financial advantage in the City of New York. What happens next is tantalizing.  

Movements in LGBT Discrimination Laws

In the wake of the U.S. Supreme Court's June 26 same-sex marriage decisions, pressure has increased to expand protections under federal, state and local legislation regarding sexual orientation, gender identity and gender expression in the context of employment and housing. In the employment area, the Senate Health, Education, Labor and Pensions ("HELP") Committee has approved a bill, ENDA (the Employment Non-Discrimination Act), that would prohibit employers from discriminating against employees on the basis of sexual orientation or gender identity.

Learn more about employment and housing regulations and see the full published article here

Find a housing counselor - Consumer Financial Protection Bureau approves list

Learn if a mortgage is good for you, your clients &/or customers.

Housing counselors provide advice on buying a home, renting, defaults, foreclosures, and credit issues.

In NY, 2 nationally approved housing counselors are:

1. National Federation of Community Development Credit Unions
2. National Urban League

However, there are many local housing counselors that can be found through this tool.

After, January 10, 2014 lenders will be required to provide a list of ten (10) housing counselors to all applicants for federally-related loans.

The list will also include this warning:
"The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. This list shows you several approved agencies in your area. You can find other approved counseling agencies at the Consumer Financial Protection Bureau’s (CFPB) website: consumerfinance.gov/mortgagehelp or by calling 1-855-411-CFPB (2372). You can also access a list of nationwide HUD-approved counseling intermediaries at http://portal.hud.gov/hudportal/HUD?src=/ohc_nint.”

No need to wait until January 10th - real estate professionals should start directing consumers to this list today.

Consumer Financial Protection Bureau getting into the Mortgage Modification Game

Incident to the Consumer Financial Protection Bureau's (CFPB) new mortgage rules, the Ability-to-Repay Rules, the CFPB also has created rules for delinquency notices, follow-up information for loss-mitigation, and forbearance plans. Its imperative that foreclosure defense counsel familiarize themselves with these rules prior to their effective in 2014.

The full final rule is available here.

Most interestingly is the "general ban on proceeding to foreclosure before a borrower is 120 days delinquent".

Also, important for mitigation specialists is the clear requirement that servicers provide notice of deficient document submissions incident to a modification application and an opportunity to cure. This should hopefully put an end to the days of we closed your file because we didn't get all of your documents - the fax shredder will be broken.

Mortgage Foreclosure Alert: New Making Home Affordable Program Handbook Released - Version 4.3

To access the new Handbook for MHA, inclusive of HAMP and HAFA, click here. 
This Handbook is the rules for banks / servicers to modify mortgages, so pay careful attention to detail and make sure that they comply.

Participating in Foreclosure Settlement Conferences prevents Default Judgment against Mortgagor

In a strikingly important decision, the Supreme Court, Kings County, faced the issue of whether a Defendant who participates in Foreclosure Settlement Conferences, but did not Answer the Complaint, can be held in Default granting the lender judgment.

The Court held:  "For the most part, caselaw is clear that, where a defendant makes an "informal appearance" within the time specified by CPLR 320(a), the defendant is not "in default," and a motion to enter judgment by default should be denied."

Practitioners and borrowers alike should read this decision and utilize it to advocate against judgments as many pro se defendants in the foreclosure arena participate in settlement conferences without formally answering.

Foreclosure Requirements After 7/31/13

At the end of last month, the Governor signed into law Bill A5582-2013. This Bill added CPLR 3012-B and amended CPLR 3408. Effectively, this Bill eliminates prior rules with respect to attorneys filing the Attorney Affirmation pursuant to AO/413/11. Specifically, this Bill changes the time period for the requirement from accompanying the Request for Judicial Intervention (RJI) to accompanying the Complaint. As a result, a shadow docket can be eliminated of cases that were commenced, but cannot move to be assigned to a Judge. So, this is a great change in operations for foreclosures in this state. Additionally, it adds precise sanctions for failure at CPLR 3012-B(D) thereby taking out the guesswork for Judges that has plagued the State for the last years.

