S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7546
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               April 1, 2025
                                ___________
 
 Introduced by M. of A. LAVINE -- read once and referred to the Committee
   on Judiciary
 
 AN  ACT  to  amend the real property actions and proceedings law and the
   civil practice law and rules, in relation to actions upon  a  subordi-
   nate bond or note
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 1302 of the real property actions  and  proceedings
 law,  as  amended by chapter 145 of the laws of 2022, is amended to read
 as follows:
   § 1302. Foreclosure of certain residential mortgages. 1. Any complaint
 served in a proceeding [initiated on a residential mortgage  covering  a
 one  to four family dwelling pursuant to] INVOLVING A HOME LOAN, AS SUCH
 TERM IS DEFINED IN SECTION THIRTEEN HUNDRED FOUR OF this  article,  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, and section six-l or six-m of  the  banking  law,  for
 loans governed by section six-l or six-m of the banking law, and section
 thirteen hundred four of this article for all residential mortgage loans
 covering a one to four family dwelling;
   (C)  HAS  MAINTAINED  OR  IS IN POSSESSION OF A PAYMENT HISTORY OF THE
 SUBJECT LOAN, WHICH INCLUDES A COMPLETE  SCHEDULE  OF  ALL  TRANSACTIONS
 CREDITED  OR  DEBITED  TO  THE  MORTGAGE LOAN ACCOUNT, INCLUDING BUT NOT
 LIMITED TO ANY ESCROW ACCOUNT OR SUSPENSE  ACCOUNT,  FROM  THE  DATE  OF
 ORIGINATION OF THE LOAN TO THE PRESENT; AND
   (D) IF SUCH PLAINTIFF CLAIMS TO POSSESS THE ORIGINAL NOTE, SUCH PLAIN-
 TIFF  HAS MAINTAINED OR IS IN POSSESSION OF A CUSTODIAL FILE DOCUMENTING
 SUCH PLAINTIFF'S POSSESSION OF THE SUBJECT NOTE, WHICH INCLUDES THE NAME
 OF THE ENTITY THAT PHYSICALLY POSSESSES THE ORIGINAL NOTE, THE  DATE  ON
 
              

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08275-02-5
 A. 7546                             2
 
 WHICH THAT ENTITY TOOK PHYSICAL POSSESSION OF THE ORIGINAL NOTE, A CHRO-
 NOLOGICAL  LISTING  OF  THE  NAMES OF ALL PRIOR ENTITIES THAT PHYSICALLY
 POSSESSED THE ORIGINAL NOTE, THE DATE OF TRANSFER OF THAT NOTE  STARTING
 WITH  THE  ORIGINAL  LENDER,  AND THE ADDRESS WHERE THE ORIGINAL NOTE IS
 CURRENTLY LOCATED.
   2. It shall be a defense to an action to foreclose a mortgage that:
   (A) the terms of the home loan or the actions of  the  lender  violate
 any  provision  of  section six-l or six-m of the banking law or section
 thirteen hundred four of this  article,  for  loans  governed  by  these
 provisions;
   (B)  THE  PLAINTIFF'S  PAYMENT  HISTORY  FOR THE SUBJECT LOAN DOES NOT
 INCLUDE A COMPLETE SCHEDULE OF ALL TRANSACTIONS CREDITED OR  DEBITED  TO
 THE  MORTGAGE  LOAN  ACCOUNT,  INCLUDING  ANY ESCROW ACCOUNT OR SUSPENSE
 ACCOUNT, FROM THE DATE OF ORIGINATION OF THE LOAN TO THE PRESENT; AND
   (C) IF  THE  PLAINTIFF  CLAIMS  TO  POSSESS  THE  ORIGINAL  NOTE,  THE
 PLAINTIFF'S  CUSTODIAL FILE DOES NOT INCLUDE THE NAME OF THE ENTITY THAT
 PHYSICALLY POSSESSES THE ORIGINAL NOTE, THE DATE ON  WHICH  THAT  ENTITY
 TOOK  PHYSICAL  POSSESSION  OF  THE ORIGINAL NOTE, THE ADDRESS WHERE THE
 ORIGINAL NOTE IS LOCATED, A CHRONOLOGICAL LISTING OF THE  NAMES  OF  ALL
 PRIOR  ENTITIES THAT PHYSICALLY POSSESSED THE ORIGINAL NOTE AND THE DATE
 OF TRANSFER OF THAT NOTE STARTING WITH THE ORIGINAL LENDER AND,  IF  THE
 NOTE  IS  POSSESSED BY AN ENTITY OTHER THAN THE PLAINTIFF, THE AUTHORITY
 UNDER WHICH AN ENTITY OTHER THAN THE PLAINTIFF PHYSICALLY POSSESSES  THE
 SUBJECT NOTE FOR THE PLAINTIFF.
