NY State Senate Bill 2011-S5636

Senate Bill S5636

2011-2012 Legislative Session

Establishes certain proof requirements for plaintiffs seeking summary judgment or a default judgment in a residential foreclosure proceeding

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Archive: Last Bill Status - In Senate Committee Judiciary 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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 04, 2012	referred to judiciary
Jun 08, 2011	referred to judiciary

2011-S5636 (ACTIVE) - Details

See Assembly Version of this Bill:: A7264
Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Amd RR3212 & 3408, §3215, CPLR; amd §1302, add §1302-a, RPAP L
Versions Introduced in 2013-2014 Legislative Session:: A2041

2011-S5636 (ACTIVE) - Summary

Establishes certain proof and settlement requirements for plaintiffs seeking summary judgment or a default judgment in a residential foreclosure proceeding; 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 delegated agent, of the subject mortgage and note

2011-S5636 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S5636

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

PURPOSE OF BILL:
Establishes certain proof requirements for plaintiffs
in mortgage foreclosure actions.

SUMMARY OF PROVISIONS OF BILL:
Requires a mandatory settlement
conference be held as a condition precedent to the granting of
summary judgment motions in residential mortgage foreclosure
proceedings;
Creates standards for the granting of summary judgment and default
judgments, including an affirmative showing that plaintiff has dealt
with defendant in good faith as required by the implied covenant of
good faith contained within the mortgage.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER:
Amends CPLR 3212
(a); creates a new CPLR (j); amends CPLR 3215 (f); amends CPLR 3408

(a) and (f); amends RPAPL 1302; creates a new RPAPL 1302-a.

JUSTIFICATION:
There exists in all contracts, and in all mortgages, an
implied covenant to act in good faith and to deal fairly. Gordon v
Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 437, cert denied 410 U.S. 931;
Security Pacific National Bank v. Evans, 62 A.D.3d 512 (1st Dept
2009); DiBlanda v. ADC Pinebrook, LLC, 44 A.D.3d 702 (2nd; Dept
2007). Unfortunately, it would appear that numerous residential
properties have been foreclosed upon without any showing that the
foreclosing mortgagee has lived up to this requirement in law. Given
that the great majority of foreclosure judgments result from either
applications for summary judgment or default judgment, it is
important that there be a demonstration to the Court that this
covenant has been abided by. The bill would also clarify that the
duty of all parties to negotiate in good faith at settlement
conferences required by CPLR 3408 includes the duty to abide by the
covenant of fair dealing, and that this obligation shall continue
throughout the pendency of the action.

Likewise, numerous residential properties have been foreclosed without
an adequate showing that the mortgagee-plaintiff owns and physically
possesses the note and mortgage, and can demonstrate a chain of
custody from mortgage inception through to the commencement of the
action. This bill would require plaintiff in a mortgage foreclosure
action to make such a showing.

This bill would also require that a plaintiff demonstrate standing and
capacity to bring the action, and that plaintiff has attended the
mandatory settlement conference required by CPLR 3408, all as a
condition precedent to the entry of summary judgment, or a default
judgment.

Finally, the bill would also require that standing and capacity be
affirmatively demonstrated in order to successfully adjudicate a
mortgage foreclosure action. Further, the bill would amend the CPLR
to provide that failure to timely raise standing as a defense would
not result in waiver of same.

LEGISLATIVE HISTORY:
New bill, 2011.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.

EFFECTIVE DATE:
Immediately, except that portion of the bill which
states requisites for the quantum of proof necessary in order to
prevail in a mortgage foreclosure action shall become effective on
the 90th day after the bill shall become law.

2011-S5636 (ACTIVE) - Bill Text download pdf

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

                                  5636

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              June 8, 2011
                               ___________

Introduced  by  Sen.  KLEIN  -- read twice and ordered printed, and when
  printed to be committed 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.
  (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

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

S. 5636                             2

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;
  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

S. 5636                             3

  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:
  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

S. 5636                             4

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.

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