NY State Senate Bill 2011-S697

Senate Bill S697

2011-2012 Legislative Session

Provides that only the owner and holder of a mortgage and note, or its agent, shall have standing to commence a mortgage foreclosure action

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Archive: Last Bill Status - In Senate Committee Housing, Construction And Community Development Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 04, 2012	referred to housing, construction and community development
May 25, 2011	print number 697a
May 25, 2011	amend and recommit to housing, construction and community development
Jan 05, 2011	referred to housing, construction and community development

Bill Amendments

Original

A (Active)

co-Sponsors

2011-S697 - Details

Current Committee:: Senate Housing, Construction And Community Development
Law Section:: Real Property Actions and Proceedings Law
Laws Affected:: Amd §1302, add §1302-a, RPAP L
Versions Introduced in 2009-2010 Legislative Session:: S8174

2011-S697 - Summary

Provides that only the owner and holder of a mortgage and note, or its agent, shall have standing to commence a mortgage foreclosure action; lack of standing shall be defense that may be raised at any time; requires the plaintiff in a foreclosure action to affirm that it is the holder and owner, or its designed agent, of the subject mortgage and note; provides that the summons and complaint shall include a copy of the original mortgage and note, and all endorsements, assignments and transfers thereof, and any delegations of authority by the owner and holder of the mortgage and note.

2011-S697 - Sponsor Memo

                                BILL NUMBER:S697

TITLE OF BILL:

An act
to amend the real property actions and proceedings law, in relation to
standing to commence an action to foreclose a mortgage

PURPOSE:

To prevent foreclosure proceedings of high-cost and subprime home
loans without proof of the plaintiff's mortgage ownership and
"standing to commence a foreclosure action."

SUMMARY OF PROVISIONS:

Section 1 amends subdivision 1 of section 1302 of the RPAPL to require
the plaintiff in a proceeding related to high-cost home loan or
subprime home loans to adhere to the regulations set forth in the new
section 1302-a prior to commencing a foreclosure action.

Section 2 adds a new section 1302-a to RPAPL which states that:

(1) No person shall have standing to commence an action unless it is
the owner and holder of the mortgage and note, and any defense based
on a plaintiff's lack of standing cannot be waived if a defendant

fails to raise such a defense in a responsive pleading or pre-answer
motion to dismiss.

(2) Every summons and complaint to commence a foreclosure action shall
include an affirmative allegation at the time of the proceeding that
the plaintiff is the owner and holder of the subject mortgage and note.

(3) Every summons and complaint filed to commence a foreclosure action
shall be accompanied by a copy of the note with all original
endorsements, assignments and transfers.

Section 3 specifies the effective date.

JUSTIFICATION:

During the past 4 years, both before and after the stock market crash
of 2008, and the previous and associated meltdown of the housing
market, there has been a nationwide increase in foreclosures
throughout the country. However, many of the foreclosure actions
initiated by lenders and trusts to obtain the securitized debt
obligation (the property) have called into question the inherent
legality of the proceedings, due to the plaintiff's lack of
"standing," and in many cases it is simply not
clear who actually owns the mortgage or debt.

Despite the fact that in order to have an appropriate foreclosure
proceeding the filing party must legally have "standing to commence
a foreclosure action" against a mortgagor or borrower, many lenders
and trusts alike continue to move forward with bringing a legal


action against borrowers when many of these lenders don't even own
the debts in the first place.

In New York, a recent court decision stated that if the borrower
doesn't raise standing up front when they first answer the
foreclosure summons, then the defense of standing is waived for the
borrower. Unfortunately, many times the borrower often has no way of
knowing who owns the loan and if they do not raise it up front, they
can never raise it again. In this situation, an entity foreclosing
could potentially foreclose on a home it does not have a right to
foreclose on.

The proposed bill language does three things:

1. Requires those homeowners facing foreclosure to provide evidence
that they own the loan.

2. Asserts that defense of standing is not waivable and can be raised
throughout the foreclosure process.

3. Requires all documents proving ownership to be filed with summons
and complaint.

LEGISLATIVE HISTORY:

2010 - S.8174 ORDERED TO THIRD READING CAL. 1396 - A.11465 Passed
Assembly

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This bill would be effective immediately, with provisions.

