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A07546 Summary:

BILL NOA07546
 
SAME ASSAME AS S06971
 
SPONSORLavine
 
COSPNSR
 
MLTSPNSR
 
Amd §§1302, 1302-a, 1311 & 1321, RPAP L; amd §§213, 203, 205-a & 3012-b, R3408, add §213-e, CPLR
 
Relates to actions upon a subordinate bond or note; provides a statute of limitations for such actions.
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A07546 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7546
 
SPONSOR: Lavine
  TITLE OF BILL: An act to amend the real property actions and proceedings law and the civil practice law and rules, in relation to actions upon a subordinate bond or note   PURPOSE: The bill limits.the ability of mortgage debt speculators to strip equity from homeowners by strengthening existing foreclosure laws to require increased consumer transparency, mandate compliance with existing duties to negotiate in good faith at foreclosure settlement conferences, and conform the statute of limitations for such cases with those governing other analogous consumer debt collection cases.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 of the bill amends section 1302 of the real property actions and proceedings law (RPAPL). Subdivision 1 of section 1302 of the RPAPL is amended to make its provisions applicable to any complaint served in a proceeding involving a home loan, as defined in RPAPL section 1304, and to add new paragraphs (c) and (d) to establish new affirmative allegation requirements for the foreclosure complaint to prevent abuse of the foreclosure process and the court system. A new paragraph (c) is added to subdivision 1 of section 1302 of the RPAPL to require the holder of the debt to allege in a foreclosure complaint that it has a complete record of all transactions of the subject loan. A new paragraph (d) is added to subdivision 1 section 1302 of the RPAPL to require the holder of the debt to document the chain of ownership of the subject loan. Subdivision 2 of section 1302 of the RPAPL is amended by adding new paragraphs (b) and (c) to establish additional defenses to a foreclosure action. A new paragraph (b) is added to subdivision 2 of section 1302 of the RPAPL to add as a defense where the debt holder does not keep and main- tain a complete record of all transactions of the subject loan. A new paragraph (c) is added to subdivision 2 of section 1302 of the RPAPL to add as a defense where the holder of the debt does not document the chain of ownership of the subject loan. Section 1 of the bill also adds a new subdivision 3 to section 1302 of the RPAPL to require a foreclosing party who purchased the subject loan when that loan was in default to affirmatively allege the date and amount of the purchase. If the subject loan was purchased as part of a portfolio of loans, the amount paid for the subject loan shall be deter- mined by a formula based on a ratio of unpaid-to-paid loan balance at the time of default for all the loans in the portfolio. Section 2 of the bill amends section 1302-a of the RPAPL and adds a new subdivision (1) to the section to specify that statute of limitations is not waived in a foreclosure proceeding, regardless of whether the defendant fails to raise the defense in a responsive pleading. Section 3 of the bill amends the opening paragraph and subdivision 3 of section 1311 of the RPAPL by making every person having a lien or encum- brance upon the subject real property a necessary and indispensable party to the foreclosure action. Section 4 of the bill amends section 1321 of the RPAPL by adding a new subdivision 3 to limit the amount recoverable in a foreclose on a subor- dinate loan where such plaintiff purchased the subject subordinate loan when that loan was in default. The limit is the amount the plaintiff paid for the subject loan, as determined under new subdivision 3 of section 1302, and the maximum rate of interest is as provided under section 14-a of the banking law accruing from the date the plaintiff purchased the subject loan. Section 5 of the bill amends the opening paragraph of subdivision 4 of section 213 of the civil practice law and rules (CPLR) to exclude from covered actions a subordinate bond or note purchased when such bond or note was in default in order to conform with the adjustment to the stat- ute of limitations for such loans in Section 6 of the bill. Section 6 of the bill amends the CPLR by adding a new section 213-e to establish a statute of limitations for actions on a subordinate bond or note purchased in default, which shall be commenced within the shorter of (a) three years of the purchase of the bond or note or (b) the rele- vant time limit as provided by subdivision 4 of section 213 of the CPLR. This conforms the statute of limitations for such actions with other categories of cases that have a three-year limitations period, such as consumer credit collection actions (CPLR section 214-i). Section 7 of the bill amends Subdivision (h) of section 203 of the CPLR to conform the existing prohibition on unilateral extensions of the statute of limitations to reflect the bill's addition of CPLR section 213-e. Section 8 of the bill amends the opening paragraph of subdivision (a) of section 205-a of the CPLR to conform the existing provision to reflect this bill's addition of CPLR section 213-e. Section 9 of the bill amends subdivision (a) of section 3012-b of the CPLR to conform the existing certificate of merit provision with the amended pleading requirements enacted by this bill. Section 10 of the bill amends rule 3408 of the CPLR governing foreclo- sure settlement conferences to conform to the provisions of this bill and to clarify that the existing good faith negotiation standard in subdivision (f) is violated if a plaintiff demands payment in excess of the limit set out in section 1321 of the RPAPL, and establishes that any demand made for a payment in excess of this amount, whether to reinstate the loan or through a repayment plan, loan modification or other loss mitigation option, would also constitute a failure to negotiate in good faith. Section 11 of the bill sets forth the effective date.   