   3. ANY COMPLAINT SERVED IN A PROCEEDING INVOLVING A HOME LOAN, AS SUCH
 TERM  IS  DEFINED  IN  SECTION THIRTEEN HUNDRED FOUR OF THIS ARTICLE, IN
 WHICH THE PLAINTIFF IS SEEKING TO FORECLOSE ON A  SUBORDINATE  LOAN  AND
 SUCH PLAINTIFF PURCHASED THE SUBJECT SUBORDINATE LOAN WHEN THAT LOAN WAS
 IN DEFAULT, THE PLAINTIFF MUST AFFIRMATIVELY ALLEGE THE DATE SUCH PLAIN-
 TIFF  PURCHASED  THE SUBJECT LOAN AND THE AMOUNT SUCH PLAINTIFF PAID FOR
 THE SUBJECT LOAN. IF THE PLAINTIFF PURCHASED THE SUBJECT LOAN AS PART OF
 A PORTFOLIO OF LOANS, THE AMOUNT THE PLAINTIFF PAID FOR THE SUBJECT LOAN
 SHALL BE DETERMINED BY MULTIPLYING THE TOTAL AMOUNT PAID FOR THE PORTFO-
 LIO OF LOANS BY A RATIO, THAT RATIO BEING THE UNPAID  PRINCIPAL  BALANCE
 AT  DEFAULT  FOR  THE SUBJECT LOAN DIVIDED BY THE TOTAL UNPAID PRINCIPAL
 BALANCE AT DEFAULT FOR ALL THE LOANS IN THE PORTFOLIO.
   § 2. Section 1302-a of the real property actions and proceedings  law,
 as  added  by  chapter  739  of  the laws of 2019, is amended to read as
 follows:
   § 1302-a. Defense of STATUTE OF LIMITATIONS AND lack of standing;  not
 waived.  1.    NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION (E) OF RULE
 THIRTY-TWO HUNDRED ELEVEN OF THE  CIVIL  PRACTICE  LAW  AND  RULES,  ANY
 OBJECTION  OR  DEFENSE BASED ON THE STATUTE OF LIMITATIONS IN A FORECLO-
 SURE PROCEEDING RELATED TO A HOME LOAN, AS DEFINED IN PARAGRAPH  (A)  OF
 SUBDIVISION  SIX OF SECTION THIRTEEN HUNDRED FOUR OF THIS ARTICLE, SHALL
 NOT BE WAIVED IF A DEFENDANT FAILS TO RAISE THE OBJECTION OR DEFENSE  IN
 A RESPONSIVE PLEADING OR PRE-ANSWER MOTION TO DISMISS.
   2.  Notwithstanding  the provisions of subdivision (e) of rule thirty-
 two hundred eleven of the civil practice law and rules, any objection or
 defense based on the plaintiff's  lack  of  standing  in  a  foreclosure
 proceeding related to a home loan, as defined in paragraph (a) of subdi-
 vision  six  of section thirteen hundred four of this article, shall not
 be waived if a defendant fails to raise the objection or  defense  in  a
 responsive pleading or pre-answer motion to dismiss. A defendant may not
 raise  an  objection or defense of lack of standing following a foreclo-
 A. 7546                             3

 sure sale, however, unless the judgment  of  foreclosure  and  sale  was
 issued upon defendant's default.
