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RPAPL 1302-a was enacted on December 23, 2019 and became effective on that date.  It provides as follows:  “Notwithstanding the provisions of[CPLR3211(e)], any objection or defense based on the plaintiff’s lack of standing in a foreclosure proceeding related to a home loan, as defined in [RPAPL 1304(6)(a)], shall not be waived if a defendant fails to raise the objection or defense in a responsive pleading or pre-answer motion to dismiss. A defendant may not raise an objection or defense of lack of standing following a foreclosure sale, however, unless the judgment of foreclosure and sale was issued upon defendant’s default” (RPAPL 1302-a).”

This provision applies only to residential mortgage foreclosures and provides that failure to raise standing a defense in a pleading does not constitute waiver pursuant to CPLR 3211(e).   The law was implemented to have cases regarding standing be resolved on the merits and not a technicality.

A recent decision GMAC Mortgage, LLC v. Coombs, AD 2^nd, 2017-08030 issued November 25, 2020, sheds light on the Court’s interpretation of the law.  The Court found that the statute does not impact CPLR 3018 (b), “where, as here, standing is not an essential element of the cause of action, under CPLR 3018(b) a defendant must affirmatively plead lack of standing as an affirmative defense in the answer in order to properly raise the issue in its responsive pleading”. 

– The defense of standing is exempt from waiver provisions of CPLR 3211 (e), but, it does not excuse defendant from raising the issue before it may be considered by the Court.  

– The Court was not vested with the authority to raise standing on its own initiative, as the legislature did not go that far in its change to the law.

As applied to the case,  the Court found that defendant’s answer be deemed amended to include lack of standing in the opposition to plaintiff’s motion for summary judgment, as plaintiff had the duty of establishing standing in order to be entitled to summary judgment.  Here, this was brought up in the opposition, therefore, plaintiff in the reply provided that they had physical possession of the note and mortgage prior to commencement.  While the defendant did make allegations regarding the validity of the assignment, the Court found that it was of no relevance as standing based on the note. 

Therefore, the Court agreed with the Supreme Court’s determination to grant leave to reargue, and upon re-argument grant plaintiff’s motion for summary judgment. 

If you have any questions regarding this case, please contact Deborah Gallo, Esq., Director of Operations at dgallo@friedmanvartolo.com.

NY Bill S4190 requires including name and telephone number of the mortgage servicer on residential foreclosure documents. The Bill has been delivered to the Governor after having passed the Senate and Assembly.  The goal is to make it access to the information more available to the parties and to be at their fingertips.  Additionally, making the servicer information available to municipalities to enforce maintenance of the property and reduce zombie properties. 

The first section amends Real Property Actions and Proceedings Law 1321 to require the name and telephone number of the servicer to the Order of reference for 1-4 family residential properties. The second section amends Real Property Actions and Proceedings Law 1351 to require the name and telephone number for the servicer to the Judgment of Foreclosure and sale for 1-4 family residential properties.  The final section requires that the Civil Practice Law 6511 be amended to require the name and telephone number for the service to the Lis Pendens for 1-4 family residential properties.  If the bill becomes law, it will be effective immediately.

The Governor has 10 days (not including Sundays) to approve/sign or reject/veto bills passed by both houses.  Signed bills become law, vetoed bills do not.  If the Governor fails to take action within 10 days, the bill automatically becomes law.  We continue to monitor NY Bill S4190 to determine the outcome and will keep you advised.  If you have any questions please contact Deborah M. Gallo, Esq., Director of Operations at dgallo@friedmanvartolo.com.

Thursday, October 22, 2020, the NYS Office of Court Administration released the attached Memorandum which includes the newly issued AO 232/20. This Administrative Order expands on topics previously addressed in AO 157/20. https://www.nycourts.gov/whatsnew/pdf/2020_10_22_11_14_11.pdf

In particular:

• All residential, commercial and in rem foreclosures may proceed, subject to federal and state relief provisions and restrictions (such as the current suspension of all NY commercial foreclosures through January 1, 2021), foreclosure conference requirements and general court delays due to the pandemic;
• Elimination of the conference requirement prior to scheduling auctions for Vacant and Abandoned Properties, provided plaintiff files an affirmation attesting, ‘following diligent inquiry’, that the property is currently abandoned and vacant
• Auctions must be conducted in accordance with newly issued local foreclosure auction plans and rules (however, not all districts and counties have published their new rules for review and compliance)
• No default judgments may be entered against a party that fails to answer a complaint or petition during a Suspension of Statutory Time Limits period (which is currently suspended through 11/3/20 pursuant to the Governor’s Executive Order 202.67)

Please contact Deborah Gallo, Esq. Director of Operations with any questions at dgallo@friedmanvartolo.com.