JUSTIFICATION: This bill seeks to address the growing prevalence of "zombie second mortgage" foreclosures -debt-collection actions initiated by holders of a home's subordinate, high-interest second mortgage loan in default that can result in foreclosure if the homeowner/borrower fails to repay the loan's outstanding balance along with interest and fees. When the holder of a defaulted second mortgage chooses not to collect on the loan because any prospect of recovery is subordinant to a first mortgage, the second mortgage becomes dormant. Many holders of these loans cease sending mortgage statements and "charge off" and warehouse these loans. Borrowers, many of whom never even knew that their homes were encumbered by second mortgages because they were marketed simul- taneously with their first mortgages as "80/20" loans, receive no state- ments on these loans, sometimes for a decade or longer. And if a home- owner in default of a first mortgage successfully avoids foreclosure by obtaining a loan modification, they may reasonably believe that the loan modification has also resolved their second mortgage. Second mortgage loans left uncollected for years are often sold to debt buyers "for pennies on the dollar," according to an advisory opinion on this issue released by the U.S. Consumer Financial Protection Bureau (CFPB) in April 2023. The same opinion further explains that "(s)uch sales often occurred unbeknownst to borrowers, who continued to receive no communications regarding the loans. Many borrowers, having not received any notices or periodic statements for years, concluded that their second mortgages had been modified along with the first mortgage, discharged in bankruptcy, or forgiven." As home prices have increased over the years and borrowers have paid down their first mortgages, thousands of homeowners are now being sued by debt collection firms and private equity investors claiming to own or have the right to collect on their homes' dormant second mortgages. These debt collectors demand the outstanding balance on the second mort- gage -regardless of whether the mortgage was acquired from a previous debt holder at a steep discount -- plus high fees and interest. Homeown- ers face a choice between entering into onerous payment plans or losing their homes and the equity they have diligently built. This bill would address the lack of transparency in the mortgage lien process, which currently allows debt collectors to purchase liens for pennies on the dollar and then demand collection on the full value of the defaulted loan while piling on unreasonable fees and interest, all without notice to the borrower. This bill requires the sharing of accu- rate payment and chain of title records between parties before any fore- closure action may be brought, providing homeowners with proper notice regarding the status of their debt. In addition to the procedural protections afforded by transparency, this bill would substantively reduce the amount of fees and interest chargea- ble on the zombie second mortgage loan not to exceed the amount paid for the subject loan by the debt holder, plus the maximum rate of interest permitted under section 14(a) of the Banking Law accruing from the date of the subject loan's purchase. The CFPB's advisory opinion also discusses how a state's statute of limitations on debt collection practices may provide a jurisdictional hook into federal law. Debt collectors as defined in section 803(6) of the federal Fair Debt Collection Practices Act (FDCPA) and implemented in Regulation F, 12 CFR 1006.2(i) prohibits a debt collector from bring- ing suit or threatening to sue to collect a time-barred debt. According- ly, an FDCPA debt collector who brings or threatens to bring a State court foreclosure action to collect a time-barred mortgage debt may violate the FDCPA and Regulation F. The existing six-year statute of limitations for foreclosure actions operates as an injustice in these zombie second foreclosure actions, as homeowner defendants who have received no statements or communications from their lender for many years lack access to any payment records with which to challenge these actions, and the debt-buyer plaintiffs often have no documentation and routinely flout the discovery process when they bring judicial foreclosure actions. By conforming the statute of limitations for these cases to the three-year limitations period govern- ing consumer credit cases, which are also typically brought by debt buyers paying pennies on the dollar for the debts, this bill would ensure that zombie second mortgage foreclosure defendants receive simi- lar protections to those already extended to consumer credit case defendants. As a matter of fairness and in view of the ongoing homelessness and affordability crisis in New York, homeowners should be protected from abusive and unfair debt collection practices and be given the opportu- nity to defend these actions in a fair and transparent judicial foreclo- sure process.   LEGISLATIVE HISTORY: This is a new bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect on the one hundred twentieth day after it shall have become a law and shall apply to all actions filed on or after such effective date.
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A07546 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7546
 