2011-S697 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   697

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sens.  KLEIN, KRUEGER -- read twice and ordered printed,
  and when  printed  to  be  committed  to  the  Committee  on  Housing,
  Construction and Community Development

AN  ACT  to  amend  the  real  property  actions and proceedings law, in
  relation to standing to commence an action to foreclose a mortgage

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Subdivision 1 of section 1302 of the real property actions
and proceedings law, as amended by chapter 472 of the laws of  2008,  is
amended to read as follows:
  1.  Any  complaint  served  in a proceeding initiated pursuant to this
article relating to a high-cost home loan or a subprime  home  loan,  as
such  terms  are  defined in section six-l and six-m of the banking law,
respectively, must contain an affirmative allegation that  at  the  time
the proceeding is commenced, the plaintiff[:
  (a)  is  the owner and holder of the subject mortgage and note, or has
been delegated the authority to institute a mortgage foreclosure  action
by the owner and holder of the subject mortgage and note; and
  (b)]  has  complied with all of the provisions of section five hundred
ninety-five-a of the banking law and any rules and  regulations  promul-
gated  thereunder, section six-l or six-m of the banking law, and SUBDI-
VISION TWO OF  SECTION  THIRTEEN  HUNDRED  TWO-A  AND  section  thirteen
hundred four of this article.
  S  2.  The  real  property  actions  and proceedings law is amended by
adding a new section 1302-a to read as follows:
  S 1302-A. STANDING TO COMMENCE AN ACTION.  1.  NO  PERSON  SHALL  HAVE
STANDING TO COMMENCE AN ACTION PURSUANT TO THIS ARTICLE UNLESS IT IS THE
OWNER AND HOLDER OF THE SUBJECT MORTGAGE AND NOTE, OR HAS BEEN DELEGATED
THE  AUTHORITY  TO  INSTITUTE A MORTGAGE FORECLOSURE ACTION BY THE OWNER
AND HOLDER  OF  THE  SUBJECT  MORTGAGE  AND  NOTE.  NOTWITHSTANDING  THE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD03116-01-1

S. 697                              2

PROVISIONS  OF  SUBDIVISION (E) OF RULE THIRTY-TWO HUNDRED ELEVEN OF THE
CIVIL PRACTICE LAW AND RULES, ANY DEFENSE BASED ON THE PLANITIFF'S  LACK
OF STANDING IN A FORECLOSURE PROCEEDING SHALL NOT BE WAIVED IF A DEFEND-
ANT  FAILS  TO  RAISE THE DEFENSE IN A RESPONSIVE PLEADING OR PRE-ANSWER
MOTION TO DISMISS.
  2. EVERY SUMMONS AND COMPLAINT TO COMMENCE A FORECLOSURE ACTION  SHALL
INCLUDE  AN  AFFIRMATIVE  ALLEGATION  THAT AT THE TIME THE PROCEEDING IS
COMMENCED, THE PLAINTIFF IS THE OWNER AND HOLDER OF THE SUBJECT MORTGAGE
AND NOTE, OR HAS BEEN DELEGATED THE AUTHORITY TO  INSTITUTE  A  MORTGAGE
FORECLOSURE  ACTION  BY THE OWNER AND HOLDER OF THE SUBJECT MORTGAGE AND
NOTE.  IN ADDITION, THE PLAINTIFF SHALL PLEAD IN ITS COMPLAINT THAT  THE
ORIGINALS  OF  THE  SUBJECT  MORTGAGE AND NOTE ARE IN ITS POSSESSION AND
CONTROL, AND THAT SUCH PLAINTIFF IS OTHERWISE ENTITLED  TO  ENFORCE  THE
SUBJECT MORTGAGE AND NOTE PURSUANT TO LAW.
  3. THERE SHALL BE FILED WITH EVERY SUMMONS AND COMPLAINT TO COMMENCE A
FORECLOSURE ACTION:
  (A) A COPY OF THE ORIGINAL SUBJECT MORTGAGE AND NOTE, AND PROOF OF THE
OWNERSHIP  THEREOF  INCLUDING ALL ORIGINAL ENDORSEMENTS, ASSIGNMENTS AND
TRANSFERS OF SUCH MORTGAGE AND NOTE; AND
  (B) IF APPLICABLE, PROOF OF DELEGATION OF AUTHORITY FROM THE OWNER AND
HOLDER OF THE SUBJECT MORTGAGE AND NOTE TO INSTITUTE A MORTGAGE FORECLO-
SURE ACTION ON BEHALF OF SUCH OWNER AND HOLDER.
  S 3. This act shall take effect immediately, except that  section  one
of this act and subdivisions 2 and 3 of section 1302-a of the real prop-
erty  actions  and proceedings law, as added by section two of this act,
shall take effect on the ninetieth day after it shall have become a law.

co-Sponsors

View additional co-sponsors

2011-S697A (ACTIVE) - Details

Current Committee:: Senate Housing, Construction And Community Development
Law Section:: Real Property Actions and Proceedings Law
Laws Affected:: Amd §1302, add §1302-a, RPAP L
Versions Introduced in 2009-2010 Legislative Session:: S8174

2011-S697A (ACTIVE) - Summary

2011-S697A (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S697A

TITLE OF BILL:
An act
to amend the real property actions and proceedings law, in relation to
standing to commence an action to foreclose a mortgage

SUMMARY OF PROVISIONS:
Section 1: Amends Subdivision 1 of section 1302 of RPAPL to require the
plaintiff to adhere to the regulations set forth in the new section
1302 a with regards to commencing a foreclosure action.