   §  3.  The  opening paragraph and subdivision 3 of section 1311 of the
 real property actions and proceedings law, as added by  chapter  312  of
 the laws of 1962, are amended to read as follows:
   Each  of  the  following  persons[,  whose  interest  is claimed to be
 subject and subordinate to the plaintiff's lien,] shall be made a  party
 defendant  to  the  action,  AND  SHALL  BE  NECESSARY AND INDISPENSABLE
 PARTIES TO THAT ACTION:
   3. Every person having any lien or incumbrance upon the real  property
 [which  is  claimed  to  be  subject  and subordinate to the lien of the
 plaintiff].
   § 4. Section 1321 of the real property actions and proceedings law, as
 added by chapter 312 of the laws of 1962, subdivision 1  as  amended  by
 chapter 269 of the laws of 2020, is amended to read as follows:
   § 1321. [Default or admission] ORDER OF REFERENCE. 1.  [If the defend-
 ant  fails  to answer within the time allowed or the right of the plain-
 tiff is admitted by the answer, upon] UPON motion of the plaintiff,  the
 court  shall ascertain and determine the amount due, or direct a referee
 to compute the amount due to the plaintiff and to such of the defendants
 as are prior incumbrancers of the mortgaged premises, and to examine and
 report whether the mortgaged premises can be sold in parcels and, if the
 whole amount secured by the mortgage has not become due, to  report  the
 amount  thereafter  to become due. Where the defendant is an infant, and
 has put in a general answer by [his] SUCH DEFENDANT'S  guardian,  or  if
 any  of  the  defendants be absentees, the order of reference also shall
 direct the referee to take proof of the facts and  circumstances  stated
 in  the complaint and to examine the plaintiff or [his] SUCH PLAINTIFF'S
 agent, on oath, as to any payments which have been made.  The  order  of
 reference  shall also include the name and telephone number of the mort-
 gage servicer for a plaintiff involving a mortgage foreclosure of a one-
 to four-family residential property.
   2. When [he] THE PLAINTIFF moves for  judgment,  the  plaintiff  shall
 show whether any of the defendants who have not appeared are absentees.
   3.  IN  ANY  RESIDENTIAL  FORECLOSURE ACTION INVOLVING A HOME LOAN, AS
 SUCH TERM IS DEFINED IN SECTION THIRTEEN HUNDRED FOUR OF  THIS  ARTICLE,
 IN WHICH THE PLAINTIFF IS SEEKING TO FORECLOSE ON A SUBORDINATE LOAN AND
 SUCH PLAINTIFF PURCHASED THE SUBJECT SUBORDINATE LOAN WHEN THAT LOAN WAS
 IN  DEFAULT,  THE  AMOUNT  DUE SHALL NOT EXCEED THE AMOUNT THE PLAINTIFF
 PAID FOR THE SUBJECT LOAN, AS DETERMINED UNDER SECTION THIRTEEN  HUNDRED
 TWO  OF  THIS  ARTICLE,  AND THE MAXIMUM RATE OF INTEREST PROVIDED UNDER
 SECTION FOURTEEN-A OF THE BANKING LAW ACCRUING FROM THE DATE THE  PLAIN-
 TIFF PURCHASED THE SUBJECT LOAN.
   §  5.  The  opening  paragraph  of subdivision 4 of section 213 of the
 civil practice law and rules is amended to read as follows:
   an action upon a bond or note, the payment of which is  secured  by  a
 mortgage  upon  real  property,  or  upon a bond or note and mortgage so
 secured, or upon a mortgage of real property, or any  interest  therein,
 EXCEPT  FOR  A SUBORDINATE BOND OR NOTE PURCHASED WHEN SUCH BOND OR NOTE
 IS IN DEFAULT;
   § 6. The civil practice law and rules  is  amended  by  adding  a  new
 section 213-e to read as follows:
   §  213-E.  ACTION  UPON  A SUBORDINATE BOND OR NOTE. BEGINNING JANUARY
 FIRST, TWO THOUSAND TWENTY-SEVEN, AN ACTION UPON A SUBORDINATE  BOND  OR
 NOTE,  THE PAYMENT OF WHICH IS SECURED BY A MORTGAGE UPON REAL PROPERTY,
 OR UPON A BOND OR NOTE AND MORTGAGE SO SECURED, OR UPON  A  MORTGAGE  OF
 A. 7546                             4

 REAL  PROPERTY,  OR ANY INTEREST THEREIN, WHERE THE SUBJECT BOND OR NOTE
 IS PURCHASED WHEN SUCH BOND OR NOTE WAS IN DEFAULT, SHALL  BE  COMMENCED
 WITHIN  THE  SHORTER  OF  (A) THREE YEARS OF THE PURCHASE OF THE BOND OR
 NOTE  OR  (B) THE RELEVANT TIME LIMIT AS PROVIDED BY SUBDIVISION FOUR OF
 SECTION TWO HUNDRED THIRTEEN OF THIS ARTICLE.
