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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