Section 2: Adds anew section 1302-a which states that:

(1) No person shall have standing to commence an action unless it is
the owner and holder of the mortgage and note and any defense based
on a plaintiff's lack of standing cannot be waived if a defendant
fails to raise such a defense in a responsive pleading or pre-answer
motion.

(2) Every summons and complaint to commence a foreclosure action shall
include an affirmative allegation at the time of the proceeding that
the plaintiff is the owner and holder of the note

(3) That every summons and complaint filed to commence a foreclosure
action shall be accompanied by a copy of the note with all original

endorsements, assignments and transfers.

Section 3: Sets the effective date on the 90th day after it shall have
become law.

JUSTIFICATION:
During the past 4 years, both before and after the stock market crash
of 2008, and the previous and associated meltdown of the housing
market, there has been a nationwide increase in foreclosures
throughout the country. However, many of the foreclosure actions
initiated by lenders and trusts to obtain the securitized debt
obligation (the property)," have called into question the inherent
legality of the proceedings, due to the plaintiff s lack of
"standing" and in many cases it is simply not clear who actually owns
the mortgage or debt.

Despite the fact that in order to have an appropriate foreclosure
proceeding the filing party must legally have "standing to commence a
foreclosure action" against a mortgagor or borrower, many lenders and
trusts alike continue to move forward with bringing a legal action
against borrowers when many of these lenders don't even own the debts
in the first place.

In New York, numerous court decisions have held that if the borrower
doesn't raise standing upon answering the foreclosure action, the
defense of standing is waived for the borrower. See, HSBC Bank, USA v
Dammond, 59 AD3d 679 (2nd Dept 2009). Unfortunately, many times the
borrower often has no way of knowing who owns the loan, and despite
the clear requirement that the plaintiff own the note, if the
defendant borrower does not raise the issue initially in an answer or


pre-answer motion to dismiss up front, they may never be able to
raise it again. In this situation, an entity foreclosing can
foreclose on a home they don't have any legal right to foreclose on.

The proposed bill language does several things, inter alia:

1. In order to foreclose, the mortgagee must allege and prove
ownership of the note and mortgage.

2. Asserts that defense of standing is not waivable and can be raised
throughout the foreclosure process.

3. Requires all documents that prove ownership be filed with summons
and complaint.

While there exists some case law which requires plaintiffs in
foreclosure actions to adhere to some or all of these measures, a
statutory clarification is required in order to eliminate the
possibility of any ambiguity or confusion for either bench or bar as
to applicable law. See, Countrywide Home Loans, Inc. v Gress, 68
AD3d 709 (2nd Dept 2009). Absent further clarification in the law
which this bill provides, mortgagees will continue to be able to
foreclose solely because an otherwise viable standing defense was not
timely raised.

LEGISLATIVE HISTORY:
2010: A.11465/S.8174-PA/S. Cal

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.

EFFECTIVE DATE:
Immediately with provisions.

2011-S697A (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 697--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sens. KLEIN, GRISANTI, KRUEGER -- read twice and ordered
  printed, and when printed to be committed to the Committee on Housing,
  Construction and Community Development -- committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee

AN ACT to amend the  real  property  actions  and  proceedings  law,  in
  relation to standing to commence an action to foreclose a mortgage