   § 7. Subdivision (h) of section 203 of  the  civil  practice  law  and
 rules,  as  added by chapter 821 of the laws of 2022, is amended to read
 as follows:
   (h) Claim and action upon certain instruments. Once a cause of  action
 upon  an instrument described in subdivision four of section two hundred
 thirteen OR SECTION TWO HUNDRED THIRTEEN-E of this article has  accrued,
 no  party  may, in form or effect, unilaterally waive, postpone, cancel,
 toll, revive, or reset the accrual  thereof,  or  otherwise  purport  to
 effect  a  unilateral  extension of the limitations period prescribed by
 law to commence an action and to interpose the claim,  unless  expressly
 prescribed by statute.
   §  8. The opening paragraph of subdivision (a) of section 205-a of the
 civil practice law and rules, as added by chapter 821  of  the  laws  of
 2022, is amended to read as follows:
   If  an  action  upon an instrument described under subdivision four of
 section two hundred thirteen OR SECTION TWO HUNDRED THIRTEEN-E  of  this
 article is timely commenced and is terminated in any manner other than a
 voluntary discontinuance, a failure to obtain personal jurisdiction over
 the  defendant,  a  dismissal  of the complaint for any form of neglect,
 including, but not limited to those specified in  subdivision  three  of
 section   thirty-one  hundred  twenty-six,  section  thirty-two  hundred
 fifteen, rule thirty-two hundred sixteen and  rule  thirty-four  hundred
 four  of  this  chapter,  for violation of any court rules or individual
 part rules, for failure to comply with any court scheduling  orders,  or
 by default due to nonappearance for conference or at a calendar call, or
 by failure to timely submit any order or judgment, or upon a final judg-
 ment upon the merits, the original plaintiff, or, if the original plain-
 tiff  dies  and the cause of action survives, [his or her] SUCH ORIGINAL
 PLAINTIFF'S executor or administrator, may commence a  new  action  upon
 the  same  transaction or occurrence or series of transactions or occur-
 rences within six months following the termination,  provided  that  the
 new  action would have been timely commenced within the applicable limi-
 tations period prescribed by law at the time of the commencement of  the
 prior  action  and that service upon the original defendant is completed
 within such six-month period. For purposes of this subdivision:
   § 9. Subdivision (a) of section 3012-b of the civil practice  law  and
 rules,  as  added by chapter 306 of the laws of 2013, is amended to read
 as follows:
   (a) In any residential foreclosure action involving a  home  loan,  as
 such  term is defined in section thirteen hundred four of the real prop-
 erty actions and proceedings law, in which the defendant is  a  resident
 of  the property which is subject to foreclosure, the complaint shall be
 accompanied by a certificate, signed by the attorney for the  plaintiff,
 certifying  that  the  attorney  has  reviewed the facts of the case and
 that, based on consultation with representatives of the plaintiff  iden-
 tified  in  the certificate and the attorney's review of pertinent docu-
 ments, including the mortgage,  security  agreement  and  note  or  bond
 underlying  the  mortgage  executed  by defendant and all instruments of
 assignment, if any, [and] any other instrument of indebtedness including
 any  modification,  extension,  and  consolidation  AGREEMENT,  AND  THE
 PAYMENT  HISTORY  FOR  THE  SUBJECT  LOAN AND THE CUSTODIAL FILE FOR THE
 A. 7546                             5
 
 SUBJECT NOTE AS DEFINED UNDER SECTION THIRTEEN HUNDRED TWO OF  THE  REAL
 PROPERTY  ACTIONS  AND  PROCEEDINGS  LAW, to the best of such attorney's
 knowledge, information and belief there is a reasonable  basis  for  the
 commencement  of  such  action  and  that the plaintiff is currently the
 creditor entitled  to  enforce  rights  under  such  documents.  If  not
 attached to the summons and complaint in the action, a copy of the mort-
 gage,  security  agreement  and  note  or  bond  underlying the mortgage
 executed by defendant and all instruments of assignment, if any, and any
 other instrument of indebtedness including any modification,  extension,
 and  consolidation  AGREEMENT,  AND  THE PAYMENT HISTORY FOR THE SUBJECT
 LOAN AND THE CUSTODIAL FILE  FOR  THE  SUBJECT  NOTE  AS  DEFINED  UNDER
 SECTION   THIRTEEN   HUNDRED  TWO  OF  THE  REAL  PROPERTY  ACTIONS  AND
 PROCEEDINGS LAW shall be attached to the certificate.
