As promised at the Lieb at Law, P.C. Foreclosure Filibuster class last night in Bethpage, please find below a sample distressed property agreement. This sample is intended for use by individuals, corporations, partnerships, LLCs or other business entities that, directly or indirectly, solicit or undertake employment to provide consulting services to a homeowner for compensation or promise of compensation with respect to a distressed home loan or a potential loss of the home for nonpayment of taxes. It is not necessary that attorneys and other persons/entities use the same (please see N.Y.RPP.LAW § 265-b: NY Code - Section 265-B: Distressed property consulting contracts). Please be aware that the two (2) "Notice of Cancellation" provisions contained below are there by design. It is necessary, under the above law, to attach two (2) copies of the Notice of Cancellation provision to any sample distressed property agreement. Therefore, we've provided the same for your use. Here it is:

WHEREAS, “Homeowner” and Distressed Property Consulting Firm, who’s primary place of business is located at _____________________and telephone number is ________and fax number is________, are parties to a Consulting Agreement dated as of _____,__,201_; and;

WHEREAS, the Consulting Agreement provides the Services to be delivered by Distressed Property Consulting Firm (‘Consultant”) or such other persons as Consulting Firm may designate.

WHEREAS, the scope of this agreement entails that the Consultant provide services to help to achieve any of the following for homeowner:

(i) stop, enjoin, delay, void, set aside, annul, stay or postpone a

foreclosure filing, a foreclosure sale or the loss of a home for

nonpayment of taxes;

(ii) obtain forbearance from any servicer, beneficiary or mortgagee or

relief with respect to the potential loss of the home for nonpayment of

taxes;

(iii) assist the homeowner to exercise a right of reinstatement or

similar right provided in the mortgage documents or any law or to

refinance a distressed home loan;

(iv) obtain any extension of the period within which the homeowner may

reinstate or otherwise restore his or her rights with respect to the

property;

(v) obtain a waiver of an acceleration clause contained in any

promissory note or contract secured by a mortgage on a property in

foreclosure;

(vi) assist the homeowner to obtain a loan or advance of funds;

(vii) assist the homeowner in answering or responding to a summons and

complaint, or otherwise providing information regarding the foreclosure

complaint and process;

(viii) avoid or ameliorate the impairment of the homeowner's credit

resulting from the commencement of a foreclosure proceeding or tax sale;

or

(ix) save the homeowner's property from foreclosure or loss for

non-payment of taxes.

NOW, THEREFORE, in consideration of the foregoing premises and the covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound, hereby agree as follows:

(a) As consideration for Consulting Firm’s agreement to enter into this agreement and rendering the Services, homeowner shall pay to Consulting Firm at the conclusion of the Consulting Firm’s services a fee of $_______; with no payments being charged or accepted at any time prior to the completion of consultants services. Terms of payment shall be ____________.

(b) Except as specifically amended hereby, the Consulting Agreement shall continue in full force and effect unmodified and the parties hereby reaffirm the same.

IN WITNESS WHEREOF, this agreement has been executed by and on behalf of the parties hereto to become effective as of the day and year first above written.

Sworn to and subscribed

before me this _____day of ____2010

Notary Public

NOTICE REQUIRED BY NEW YORK LAW

You may cancel this contract, without any penalty or obligation, at

Any time before midnight of _____ (fifth business day after

execution).

(the "Consultant") or anyone working for the Consultant may not take any

money from you or ask you for money until the Consultant has

completely finished doing everything this Contract says the Consultant will

do.

You should consider consulting an attorney or a government-approved

housing counselor before signing any legal document concerning your

home. It is advisable that you find your own attorney, and not consult

with an attorney recommended or provided to you by the Consultant. A

list of housing counselors may be found on the website of the New York

State Banking Department, www.banking.state.ny.us or by calling the

Banking Department toll-free at 1-877-BANK-NYS (1-877-226-5697). The

law requires that this contract contain the entire agreement between you and

the Consultant. You should not rely upon any other written or oral

agreement or promise."

NOTICE OF CANCELLATION

Note: You may cancel this contract, without any penalty or obligation,

at any time before midnight of ______. (Enter date)

To cancel this contract, sign and date both copies of this cancellation

notice and personally deliver one copy or send it by facsimile, United

States mail, or an established commercial letter delivery service,

indicating cancellation to the Distressed Property Consultant at one of

the following:

Name of Contractor_________________________

Street Address_____________________________

City, State, Zip___________________________

Facsimile:_________________________________

I hereby cancel this transaction.

