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

                                  7264

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                             April 25, 2011
                               ___________

Introduced  by M. of A. WEINSTEIN, P. RIVERA, MAISEL, ROBINSON, LANCMAN,
  BARRON,  ABINANTI,  BRAUNSTEIN,  BRONSON,  COLTON,  DINOWITZ,   GALEF,
  HIKIND,  JAFFEE, MARKEY, M. MILLER, REILLY, ROBERTS, RUSSELL, SCARBOR-
  OUGH, WEPRIN, WRIGHT, ZEBROWSKI -- Multi-Sponsored  by  --  M.  of  A.
  BRENNAN,  COOK, FARRELL, GLICK, GOTTFRIED, GUNTHER, HEASTIE, JEFFRIES,
  LENTOL, McENENY, PHEFFER, SCHIMEL, SWEENEY -- read once  and  referred
  to the Committee on Judiciary

AN  ACT  to amend the civil practice law and rules, in relation to resi-
  dential foreclosure  actions; and 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 (a) of rule 3212 of the civil practice law and
rules, as amended by chapter 492 of the laws of 1996, is amended  and  a
new subdivision (j) is added to read as follows:
  (a)  Time; kind of action.  [Any] EXCEPT AS OTHERWISE PROVIDED IN THIS
RULE, ANY party may move for summary judgment in any action, after issue
has been joined; provided however, that the court may set a  date  after
which no such motion may be made, such date being no earlier than thirty
days  after  the  filing of the note of issue. If no such date is set by
the court, such motion shall be made no later than  one  hundred  twenty
days  after  the filing of the note of issue, except with leave of court
on good cause shown.  IN ANY RESIDENTIAL FORECLOSURE ACTION INVOLVING  A
HOME  LOAN,  TO WHICH SECTION THIRTEEN HUNDRED FOUR OF THE REAL PROPERTY
ACTIONS AND PROCEEDINGS LAW APPLIES, IN WHICH THE DEFENDANT IS  A  RESI-
DENT  OF THE PROPERTY SUBJECT TO FORECLOSURE, A MOTION FOR SUMMARY JUDG-
MENT SHALL BE DENIED UNLESS AND UNTIL A MANDATORY SETTLEMENT  CONFERENCE
HAS  BEEN  HELD PURSUANT TO RULE 3408 OF THIS CHAPTER, AND THE COURT HAS
CONCLUDED THAT NO FURTHER SUCH CONFERENCES SHOULD  BE  SCHEDULED  IN  AN
ATTEMPT TO RESOLVE THE MATTER IN ACCORDANCE WITH SUCH RULE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09828-02-1
              

