Archives for August 2015

The Response To Being Served With A Summons And Complaint: The “Answer” – Part I

foreclosure defense lawyerWhen homeowners are served with a Summons and Complaint they must file a response to that Summons and Complaint. The response is referred to as an “ANSWER“. There are very specific and detailed requirements as to what should be contained in the Answer submitted by the homeowners.

To start with, the Answer should include a response to each and every numbered paragraph and claim made by the financial institution in its Complaint. The paragraphs in the homeowners’ Answer should be numbered. The numbered paragraphs in the homeowners’ Answer should respond to the numbered paragraphs in the financial institution’s Complaint. The homeowner can either admit the allegations, deny the allegations, or deny knowledge or information sufficient to either admit or deny the allegation contained in the numbered paragraph of the financial institution’s Complaint.

The attorneys for the financial institution must prove all of the allegations in their Complaint which are either denied or which the homeowner denies knowledge or information sufficient to form a belief as to the truthfulness of the allegation contained in that paragraph. The paragraphs which are either admitted or not denied by the Answer of the homeowner are deemed admitted and the bank will not have to prove the truthfulness of those allegations at the time of trial.

Affirmative Defenses

In addition to either admitting, denying, or denying knowledge or information about the allegations in the specific paragraphs of plaintiff’s Complaint, the homeowners can assert affirmative defenses in their Answer with regard to the foreclosure lawsuit. An affirmative defense is basically a legal argument as to why the bank should not be allowed to be successful in prosecuting the lawsuit. Examples of affirmative defenses can deal with the fact the mortgage is actually current, and not overdo; that documents were signed by robo-signers; the homeowner was fraudulently induced into taking the loan; the financial institution violated Federal Truth in Lending Laws, New York State banking laws or Federal banking laws, the Fair Debt Collection Practices Act; predatory lending issues; bad assignments; lack of standing to bring the lawsuit; failure to serve a 90 day notice; failure to adhere to all types of procedural foreclosure requirements and many, many other affirmative defenses.

The Answer to the bank’s Complaint must be sworn to by the homeowners and acknowledged before a Notary Public. Thereafter a copy of it must be served on the attorney for the bank. The homeowners must file a copy of the Answer with the court and the bank’s lawyers. The Answer must have attached to it an Affidavit of Service of the Answer on the bank’s attorneys.New York foreclosure defense attorney

Foreclosure Legal Documents – Part II

advocate for homeownersThe Complaint

The purpose of the Complaint in a foreclosure lawsuit is to spell out the financial institution’s claims as to why they are entitled to relief. The Complaint specifically will discuss the nature of the mortgage and the promissory note. The Complaint will also provide the address and legal metes and bounds description of the property being foreclosed upon. It will usually state the homeowner had agreed to make payments pursuant to the terms of the note and mortgage and they defaulted on these terms. The Complaint will specifically name who owes the bank money and their interest in the property being foreclosed upon. In addition, the Complaint will usually have exhibits attached to it. These exhibits, at a minimum, will be the note and the mortgage.

The Complaint will also state the relief the lender asks for. This will usually be the right to sell the property and after the sale having the net proceeds after the costs of the sale apply to the balance due under the lender’s mortgage. The bank’s complaint may also have a request they receive a deficiency judgment in the event the proceeds from the sale of the home do not satisfy the entire balance due of their mortgage costs and disbursements.

The Lis Pendens

The lis pendens is a legal document the attorney for the financial institution files in the County Clerk’s office of the county where the property being foreclosed upon is located. This document serves to provide public notice to all future individuals obtaining liens and judgments as well as any potential interested purchaser of the property the property is in the midst of a foreclosure lawsuit and is encumbered by this foreclosure proceeding. The attorneys for the financial institution bringing the foreclosure proceeding usually files the lis pendens on or about the same time the Summons and Complaint are filed with the County Clerk’s office.New York foreclosure defense attorney

Foreclosure Legal Documents – Part I

foreclosure defense on Long IslandThe Summons

The purpose of a Summons is to inform the person being sued that a lawsuit is pending against them and an Answer to the lawsuit must be filed if they seek to contest or assert their rights related to the lawsuit. Each defendant in a foreclosure lawsuit who is named must be served by a process server in New York. Homeowners who are named as defendants in foreclosure lawsuits must be served with a Summons. Also, individuals having liens on the house or creditors holding judgments filed against the house also must be served with a Summons. This gives these other individuals notice that this lawsuit may affect their rights to collect on their liens and judgments against the house. The Summons specifically provides notice to the homeowners with regard to how much time they have to respond to the initiation of the lawsuit. The Summons states if the individual is served personally, they have twenty days to respond, and if served by any other means other than personal service, they have thirty days to respond to the lawsuit. This sets the time period by which homeowners who are served with the Summons and Complaint in foreclosure cases must respond to it by filing a written Answer, acknowledged before a notary public, with the Court and with the attorney for the bank. If the homeowner fails to respond in a timely manner, their failure to submit an Answer will be considered a default. The default means the homeowner is not challenging the allegations in the lawsuit.New York foreclosure defense lawyer

Underwater Homes

foreclosure defense lawyer in New YorkThe term “underwater homes” means the home is worth less than the amount owed on its mortgage. Another way of referring to a home that has a mortgage greater than its value is “negative equity”. Most people who are in underwater homes are unable to sell their home or refinance it. At the height of the real estate crisis in America in 2012, approximately one-third of all homes in the United States were underwater. Today, approximately 15% of homes in the United States are underwater. This represents about 12% of all homeowners in the country, or approximately 950,000 homeowners have homes which are underwater. In many instances, homeowners’ homes are so far underwater that the mortgage is twice the value of their home.

