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

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.


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

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.


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

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.


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

Bank Punished For Negotiating In Bad Faith: Court Limits Their Interest Rate to 2%

homeowner's attorneyJustice Debra Silber sitting in a Supreme Court foreclosure court in Kings County, New York recently had a case involving bad faith in negotiations by Deutsche Bank. In this case the defendant moved for, and was granted, an Order which confirmed a report of a special referee made at the foreclosure conference which found that Deutsche Bank had acted in bad faith in violation of New York Civil Practice Law and Rules section 3408(f).

Bad Faith by Bank

Justice Silber, in her decision, found the actions and inactions by Deutsche Bank clearly indicated an absence of good faith as was contemplated by the New York Statute. During a period of ten months the bank delayed the underwriting of husband’s mortgage modification application. The referee found Deutsche Bank’s failure to act during a 10 month period was a dilatory tactic. Justice Silber concluded the husband had sought to obtain a mortgage modification for a period of 6 months. He had made 18 appearances at foreclosure mediation conferences. In determining the appropriate sanction to punish Deutsche Bank for its failure to work with the defendant in this case regarding his mortgage modification application, the court decided to reduce the interest rate to 2% on the balance of the mortgage which accrued after August 1, 2010. This was the date Justice Silber deemed the bank should have approved the husband’s HAMP mortgage application. In addition, the bank and its loan servicer organization were barred from collecting attorney’s fees with regard to the foreclosure lawsuit which accrued after August 1, 2010.


If a bank fails to negotiate in good faith mortgage modifications at foreclosure court mediation conferences, there are remedies available to the homeowner.

foreclosure defense lawyersElliot S. Schlissel is a foreclosure attorney who litigates foreclosure cases. He seeks to keep homeowners in their homes.

Foreclosure Dismissed, Bank Fails To Show It Was The Holder Of The Note

mortgage modification and bankruptcy attorneys on long islandJustice Francois Rivera, sitting in the Real Property Part in Supreme Court, Kings County, recently dismissed a foreclosure case brought by Loancare against Mr. Coleman.

The foreclosure lawsuit claimed Coleman had failed to make payments on the note and mortgage. It further claimed he took no action to cure the default. Coleman submitted an Answer which contained seventeen affirmative defenses. One of the affirmative defenses was that the bank lacked standing to bring this lawsuit.

Justice Rivera noted in his decision, before commencing a foreclosure lawsuit a plaintiff must have a legal or an equitable interest in the mortgage.

Transfer of the Mortgage

Coleman initially had given a mortgage to Lend America. Lend America executed and delivered the mortgage and note to Mortgage Electronic Registration Systems, Inc., (hereinafter referred to as “MERS”) as Lend America’s nominee.

When Loancare brought the lawsuit, they did not claim or prove that Lend America delivered the note to MERS. Therefore MERS was never the holder of the note. Since they didn’t have the note to begin with, they couldn’t assign it! Since MERS couldn’t assign it to Loancare, Loancare never became the holder of the note pursuant to a written assignment prior to initiating the foreclosure lawsuit. In addition, Justice Rivera pointed out in his decision Loancare did not allege the facts and circumstances as to who and which entity physically delivered the note.

Justice Rivera therefore decided Loancare did not establish a prima facie case that it was the holder and/or assignee of the note and mortgage. Justice Rivera therefore dismissed the lawsuit based on the fact the plaintiff had no standing to bring this foreclosure proceeding.


Submitting an appropriate Answer with numerous affirmative defenses and especially alleging lack of standing, is very important when responding to a foreclosure lawsuit. If Coleman had failed to allege lack of standing in his Answer, he would have waived this affirmative defense and Loancare would have been successful in obtaining a judgment of foreclosure and selling Coleman’s home.

foreclosure defense attorneysElliot S. Schlissel is a foreclosure attorney who helps homeowners fight foreclosure lawsuits and stay in their home.

Foreclosure And Your Credit Score

New York foreclosure and bankruptcy attorneyThe initiation of a foreclosure lawsuit by a financial institution against you will have a negative impact on your credit score. For most families, their home is their most significant asset and investment. When the family gets served with a Summons and Complaint in a foreclosure lawsuit, not only are they facing the potential loss of their home, but in addition, their credit worthiness is also being negatively impacted. Foreclosure lawsuits generally cause individual’s credit scores to be reduced by between 150 and 300 points. The foreclosure action can remain on your credit report for between 7 and 10 years.

Reduced Credit Scores

The reduction in your credit score may make it more difficult for you to rent an apartment should you decide to leave your home, do a short sale, or give the bank a deed in lieu of foreclosure. In addition, a reduced credit score will make it more difficult to obtain car loans, personal loans and credit cards. Some employers also look into an individual’s credit scores as part of their employment process. A low credit score may lead a potential employer to a negative conclusion regarding an individual’s level of responsibility or character.