A. 7264                             2

  (J)  STANDARDS  FOR  SUMMARY  JUDGMENT  IN CASES INVOLVING RESIDENTIAL
FORECLOSURE. A MOTION FOR SUMMARY JUDGMENT IN AN ACTION INVOLVING A HOME
LOAN, TO WHICH SECTION  THIRTEEN  HUNDRED  FOUR  OF  THE  REAL  PROPERTY
ACTIONS  AND  PROCEEDINGS LAW APPLIES, IN WHICH THE DEFENDANT IS A RESI-
DENT  OF  THE PROPERTY SUBJECT TO FORECLOSURE, SHALL NOT BE GRANTED TO A
PLAINTIFF SEEKING TO FORECLOSE UPON A MORTGAGE OR  A  NOTE,  UNLESS  THE
PLAINTIFF  HAS  SET  FORTH IN AN AFFIDAVIT BY A PERSON WITH KNOWLEDGE OF
THE FACTS AS REQUIRED BY SUBDIVISION (B) OF THIS RULE:
  1. THAT PLAINTIFF HAS DEMONSTRATED THAT IT  HAS  SATISFIED  ITS  OBLI-
GATION  TO  DEAL WITH DEFENDANT IN GOOD FAITH AS REQUIRED BY THE IMPLIED
COVENANT OF FAIR DEALING AND GOOD FAITH CONTAINED WITHIN  THE  MORTGAGE,
IN  ITS DEALINGS WITH THE DEFENDANT BOTH PRIOR AND SUBSEQUENT TO DEFEND-
ANT'S EXECUTION OF THE MORTGAGE AND NOTE, THROUGH  COMMENCEMENT  OF  THE
INSTANT  ACTION, INCLUDING BUT NOT LIMITED TO ANY INDUCEMENTS TO EXECUTE
SAME, AND ANY MODIFICATION SOUGHT BY DEFENDANT TO SAID  MORTGAGE  AND/OR
NOTE;
  2.  THAT  PLAINTIFF  HOLDS, OWNS AND PHYSICALLY POSSESSES THE NOTE AND
THE MORTGAGE;
  3. THAT PLAINTIFF CAN DEMONSTRATE THE CHAIN OF  CUSTODY  OF  BOTH  THE
NOTE  AND THE MORTGAGE FROM THE TIME SAME WAS EXECUTED BY THE DEFENDANT,
THROUGH TO THE TIME OF COMMENCEMENT OF THE INSTANT ACTION;
  4. THAT PLAINTIFF HAS STANDING TO BRING THE INSTANT ACTION;
  5. THAT PLAINTIFF POSSESSES CAPACITY TO BRING THE INSTANT ACTION; AND
  6. THAT PLAINTIFF HAS ATTENDED A MANDATORY  SETTLEMENT  CONFERENCE  AS
REQUIRED BY RULE 3408 OF THIS CHAPTER, AND HAS NEGOTIATED IN GOOD FAITH,
AT  ALL  TIMES,  INCLUDING ANY ADJOURNED DATES, IN ATTEMPTING TO REACH A
MUTUALLY AGREEABLE RESOLUTION AS REQUIRED BY  SUBDIVISION  (F)  OF  SUCH
RULE.
  S  2.  Subdivision  (f)  of section 3215 of the civil practice law and
rules, as amended by chapter 453 of the laws of 2006, is amended to read
as follows:
  (f) Proof. On any application for judgment by default,  the  applicant
shall  file  proof  of  service  of  the summons and the complaint, or a
summons and notice served pursuant to subdivision (b)  of  rule  305  or
subdivision  (a)  of  rule  316  of this chapter, and proof of the facts
constituting the claim, the default and the amount due by affidavit made
by the party, or where the state of New York is the plaintiff, by  affi-
davit  made  by  an attorney from the office of the attorney general who
has or obtains knowledge of such facts through review of  state  records
or otherwise. Where a verified complaint has been served, it may be used
as the affidavit of the facts constituting the claim and the amount due;
in  such case, an affidavit as to the default shall be made by the party
or the party's attorney.  IN AN ACTION ARISING OUT OF AN ACTION  INVOLV-
ING  A  HOME  LOAN,  TO  WHICH SECTION THIRTEEN HUNDRED FOUR OF THE REAL
PROPERTY ACTIONS AND PROCEEDINGS LAW APPLIES, IN WHICH THE DEFENDANT  IS
A  RESIDENT  OF THE PROPERTY SUBJECT TO FORECLOSURE, THE APPLICANT SHALL
INCLUDE AN AFFIDAVIT FROM A PERSON WITH KNOWLEDGE OF THE FACTS:
  1. THAT PLAINTIFF HAS DEMONSTRATED THAT IT  HAS  SATISFIED  ITS  OBLI-
GATION  TO  DEAL WITH DEFENDANT IN GOOD FAITH AS REQUIRED BY THE IMPLIED
CONVENT OF FAIR DEALING AND GOOD FAITH CONTAINED WITHIN THE MORTGAGE, IN
ITS DEALINGS WITH THE DEFENDANT BOTH PRIOR AND SUBSEQUENT TO DEFENDANT'S
EXECUTION OF THE MORTGAGE AND NOTE, THROUGH COMMENCEMENT OF THE  INSTANT
ACTION,  INCLUDING  BUT  NOT LIMITED TO ANY INDUCEMENTS TO EXECUTE SAME,
AND ANY MODIFICATION SOUGHT BY DEFENDANT TO SAID MORTGAGE AND/OR NOTE;
  2. THAT PLAINTIFF HOLDS, OWNS AND PHYSICALLY POSSESSES  THE  NOTE  AND
THE MORTGAGE;