                               2025-2026 Regular Sessions
 
                   IN ASSEMBLY
 
                                      April 1, 2025
                                       ___________
 
        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 and the
          civil practice law and rules, in relation to actions upon  a  subordi-
          nate bond or note
 
          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 145 of the laws of 2022, is amended to read
     3  as follows:
     4    § 1302. Foreclosure of certain residential mortgages. 1. Any complaint
     5  served in a proceeding [initiated on a residential mortgage  covering  a
     6  one  to four family dwelling pursuant to] involving a home loan, as such
     7  term is defined in section thirteen hundred four of this  article,  must
     8  contain  an  affirmative  allegation  that at the time the proceeding is
     9  commenced, the plaintiff:
    10    (a) is the owner and holder of the subject mortgage and note,  or  has
    11  been  delegated the authority to institute a mortgage foreclosure action
    12  by the owner and holder of the subject mortgage and note; [and]
    13    (b) has complied with all of the provisions of  section  five  hundred
    14  ninety-five-a  of  the banking law and any rules and regulations promul-
    15  gated thereunder, and section six-l or six-m of  the  banking  law,  for
    16  loans governed by section six-l or six-m of the banking law, and section
    17  thirteen hundred four of this article for all residential mortgage loans
    18  covering a one to four family dwelling;
    19    (c)  has  maintained  or  is in possession of a payment history of the
    20  subject loan, which includes a complete  schedule  of  all  transactions
    21  credited  or  debited  to  the  mortgage loan account, including but not
    22  limited to any escrow account or suspense  account,  from  the  date  of
    23  origination of the loan to the present; and
    24    (d) if such plaintiff claims to possess the original note, such plain-
    25  tiff  has maintained or is in possession of a custodial file documenting
    26  such plaintiff's possession of the subject note, which includes the name
    27  of the entity that physically possesses the original note, the  date  on
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08275-02-5

