By Michael L. Moskowitz and Michele K. Jaspan
In Part I we highlighted how the amendments to the NY Real Property Actions and Proceedings Law (“RPAPL”), which became effective on December 20, 2016, affect lenders duties and obligations with respect to vacant and abandoned properties in foreclosure. In Part II we will address how the RPAPL amendments impact the foreclosure settlement conferences and pre-foreclosure notices.
I. Changes to Mandatory Foreclosure Settlement Conferences
CPLR §3408 was amended to clarify and impose additional duties on foreclosing lenders as follows:
1. Scope of Coverage. Settlement conferences should include discussions about loan modification, short sale, deed-in-lieu of foreclosure, and any other loss mitigation options.
2. Appearances. Both Plaintiff and Defendant must appear; either party may appear by phone if the court permits.
3. Documents. It is now mandatory for Plaintiff to submit reinstatement and payoff amounts, payment history, copies of the note and mortgage, loss mitigation application forms and any other documents the presiding judge may request.
4. Good Faith Negotiation. The good faith standard will be measured by a totality of the circumstances and measured by compliance with the court rules, mortgage servicing rules, conduct and avoidance of undue delay; however, failure to make or accept an offer cannot constitute a failure to negotiate in good faith.
5. Appearance and Answer by Borrower. A defendant who appears at the conference, but has failed to answer, shall be presumed to have a reasonable excuse for the default and shall be permitted to serve and file an answer, without having waived substantive defenses, within 30 days of the initial conference.
II. Changes to Pre-Foreclosure Notices
Amendments to RPAPL §§1303 and 1304 add additional revised disclosures required to be provided by foreclosing Plaintiffs. The RPAPL §1304 notice must be sent to homeowners at least 90 days before commencement of a foreclosure action and must include a list of agencies obtained from the New York State Department of Financial Services (“DFS”) website. The RPAPL §1303 notice must be sent by the lender at the time the complaint is filed warning borrowers about foreclosure scams. The salient change to the required verbiage of both notices advises the borrowers that despite their mortgage delinquency, they are not required to leave their home until the mortgaged property is sold at auction.
In addition, Lenders must also send the RPAPL §1304 notice to all known addresses for the borrower, in addition to the address of the property sought to be foreclosed. Lender must send this notice one time per loan in a twelve-month calendar year, but if the arrears are cured, and borrower defaults at a later date, a new 90-day notice must be sent. For Borrowers with limited English proficiency, the notice must be sent in their native language if it is one of the six languages listed on the DFS website. The law has also been clarified that the 90-day waiting period shall cease to apply if the borrower files bankruptcy, but the notice is still required.
A link to the template for the new notice can be found here.
A link to the list of agencies which must be attached to the notice can be found here.
Should you, or anyone you know, need assistance navigating these new RPAPL and CPLR duties and obligations, please reach out to the team at Weltman & Moskowitz, LLP for assistance.
About Weltman & Moskowitz, LLP, A New York and New Jersey Business, Bankruptcy, and Creditors’ Rights Law Firm:
Founded in 1987, Weltman & Moskowitz, LLP is a highly regarded business law firm concentrating on creditors’ rights, bankruptcy, foreclosure, and business litigation. Michael L. Moskowitz, a partner with the firm, focuses his practice on business and bankruptcy litigation, as well as creditor’s rights, foreclosure, adversary proceeding litigation, corporate counseling, M&A, and transactional matters. Michael can be reached at (212) 684-7800, (201) 794-7500 or mlm@weltmosk.com. Michele Jaspan is an associate of the firm. Michele can be reached at mkj@weltmosk.com.
