2 Bills to Protect Homeowners in Foreclosure Die

We previously blogged about 2 proposed items of legislation that were designed to both ensure proper paperwork in foreclosures and to eliminate the shadow docket of foreclosures that have been commenced, but have not moved past the foreclosure settlement conference stage of a residential foreclosure action. 

The first proposal would require that attorneys for the lenders submit a "certificate of merit" at the start of the action, which would swear that all paperwork was proper at that time instead of just requiring such a sworn statement post settlement conferences, as is now most common. This would have been beneficial because now lenders and borrowers are engaged in a lawsuit that often is put on hold as the lenders' attorneys attempt to verify the propriety of documents without success and borrowers are stuck in limbo while they await if the lender was even the proper party to the action. 

The second proposal would have created a criminal penalty for the submission of fraudulent foreclosure documents, such as robo-signed assignments of the note and mortgage. This proposal would have heightened the level of caution applied to lenders submissions of foreclosures and also would have prevented the incorrect lender from prosecuting a foreclosure action.

While both proposals are not moving forward, the importance of these proposals having had been made should not be lost on the reader. The key is that many eyes are watching the unscrupulous conduct of lenders and that this fact, alone, puts the banks in check when attempting to foreclose on a homeowner's residence. Yes, lenders of defaulted loans have a right and should be permitted to obtain the security for the payment of their loan; the house. Yet, taking someone's home should be only undertaken under a proper legally defensible claim as the impact is far reaching and devastating to the homeowner. 

These results may have done more good than one may think. Now, all borrowers' attorneys are on notice that they should be even more vigilant in forcing a lender to prove their case in foreclosure. Do not just accept that the lender is in the right. Instead, question their claims and tactics before waiving the white flag of defeat. Only than is justice served. 

Does a real estate brokerage firm's due diligence reports entitle them to a commission when they are not the procuring cause?

A brokerage commission is generally due when a real estate broker procures a ready, willing and able purchaser for a transaction. Nonetheless, it is often the case that real estate brokerages work very hard to procure a purchaser just to have their work-product utilized by a competitor to procure the purchaser and earn the commission. This is the situation that the NYS Court of Appeals recently faced when deciding Malone v. Ralph Rieder, which can be read here.

The issue presented to the Court was if the procuring brokerage was unjustly enriched at the expense of the due diligence brokerage and hence, did the procuring brokerage owe the due diligence brokerage a portion of their commissions? 

The Court answered the question with a striking NO. The rationale says the Court is that there was no business relationship or connection between the 2 brokerage companies. Therefore, the relationship between the 2 brokerage companies was too attenuated to justify the claim and the case was dismissed. 

The lesson here is that one needn't be concerned about the acts of unknown parties and one can protect oneself by acting as a good-faith purchaser for value. To illustrate, here, the defendant purchased the due diligence reports from the seller and therefore was an innocent party and consequently not liable for unjust enrichment to the due diligence brokerage.

Real estate brokers should take comfort in the Court's decision because they needn't probe the underlying relationships between the businesses with whom they contract and other entities tangentially involved but with whom they have no direct connection.

The Court did state however that the claims against the first procured purchaser who did not proceed with the transaction and the seller remain pending - so this remains as the best route for the due diligence brokerage to obtain recourse for its loss. 

E-Recording at the County Clerk - Proposed Regulation

For all of you who are as happy as we are about E-Recording coming to your local County Clerk's Office in September of this year, you should take some time to read the Proposed Regulations that will govern the process by clicking here.

Stay tuned for the proposal to be filed in the State Register in order to make your comments and to help shape this important Regulation.

The Origin of the name Lieb at Law, P.C...

Andrew Lieb, reveals how he came up with the name "Lieb at Law, P.C." as featured in CEO Blog Nation answering the question:  " HOW DID YOU COME UP WITH YOUR BUSINESS NAME?"

We Chose Something Catchy, Unique & Ethical

I operate a law firm in NY and names for firms in my State cannot be fictitious under ethics rules. Yet, who can remember all of the partners name for a firm? The list is often 3 pages long and says very little to the consumers except that each partner is self-important. So, I decided that we needed something catchy and unique, that said what type of business we are to the consumer, but that also complied with the restrictive ethics rules. Lieb at Law, P.C. is just that and has been approved by an ethics committee opinion letter and all of our clients. Why did you start your business? In my family you only have 1  choice of professions so I became an attorney. Yet, I am very entrepreneurial and wanted to carve my own niche. Therefore, I started a teaching law firm where we are a licensed school in our State with our attorneys serving as the school’s instructors. Just like a teaching hospital, my firm is on the cutting-edge of developments in our field because we teach the topics that we practice in a free educational setting for both attorneys and real estate agents. Our philosophy is that if every student passes on 1 lesson and educates 10 people in their community we have really achieved positive change for society and reduced unnecessary litigation.

Click Here to learn how other Entrepreneurs came up with their business name. 

HAFA EXTENDED THROUGH 2013

The Home Affordable Foreclosure Alternatives (“HAFA”) Program has been extended through 2013 pursuant to Supplemental Directive 12-02. This extension is coupled with many changes to the Policies governing HAFA, effective June 1, 2012, which servicers shall implement immediately. They are, including but not limited to, the following:

1 )      Occupancy Requirements: None, although the following conditions exist: Borrower(s) must not have purchased another residential property in the previous twelve (12) months, nor can the property be owned or secured by a business entity.

      2 )      Relocation Assistance: $3,000.00 is limited to the primary occupant of the premises at the time of execution of the agreement (short-sale or deed-in-lieu). Occupants must vacate on or before closing. Vacant properties are ineligible for this option.
3 )      Second Lien Maximum: Increased from $6,000.00 to $8,500.00.

      4 )      Debt to Income Ratio: A borrower’s monthly mortgage payments are now permitted to exceed 31% of a borrower’s grossly monthly income, allowing a servicer to accept full payment to keep the borrower current on their mortgage.
5 )      Credit Bureau: If a deficiency is forgiven as a result of a short-sale or deed-in-lieu, the following Base Segment fields may be reported as follows, if applicable: Account Status Codes amended to 13 (Paid or closed account/zero balance) OR 65 (Account paid in full/foreclosure started).

The following amendments to HAFA should greatly improve its goal of assisting borrowers in need. Supplemental Directive 12-02 in its entirety can be found here:  https://www.hmpadmin.com/portal/programs/docs/hamp_servicer/sd1202.pdf .