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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.

Proposed Changes To The Foreclosure Process In New York State

foreclosure defense lawyerBenjamin Lawsky is the Superintendent of Financial Services in New York State. He feels the delays in foreclosure settlement conferences are the main reason why New York’s foreclosure system is “broken and badly in need of change.” A study by the Department of Financial Services found that it takes approximately 9 months from the time a foreclosure lawsuit is initiated to when the foreclosure settlement conference procedures are completed. With regard to this approximate 9 month period, he stated “unfortunately…the mandatory settlement conferences have not been the timely and efficient forum for foreclosure resolution that was once envisioned.” He went on further to state “for borrowers that are already at the end of their rope, any interruption – let alone nine months of start – and – stop delays – can be the death knell to any chance of saving their home.”

New York Civil Practice Law and Rules section 3408(a)(1) requires both the homeowner and the financial institution negotiate in good faith. Lawsky finds that there is a lack of a clear definition of what is “good faith.”

Bank’s Representatives Having No Authority To Settle

In many situations, courts are confronted by bank attorneys appearing at foreclosure court conferences who do not have authority to enter into settlements or mortgage modifications with homeowners. In these situations the courts often simply keep adjourning the case until someone shows up who has greater authority to enter into mortgage modifications on behalf of the banks.

Lawsky believes the law creating foreclosure court conferences is flawed. He stated “the unintended consequences of this legal flaw are unproductive conference sessions, useless delays, waste of court resources, and most importantly, needless foreclosures.” Lawsky wants there to be new legislation which will define what negotiating in good faith means to both homeowners and financial institutions. He also feels courts should have greater authority to impose sanctions on the parties to these proceedings who do not negotiate in good faith.

Zombie Homes

Lawsky feels there is a special problem in the courts with the processing of foreclosures on “zombie homes”. Zombie homes are homes which have been abandoned by the homeowners. These homes create a blight in communities. They are vacant. Sometimes they are vandalized. Vandals remove the pipes from these homes. Lawsky wants the foreclosure process on vacant homes to be streamlined to allow them to be expedited. Lawsky has specifically suggested a new non-judicial process for either uncontested foreclosures or foreclosures on vacant homes be established.

Courts Flooded With Foreclosures

Approximately one-third of all the cases brought before the Supreme Court Civil Parts throughout the State of New York are now foreclosure cases.

Conclusion

The foreclosure process should be set up in a manner to help homeowners who have the wherewithal to keep their homes and obtain mortgage modifications.foreclosure defense attorney in New York

Deeds In Lieu of Foreclosure: An Imperfect Remedy

foreclosure attorney for homeownersDeeds in lieu of foreclosure are used by many attorneys and homeowners to short circuit the foreclosure process. I rarely suggest to a client to execute a deed in lieu of foreclosure. What a deed in lieu of foreclosure accomplishes is it allows the bank to take the home back quickly. It often leaves the homeowner with no credit, no assets, and no place to live! The reason given for executing a deed in lieu of foreclosure is it will eliminate a deficiency judgment.

Deficiency Judgment

Here is an example of what a deficiency judgment is: let’s assume there is a home worth $300,000, and a mortgage on the home in amount of $400,000. The house sells for $250,000 to a speculator at a foreclosure sale. There is a $150,000 deficiency which is still owed by the borrower. The deed in lieu of foreclosure prevents the bank from getting a deficiency judgment in the amount of $150,000.

This is the selling point used by many attorneys. It is usually a false selling point. Banks, generally speaking, do not pursue deficiency judgments in the Metropolitan New York area if the homeowner has no assets. Even if the bank desires to move forward for a deficiency judgment, the homeowner can simply file a Chapter 7 bankruptcy and eliminate the debt.

Fighting the Foreclosure Proceeding

When the homeowner decides to hire an attorney and fight the foreclosure proceeding, both the homeowner and his or her family will probably spend the next three or four years living in their home and not facing the problems of finding a place to live without credit and financial resources.

Deeds in Lieu of Foreclosure Won’t Always Work

A deed in lieu of foreclosure is usually only accepted by financial institutions where there is no equity in the property, and there are no liens or other mortgages attached to the property. In these types of cases, most banks will agree to a deed in lieu of foreclosure transaction.