Pursuant to the Orders of the Governor and the Chief Judge of the State of New York, scheduling of residential foreclosure auctions may recommence starting October 15, 2020.  Although the suspension of residential auctions has been lifted, two conditions must be satisfied before auctions can be scheduled: (i) each judicial district must announce new protocols for conducting auctions; and (ii) a “Covid conference” must be held on each case to assess whether Covid has impacted the parties and whether settlement is viable.  Unfortunately not all judicial districts have released their new protocols and the Courts have been slow to schedule conferences for post-judgment cases.  While these conditions continue to delay foreclosures sales, we are actively engaged with the Courts in an effort to confirm the new auction rules and to expedite the scheduling of sales.

For any questions, please contact Deborah Gallo, Esq, Director of Operations at dgallo@friedmanvartolo.com.

The New York City Department of Consumer Affairs (DCA) has issued a set of revisions to its debt collection rules that are intended to track consumer language preferences and apprise consumers of the availability of language services, either from the servicer or the DCA. These new requirements, which are effective as of October 1, 2020, affect recordkeeping, translation quality (should a collector decide to provide translations), the debt validation notice, and any public website maintained by the servicer. These changes are made to Title 6 of the Rules of the City of New York (RCNY). The particulars of these changes are outlined below, with specific citations for each new requirement. Please note that these revisions do not require the servicer to provide any new language services; if a servicer chooses to provide language services, it must inform the consumer of their availability and ensure their accuracy.

Language Preference Tracking and Annual Report

The following are additional recordkeeping burdens borne by the servicer.

• Servicers must make reasonable efforts to ascertain every consumer’s language preference and maintain a record of it. 6 RCNY § 2-193(b)(5).
• Servicers must prepare an annual report, using a form provided by the DCA, disclosing (1) the number of accounts on which non-English collection communications were made and (2) the number of employees that conducted these non-English collection communications. 6 RCNY § 2-193(c)(3). Please note that this annual report form does not appear to be available at this time.

Prohibition on Inaccurate or Incomplete Translations and Requirement to Disclose Language Preference

The following will now be included in the legal definition of “false, deceptive, or misleading” representations:

• Any “false, inaccurate, or partial” translation of a collection communication, if the servicer is providing the translation. Please note that the servicer is not required to provide translation services under this revision. However, should a servicer decide to do so, the translation must be complete and correct. 6 RCNY § 5-77(d)(18).
• Failure to accurately disclose a consumer’s known language preference when returning or selling an account, or when referring an account for litigation. 6 RCNY § 5-77(d)(18). Please note that our interpretation of this is that the next contact with any existing NYC consumer should include a request for their language preference. The first contact with any new consumer should also include this request, unless a prior servicer has already included the consumer’s language preference information in a transfer file.

In addition, the following will now be included in the legal definition of “unfair or unconscionable means” of collecting a debt:

• Attempting to collect a debt without first requesting the consumer’s language preference and keeping a record of it. 6 RCNY § 5-77(e)(9).

Additional Requirements for Debt Validation Notices and Public Websites

The following are additional statements which must now be included in the standard debt validation notice sent to any NYC consumer:

• A statement informing the consumer of any language services provided by the servicer, including whether the servicer will provide non-English translations of all communications. 6 RCNY § 5-77(f)(2)(vii). As noted above, the servicer is not required to provide translation services under this revision. However, should a servicer decide to do so, it must inform the consumer that these services are available.
• A statement that the consumer may find “translation and description” of common debt-collection terms, in multiple languages, on the DCA website: www.nyc.gov/dca. 6 RCNY § 5-77(f)(2)(viii).

These same two statements, regarding (1) language services provided by the servicer and (2) the glossary provided by the DCA, must be added “clearly and conspicuously” to any website maintained by the servicer that is accessible by the public. 6 RCNY § 5-77(h)(1)-(2). Note that since these rules only apply to New York City, it is our recommendation that such website disclosures clearly indicate that they are for NYC consumers only. The DCA has added a new penalty to its enforcement schedule for failure to comply with this new website requirement. The penalties match those for violation of the debt validation notice requirements: $260 for a first violation, $315 for a second violation, and $350 per any additional violation. 6 RCNY § 6-62.  For any questions regarding this article, please contact Deborah Gallo, Director of Operations, as dgallo@friedmanvartolo.com.