   § 10. Subdivision (f) of rule 3408  of  the  civil  practice  law  and
 rules,  as  amended  by section 2 of part Q of chapter 73 of the laws of
 2016, is amended to read as follows:
   (f) Both the plaintiff and defendant shall negotiate in good faith  to
 reach  a  mutually  agreeable resolution, including but not limited to a
 loan modification, short sale, deed in lieu of foreclosure, or any other
 loss mitigation, if possible.
   1. Compliance with the obligation to negotiate in good faith  pursuant
 to  this section shall be measured by the totality of the circumstances,
 including but not limited to the following factors:
   [1.] (I) Compliance with the requirements of this rule and  applicable
 court  rules,  court orders, and directives by the court or its designee
 pertaining to the settlement conference process;
   [2.] (II) Compliance with applicable mortgage servicing  laws,  rules,
 regulations,  investor  directives,  and  loss  mitigation  standards or
 options concerning loan modifications, short sales, and deeds in lieu of
 foreclosure; and
   [3.] (III) Conduct consistent with efforts to reach a mutually  agree-
 able  resolution,  including  but  not limited to, avoiding unreasonable
 delay, appearing at the settlement conference with  authority  to  fully
 dispose  of  the  case,  avoiding prosecution of foreclosure proceedings
 while loss mitigation applications are pending, and  providing  accurate
 information to the court and parties.
   Neither  of the parties' failure to make the offer or accept the offer
 made by the other party is sufficient to establish a failure to  negoti-
 ate in good faith.
   2.  AS  PROVIDED  FOR UNDER SECTION THIRTEEN HUNDRED TWENTY-ONE OF THE
 REAL PROPERTY ACTIONS AND PROCEEDINGS LAW, IT SHALL BE  UNLAWFUL  FOR  A
 PLAINTIFF  TO  DEMAND PAYMENT IN EXCESS OF THE AMOUNT THE PLAINTIFF PAID
 FOR A SUBORDINATE LOAN SUCH PLAINTIFF PURCHASED IN  DEFAULT,  AS  DETER-
 MINED  UNDER  SECTION  THIRTEEN HUNDRED TWO OF THE REAL PROPERTY ACTIONS
 AND PROCEEDINGS LAW, AND THE MAXIMUM RATE  OF  INTEREST  PROVIDED  UNDER
 SECTION  FOURTEEN-A OF THE BANKING LAW ACCRUING FROM THE DATE THE PLAIN-
 TIFF PURCHASED THE SUBJECT LOAN. ANY DEMAND FOR A PAYMENT IN  EXCESS  OF
 THIS  AMOUNT, WHETHER TO REINSTATE THE LOAN OR THROUGH A REPAYMENT PLAN,
 LOAN MODIFICATION OR OTHER LOSS MITIGATION OPTION, SHALL ALSO CONSTITUTE
 A FAILURE TO NEGOTIATE IN GOOD FAITH.
   § 11. This act shall take effect on  the  one  hundred  twentieth  day
 after it shall have become a law and shall apply to all actions filed on
 or after such effective date.