If there is a second mortgage, monetary judgments on the property, mechanics’ liens, or other types of liens on the property, the bank will generally not agree to a deed in lieu of foreclosure transaction. In these situations they want the foreclosure sale to go forward. At the foreclosure sale, the second mortgage, the mechanics’ liens, and the judgments will be eliminated. The bank will obtain clear title to the property and not have to deal with the nuisances involved with other title impediments. In situations where there are second mortgages, mechanics’ liens, or other judgments or liens on the property, most banks will simply want to continue with the foreclosure process to obtain clear title.

New York foreclosure defense attorney IslandElliot Schlissel is a foreclosure defense lawyer helping homeowners stay in their homes throughout the Metropolitan New York area.

Various Fraudulent Mortgage Transaction Issues – Part II

legal help for homeownersFraudulent Mortgage Assignments

There are a variety of types of fraud which banks engage in related to the assignment of mortgages. Sometimes the assignment contains signatures of individuals claiming to be corporate officers of the bank and/or mortgage company when in fact they were never employed by these institutions. On other occasions, mortgage assignments are signed by individuals who claim to be corporate officers of financial institutions which went out of business or filed bankruptcy many years earlier. There are also many examples of assignments of mortgages which are notarized by notaries who were actually in a different state at the time of the transaction. These notaries never witnessed the signatures of the individuals they notarized.

Ownership of the Note and Mortgage

There is a United States Supreme Court Case which stands for the proposition the foreclosing institution must own the note and mortgage at the time of the initiation of the foreclosure lawsuit. The case is Carpenter v. Longan, 83 U.S. 271. In this case, the United States Supreme Court stated “plaintiff failed to show that it owned the mortgage at the time the complaint was filed.” As a result the court ruled the plaintiff financial institution did not have standing in the foreclosure case. The financial institution must not only be the holder and owner of the original note, but also must be the holder and owner of the mortgage as well. In Carpenter v. Longan, the United States Supreme Court held the plaintiff lacked standing to initiate and prosecute the foreclosure case and therefore the case was dismissed.

New York foreclosure defense attorney IslandElliot S. Schlissel, Esq., is a foreclosure lawyer representing homeowners throughout the Metropolitan New York area. He defends homeowners whose homes are subject to being foreclosed upon. He also helps homeowners obtain mortgage modifications.

The Foreclosure Process: The Initial Steps

foreclosure defense for homeownersThe first step in a foreclosure proceeding is the bank sending the homeowner a letter accelerating the mortgage. The acceleration letter advises the homeowner the financial institution (lender) will call in the entire balance of the mortgage, which represents the total amount due, unless the homeowner becomes up to date on his or her mortgage payments by a specified date. Most banks send an acceleration letter after the homeowner falls approximately three months behind on their mortgage payments. However, there is no specific rule which requires a bank to send an acceleration letter when the homeowner is three months behind.

Falling Behind On Your Mortgage Payments

The homeowner technically defaults on the payment of the loan on their home when they become one month late on their mortgage payments. However, as indicated earlier in this article, acceleration letters are almost never sent out prior to the homeowner being three months behind on their mortgage.

Ninety Day Pre-Foreclosure Filing Notice

New York State has a statute which requires the financial institution holding the mortgage to send out a notice a minimum of ninety days before they initiate a foreclosure legal action by filing a Summons and Complaint in the County Clerk’s office of the County in which the home is located. There are very specific rules and notice requirements concerning the ninety day pre-foreclosure filing notice. This notice also must list at least five not for profit organizations which can provide information or counseling to homeowners with regard to the problems they are having in making their mortgage payments.New York foreclosure defense attorney Island

How A Home Is Sold In Foreclosure

Please click on the link below to watch today’s video blog:

http://youtu.be/uhj4y6Vf62Q

Elliot S. Schlissel is a foreclosure lawyer who has been representing homeowners for more than 20 years.  His goal is to keep homeowners in their homes.  He defends homeowners in foreclosure lawsuits and helps his clients in obtaining mortgage modifications.  He and his associates can be reached for consultation at 516-561-6645, 718-350-2802 or by email to schlissel.law@att.net.