Real estate values have been going up recently. However, many homes in America are so far underwater these homes will never reach a point of having equity in them.

Lack of Funds and Bad Credit

This can result in the homeowner trying to rent a home when they don’t have sufficient funds to pay the security and one month’s rent on a rental apartment or rental home. They also will most likely have a low credit score because they are behind on their mortgage payments. Landlords do not like to rent homes to families that have bad credit.

What Should Homeowners With Underwater Homes Do?

The best recommendation would be to consult with a foreclosure defense attorney. What homeowners of underwater homes should not do is move out and abandon their homes. The fact their home is underwater and they are behind on their mortgage, does not mean they are in imminent threat of losing their home and being forced out of it. In most situations, it is in the homeowner’s best interest to continue to live in their home. Many homeowners do not understand the full implications of simply moving out of their home, abandoning it and not paying their mortgage.

Conclusion

Don’t move out of your home solely if you are behind on your mortgage payments. Try to obtain a mortgage modification. Seek out an experienced foreclosure lawyer and review your options with him or her.New York foreclosure defense lawyer

New York Banks Agree to Maintain “Zombie Properties”

foreclosure defense for homeowners on Long IslandEleven banks in the State of New York have agreed to establish a program to maintain and monitor homes in foreclosure which are vacant. They have taken this action because of pressure from the New York State Attorney General, Eric Schneiderman, and complaints by neighbors surrounding these properties which have been made to the financial institutions. These eleven banks and credit unions represent approximately three-quarters of all of the houses in foreclosure in the Metropolitan New York market.

Bank To Check To See If Homes Are Vacant

The banks have agreed they will check all properties within 60 days of the loans becoming delinquent. The checking will involve an external inspection. In addition, the financial institutions will check each property in foreclosure every 25 to 35 days thereafter. If they reach a decision that the foreclosed home has been abandoned by its owners, they will post a notice with their contact information on it. In addition, they will change one of the door locks. They will also board up broken windows and doors and remove nuisance features. In addition, they will take action with regard to safety issues. All of these properties will be placed on a list to be shared with municipalities throughout the State.

The Eleven Banks

The eleven banks which have agreed to this process are: Ridgewood Savings Bank, M&T Bank, Bethpage Federal Credit Union, Astoria Bank, Green Tree Servicing, PHH, Northstar, Ocwen, CitiMortgage, Bank of America, and Wells Fargo.

More and More Zombie Homes

Attorney General Eric Schneiderman who had previously submitted legislation to the State Legislature, noted that zombie foreclosures have increased more than 50% recently. He claims there are approximately 17,000 zombie homes being foreclosed on. Zombie homes place burdens on the communities in which they are located. These burdens deal with maintenance costs, property tax issues, and vandalism of these homes.

New York foreclosure defense lawyerElliot S. Schlissel is a foreclosure lawyer representing homeowners throughout the Metropolitan New York area. His motto is, “I will keep you in your home.”

Foreclosure Lawsuits Time Barred by the Statute of Limitations

foreclosure attorneys for homeownerThe statute of limitations for bringing a foreclosure lawsuit in the State of New York is six years from the time the mortgage is accelerated by the bank (called due) or from the initiation of the foreclosure legal action, whichever occurs first.

The real estate crisis in America started many years ago. Foreclosure defense attorneys are now coming across cases initiated by banks where the statute of limitations defense bars the banks from moving forward with their foreclosure case. It should be noted the statute of limitations is a defense to the foreclosure lawsuit. However, it does not remove the bank’s lien from the property. What you end up with in a case where the statute of limitations defense is effectively plead, a bank is unable to collect on their mortgage but their mortgage still remains a lien on the property preventing it from being sold without it being repaid.

Acceleration of the Mortgage

A mortgage requires that a homeowner make payments over a period of time. The usual length of mortgages are 15 or 30 years. During the period the homeowner is making payments, all they owe each month is the amount of their payment. The acceleration of the loan involves the bank usually sending a letter to the homeowner saying it is calling the entire balance of the mortgage due and owing. This means, if the homeowner sends a payment in the correct monthly amount to the bank they will usually reject it claiming they want the entire mortgage paid in a lump sum payment. It should be noted however, if the homeowner is several months behind and pays all the arrears, the bank will usually reinstate the mortgage.

After the bank sends the acceleration letter or initiates a foreclosure lawsuit, if the homeowner takes action to acknowledge the debt, it can start the statute of limitations running all over again.