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 1 of section 1302 of the real property  actions
and  proceedings  law, as amended by chapter 472 of the laws of 2008, is
amended to read as follows:
  1. Any complaint served in a proceeding  initiated  pursuant  to  this
article  relating  to  a high-cost home loan or a subprime home loan, as
such terms are defined in section six-l and six-m of  the  banking  law,
respectively,  must  contain  an affirmative allegation that at the time
the proceeding is commenced, the plaintiff[:
  (a) is the owner and holder of the subject mortgage and note,  or  has
been  delegated the authority to institute a mortgage foreclosure action
by the owner and holder of the subject mortgage and note; and
  (b)] has complied with all of the provisions of section  five  hundred
ninety-five-a  of  the banking law and any rules and regulations promul-
gated thereunder, section six-l or six-m of the banking law, and  SUBDI-
VISION  TWO  OF  SECTION  THIRTEEN  HUNDRED  TWO-A  AND section thirteen
hundred four of this article.
  S 2. The real property actions  and  proceedings  law  is  amended  by
adding a new section 1302-a to read as follows:
  S  1302-A.  STANDING  TO  COMMENCE  AN ACTION. 1. NO PERSON SHALL HAVE
STANDING TO COMMENCE AN ACTION PURSUANT TO THIS ARTICLE UNLESS IT IS THE
OWNER AND HOLDER OF THE SUBJECT MORTGAGE AND NOTE, OR HAS BEEN DELEGATED

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD03116-07-1

S. 697--A                           2

THE AUTHORITY TO INSTITUTE A MORTGAGE FORECLOSURE ACTION  BY  THE  OWNER
AND  HOLDER  OF  THE  SUBJECT  MORTGAGE  AND  NOTE.  NOTWITHSTANDING THE
PROVISIONS OF SUBDIVISION (E) OF RULE THIRTY-TWO HUNDRED ELEVEN  OF  THE
CIVIL  PRACTICE LAW AND RULES, ANY DEFENSE BASED ON THE PLAINTIFF'S LACK
OF STANDING IN A FORECLOSURE PROCEEDING SHALL NOT BE WAIVED IF A DEFEND-
ANT FAILS TO RAISE THE DEFENSE IN A RESPONSIVE  PLEADING  OR  PRE-ANSWER
MOTION TO DISMISS.
  2.  EVERY SUMMONS AND COMPLAINT TO COMMENCE A FORECLOSURE ACTION SHALL
INCLUDE AN AFFIRMATIVE ALLEGATION THAT AT THE  TIME  THE  PROCEEDING  IS
COMMENCED, THE PLAINTIFF IS THE OWNER AND HOLDER OF THE SUBJECT MORTGAGE
AND  NOTE,  OR  HAS BEEN DELEGATED THE AUTHORITY TO INSTITUTE A MORTGAGE
FORECLOSURE ACTION BY THE OWNER AND HOLDER OF THE SUBJECT  MORTGAGE  AND
NOTE.   IN ADDITION, THE PLAINTIFF SHALL PLEAD IN ITS COMPLAINT THAT THE
ORIGINALS OF THE SUBJECT MORTGAGE AND NOTE ARE  IN  ITS  POSSESSION  AND
CONTROL,  AND  THAT  SUCH PLAINTIFF IS OTHERWISE ENTITLED TO ENFORCE THE
SUBJECT MORTGAGE AND NOTE PURSUANT TO LAW.
  3. THERE SHALL BE FILED WITH EVERY SUMMONS AND COMPLAINT TO COMMENCE A
FORECLOSURE ACTION:
  (A) A COPY OF THE ORIGINAL SUBJECT MORTGAGE AND NOTE, AND PROOF OF THE
OWNERSHIP THEREOF INCLUDING ALL ORIGINAL ENDORSEMENTS,  ASSIGNMENTS  AND
TRANSFERS OF SUCH MORTGAGE AND NOTE; AND
  (B) IF APPLICABLE, PROOF OF DELEGATION OF AUTHORITY FROM THE OWNER AND
HOLDER OF THE SUBJECT MORTGAGE AND NOTE TO INSTITUTE A MORTGAGE FORECLO-
SURE ACTION ON BEHALF OF SUCH OWNER AND HOLDER.
  4. THE COURT SHALL MAKE AN AFFIRMATIVE FINDING OF STANDING WHICH SHALL
BE INCLUDED IN THE JUDGMENT OF FORECLOSURE AND SALE.
  S  3.  This act shall take effect immediately, except that section one
of this act and subdivisions 2 and 3 of section 1302-a of the real prop-
erty actions and proceedings law, as added by section two of  this  act,
shall take effect on the ninetieth day after it shall have become a law.

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Senate Bill S697

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Sponsored By

Archive: Last Bill Status - In Senate Committee Housing, Construction And Community Development Committee

Bill Amendments

co-Sponsors

2011-S697 - Details

2011-S697 - Summary

2011-S697 - Sponsor Memo

2011-S697 - Bill Text download pdf

co-Sponsors

2011-S697A (ACTIVE) - Details

2011-S697A (ACTIVE) - Summary

2011-S697A (ACTIVE) - Sponsor Memo

2011-S697A (ACTIVE) - Bill Text download pdf

Comments