Mortgage Modifications

Please click on the link below to watch today’s video blog:

http://youtu.be/PY8ARn7m9nw

Elliot S. Schlissel is a foreclosure defense lawyer in the Metropolitan New York area.  He has been helping homeowners stay in their homes for more than 20 years.  Elliot and his associates help their clients obtain mortgage modifications and defend foreclosure lawsuits.  Elliot can be reached for consultation at 516-561-6645, 718-350-2802 or by email to schlissel.law@att.net.

The Foreclosure Legal Process On A Step By Step Basis – Part V

mortgage modification attorneysResponse To The Motion For Summary Judgment

When the motion for summary judgment is made, it is extremely important the attorney for the homeowner submit an aggressive, well thought out, well-written response to the motion for summary judgment. If the attorney for the homeowner is successful in defeating the motion for summary judgment, the litigation will continue and the case will eventually get placed on a trial calendar for a trial on the issues raised in the plaintiff’s Complaint and the defenses alleged in the homeowners’ Answer.

If the bank is successful with regard to the motion for summary judgment, the court will grant the motion and the lender will thereafter move for an Order of Reference as described in Part II of this series of articles.

Trial

As stated earlier, in the event the motion for summary judgment is defeated, the case will eventually go to the trial calendar. However, before the case goes to the trial calendar, the attorneys for the homeowner can make motions on their own to dismiss the case and for all types of other relief.

Conclusion

The foreclosure legal process described in this series of articles just gives an overview. Numerous nuances, subtleties and other legal procedures can be taken during this process. The best way of dealing with any foreclosure lawsuit is to immediately hire an experienced, dedicated foreclosure defense lawyer. Before you hire any lawyer to represent you in a lawsuit as significant as this, you should investigate his or her background. The lawyer should not be someone who handles a foreclosure defense case every now and then. You should hire a lawyer who does a significant amount of foreclosure defense legal work.

Be aware, the attorneys for the financial institutions usually bring hundreds of foreclosure cases each and every year. Many of these law firms have been doing this for decades. They have expertise in dealing with these foreclosure related issues. Some law firms that handle a foreclosure defense case every now and then may not have the expertise, experience, and wherewithal to litigate with the attorneys representing a financial institution worth hundreds of billions of dollars.foreclosure attorney on Long Island and New York City

The Foreclosure Legal Process On A Step By Step Basis – Part IV

foreclosure lawyer Long IslandLitigation

Litigation only begins in the foreclosure proceeding after the case leaves the settlement conference area. At that point, there is a stage in the lawsuit called the discovery stage. The discovery stage allows the parties to the lawsuit to request documents, information, and respond to written requests to answer questions called Interrogatories or a Bill of Particulars. It is important that homeowners who have submitted Answers participate in the discovery process. This allows them to obtain information with regard to bank practices, underwriting, and all other issues involved in their transaction with the bank.

The lender can also make discovery demands upon the homeowner. The lender’s discovery demands usually relate to issues raised by the homeowner in their Answer. Another purpose for the lender’s discovery demands is to obtain more information for them to be successful in their foreclosure lawsuit.

Motion Practice

In almost all foreclosure lawsuits, the attorneys for the financial institution at some point bring a motion for summary judgment. In the motion for summary judgment, the attorneys for the financial institution allege the defenses in the homeowners’ Answer are completely without merit. The standard in a motion for summary judgment is to determine whether there is an issue of fact for the court to really look at in the lawsuit.

Summary Judgment

Another way of looking at a motion for summary judgment is that it is a request by the attorneys for the bank to eliminate the homeowner’s Answer, avoid a trial, and go right to judgment. The court will grant the motion for summary judgment if they believe the homeowner has not presented any valid defenses or there is no evidence or documentation to their defenses and/or affirmative defenses.foreclosure attorney on Long Island and New York City

Foreclosure Defense in Valley Stream, Lynbrook, Baldwin, Malverne, Freeport, Oceanside, Long Beach, Elmont, Lakeview, West Hempstead, Hempstead, Merrick and Bellmore, New York

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