LIEB BLOG

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Showing posts with label lis pendens. Show all posts
Showing posts with label lis pendens. Show all posts

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.


 

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.

Monday, October 29, 2018

Attention Brokers - What should you do if your prospective seller has a Lis Pendens on their property with public records?

Most importantly, a Lis Pendens does not necessarily mean that there is a foreclosure on the property. Instead, a Lis Pendens simply means that a lawsuit has been filed against the property. This lawsuit could be a foreclosure, but it could also be a lawsuit for partition, adverse possession, prescriptive easement, constructive trust, specific performance, as well as many other topics.

So, first and foremost don't assume that there is a foreclosure on the property, but instead make inquiry as to the Lis Pendens.

  • Step 1 - Ask the homeowner the nature of the lawsuit on the property.
  • Step 2 - Inquire if you can talk to the homeowner's attorney to learn whether the lawsuit will be an impediment to selling the property (e.g., a specific performance lawsuit by a prior purchaser can make it impossible to sell the house whereas a foreclosure lawsuit with a house with equity remains a viable sale and a foreclosure lawsuit with a house without equity can be sold as a short sale).
  • Step 3 - Assuming the lawsuit is a foreclosure, determine when the lawsuit was filed with the county clerk because if it was years ago its going to be very hard to sell the house before the auction (i.e., you can sell up until the auction as long as the seller can payoff the loan or if the lender takes a short payoff) and the homeowner likely defaulted on the lawsuit (i.e., they lost for inaction).
  • Step 4 - If it is a foreclosure, help the homeowner to order payoff letters from their lenders in order to ascertain the precise amount owed (i.e., its not just the loan, but also the penalties, interest and attorneys' fees that are owed when the property is in foreclosure).  
  • Step 5 - Workup a brokers' price opinion for the house as a distressed sale.
  • Step 6 - Calculate closing costs for your seller.
  • Step 7 - Determine if the seller has enough equity to close without dipping into their own pocketbook (i.e., compare the BPO with the payoffs and the closing costs). 
  • Step 8 - If there is enough equity, list the house fast; if not, advise the seller that you can only list the property as a short sale (i.e., subject to bank approval with a short payoff).
REMEMBER - the bank doesn't stop the foreclosure process when a short sale is being sought, so you must insist that your listing is subject to the seller fighting the foreclosure with a competent foreclosure defense attorney - otherwise you will likely waste your time / money on this listing.

The advantage of a short sale over a foreclosure is #1 avoiding a deficiency judgment (i.e., judgment that can be enforced for 20 years for the amount the property is underwater). 

To learn about foreclosure / short sales / Lis Pendens and more - take our CE course, Foreclosure & Short Sales ONLINE.