Maintaining Your Credit Score During Foreclosure Litigation

Do not despair! Action can be taken to maintain your credit score even during the course of foreclosure litigation. If you have credit cards you should use 2 or 3 credit cards each and every month. It is important you make timely payments on these credit cards even if the payments are only minimum payments. Each time you use your credit cards it will give you positive points on your credit score. In addition, if you have car loans, personal loans, or other debt you should make your payments in a timely manner on these debts. Your continued use of credit cards, paying loans such as car loans, over time will completely rebuild your credit score. My office has represented individuals who while in foreclosure maintained credit scores of over 700 points.


Even though a foreclosure will have a negative impact on your credit score it is possible to maintain your credit score during the course of foreclosure litigation.

New York foreclosure defense attorney IslandElliot S. Schlissel is a foreclosure attorney who is familiar with the multitude of problems caused by the sub-prime mortgage crisis in America. He represents homeowners in foreclosure cases throughout the Metropolitan New York area and takes legal action to preserve their home ownership rights and help them 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

The Note and The Mortgage

foreclosure and real estate lawyer in New YorkIf you have purchased a home and financed it through a financial institution, you attended a closing. At that closing, you executed numerous documents. One of those documents is the note. The note is simply an I owe you. The note basically states you are borrowing money from a lender and you promise to pay it back. The note includes the terms of repayment, interest rates, the term of the loan and information concerning late charges and other issues.

The Mortgage

The mortgage and note are two separate documents completely. The mortgage is an agreement which allows the financial institution, who is the lender concerning your property, to have a security interest, or lien, on your property. Another way of looking at the mortgage is you pledge your home as collateral to secure the financial transaction which allows you to buy your home. If the bank does not get paid, they go after the collateral, to wit, your home, to take it back and sell it at auction to repay the note which documents the loan you took from them.

New York foreclosure defense attorney IslandElliot S. Schlissel is a foreclosure lawyer. He has helped hundreds of New Yorkers stay in their homes. He fights foreclosure lawsuits throughout the Metropolitan New York area and helps his clients obtain mortgage modifications. Elliot and his staff of attorneys can be reached 7 days a week.

Bank Sanctioned For Failure to Negotiate a Mortgage Modification In Good Faith

mortgage modification attorneysA foreclosure action was referred to Justice Genine Edwards who sits in Kings County. The lawsuit had been referred to her for a bad faith and standing hearing after more than 25 foreclosure conferences had been held regarding the case during a period of more than 36 months. After numerous attempts to reach an agreement between the homeowner and the bank, a hearing was conducted by Justice Genine Edwards.

Foreclosure Court Conferences

The foreclosure court conferences had taken place before a referee. The referee had written a report which stated the defendant, Diakite had qualified for a HAMP trial mortgage modification. In addition, Diakite had made three monthly payments under the HAMP temporary mortgage modification. After the three payments were made, the bank refused to accept any further payments from Diakite.

Three Mortgage Payments Made Under The Temporary Mortgage Modification

The first three mortgage trial modification payments were accepted by Aurora Loan Services. Aurora rejected the final modification. They claimed Diakite needed to restart the process all over again since Aurora did not receive the executed mortgage modification agreement from Diakite. Diakite indicated the reason she didn’t send it to Aurora was that she had never received it in the first place. Nationstar Mortgage thereafter informed Diakite the servicing on the loan was being transferred to them from Aurora. Nationstar thereafter denied Diakite’s HAMP application. They claimed Diakite did not provide necessary documentation.

The Judge’s Decision

Justice Edwards took into consideration that while she had directed the bank to produce a copy of the mortgage and the note and any assignments which indicated proof of ownership of both instruments, the bank had failed to produce any documentation whatsoever. She concluded the record supported the referee’s report. The plaintiff had failed to negotiate in good faith pursuant to New York Civil Practice Law and Rules section 3408. Justice Edwards therefore confirmed the referee’s report and stayed all interests, costs, and attorneys fees due and owing to the bank from March 1, 2010 until October 27, 2014, the date the hearing took place before her.


More and more banks are being sanctioned for failure to negotiate in good faith at mortgage modification conferences. Making homeowners provide documents over and over again, not taking responsibility for misplacing the documents, or losing the documents is simply unfair. In addition, it is unfair to grant a homeowner a mortgage modification, have them pay the required amount pursuant to the modification for between three and six months and thereafter have the bank say, no we are not going to make the modification permanent.foreclosure lawyer New York

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