CPLR 3012-B now reads as follows:CERTIFICATE OF  MERIT  IN  CERTAIN  RESIDENTIAL  FORECLOSURE ACTIONS.  (A)  IN  ANY  RESIDENTIAL  FORECLOSURE ACTION INVOLVING A HOME LOAN, AS SUCH TERM IS DEFINED IN SECTION THIRTEEN HUNDRED  FOUR  OF  THE REAL PROPERTY  ACTIONS AND PROCEEDINGS LAW, IN WHICH THE DEFENDANT IS A RESIDENT OF THE PROPERTY SUBJECT TO FORECLOSURE, THE COMPLAINT SHALL  BEACCOMPANIED  BY  A  CERTIFICATE, EXECUTED BY THE ATTORNEY FOR THE PLAIN-TIFF, CERTIFYING THAT THE ATTORNEY HAS REVIEWED THE FACTS  OF  THE  CASEAND  THAT,  BASED ON CONSULTATION WITH AUTHORIZED REPRESENTATIVES OF THEPLAINTIFF AND THE ATTORNEY'S REVIEW OF  PERTINENT  DOCUMENTS,  INCLUDINGTHE  MORTGAGE,  SECURITY AGREEMENT AND NOTE OR BOND UNDERLYING THE MORT-GAGE EXECUTED BY  THE  RESIDENTIAL  DEFENDANT  AND  ALL  INSTRUMENTS OF ASSIGNMENT,  IF ANY, OR ANY OTHER INSTRUMENT OF INDEBTEDNESS, THERE IS AREASONABLE BASIS FOR THE COMMENCEMENT OF SUCH ACTION AND THAT THE PLAIN-TIFF IS CURRENTLY THE CREDITOR ENTITLED TO  ENFORCE  RIGHTS  UNDER SUCH DOCUMENTS. SUCH CERTIFICATE SHALL ATTACH A COPY OF THE MORTGAGE, SECURI-TY  AGREEMENT  AND  NOTE OR BOND UNDERLYING THE MORTGAGE EXECUTED BY THE RESIDENTIAL DEFENDANT AND ALL INSTRUMENTS OF ASSIGNMENT.(B) WHERE A CERTIFICATE IS REQUIRED PURSUANT TO THIS SECTION, A SINGLECERTIFICATE SHALL BE FILED FOR EACH ACTION EVEN IF MORE THAN ONE DEFEND-ANT HAS BEEN NAMED IN THE COMPLAINT OR IS SUBSEQUENTLY NAMED.(C) THE PROVISIONS OF SUBDIVISION (D) OF RULE  3015  OF  THIS  ARTICLE SHALL  NOT BE APPLICABLE TO A DEFENDANT RESIDENT OF THE PROPERTY SUBJECT TO FORECLOSURE WHO IS NOT REPRESENTED BY AN ATTORNEY.(D) IF A PLAINTIFF WILLFULLY FAILS TO PROVIDE COPIES OF THE PAPERS ANDDOCUMENTS  AS  REQUIRED BY SUBDIVISION (A) OF THIS SECTION AND THE COURTFINDS, UPON THE MOTION OF ANY PARTY OR ON ITS OWN MOTION  ON  NOTICE  TOTHE PARTIES, THAT SUCH PAPERS AND DOCUMENTS OUGHT TO HAVE BEEN PROVIDED,THE  COURT  MAY  DISMISS THE COMPLAINT OR MAKE SUCH FINAL OR CONDITIONALORDER WITH REGARD TO SUCH FAILURE AS IS JUST INCLUDING BUT  NOT  LIMITEDTO  DENIAL  OF  THE  ACCRUAL OF ANY INTEREST, COSTS, ATTORNEYS' FEES ANDOTHER FEES, RELATING TO THE UNDERLYING MORTGAGE DEBT. ANY SUCH DISMISSALSHALL NOT BE ON THE MERITS. 

Amended CPLR 3048 now reads as follows: (a) In any residential foreclosure action involving a home loan assuch term is defined in section thirteen hundred four of the real prop-erty actions and proceedings law, in which the defendant is a residentof the property subject to foreclosure, PLAINTIFF SHALL FILE PROOF OFSERVICE WITHIN TWENTY DAYS OF SUCH SERVICE, HOWEVER SERVICE IS MADE, ANDthe court shall hold a mandatory conference within sixty days after thedate when proof of service UPON SUCH DEFENDANT RESIDENT is filed withthe county clerk, or on such adjourned date as has been agreed to by theparties, for the purpose of holding settlement discussions pertaining tothe relative rights and obligations of the parties under the mortgageloan documents, including, but not limited to determining whether theparties can reach a mutually agreeable resolution to help the defendantavoid losing his or her home, and evaluating the potential for a resol-ution in which payment schedules or amounts may be modified or otherworkout options may be agreed to, and for whatever other purposes thecourt deems appropriate.