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New York Law: New Requirement on Lenders in Foreclosure Process Is Constitutional

New York Law Journal | April 08, 2017

By Neil Garfield

A new law in New York that says lenders' legal representatives must bring all the necessary documentation to foreclosure settlement conferences with mortgage holders has been upheld by a judge.

While Acting Suffolk County Supreme Court Justice James Hudson said he can find no appellate courts that have ruled on the issue since changes to §3408 of New York's Civil Practice Law and Rules (CPLR) became effective Dec. 20, 2016, he is "confident" the requirements are constitutional.

Hudson made the determination in MLF3 Jagger v. Kempton, 613564/2015E, a case over a Long Island foreclosure and whether the property was used primarily for residential or commercial purposes.

Crane Neck Association v. New York City/Long Island City Services Group , 61 NY2d 154 (1984), and other cases show that special requirements imposed on regulated entities during times of public policy crises enjoy legal review under a "relaxed constitutional standard," Hudson wrote. He said the rules on foreclosures qualify because they are responding to such a crisis.

Among other things, the amendments to CPLR 3408 allow courts to impose civil penalties of up to $25,000 plus attorney fees against lenders for their failure to bring the proper documentation to foreclosure conferences, such as proof that they still control the mortgages that are being foreclosed.

The measure was enacted following complaints that some lenders were intentionally delaying settlement of mortgage cases by not having proper documentation in hand in order to make it harder for homeowners to reach agreements that would allow them to hold onto their properties and avoid foreclosure (NYLJ, July 22, 2016).

Hudson's ruling was dated March 27.

 

 

 

 

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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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