Makes the affirmative allegation provisions for high-cost loans and subprime home loans applicable to foreclosures of residential mortgages covering one to four family dwellings.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2502A
SPONSOR: Weinstein TITLE OF BILL:
An act to amend the real property actions and proceedings law, in
relation to foreclosure of residential mortgages covering one to four
family dwellings
SUMMARY OF PROVISIONS OF BILL:
Section 1: Amends section 1302 of RPAPL to require that foreclosing
plaintiffs plead ownership of the note and mortgage applicable to all
homeowners instead of limited to only homeowners with subprime and high-
cost home loans. It also ensures that RPAPL 1302 defenses are applicable
to all homeowners instead of limited to just homeowners with subprime
and high-cost home loans.
Section 2: Sets the effective date on the first of January after it
shall have become law.
JUSTIFICATION:
There has been a nationwide increase in residential foreclosures
throughout the country in recent years. However, many of the foreclosure
actions initiated by lenders and trusts to obtain the securitized debt
obligation (the property) have called into question the inherent legali-
ty of the proceedings, due to the plaintiffs lack of "capacity to sue"
and in many cases it is simply not clear who actually owns the mortgage
or debt. Despite the fact that in order to have an appropriate foreclo-
sure proceeding the filing party must legally have standing to commence
a foreclosure action against a mortgagor or borrower, many lenders and
trusts alike continue to move forward with bringing a legal action
against borrowers when many of these lenders don't even own the mortgage
or the underlying debt in the first place.
In New York, numerous court decisions had held that if the borrower
doesn't raise standing upon answering the foreclosure action, the
defense of standing is waived for the borrower. See, HSBC Bank USA v
Dammond, 59 AD3d 679 (2nd Dept 2009). In response, we have enacted
legislation which makes standing a non-waivable defense. Ch. 739 of
2019. However, that enactment does not sufficiently obviate the problem
which this legislation is designed to address, that of putative mortga-
gees not actually possessing the right to proceed in court because they
do not own the note or and/or mortgage.
The proposed bill would require plaintiffs in a foreclosure action to
Affirmatively plead ownership of the note and mortgage for all home
loans and would enable all homeowners to avail the statutory defenses to
protect their homes, as opposed to just those homeowners with subprime
or high-cost home loans.
LEGISLATIVE HISTORY:
2020: A.5611/S.3216 - A.Cal/S.Cal
2019: A.5611/S.3216 - A.Cal/S.Rules
2017-18: A.1371/S.5928 - A.Cal/S. Housing
2016: A.10373 - A.Rules
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
EFFECTIVE DATE:
First of January after it shall have become law.
STATE OF NEW YORK
________________________________________________________________________
2502--A
R. R. 82
2021-2022 Regular Sessions
IN ASSEMBLY
January 19, 2021
___________
Introduced by M. of A. WEINSTEIN, TAYLOR -- read once and referred to
the Committee on Judiciary -- reported and referred to the Committee
on Rules -- ordered to a third reading, passed by Assembly and deliv-
ered to the Senate, recalled from the Senate, vote reconsidered, bill
amended, ordered reprinted, retaining its place on the special order
of third reading
AN ACT to amend the real property actions and proceedings law, in
relation to foreclosure of residential mortgages covering one to four
family dwellings
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 1302 of the real property actions and proceedings
2 law, as amended by chapter 472 of the laws of 2008, is amended to read
3 as follows:
4 § 1302. Foreclosure of [high-cost home loans and subprime home loans]
5 certain residential mortgages. 1. Any complaint served in a proceeding
6 initiated on a residential mortgage covering a one to four family dwell-
7 ing pursuant to this article [relating to a high-cost home loan or a
8 subprime home loan, as such terms are defined in section six-l and six-m
9 of the banking law, respectively,] must contain an affirmative allega-
10 tion that at the time the proceeding is commenced, the plaintiff:
11 (a) is the owner and holder of the subject mortgage and note, or has
12 been delegated the authority to institute a mortgage foreclosure action
13 by the owner and holder of the subject mortgage and note; and
14 (b) has complied with all of the provisions of section five hundred
15 ninety-five-a of the banking law and any rules and regulations promul-
16 gated thereunder, section six-l or six-m of the banking law, for loans
17 governed by those provisions, and section thirteen hundred four of this
18 article.
19 2. It shall be a defense to an action to foreclose a mortgage [for a
20 high-cost home loan or subprime home loan] that the terms of the home
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00013-02-1
A. 2502--A 2
1 loan or the actions of the lender violate any provision of section six-l
2 or six-m of the banking law or section thirteen hundred four of this
3 article.
4 § 2. This act shall take effect on the first of January next succeed-
5 ing the date on which it shall have become a law and shall apply to
6 actions commenced on or after such date.