        A. 7546                             2
 
     1  which that entity took physical possession of the original note, a chro-
     2  nological  listing  of  the  names of all prior entities that physically
     3  possessed the original note, the date of transfer of that note  starting
     4  with  the  original  lender,  and the address where the original note is
     5  currently located.
     6    2. It shall be a defense to an action to foreclose a mortgage that:
     7    (a) the terms of the home loan or the actions of  the  lender  violate
     8  any  provision  of  section six-l or six-m of the banking law or section
     9  thirteen hundred four of this  article,  for  loans  governed  by  these
    10  provisions;
    11    (b)  the  plaintiff's  payment  history  for the subject loan does not
    12  include a complete schedule of all transactions credited or  debited  to
    13  the  mortgage  loan  account,  including  any escrow account or suspense
    14  account, from the date of origination of the loan to the present; and
    15    (c) if  the  plaintiff  claims  to  possess  the  original  note,  the
    16  plaintiff's  custodial file does not include the name of the entity that
    17  physically possesses the original note, the date on  which  that  entity
    18  took  physical  possession  of  the original note, the address where the
    19  original note is located, a chronological listing of the  names  of  all
    20  prior  entities that physically possessed the original note and the date
    21  of transfer of that note starting with the original lender and,  if  the
    22  note  is  possessed by an entity other than the plaintiff, the authority
    23  under which an entity other than the plaintiff physically possesses  the
    24  subject note for the plaintiff.
    25    3. Any complaint served in a proceeding involving a home loan, as such
    26  term  is  defined  in  section thirteen hundred four of this article, in
    27  which the plaintiff is seeking to foreclose on a  subordinate  loan  and
    28  such plaintiff purchased the subject subordinate loan when that loan was
    29  in default, the plaintiff must affirmatively allege the date such plain-
    30  tiff  purchased  the subject loan and the amount such plaintiff paid for
    31  the subject loan. If the plaintiff purchased the subject loan as part of
    32  a portfolio of loans, the amount the plaintiff paid for the subject loan
    33  shall be determined by multiplying the total amount paid for the portfo-
    34  lio of loans by a ratio, that ratio being the unpaid  principal  balance
    35  at  default  for  the subject loan divided by the total unpaid principal
    36  balance at default for all the loans in the portfolio.
    37    § 2. Section 1302-a of the real property actions and proceedings  law,
    38  as  added  by  chapter  739  of  the laws of 2019, is amended to read as
    39  follows:
    40    § 1302-a. Defense of statute of limitations and lack of standing;  not
    41  waived.  1.    Notwithstanding the provisions of subdivision (e) of rule
    42  thirty-two hundred eleven of the  civil  practice  law  and  rules,  any
    43  objection  or  defense based on the statute of limitations in a foreclo-
    44  sure proceeding related to a home loan, as defined in paragraph  (a)  of
    45  subdivision  six of section thirteen hundred four of this article, shall
    46  not be waived if a defendant fails to raise the objection or defense  in
    47  a responsive pleading or pre-answer motion to dismiss.
    48    2.  Notwithstanding  the provisions of subdivision (e) of rule thirty-
    49  two hundred eleven of the civil practice law and rules, any objection or
    50  defense based on the plaintiff's  lack  of  standing  in  a  foreclosure
    51  proceeding related to a home loan, as defined in paragraph (a) of subdi-
    52  vision  six  of section thirteen hundred four of this article, shall not
    53  be waived if a defendant fails to raise the objection or  defense  in  a
    54  responsive pleading or pre-answer motion to dismiss. A defendant may not
    55  raise  an  objection or defense of lack of standing following a foreclo-

        A. 7546                             3

     1  sure sale, however, unless the judgment  of  foreclosure  and  sale  was
     2  issued upon defendant's default.
     3    §  3.  The  opening paragraph and subdivision 3 of section 1311 of the
     4  real property actions and proceedings law, as added by  chapter  312  of
     5  the laws of 1962, are amended to read as follows:
     6    Each  of  the  following  persons[,  whose  interest  is claimed to be
     7  subject and subordinate to the plaintiff's lien,] shall be made a  party
     8  defendant  to  the  action,  and  shall  be  necessary and indispensable
     9  parties to that action:
    10    3. Every person having any lien or incumbrance upon the real  property
    11  [which  is  claimed  to  be  subject  and subordinate to the lien of the
    12  plaintiff].
    13    § 4. Section 1321 of the real property actions and proceedings law, as
    14  added by chapter 312 of the laws of 1962, subdivision 1  as  amended  by
    15  chapter 269 of the laws of 2020, is amended to read as follows:
    16    § 1321. [Default or admission] Order of reference. 1.  [If the defend-
    17  ant  fails  to answer within the time allowed or the right of the plain-
    18  tiff is admitted by the answer, upon] Upon motion of the plaintiff,  the
    19  court  shall ascertain and determine the amount due, or direct a referee
    20  to compute the amount due to the plaintiff and to such of the defendants
    21  as are prior incumbrancers of the mortgaged premises, and to examine and
    22  report whether the mortgaged premises can be sold in parcels and, if the
    23  whole amount secured by the mortgage has not become due, to  report  the
    24  amount  thereafter  to become due. Where the defendant is an infant, and
    25  has put in a general answer by [his] such defendant's  guardian,  or  if
    26  any  of  the  defendants be absentees, the order of reference also shall
    27  direct the referee to take proof of the facts and  circumstances  stated
    28  in  the complaint and to examine the plaintiff or [his] such plaintiff's
    29  agent, on oath, as to any payments which have been made.  The  order  of
    30  reference  shall also include the name and telephone number of the mort-
    31  gage servicer for a plaintiff involving a mortgage foreclosure of a one-
    32  to four-family residential property.
    33    2. When [he] the plaintiff moves for  judgment,  the  plaintiff  shall
    34  show whether any of the defendants who have not appeared are absentees.
    35    3.  In  any  residential  foreclosure action involving a home loan, as
    36  such term is defined in section thirteen hundred four of  this  article,
    37  in which the plaintiff is seeking to foreclose on a subordinate loan and
    38  such plaintiff purchased the subject subordinate loan when that loan was
    39  in  default,  the  amount  due shall not exceed the amount the plaintiff
    40  paid for the subject loan, as determined under section thirteen  hundred
    41  two  of  this  article,  and the maximum rate of interest provided under
    42  section fourteen-a of the banking law accruing from the date the  plain-
    43  tiff purchased the subject loan.
    44    §  5.  The  opening  paragraph  of subdivision 4 of section 213 of the
    45  civil practice law and rules is amended to read as follows:
    46    an action upon a bond or note, the payment of which is  secured  by  a
    47  mortgage  upon  real  property,  or  upon a bond or note and mortgage so
    48  secured, or upon a mortgage of real property, or any  interest  therein,
    49  except  for  a subordinate bond or note purchased when such bond or note
    50  is in default;
    51    § 6. The civil practice law and rules  is  amended  by  adding  a  new
    52  section 213-e to read as follows:
    53    §  213-e.  Action  upon  a subordinate bond or note. Beginning January
    54  first, two thousand twenty-seven, an action upon a subordinate  bond  or
    55  note,  the payment of which is secured by a mortgage upon real property,
    56  or upon a bond or note and mortgage so secured, or upon  a  mortgage  of

