There is currently a bill in the New York State Legislature to protect homeowner. The statute states that a bank or other financial institution cannot commence a foreclosure proceeding unless they have an original mortgage document. This means that a prerequisite for the financial institution to commence a foreclosure proceeding will be that it must allege and prove ownership of the note and the mortgage. These documents also must be filed by the bank, with the Summons and Complaint, when the foreclosure action is initiated.
Illegal Foreclosure Proceedings
There has been a series of cases in the past few years where banks who are not the mortgage holders have illegally foreclosed on homes and sold them at auction. This new law will codify the rulings of court cases that have held that institutions must have standing to initiate mortgage foreclosure proceedings.
When a homeowner receives the Summons and Complaint in foreclosure, they are usually frightened. Since homeowners are not lawyers and are generally not familiar with this area of the law, they do not know what their rights are. If a homeowner is sued by a bank that doesn’t own his or her mortgage, they have a right to claim that the bank doesn’t have standing to sue them. Unfortunately, if the homeowner doesn’t submit a written answer alleging lack of standing, this defense to the lawsuit is waived.
This new statute helps homeowners by making the homeowner’s defense that the bank has lack of standing to bring the foreclosure lawsuit non-waivable. This gives the homeowner a complete defense to the lawsuit. It also allows counsel for the homeowner to use this defense as a tactic in defending the foreclosure lawsuit.
Foreclosures can be stopped in a number of ways. The filing of an Answer on behalf of the homeowner stops the foreclosure case from going forward. There are specific defenses that can be alleged in the answers, such as predatory lending, the mortgage was defective, the foreclosure lawsuit is defective, and other real estate related defenses. Another foreclosure defense option is to file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. The filing of either of these bankruptcies gives the homeowner an automatic stay that immediately stops the foreclosure lawsuit from going forward.
Many homeowners are under the false belief that filing for a mortgage modification stops a foreclosure from going forward. This is incorrect! The mortgage modification process has nothing to do with the litigation in the courts of foreclosures. Most mortgage modification programs fail to provide the homeowners with the relief they are seeking. The large majority of homeowners are denied mortgage modifications! Feel free to call us for a free consultation regarding foreclosure defense and bankruptcy matters. Thank you for visiting our foreclosure blog.
