Financial Services Law Developments: FYI: NY Enacts Law Affecting Mandatory Foreclosure Settlement Conferences, Pre-Foreclosure Maintenance and Registration as to Vacant Properties

Sunday, June 26, 2016

FYI: NY Enacts Law Affecting Mandatory Foreclosure Settlement Conferences, Pre-Foreclosure Maintenance and Registration as to Vacant Properties

On June 23, 2016, New York Governor Cuomo signed S8159 (attached) into law, which among other things contains provisions relating to:

- Mandatory settlement conferences in residential foreclosures. The new law modifies New York's mandatory settlement conference provisions for residential mortgage foreclosures to among other things allow courts to sanction mortgagees up to $25,000 and award attorney fees in favor of the borrower for non-compliance, clarify that the failure to offer or accept an offer is not sufficient to establish lack of good faith participation, and allow borrowers who participate in settlement conferences to have defaults vacated

- A pre-foreclosure duty for mortgagees to register and maintain vacant properties. The new law imposes a duty on mortgagees to register, maintain and secure residential real property collateral where there is a reasonable basis to believe the property is vacant and abandoned, allows penalties of up to $500 per violation, per property, per day, and provides for a state-wide electronic registry of vacant and abandoned properties as well as communication between local governments and mortgagees.

- An expedited or fast-track foreclosure process for vacant and abandoned properties. The new law allows mortgagees to file a motion or application in residential foreclosures to have the collateral property deemed vacant and abandoned, provides standards for the court to use in determining whether a residential property is "vacant and abandoned," requires related disclosures to the mortgagors, prohibits mortgagees from trying to force occupants of the property to vacate or abandon the property, allows judgments of foreclosure and sale to be entered quickly if the court finds that the property is vacant and abandoned, and sets deadlines for conducting foreclosure auctions and marketing REO.

- New default disclosure requirements. The new law requires the New York Department of Financial Services to publish a "Consumer Bill of Rights" detailing the rights and responsibilities of the parties in foreclosure and for courts to provide the disclosure to foreclosure defendants, revises the language of New York's mandatory pre-foreclosure notice (including translation obligations "for any borrower known to have limited English proficiency"),

A copy of the bill showing the revisions added and removed as to various statutory sections is attached.

The new law provides limited preemption of local laws for "any state or federally chartered bank, savings bank, savings and loan association or credit union that originates, owns, services or maintains mortgages" relating to affected properties. See pp. 12-13, 25-26 of the attached.

Generally, the new law will become effective "on the one hundred eightieth day after it shall have become a law," which is December 23, 2016.

However, "(a) The amendments to subdivision (a) of rule 3408 of the civil practice law and rules made by section two of this act shall be subject to the expiration and reversion of such subdivision pursuant to chapter 507 of the laws of 2009, as amended, when upon such date the provisions of section three of this act shall take effect; and (b) The amendments to subdivisions 1, 2, 5 and 6 of section 1304 of the real property actions and proceedings law made by section six of this act shall be subject to the expiration and reversion of such subdivisions pursuant to chapter 507 of the laws of 2009, as amended, when upon such date the provisions of section seven of this act shall take effect."

Ralph T. Wutscher
Maurice Wutscher LLP
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The Editor's Bio

Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, 33rd Floor
Chicago, Illinois 60602
Direct: (312) 493-0874
RWutscher@MauriceWutscher.com
https://www.MauriceWutscher.com/

Ralph Wutscher's practice focuses primarily on representing depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, distressed asset buyers and sellers, loss mitigation companies, automobile and other personal property secured lenders and finance companies, credit card and other unsecured lenders, and other consumer financial services providers. He represents the consumer lending industry as a litigator, and as regulatory compliance counsel.

Ralph has substantial experience in defending private consumer finance lawsuits, including cases ranging from large interstate putative class actions to localized single-asset cases, as well as in responding to regulatory investigations and other governmental proceedings. His litigation successes include not only victories at the trial court level, but also on appeal, and in various jurisdictions. He has successfully defended numerous putative class actions asserting violations of a wide range of federal and state consumer protection statutes. He is frequently consulted to assist other law firms in developing or improving litigation strategies in cases filed around the country.

Ralph also has substantial experience in counseling clients regarding their compliance with federal laws, and with state and local laws primarily of the Midwestern United States. For example, he regularly provides assistance in connection with portfolio or program audits, consumer lending disclosure issues, the design and implementation of marketing and advertising campaigns, licensing and reporting issues, compliance with usury laws and other limitations on pricing, compliance with state and local “predatory lending” laws, drafting or obtaining opinion letters on a single- or multi-state basis, interstate branching and loan production office licensing, evaluations and modifications of new or existing products and procedures, debt collection and servicing practices, proper methods of responding to consumer inquiries and furnishing consumer information, as well as proposed or existing arrangements with settlement service providers and other vendors, and the implementation of procedural or other operational changes following developments in the law.

Ralph is a member of the Governing Committee of the Conference on Consumer Finance Law. He is also the immediate past Chair of the Preemption and Federalism Subcommittee for the ABA's Consumer Financial Services Committee. He served on the Law Committee for the former National Home Equity Mortgage Association, and completed two terms as Co-Chair of the Consumer Credit Committee of the Chicago Bar Association.

Ralph received his Juris Doctor from the University of Illinois College of Law, and his undergraduate degree from the University of California at Los Angeles (UCLA). He is a member of the national Mortgage Bankers Association, the American Bankers Association, the Conference on Consumer Finance Law, DBA International, the ACA International Members Attorney Program, as well as the American and Chicago Bar Associations.

Ralph is admitted to practice in Illinois, as well as in the United States Court of Appeals for the Seventh Circuit, the United States District Courts for the Northern and Southern Districts of Illinois, and the United States District Court for the Eastern District of Wisconsin, and has been admitted pro hac vice in various jurisdictions around the country.