        A. 7546                             4

     1  real  property,  or any interest therein, where the subject bond or note
     2  is purchased when such bond or note was in default, shall  be  commenced
     3  within  the  shorter  of  (a) three years of the purchase of the bond or
     4  note  or  (b) the relevant time limit as provided by subdivision four of
     5  section two hundred thirteen of this article.
     6    § 7. Subdivision (h) of section 203 of  the  civil  practice  law  and
     7  rules,  as  added by chapter 821 of the laws of 2022, is amended to read
     8  as follows:
     9    (h) Claim and action upon certain instruments. Once a cause of  action
    10  upon  an instrument described in subdivision four of section two hundred
    11  thirteen or section two hundred thirteen-e of this article has  accrued,
    12  no  party  may, in form or effect, unilaterally waive, postpone, cancel,
    13  toll, revive, or reset the accrual  thereof,  or  otherwise  purport  to
    14  effect  a  unilateral  extension of the limitations period prescribed by
    15  law to commence an action and to interpose the claim,  unless  expressly
    16  prescribed by statute.
    17    §  8. The opening paragraph of subdivision (a) of section 205-a of the
    18  civil practice law and rules, as added by chapter 821  of  the  laws  of
    19  2022, is amended to read as follows:
    20    If  an  action  upon an instrument described under subdivision four of
    21  section two hundred thirteen or section two hundred thirteen-e  of  this
    22  article is timely commenced and is terminated in any manner other than a
    23  voluntary discontinuance, a failure to obtain personal jurisdiction over
    24  the  defendant,  a  dismissal  of the complaint for any form of neglect,
    25  including, but not limited to those specified in  subdivision  three  of
    26  section   thirty-one  hundred  twenty-six,  section  thirty-two  hundred
    27  fifteen, rule thirty-two hundred sixteen and  rule  thirty-four  hundred
    28  four  of  this  chapter,  for violation of any court rules or individual
    29  part rules, for failure to comply with any court scheduling  orders,  or
    30  by default due to nonappearance for conference or at a calendar call, or
    31  by failure to timely submit any order or judgment, or upon a final judg-
    32  ment upon the merits, the original plaintiff, or, if the original plain-
    33  tiff  dies  and the cause of action survives, [his or her] such original
    34  plaintiff's executor or administrator, may commence a  new  action  upon
    35  the  same  transaction or occurrence or series of transactions or occur-
    36  rences within six months following the termination,  provided  that  the
    37  new  action would have been timely commenced within the applicable limi-
    38  tations period prescribed by law at the time of the commencement of  the
    39  prior  action  and that service upon the original defendant is completed
    40  within such six-month period. For purposes of this subdivision:
    41    § 9. Subdivision (a) of section 3012-b of the civil practice  law  and
    42  rules,  as  added by chapter 306 of the laws of 2013, is amended to read
    43  as follows:
    44    (a) In any residential foreclosure action involving a  home  loan,  as
    45  such  term is defined in section thirteen hundred four of the real prop-
    46  erty actions and proceedings law, in which the defendant is  a  resident
    47  of  the property which is subject to foreclosure, the complaint shall be
    48  accompanied by a certificate, signed by the attorney for the  plaintiff,
    49  certifying  that  the  attorney  has  reviewed the facts of the case and
    50  that, based on consultation with representatives of the plaintiff  iden-
    51  tified  in  the certificate and the attorney's review of pertinent docu-
    52  ments, including the mortgage,  security  agreement  and  note  or  bond
    53  underlying  the  mortgage  executed  by defendant and all instruments of
    54  assignment, if any, [and] any other instrument of indebtedness including
    55  any  modification,  extension,  and  consolidation  agreement,  and  the
    56  payment  history  for  the  subject  loan and the custodial file for the

