Bill Text: NY A06756 | 2009-2010 | General Assembly | Introduced
Bill Title: Provides foreclosure relief for fundamentally unaffordable mortgage loans, second mortgages and home equity loans.
Spectrum: Partisan Bill (Democrat 68-3)
Status: (Introduced - Dead) 2010-01-06 - referred to judiciary [A06756 Detail]
Download: New_York-2009-A06756-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
6756
2009-2010 Regular Sessions
I N A S S E M B L Y
March 12, 2009
___________
Introduced by M. of A. BRENNAN, CLARK, JEFFRIES, ORTIZ, ROBINSON, ROSEN-
THAL, DIAZ, PERRY, CAMARA, CAHILL, GALEF, J. RIVERA, P. RIVERA, SCAR-
BOROUGH, BOYLAND, N. RIVERA, BRODSKY, LANCMAN, KAVANAGH, DINOWITZ,
RAMOS, MAISEL, ESPAILLAT, HOOPER, ENGLEBRIGHT, SPANO -- Multi-Spon-
sored by -- M. of A. ABBATE, ALESSI, ALFANO, ARROYO, AUBRY, BENEDETTO,
BENJAMIN, BING, BROOK-KRASNY, COLTON, COOK, CYMBROWITZ, DelMONTE,
DESTITO, EDDINGTON, FIELDS, GABRYSZAK, GLICK, GOTTFRIED, GREENE,
HEASTIE, HOYT, HYER-SPENCER, JACOBS, JAFFEE, JOHN, KELLNER, KOON,
LENTOL, LIFTON, V. LOPEZ, LUPARDO, MARKEY, McENENY, MILLMAN, NOLAN,
PEOPLES, PERALTA, PHEFFER, POWELL, PRETLOW, QUINN, REILLY, SALADINO,
SCHIMEL, SWEENEY, TITUS, WALKER, WEISENBERG, WRIGHT -- read once and
referred to the Committee on Judiciary
AN ACT to amend the real property actions and proceedings law, in
relation to providing foreclosure relief; and providing for the repeal
of such provisions upon expiration thereof
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Legislative intent. The legislature declares that a public
2 emergency exists in regards to real estate foreclosures due to the
3 extension of fundamentally unaffordable mortgage loans, fundamentally
4 unaffordable second mortgages and fundamentally unaffordable home equity
5 loans. Many such loans were extended under conditions which evince
6 deception, misrepresentation and fraud on the part of many lenders and
7 agents. This is particularly true of loans which qualify as subprime.
8 The presence of such subprime loans is distorting the New York state
9 real estate market. The problems associated with these subprime loans
10 are adversely affecting availability of capital, the demand for housing,
11 and the value of real estate. The financial problems created by such
12 subprime loans threaten to spill over into the rest of the real estate
13 market and the general economy. It is in the interest of New York state
14 to ensure the rights of all parties are protected and that all foreclo-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD07381-01-9
A. 6756 2
1 sures which come into the New York courts during this period are care-
2 fully scrutinized.
3 S 2. The real property actions and proceedings law is amended by
4 adding a new section 1305 to read as follows:
