Relates to the language which must be included in mortgage foreclosure notices; requires lenders, assignees, and mortgage loan servicers to evidence strict compliance with such notice requirements.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5841
SPONSOR: Lavine TITLE OF BILL:
An act to amend the real property actions and proceedings law, in
relation to notices required prior to mortgage foreclosure
PURPOSE AND INTENT OF BILL:
This remedial bill will overturn a certain court decision to ensure that
important homeowner protection laws of this state apply equally to all
litigants, including those currently involved in mortgage foreclosure
actions. The aim of the bill is to restore the RPAPL § 1304 law to its
intended meaning, as it existed before the recent court decision, and
provide certainty to all parties involved in an action to enforce a
mortgage loan.
SUMMARY OF SPECIFIC PROVISIONS:
Sections 1 amends RPAPL § 1304 to reverse and negate the deleterious and
onerous effect of a recent decision of the Court of Appeals in Bank of
Am., N.A. v Kessler,NY3d, 2023 NY Slip Op 00804 (2023), which effec-
tively erases the requirement to constrain the notice's content to the
language specified by the statute, making a mockery of the well-settled
case law which gave the legislature's intended force and effect to the
requirement that such a notice be sent "in a separate envelope from any
other mailing or notice" (RPAPL § 1304 (2))
Section 2 amends RPAPL § 1304 to ensure the foregoing protections apply
equally to reverse mortgages.
Section 3 of the bill amends RPAPL § 1304 to add a new subdivision clar-
ifying that a notice required by this section shall not be sent by a
lender, assignee or servicer who lacks authority to enforce the mortgage
loan.
Section 4 contains a severability clause.
Section 5 contains the effective date and makes it clear that this
legislation will apply immediately, and will apply to all such actions
commenced where a final judgment of foreclosure and sale has not been
enforced.
JUSTIFICATION:
As a direct result of the aforementioned judicial decision, lenders and
loan servicers are now free to dilute and weaken the impact of one of
the most important tools to help struggling homeowners. It was always
the intention of the legislature to control form and content of the
RPAPL § 1304 notice with exacting detail, prescribing not only its
necessary language, but also proscribing all other potential notices
from accompanying this important letter. This bill restores the law as
it existed prior to the February 14, 2023, decision from the Court of
Appeals, and confirms the continuing importance for the financial
services sector to observe strict compliance with consumer protection
statutes. Applying this bill to existing actions ensures that homeowners
currently facing foreclosure may continue to rely on the protections
which this legislature intended, as articulated by the Appellate Divi-
sion in Bank of Am., N.A. v Kessler, 202 AD3d 10, 12-19 (2d Dept 2021)
and its progeny.
The legislature finds that there is an ongoing problem with homeowners
receiving accurate information regarding their potential options to
avoid foreclosure, which RPAPL § 1304 addresses, but contrary to the
intent of the legislature, mortgage lenders and loan servicers regularly
dilute the impact of this important notice by augmenting the statutory
text with boilerplate language regarding, for instance, ancillary
rights. These unauthorized additions to this carefully-crafted notice
distract homeowners and increase the chances of a homeowner disregarding
the notice as yet another dunning letter.
PRIOR LEGISLATIVE HISTORY:
New Bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
Immediately and will apply to all such actions commenced where a final
judgment of foreclosure and sale has not been enforced.
STATE OF NEW YORK
________________________________________________________________________
5841
2023-2024 Regular Sessions
IN ASSEMBLY
March 23, 2023
___________
Introduced by M. of A. LAVINE -- read once and referred to the Committee
on Judiciary
AN ACT to amend the real property actions and proceedings law, in
relation to notices required prior to mortgage foreclosure
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The opening paragraph of subdivision 1 of section 1304 of
2 the real property actions and proceedings law, as amended by section 6
3 of part Q of chapter 73 of the laws of 2016, is amended to read as
4 follows:
5 Notwithstanding any other provision of law, with regard to a home
6 loan, at least ninety days before a lender, an assignee or a mortgage
7 loan servicer commences legal action against the borrower, or borrowers
8 at the property address and any other address of record, including mort-
9 gage foreclosure, such lender, assignee or mortgage loan servicer shall
10 give notice to the borrower in at least fourteen-point type which shall
11 include only the following:
12 § 2. The opening paragraph of subdivision 1-a of section 1304 of the
13 real property actions and proceedings law, as added by section 3 of part
14 HH of chapter 58 of the laws of 2018, is amended to read as follows:
15 Notwithstanding any other provision of law, with regard to a reverse
16 mortgage home loan, at least ninety days before a lender, an assignee or
17 a mortgage loan servicer commences legal action against the borrower or
18 borrowers at the property address and any other addresses of record,
19 including reverse mortgage foreclosure, such lender, assignee or mort-
20 gage loan servicer shall give notice to the borrower in at least four-
21 teen-point type except for the heading which shall be in at least
22 sixteen-point type which shall include only the following:
23 § 3. Section 1304 of the real property actions and proceedings law is
24 amended by adding a new subdivision 8 to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09739-01-3
A. 5841 2
1 8. To establish compliance with this section, the lender, assignee or
2 mortgage loan servicer shall evidence strict compliance with the subdi-
3 visions of this section, as pertinent, and shall demonstrate that the
4 lender, assignee or mortgage loan servicer was entitled to enforce the
5 subject note and mortgage at the time the notices were sent.
6 § 4. Severability clause. If any clause, sentence, paragraph, section
7 or part of this act shall be adjudged by any court of competent juris-
8 diction to be invalid, such judgment shall not affect, impair or invali-
9 date the remainder thereof, but shall be confined in its operation to
10 the clause, sentence, paragraph, section or part thereof directly
11 involved in the controversy in which such judgment shall have been
12 rendered.
13 § 5. This act shall take effect immediately and shall apply to all
14 actions commenced on an instrument described under subdivision 4 of
15 section 213 of the civil practice law and rules in which a final judg-
16 ment of foreclosure and sale has not been enforced.