Name of Homeowner:_________________________

Signature of Homeowner:____________________

Date:______________________________________

NOTICE OF CANCELLATION

Note: You may cancel this contract, without any penalty or obligation,

at any time before midnight of ______. (Enter date)

To cancel this contract, sign and date both copies of this cancellation

notice and personally deliver one copy or send it by facsimile, United

States mail, or an established commercial letter delivery service,

indicating cancellation to the Distressed Property Consultant at one of

the following:

Name of Contractor_________________________

Street Address_____________________________

City, State, Zip___________________________

Facsimile:_________________________________

I hereby cancel this transaction.

Name of Homeowner:_________________________

Signature of Homeowner:____________________

Date:______________________________________

The tide has turned. The homeowner is right. The home is paramount. We will protect the disadvantaged.


Law is like a seesaw and today is the homeowner's day. Just this week, New York became the first state to require lenders to vouch for the accuracy of their mortgage documents. In fact, the assurance must come in the form of an attorney certification by way of affirmation. The affirmation must state that counsel has taken reasonable steps to verify the accuracy of documents filed in support of residential foreclosures. Such residential foreclosures appear to include condos, 1-4 family homes, private homes, but no owner-occupied requirement appears, which is broader than the other requirements to date in this field.

According to a Press Release Issued by the Unified Court System:
Plaintiff's counsel in foreclosure matters must submit the affirmation at one of several stages. In new cases, the affirmation must accompany the Request for Judicial Intervention. In pending cases, the affirmation must be submitted with either the proposed order of reference or the proposed judgment of foreclosure. In cases where a foreclosure judgment has been entered but the property has not yet been sold at auction, the affirmation must be submitted to the court referee, and a copy filed with the court. five business days before the scheduled auction. Counsel is also obligated to file amended version of the affidavit if new facts emerge after the initial filing.

It seems no foreclosure auctions will be happening this week in the wake of the 5 day rule.

To see a copy of the required affirmation, click here. To view the law, click here. Fore more generalized info about residential foreclosures, click here.

Yet, this is not all, it gets better: A new law allows homeowners to recoup legal fees in foreclosure cases proclaims the New York Times in an article on October 21, 2010. To read the article, click here.
The law - Access to Justice in Lending Act - which can be found by clicking here, provides attorneys fees to defendants who are successful in a foreclosure action.

The stated purspose of the law is as follows:
The purpose of this bill is to allow borrowers in a foreclosure proceeding access to legal representation by providing that mortgage agreements which allow a prevailing lender to recover attorneys fees in a foreclosure proceeding shall be read to allow prevailing borrowers to recover attorneys fees as well, thereby enabling borrowers with meritorious defenses to foreclosure to obtain the legal representation necessary to assert those defenses.

So, mortgagors its time to get your ducks in a row. Lets clean out the cannons. Gather your troops. Its time for war.

http://myemail.constantcontact.com/NEW-CE-Class--FORECLOSURE-FILIBUSTERS--Southold-and-Bethpage-Openings-.html?soid=1103454891678&aid=uHHMY5d46Io

http://myemail.constantcontact.com/NEW-CE-Class--FORECLOSURE-FILIBUSTERS--Southold-and-Bethpage-Openings-.html?soid=1103454891678&aid=uHHMY5d46Io

So what does this all mean to you? The key issue in law is called standing to sue. Meaning, do the banks have the right to sue? Before anyone goes to Court they must be aggrieved in some way. The issue is that the banks cannot substantiate that they are the correct bank that is owed the debt on the mortgage. Now that the issue is in the limelight creative names like "robo-signers" are all abound in the headlines, but the truth is that this has been a big issue for years within the foreclosure industry. Well before the national media took hold of this issue, many in the foreclosure defense world have long been expressing that the bank's paperwork does not substantiate their right to sue. In fact, one of the main ways that people defend a foreclosure is through discovery demands that the bank cannot fulfill followed by a motion to dismiss.

This post is not meant to minimize the issue. Instead, just the opposite is intended. Yet, my hope is that the national politics don't minimize the issue either. Its plain, its easily understood, it should not be open to debate - If a bank cannot show through competent evidence that it owns the mortgage (a big big problem), its foreclosure action should be dismissed and in this individual's opinion, the bank and its attorneys should face sanctions for filing a frivolous lawsuit. My point is this, over the past week I have seen many pundits come out on both sides of a moratorium on foreclosures. This sidesteps the issue. Instead, the issue must be only: Does the bank seeking to foreclosure on the homeowner have documentation that it owns the mortgage? Its as simple as a person who wants to sell their car having the title to the car. This is not a fitting topic for national debate. Instead, this is a fitting topic for national dismay. How can banks not have clear paperwork that they own the mortgages? (I will explain how this mess happened in a future blog, which involves the distinction between servicers and investors coupled with the secondary market and MERS).