5 S 1305. FORECLOSURES; COURT RELIEF. 1. VENUE. IN ANY ACTION TO FORE-
6 CLOSE A MORTGAGE UNDER THIS ARTICLE A MORTGAGOR NAMED IN SUCH ACTION MAY
7 APPLY FOR RELIEF IN STATE SUPREME COURT PURSUANT TO THIS SECTION.
8 2. TIMING OF YEAR-LONG MORATORIUM. IF A MORTGAGEE HAS OTHERWISE ESTAB-
9 LISHED ITS LEGAL RIGHT TO JUDGMENT ON AN ACTION TO FORECLOSE A MORTGAGE
10 PURSUANT TO THIS CHAPTER, THEN SUCH ACTION SHALL BE HELD IN ABEYANCE BY
11 THE COURT BEFORE WHICH SUCH ACTION IS PENDING. SUCH PERIOD OF TIME IS
12 INTENDED TO PERMIT THE PARTIES TO SETTLE THE ACTION OUTSIDE OF COURT AND
13 TO FORESTALL FORECLOSURE WITHIN THE CURRENT ECONOMIC CLIMATE.
14 3. PROCESS AND FEES. IF AN ACTION TO FORECLOSE A MORTGAGE HAS BEEN
15 COMMENCED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, A MORTGAGOR MAY
16 ASK THE COURT BEFORE WHICH SUCH ACTION IS COMMENCED TO HOLD SUCH ACTION
17 IN ABEYANCE PURSUANT TO SUBDIVISION TWO OF THIS SECTION. MOTIONS ON
18 NOTICE IN ACCORDANCE WITH THE CIVIL PRACTICE LAW AND RULES MADE BY THE
19 MORTGAGOR SHALL BE DEEMED TO HAVE BEEN FILED BY A POOR PERSON PURSUANT
20 TO ARTICLE ELEVEN OF THE CIVIL PRACTICE LAW AND RULES AND ALL COURT FEES
21 OTHERWISE APPLICABLE TO SUCH ACTIONS AND PAYABLE BY A MORTGAGOR SHALL BE
22 WAIVED. IF A FORECLOSURE ACTION HAS NOT BEEN COMMENCED PRIOR TO THE
23 EFFECTIVE DATE OF THIS SECTION, A MORTGAGOR MUST COMMENCE AN ACTION IN
24 STATE SUPREME COURT BY FILING AND SERVING A SUMMONS PURSUANT TO ARTICLE
25 THREE OF THE CIVIL PRACTICE LAW AND RULES WITH A REQUEST FOR RELIEF
26 PURSUANT TO THE TERMS OF THIS SECTION. IN SUCH CASE, SUCH FILING SHALL
27 BE DEEMED TO HAVE BEEN FILED BY A POOR PERSON PURSUANT TO ARTICLE ELEVEN
28 OF THE CIVIL PRACTICE LAW AND RULES AND ALL FILING AND COURT FEES OTHER-
29 WISE APPLICABLE TO SUCH ACTIONS AND PAYABLE BY A MORTGAGOR IN THE FORM
30 OF INDEX AND MOTION FEES SHALL BE WAIVED.
31 4. PRIMA FACIE CASE. A MORTGAGOR MUST ESTABLISH A PRIMA FACIE CASE IN
32 THE MOTION OR PLEADING. AMENDMENTS TO SUCH MOTION OR PLEADING SHALL BE
33 LIBERALLY GRANTED. SUCH PLEADING MUST ESTABLISH THAT:
34 A. THE MORTGAGOR IS A NATURAL PERSON; AND
35 B. THE DEBT IS INCURRED BY THE MORTGAGOR PRIMARILY FOR PERSONAL, FAMI-
36 LY OR HOUSEHOLD PURPOSES; AND
37 C. THE LOAN IS SECURED BY A MORTGAGE, SECOND MORTGAGE OR HOME EQUITY
38 LOAN ON REAL PROPERTY WHICH IS IMPROVED WITH A RESIDENTIAL BUILDING
39 CONTAINING ONE TO SIX DWELLING UNITS; AND
40 D. THE REAL PROPERTY SUBJECT TO FORECLOSURE IS THE PRINCIPAL RESIDENCE
41 OF THE MORTGAGOR; AND
42 E. THE MORTGAGOR OWNS NO OTHER REAL PROPERTY; AND
43 F. THE REAL PROPERTY IS LOCATED IN THIS STATE; AND
44 G. THE MORTGAGE, SECOND MORTGAGE OR HOME EQUITY LOAN QUALIFIES AS A
45 SUBPRIME HOME LOAN. A SUBPRIME HOME LOAN FOR A FIRST LIEN LOAN IS ONE
46 WHICH HAS AN ANNUAL PERCENTAGE RATE OF THREE OR MORE PERCENTAGE POINTS
47 ABOVE THE YIELD ON TREASURY SECURITIES OF COMPARABLE MATURITY MEASURED
48 AS OF THE FIFTEENTH DAY OF THE MONTH PRECEDING THE MONTH IN WHICH THE
49 APPLICATION FOR THE LOAN IS RECEIVED BY THE LENDER. A SUBPRIME HOME LOAN
50 FOR A SUBORDINATE LIEN LOAN IS ONE WHICH HAS AN ANNUAL PERCENTAGE RATE
51 OF FIVE OR MORE PERCENTAGE POINTS ABOVE THE YIELD ON TREASURY SECURITIES
52 OF COMPARABLE MATURITY MEASURED AS OF THE FIFTEENTH DAY OF THE MONTH
53 PRECEDING THE MONTH IN WHICH THE APPLICATION FOR THE LOAN IS RECEIVED BY
54 THE LENDER.
55 5. MONTHLY PAYMENT SCHEDULE. IF A PRIMA FACIE CASE HAS BEEN ESTAB-