A. 7264                             3

  3. THAT THE PLAINTIFF CAN DEMONSTRATE THE CHAIN OF CUSTODY OF BOTH THE
NOTE  AND THE MORTGAGE FROM THE TIME SAME WAS EXECUTED BY THE DEFENDANT,
THROUGH TO THE TIME OF COMMENCEMENT OF THE INSTANT ACTION;
  4. THAT PLAINTIFF HAS STANDING TO BRING THE INSTANT ACTION;
  5. THAT PLAINTIFF POSSESSES CAPACITY TO BRING THE INSTANT ACTION; AND
  6.  THAT  PLAINTIFF  HAS ATTENDED A MANDATORY SETTLEMENT CONFERENCE AS
REQUIRED BY RULE 3408 OF THIS CHAPTER, AND HAS NEGOTIATED IN GOOD FAITH,
AT ALL TIMES, INCLUDING ANY ADJOURNED DATES, IN ATTEMPTING  TO  REACH  A
MUTUALLY  AGREEABLE  RESOLUTION  AS  REQUIRED BY SUBDIVISION (F) OF SUCH
RULE.
  When jurisdiction is based on an attachment of property, the affidavit
must state that an order of attachment granted in the  action  has  been
levied on the property of the defendant, describe the property and state
its  value.  Proof  of mailing the notice required by subdivision (g) of
this section, where applicable, shall also be filed.
  S 3.  Subdivisions (a) and (f) of rule 3408 of the civil practice  law
and  rules,  subdivision  (a) as amended and subdivision (f) as added by
chapter 507 of the laws of 2009, are amended to read as follows:
  (a) In any residential foreclosure action involving a  home  loan  [as
such term is defined in section], TO WHICH SECTION thirteen hundred four
of  the  real property actions and proceedings law APPLIES, in which the
defendant is a resident of the  property  subject  to  foreclosure,  the
court shall hold a mandatory conference within sixty days after the date
when  proof  of  service  is  filed  with  the  county clerk, or on such
adjourned date as has been agreed to by the parties, for the purpose  of
holding  settlement  discussions  pertaining  to the relative rights and
obligations of the parties under the mortgage loan documents, including,
but not limited to determining whether the parties can reach a  mutually
agreeable resolution to help the defendant avoid losing his or her home,
and evaluating the potential for a resolution in which payment schedules
or  amounts  may  be modified or other workout options may be agreed to,
and for whatever other purposes the court deems appropriate.
  (f) Both the plaintiff and defendant shall negotiate in good faith, AS
REQUIRED BY THE IMPLIED COVENANT OF FAIR DEALING  CONTAINED  WITHIN  THE
MORTGAGE,  to  reach  a  mutually agreeable resolution, including a loan
modification, if possible. THE DUTY TO NEGOTIATE  IN  GOOD  FAITH  SHALL
CONTINUE THROUGHOUT THE PENDENCY OF THE ACTION.
  S  4.  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  5.  The  real  property  actions  and proceedings law is amended by
adding a new section 1302-a to read as follows:

A. 7264                             4

  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
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  6. This act shall take effect immediately, provided that the amend-
ments to subdivision (a) of rule 3408 of  the  civil  practice  law  and
rules,  made  by section three of this act, shall not affect the expira-
tion and reversion of such subdivision and shall expire  therewith,  and
provided,  further, that section four of this act and subdivisions 2 and
3 of section 1302-a of the real property actions and proceedings law, as
added by section five of this act, shall take effect  on  the  ninetieth
day after it shall have become a law.