Additionally, there is no need for a moratorium on foreclosures. Instead, homeowners facing foreclosure should be vigilant in making the banks prove that they have the requisite documents and that they have been signed by someone with knowledge (can be tested by discovery demands inclusive of a good Demand for Discovery & Inspection coupled with a Notice to take an Examination Before Trial of the signatory). If this doesn't work, readers should pay attention on Tuesday of this week when its expected that many State Attorney Generals will uniformly announce an investigation of the the robo-signer epidemic. Click here to read a Reuters article addressing the expected announcement.

Bank of America became the third servicer to freeze their foreclosures, to learn more click here.

This is the text from my new article published in Homes of the Hamptons.

In a crashing economy, where everyone is trying to earn a buck on someone else’s back, it’s most important to know that your representative truly has unfettered allegiance to your best interest. Does a seller really want his agent telling the buyer that he would accept $50,000 less than he is listing his home for? Or, does a buyer want her broker sharing the fact that she recently inherited $1,000,000 and has a gapping whole in her pocket, plus her kids have already picked their rooms in their new house? These types of situations happen all of the time in residential real estate transactions, where a broker puts their personal desire to ‘close’ as many transactions as possible ahead of their fiduciary duty to provide a consumer with the best representation possible. The thought goes like this – why only represent the seller when you can also represent the buyer? In fact, many brokerage firms are known to only push their own deals.

Did you know that this situation, called a Dual Agency, is permitted by the NY Real Property Law? According to the Department of State’s Counsel’s Office “Dual agency arises when a real estate broker or salesperson represents adverse parties (e.g., a buyer and seller) in the same transaction”. In fact, this activity is so widespread that there is even a modified type of dual agency available called a “designated sales agent” where a smokescreen of allegiance is offered to both the buyer and seller. In this situation, a brokerage firm will assign different salespeople to represent the seller and the buyer. Yet, both salespeople work at the same firm for the same broker. If this situation exists, the broker’s fiduciary duty goes out the window. No longer can a seller or buyer rely on their agent’s undivided loyalty. Instead, they are paying a great deal of money while being stabbed in the back throughout the process. You see, a broker can make double the money and close a transaction faster when they are on both sides of the negotiation.

This is where information becomes power for consumers.Where knowing is the whole battle. It’s a time for consumers to open their eyes and for the law to protect. Thankfully, the law recently became a little stronger in this area. Just this past month, the NY legislature saw fit to protect consumers. Starting on January 1, 2011, an amendment to §443 of the NY Real Property Law “will allow consumers to select and allow a "dual agency" relationship in advance of it actually occurring”. The new amendment will permit general consent by sellers and buyers to any potential dual agency situation prior to one presenting itself during the transaction solicitation process. This should provide for greater clarity to consumers who are traditionally ill informed about the dual agency relationship having only previously engaged in a few, if any, real estate transactions.

Before this law takes effect, agents only have to address a dual agency situation with consumers as it emerges, on a given showing, by requiring the buyer and seller to each sign a new disclosure form on the fly. Now, under the new amendment, brokers can obtain consent from buyers and sellers in advance and avoid a recurring nuisance in the process. Furthermore, by executing an advanced disclosure form, brokers can avoid sanctions by the Department of State from failing to immediately provide the form to each consumer prior to such a showing. To illustrate the importance of complying with the agency disclosure rules, in 2007 a broker was sanctioned $2,000 for delaying a few days before he provided copies of an agency disclosure form, which ambiguously stated that the broker was the agent of both the seller and the buyer, instead of using the term dual agency. In addition, the amendment extends the requirement of written disclosure concerning dual agency from residential transactions, where written disclosure forms have been required for years, to condominiums and cooperative apartments, which previously only required verbal disclosure. This is an important change because condominiums and cooperatives are an ever increasing choice by consumers, especially in 55+ communities.

During the next few months it’s imperative that brokers provide training to their agents on compliance with the new amendment and on the terms and affects of different types of agency. It’s important to create uniformity in the process at each firm and for brokers to use the amendment as an opportunity to heighten their respect for the concept of a fiduciary relationship. It’s time for the emergence of an independent seller’s and buyer’s broker with unfettered loyalty in representation. It’s time for the demise of dual agency.

For information on applying to become a Fannie Mae listing broker*, appraiser, repair contractor, eviction attorney, maintenance company, or closing agent/title company - click here.

Freddie Mac's website that sells their inventory of foreclosed properties can be found by clicking here. Not to be outdone, Fannie Mae's website that sells their REOs can be found by clicking here. Happy hunting.

This is a link to the new handbook provided by the government for servicers to comply with the Home Affordability Modification Program.

Previously, I had directed students to Supplemental Directives, which detail requirements in each individual topic. This handbook should minimize the need to read Supplemental Directives because it reorganizes the topics coherently for functionality and practicality. As always, stay tuned to new versions, which will of course optimize this product.