Conclusion

If there is any possibility the bank can be barred by moving forward with a foreclosure, it is extremely important the statute of limitations be plead as an affirmative defense in the homeowners’ Answer to the Summons and Complaint.New York foreclosure defense lawyer

New Precedent Regarding the Lack of Standing Defense in Foreclosure Lawsuits

foreclosure defense for Long IslandersOne of the most potent defenses a homeowner has in a foreclosure lawsuit is based on the concept the financial institution bringing the lawsuit is not the rightful owner of the note and mortgage at the time the lawsuit was commenced. The legal terminology regarding this situation refers to the fact the financial institution lacked standing to bring the lawsuit. When this affirmative defense is alleged by the attorney for the homeowner, the lender now has the burden of proving it actually was the rightful owner of the note and mortgage at the time the lawsuit was initiated. In other words, the financial institution must show it was the appropriate institution to bring the foreclosure lawsuit.

Pleading Lack of Standing As An Affirmative Defense

The homeowner in a foreclosure lawsuit, up until now, needed to plead the affirmative defense of lack of standing in their Answer. If they did not specifically plead the lack of standing affirmative defense, courts have traditionally taken the position the homeowners have waived their right to allege this defense. This means the financial institution did not have to meet the burden of establishing it was the proper party at the time the lawsuit was initiated to bring the foreclosure proceedings. New York Civil Practice Law and Rules section 3018(b) which is entitled “Responsive Pleadings” states “[a] party shall plead all matters which if not plead would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading.” This section of the law requires defendants in all lawsuits to plead whatever defenses they feel are appropriate. If defendants in civil lawsuits do not plead their defenses, they simply waive them.

Appeals Court Decision May Have Changed the Law

Recently the Appellate Division of the Second Department, an appeals court, has rendered a decision which may change the law with regard to a homeowner raising the issue of standing in a mortgage foreclosure lawsuit as a defense. In the case of U.S. National Association v. Faruque, 120 A.D.3d 575, 991 N.Y.S.2d 630 (2d Dept. 2014) they placed the issue of standing before a court even though it was not alleged in the homeowner’s pleading.

In the Faruque case the appeals court departed from prior legal precedents. In the Faruque case the bank started a foreclosure lawsuit. The homeowner submitted an Answer which stated they “specifically denied that the note was delivered to the plaintiff or that an assignment” from the originating lender to the plaintiff “had been recorded.” Although this allegation contained elements of the lack of standing defense, the homeowners did not plead the bank had lacked standing to bring the lawsuit. In this case the court held the homeowner “was not required to plead lack of standing as an affirmative defense.” The court went on to state “in order for the plaintiff to be entitled to relief, it had to prove its standing.”

The court in the Faruque case rendered a decision whereby the financial institution did not meet its burden under the circumstances of the case because it “did not establish that the note was physically delivered to it prior to the commencement of the action.”

Best Practice

Whether the Faruque case will change the case law in the State of New York to assume a lack of standing legal defense is questionable. The best way for a homeowner to submit the most potent Answer in a foreclosure lawsuit is to plead the affirmative defense of lack of standing. This creates a problem for the bank in the case. The bank then must prove they actually were the legitimate owner of the note and mortgage at the time of initiation of the foreclosure lawsuit.New York foreclosure defense attorney

What Happens When You Fall Behind On Your Mortgage?

To watch today’s video blog, please click on the link below:

http://youtu.be/jZT2uG0JdTI

Elliot Schlissel is a foreclosure defense lawyer helping homeowners stay in their homes throughout the Metropolitan New York area.  He and his associates can be reached for consultation at 516-561-6645 or 718-350-2802 or send an email to schlissel.law@att.net.

Foreclosure Lawsuit Dismissed a Second Time!

foreclosure defense lawyer for homeownersThe Federal National Mortgage Association (FNMA) brought an application in a foreclosure case for summary judgment in the year 2010. The summary judgment motion was denied because there were defects in the foreclosure lawsuit. FNMA in 2014 brought a second foreclosure lawsuit. In this lawsuit they made a similar motion for summary judgment seeking the same relief they had sought in their prior motion. The court denied the motion again.

Justice Alice Schlesinger, sitting in a Foreclosure Supreme Court Part in New York County, dismissed the lawsuit a second time. Her decision stated there were numerous deficiencies in the papers submitted by the attorneys for FNMA. FNMA’s attorneys claimed none of the defects in their papers were significant. Justice Schlesinger found they had four years to correct the problems which existed in the original lawsuit and they still hadn’t dealt with these issues. Justice Schlesinger was “troubled” by the ambiguous role the Mortgage Electronic Registration Systems, Inc. (“MERS”) had in the assignment process with regard to this mortgage. She also noted in her decision there were a number of scriveners errors in the Complaint submitted by the bank. Her decision stated these errors dealt with significant issues. Her decision stated there was an issue concerning who had possession of the note at the time the foreclosure lawsuit was initiated. Justice Schlesinger found that FNMA sought to amend their Complaint five years after initiating the original proceeding. The court declined FNMA’s leave to amend and dismissed the foreclosure lawsuit.

Conclusion

Experienced foreclosure defense lawyers who carefully review the facts of a case can come up with winning strategies to have these cases dismissed.New York foreclosure defense attorney

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