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NY Foreclosure – Summary of directives related to COVID 19

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A timeline of events, on the handling of New York foreclosures based on recent COVID 19 concerns:

On March 15, 2020, the State of NY United Court System released a memorandum suspending, “all eviction proceedings and pending eviction orders…statewide until further notice.” The order did not discuss foreclosures. Nor, did it distinguish between commercial and residential proceedings.

On March 19, 2020, Governor Cuomo announced a directive to mortgage servicers to provide a “90-day mortgage relief to mortgage borrowers impacted by the novel coronavirus.” The directive included:

  • Waiving mortgage payments based on financial hardship
  • No negative reporting to credit bureaus
  • Grace period for loan modification
  • No late payment fees or online payment fees
  • Postponing or suspending foreclosures

Department of Financial Services later made it clear that the directives, “do not apply to any commercial mortgage” or other loans not discussed.

On March 19, 2020, the Supreme Court, New York County, ordered that “foreclosure auctions are postponed” and “foreclosure conferences will be administratively adjourned.”

On March 20, 2020, Gov. Cuomo released an executive order that there, “shall be no enforcement of either an eviction of any tenant residential or commercial or a foreclosure of any residential or commercial property for a period of ninety days.”

On March 22, 2020, Chief Administrative Judge Marks issued an order that, “effective immediately and until further order, no papers shall be accepted for filing by a county clerk or a court in any matter of a type not included on the list of essential matters attached as Exh. A.” Foreclosures and evictions were not on that list.

On March 24, 2020, the New York Department of Financial Services mandated that banking institutions establish a forbearance application process for New York residential mortgagors who have experienced a financial hardship due to the Corona Virus pandemic. This process must be in place no later than April 3, 2020.

Daily we are receiving updates that the Supreme Court’s in various counties are setting up virtual courts for appearances.  However, these are still only for those cases deemed essential matters.

Together, these orders implement a moratorium on both commercial and residential foreclosures and evictions.

If you have any questions or concerns, please contact Deborah Gallo, Director of Operations at [email protected]

NJ NOI’s now require Registration on Portal

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On June 24, 2019 P.L.2008, c.127 was enacted by the New Jersey Senate and General Assembly. It required the Department of Community Affairs to create a website or portal where residential mortgage lenders can submit a copy of the Notice of Intention to Foreclose (“NOI”) along with all relevant information (address, county, municipality, block, lot, current owner and date of NOI). After submitting the information, the DCA is directed to send notification to the residential mortgage lender confirming that the submittal has been received. Receipt of this confirmation is to be plead within the foreclosure complaint.

             The act provided a grace period that expires today. All NOIs sent prior to April 1, 2020 do not need to be registered on the portal. All NOIs sent on or after April 1, 2020 need to be registered. Yesterday we received the instructions for accessing the portal and setting up a username and password. Please find the FAQ and User Guide attached to this email. Usernames must be obtained by the lender or servicer who can then designate people or entities to register NOIs on their behalf. We recommend that all servicers review the attached documents and move quickly to set up a username so that new NOIs will be compliant. If any servicers or lenders would like assistance, please let us know. If you have any questions or concerns, please contact Catherine Aponte, Esq., at [email protected] or Deborah Gallo at [email protected]

 

NJ A3859 Passed and Executive Order issued due to Dangers of Covid 19

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On March 19, 2020, the New Jersey legislature passed Assembly Bill 3859, which stays the enforcement of all judgments of possession, warrants of removal, and writs of possession during a Public Health Emergency. The intention being to reduce the number of individuals that could be displaced during a pandemic. However, a court on its own or by a motion made by a party, an order can be entered permitted enforcement if it is in the interest of justice. Finally, it should be noted that the moratorium on enforcing evictions does not prohibit the initiation or continuation of either eviction or foreclosure proceedings during a Public Health Emergency. If you have any questions or concerns, please contact Catherine Aponte, Esq., at [email protected] or Deborah Gallo at [email protected]

Appellate Division declines to permit Supreme Court to revoke acceleration sua sponte

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In Citimortgage, Inc. etc. v. Salko, 179 A.D. 3rd 1009, 2020 WL 465495, 2020 N. Y. Slip Op. 00566, following dismissal of the first complaint for lack of jurisdiction for improper service, mortgagee’s successor brought a foreclosure action against mortgages, and the mortgage counterclaims against mortgagee for alleging violations of the FDCPA. In the Appellate Divisions review, they held that denial of the cross motion that conditioned discontinuance of the foreclosure on tolling mortgage interest, late fees and expenses from the alleged default, or payment of attorney’s fees, was warranted. However, the trial court’s sua sponte order removing the previous acceleration of the mortgage debt and directing the mortgage remain as an installment contract was not warranted.https://law.justia.com/cases/new-york/appellate-division-second-department/2020/2018-02512.html

In March 2005, Salko executed a note in the principal amount of $937,500 in favor of ABN AMRO Mortgage Group, Inc. On May 20, 2011, CitiMortgage, Inc.as successor by merger to ABN AMRO, commenced an action against the Salkos, among others, to foreclose the mortgage. The defendant served an answer and, thereafter, moved to dismiss the complaint insofar as asserted against him for lack of personal jurisdiction due to improper service. In an order dated April 18, 2012, the Supreme Court granted the defendant’s motion, which was unopposed, and dismissed the complaint insofar as asserted against him.