        A. 7546                             5
 
     1  subject note as defined under section thirteen hundred two of  the  real
     2  property  actions  and  proceedings  law, to the best of such attorney's
     3  knowledge, information and belief there is a reasonable  basis  for  the
     4  commencement  of  such  action  and  that the plaintiff is currently the
     5  creditor entitled  to  enforce  rights  under  such  documents.  If  not
     6  attached to the summons and complaint in the action, a copy of the mort-
     7  gage,  security  agreement  and  note  or  bond  underlying the mortgage
     8  executed by defendant and all instruments of assignment, if any, and any
     9  other instrument of indebtedness including any modification,  extension,
    10  and  consolidation  agreement,  and  the payment history for the subject
    11  loan and the custodial file  for  the  subject  note  as  defined  under
    12  section   thirteen   hundred  two  of  the  real  property  actions  and
    13  proceedings law shall be attached to the certificate.
    14    § 10. Subdivision (f) of rule 3408  of  the  civil  practice  law  and
    15  rules,  as  amended  by section 2 of part Q of chapter 73 of the laws of
    16  2016, is amended to read as follows:
    17    (f) Both the plaintiff and defendant shall negotiate in good faith  to
    18  reach  a  mutually  agreeable resolution, including but not limited to a
    19  loan modification, short sale, deed in lieu of foreclosure, or any other
    20  loss mitigation, if possible.
    21    1. Compliance with the obligation to negotiate in good faith  pursuant
    22  to  this section shall be measured by the totality of the circumstances,
    23  including but not limited to the following factors:
    24    [1.] (i) Compliance with the requirements of this rule and  applicable
    25  court  rules,  court orders, and directives by the court or its designee
    26  pertaining to the settlement conference process;
    27    [2.] (ii) Compliance with applicable mortgage servicing  laws,  rules,
    28  regulations,  investor  directives,  and  loss  mitigation  standards or
    29  options concerning loan modifications, short sales, and deeds in lieu of
    30  foreclosure; and
    31    [3.] (iii) Conduct consistent with efforts to reach a mutually  agree-
    32  able  resolution,  including  but  not limited to, avoiding unreasonable
    33  delay, appearing at the settlement conference with  authority  to  fully
    34  dispose  of  the  case,  avoiding prosecution of foreclosure proceedings
    35  while loss mitigation applications are pending, and  providing  accurate
    36  information to the court and parties.
    37    Neither  of the parties' failure to make the offer or accept the offer
    38  made by the other party is sufficient to establish a failure to  negoti-
    39  ate in good faith.
    40    2.  As  provided  for under section thirteen hundred twenty-one of the
    41  real property actions and proceedings law, it shall be  unlawful  for  a
    42  plaintiff  to  demand payment in excess of the amount the plaintiff paid
    43  for a subordinate loan such plaintiff purchased in  default,  as  deter-
    44  mined  under  section  thirteen hundred two of the real property actions
    45  and proceedings law, and the maximum rate  of  interest  provided  under
    46  section  fourteen-a of the banking law accruing from the date the plain-
    47  tiff purchased the subject loan. Any demand for a payment in  excess  of
    48  this  amount, whether to reinstate the loan or through a repayment plan,
    49  loan modification or other loss mitigation option, shall also constitute
    50  a failure to negotiate in good faith.
    51    § 11. This act shall take effect on  the  one  hundred  twentieth  day
    52  after it shall have become a law and shall apply to all actions filed on
    53  or after such effective date.
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