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A05841 Summary:

BILL NOA05841
 
SAME ASNo Same As
 
SPONSORLavine
 
COSPNSRDavila, Walker
 
MLTSPNSR
 
Amd §1304, RPAP L
 
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.
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A05841 Memo:

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.
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A05841 Text:



 
                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.
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