56 LISHED, THE COURT MUST SET FORTH THE TERMS OF A MONTHLY PAYMENT SCHEDULE
A. 6756 3
1 WHICH WILL PRESERVE THE RELATIVE FINANCIAL INTERESTS OF BOTH PARTIES
2 UNDER TERMS WHICH ARE EQUITABLE AND JUST. TOWARDS THAT END, THE COURT
3 SHALL INQUIRE INTO THE FINANCES OF BOTH THE MORTGAGEE AND THE MORTGAGOR.
4 THE PURPOSE OF SUCH INQUIRY SHALL BE TO DETERMINE THE MINIMUM AMOUNT
5 NECESSARY TO MAINTAIN THE MORTGAGEE'S FINANCIAL POSITION AND TO DETER-
6 MINE THE AMOUNT WHICH THE MORTGAGOR WILL BE ABLE TO AFFORD. SUCH MONTH-
7 LY PAYMENTS SHALL BE APPLIED TO THE PRINCIPAL AND INTEREST UPON THE
8 INDEBTEDNESS. IF THE FINANCIAL CONDITION OF THE MORTGAGOR EXCEEDS THE
9 MINIMUM AMOUNT NECESSARY TO MAINTAIN THE FINANCIAL POSITION OF THE MORT-
10 GAGEE, SUCH MONTHLY AMOUNT MAY BE INCREASED BEYOND THE MINIMUM AMOUNT AS
11 DETERMINED WITHIN THE DISCRETION OF THE COURT. IT IS WITHIN THE COURT'S
12 DISCRETION TO DETERMINE WHETHER THE ESTABLISHMENT OF SUCH PAYMENT SCHED-
13 ULE IS POSSIBLE UNDER TERMS WHICH ARE EQUITABLE AND JUST. THE PURPOSE OF
14 SUCH MONTHLY PAYMENTS ARE TO PRESERVE THE RELATIVE FINANCIAL INTERESTS
15 OF BOTH PARTIES UNTIL A SETTLEMENT CAN BE REACHED BUT IN NO EVENT SHALL
16 SUCH ORDER GOVERN FOR MORE THAN ONE YEAR. FAILURE TO ADHERE TO THE TERMS
17 OF SUCH SCHEDULE MAY ALSO RESULT IN FORECLOSURE OR LIFTING OF THE ABEY-
18 ANCE. MORE THAN ONE SINGLE YEAR LONG MORATORIUM MAY BE GRANTED IN THE
19 DISCRETION OF THE COURT SUBJECT TO THE FACTS ESTABLISHED DURING THE
20 PROCEEDINGS.
21 6. POSTPONEMENT ORDER. ONCE THE COURT DETERMINES THAT AN EQUITABLE AND
22 JUST PAYMENT SCHEDULE CAN BE ESTABLISHED, IT SHALL ISSUE AN ORDER WHICH
23 SETS FORTH THE TERMS OF SUCH PAYMENT SCHEDULE AND SERVE IT UPON ALL
24 PARTIES TO THE PROCEEDING. SUCH ORDER SHALL SET FORTH A RETURN DATE FOR
25 THE REEXAMINATION OF SUCH MATTER AFTER PASSAGE OF THE POSTPONEMENT TIME
26 PERIOD AT A FORMAL HEARING ON NOTICE TO THE PARTIES. THE COURT MAY
27 TAILOR RELIEF AS REQUIRED BY THE FACTS OF EACH CASE THAT FALLS WITHIN
28 THE PURVIEW OF THIS SECTION. HOWEVER, IN NO EVENT SHALL SUCH ORDER POST-
29 PONE FINAL ACTION BEYOND ONE YEAR WITHOUT A RE-EXAMINATION OF THE
30 PARTIES' FINANCIAL CIRCUMSTANCES AFTER FORMAL HEARING ON NOTICE TO THE
31 PARTIES. THE TIME PERIOD OF SUCH ORDER SHALL RUN FROM THE DATE OF THE
32 ENTRY OF SUCH ORDER. SUCH ABEYANCE SHALL NOT BEGIN UNTIL THE FORECLO-
33 SURE PROCESS HAS REACHED THE POINT WHERE A FINAL DETERMINATION IS POSSI-
34 BLE BUT SHALL BE WITHHELD UNTIL THE POSTPONEMENT PERIOD HAS ELAPSED.
35 ENTITLEMENT TO SUCH ABEYANCE MAY BE ESTABLISHED AT ANY TIME REGARDLESS
36 OF WHETHER FORECLOSURE IS BEING SOUGHT BY THE MORTGAGEE. MULTIPLE POST-
37 PONEMENTS MAY BE GRANTED IN THE DISCRETION OF THE COURT IF WARRANTED BY
38 THE FACTS OF A GIVEN CASE AND THE ECONOMIC CONDITIONS ACROSS THE STATE.
39 7. CONTINUING JURISDICTION. THE COURT SHALL MAINTAIN CONTINUING JURIS-
40 DICTION OF THE MATTER UNTIL IT REACHES FINAL RESOLUTION. UPON THE APPLI-
41 CATION OF EITHER PARTY, PRIOR TO THE EXPIRATION OF THE POSTPONEMENT
42 PERIOD, UPON PRESENTATION OF EVIDENCE THAT THE TERMS FIXED BY THE COURT
43 ARE NO LONGER JUST AND EQUITABLE, THE COURT MAY REVISE AND ALTER SUCH
44 TERMS IN SUCH MANNER AS THE CHANGED CIRCUMSTANCES AND CONDITIONS MAY
45 REQUIRE.
46 S 3. This act shall take effect immediately and shall expire and be
47 deemed repealed 3 years after such date.
