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Memorandum of Support

Empire Justice Memo of Support: Ensure Fairness in New York’s Foreclosure Process


A.5582 (Weinstein)/S.4530 (Klein)

New Yorkers for Responsible Lending (NYRL) Memos of Support Package- This legislation is a priority this year for NYRL, a statewide coalition of 159 organizations from around the state.

Empire Justice Center strongly supports A.5582/S.4530 referred to as “An act to amend the civil practice law and rules, in relation to residential foreclosure actions.”  This act will instill efficiency and fairness into New York’s foreclosure process.  It requires no more than what is already required by court rules and professional standards of conduct by plaintiffs and their lawyers. 

A.5582/S.4530 amends a substantially similar rule put in place by the Office of Court Administration (OCA) [1] to prevent the rule from being circumvented by lenders’ lawyers - a problem which is currently causing a massive slowdown of foreclosure cases in the court system.  A recent report indicates that 75% of cases in Brooklyn and Queens are stalled in what is being called the “shadow docket.” [2]  While statistics are not available on every county in the state, significant slowdowns are occurring statewide.   

The purpose of the OCA’s order was to hold attorneys accountable for maintaining minimal due diligence in the foreclosure cases they file.  Attorneys filing foreclosure actions currently must certify that they have taken basic steps to ensure the information contained in the complaint is accurate.  At present, however, attorneys do not have to file this certification until the proof of service and Request for Judicial Intervention (RJI) are filed.  A complaint can be filed and the action initiated without an RJI being filed.  Lenders’ lawyers are filing foreclosure actions but not filing, or delaying the filing of the RJIs and certifications.  The result is cases are sitting in limbo interminably in the “shadow docket.”

The greatest consequence is that mandatory settlement conferences, required by law in every residential foreclosure case, are not getting scheduled because RJI’s are not being filed.  This is placing a heavy burden on homeowners by placing them in foreclosure limbo with no means to negotiate, while interest and fees continue to accrue, damaging their ability to get a loan modification.

This bill fixes the problem by requiring the certification to be filed up front with the summons and complaint.  The certificate must verify that the lawyer has reviewed the facts of the case and verified with the plaintiff that there is a “reasonable basis” for filing the lawsuit.  It also requires the attachment of the mortgage, note and assignments, basic documents for any foreclosure filing which are necessarily accessible to the lawyer.  The primary change is timing: instead of allowing the plaintiff’s attorney to file the foreclosure action before proving they have done their due diligence in reviewing the loan documents, they would have to show that at the beginning of the proceeding.      

The current long and protracted process is not good for anyone.  Homeowners whose homes could have been saved early in the process are put in a worse position and risk losing their homes as cases sit and interest and fees accrue.  Homes that can’t be saved and should be foreclosed on (often times abandoned), just sit there and are not moved into the market, holding up New York’s economic recovery. Lenders complain that the process costs them time and money.  Courts’ dockets are growing in number with the backlog of foreclosure cases not moving.
   
The proposed legislation will hasten the foreclosure process in a majority of cases.  The current delays in New York’s foreclosure process are, in large part, due to attorneys failing to file the Request for Judicial Intervention (RJI) along with the certification and litigation over ownership of the property later in the foreclosure process.  If the certification by the attorney is required at the time of the complaint with the court, the lengthy delay between the filing of the complaint and the filing of the RJI will not occur.

Empire Justice Center strongly supports this legislation, which ensures fairness and efficiency in the foreclosure process.  Until plaintiffs in foreclosure actions are forced to accept responsibility for their pending cases at the time they file them, the foreclosure process in New York will continue to languish and the “shadow docket” will grow.


End Notes:
 [1] Special Court Rule re: Attorney Affirmation- Residential Foreclosure Actions, issued by Memorandum Oct. 20, 2010.
 [2] MFY Legal Services, Justice Unsettled: How the Foreclosure Shadow Docket and Discontinuances Prevent New Yorkers From Saving Their Homes, 2 (May 2012).

This memo was prepared by:


Kirsten E. Keefe

Empire Justice Center
119 Washington Avenue
Albany, NY  12210 


(518) 462-6831
(518) 935-2852
kkeefe@empirejustice.org

05/21/13