In June 2014, the plaintiff commenced this action to foreclose the mortgage against the defendant only, with the intention of consolidating this action with the 2011 action against the remaining defendants. 

The Salkos interposed an answer with affirmative defenses and a counterclaim alleging, inter alia, violations of the FDCPA. In March 2017, the plaintiff moved to discontinue this action without prejudice and to dismiss or sever the Salkos‘ counterclaim, asserting that it had determined that it could not prove its compliance with RPAPL 1304. The defendant cross-moved to condition the discontinuance of the action on the payment of counsel fees to him, the tolling of all mortgage interest, late fees, and expenses from the date of the alleged default on the mortgage loan, and the severance and continuation of the counterclaim.

“In an action of an equitable nature, the recovery of interest is within the court’s discretion. The exercise of that discretion will be governed by the particular facts in each case, including any wrongful conduct by either party” (Prompt Mtge. Providers of N. Am., LLC v. Zarour, 155 A.D.3d 912, 915, 64 N.Y.S.3d 106 [internal quotation marks omitted]; see CPLR 5001[a]; BAC Home Loans Servicing, L.P. v. Jackson, 159 A.D.3d 861, 862, 74 N.Y.S.3d 59; Citicorp Trust Bank, FSB v. Vidaurre, 155 A.D.3d 934, 934–935, 65 N.Y.S.3d 237; U.S. Bank N.A. v. Williams, 121 A.D.3d 1098, 1102, 995 N.Y.S.2d 172; Dayan v. York, 51 A.D.3d 964, 965, 859 N.Y.S.2d 673).

Here, the Appellate Court found the equities supported denying those branches of the motion for tolling of interest, late fees, expenses, legal fees etc. (which was requested) However, they found the Supreme Court’s sua sponte, revocation of the acceleration and mortgage remaining as an installment contract exceeds the discretion of the Court and modified the Orders accordingly.

For more information regarding this case, please contact  Deborah Gallo, Director of Operations at [email protected]

Correspondence in contemplation of settlement is not an unqualified acknowledgment of debt

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In Ditmid Holdings, LLC. Vs. JP Morgan Chase Bank, N.A., AD2nd, 2/26/2020, 2020 WL912994, 2020 N.Y. Slip Op. 01326, the Appellate Division, affirmed the lower Court’s decision granting the Plaintiff’s motion for summary judgment.https://law.justia.com/cases/new-york/appellate-division-second-department/2020/2017-02354.html   This was an action under RPAPL Section 1501(4) to cancel and discharge a recorded mortgage. On or about February 20, 2008, Washington Mutual commenced a foreclosure on the subject property. Pursuant to the terms of the note and mortgage alleged the default in payment and elected to call the full amount due.   A second action to foreclose was filed on December 8, 2009. In November 2013, the Supreme Court directed dismissal of the complaint in the Washington Mutual foreclosure action as abandoned under CPLR 3215(c) and the JPMorgan action was dismissed for failure to appear at a scheduled conference.

On November 6, 2014, the plaintiff commenced this action against JP Morgan to cancel and discharge the mortgage. After issue was joined, plaintiff moved for summary judgment, defendant opposed and cross moved for summary judgment. The Supreme Court granted Plaintiff’s motion and denied JPMorgan’s cross motion.   JPMorgan appealed from the January 26, 2017 decision. The law is well settled that, even if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt” (EMC Mtge. Corp. v. Patella, 279 A.D.2d 604, 605, 720 N.Y.S.2d 161; see BH 263, LLC v. Bayview Loan Servicing, LLC, 175 A.D.3d at 1376, 109 N.Y.S.3d 142; Bank of N.Y. Mellon v. Dieudonne, 171 A.D.3d 34, 37, 96 N.Y.S.3d 354).

JPMorgan’s attempted to use a letter written by Salaii (original mortgagor) as acknowledgment of the debt. However, the Court found that the letter was not an unqualified acknowledgment of the debt, but a request settlement. Therefore, it was insufficient to reset the statute of limitations. Additionally, the Court found that the reinstatement provisions in section 19 of the mortgage did not prevent the mortgagee from validly accelerating the mortgage debt. (see Bank of N.Y. Mellon v. Dieudonne, 171 A.D.3d at 39, 96 N.Y.S.3d 354). Therefore, the Appellate Division agreed with the Supreme Court’s decision.  

Another cautionary tale, that correspondence in contemplation of settlement cannot be used as the sword or the shield, as well as, another application of the Dieudonne decision.

For more information regarding this case, please contact Deborah Gallo, Director of Operations at [email protected]