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This program is offered for education purposes. The views and opinions of the faculty expressed during this program are those of the presenters and authors of the materials.

Further, the statements made by the faculty during this program do not constitute legal advice.

Copyright ©2016 All Rights Reserved

New York State Bar Association

Lawyer Assistance Program

Q. What is LAP? A. The Lawyer Assistance Program is a program of the New York State Bar Association established to help attorneys, judges, and law

students in New York State (NYSBA members and non-members) who are affected by alcoholism, drug abuse, gambling, depression, other mental health issues, or debilitating stress.

Q. What services does LAP provide?A. Services are free and include:

• Early identification of impairment• Intervention and motivation to seek help• Assessment, evaluation and development of an appropriate treatment plan• Referral to community resources, self-help groups, inpatient treatment, outpatient counseling, and rehabilitation services• Referral to a trained peer assistant – attorneys who have faced their own difficulties and volunteer to assist a struggling

colleague by providing support, understanding, guidance, and good listening• Information and consultation for those (family, firm, and judges) concerned about an attorney• Training programs on recognizing, preventing, and dealing with addiction, stress, depression, and other mental

health issues

Q. Are LAP services confidential?A. Absolutely, this wouldn’t work any other way. In fact your confidentiality is guaranteed and protected under Section 499 of

the Judiciary Law. Confidentiality is the hallmark of the program and the reason it has remained viable for almost 20 years.

Judiciary Law Section 499 Lawyer Assistance Committees Chapter 327 of the Laws of 1993

Confidential information privileged. The confidential relations and communications between a member or authorized agent of a lawyer assistance committee sponsored by a state or local bar association and any person, firm or corporation communicating with such a committee, its members or authorized agents shall be deemed to be privileged on the same basis as those provided by law between attorney and client. Such privileges may be waived only by the person, firm or corporation who has furnished information to the committee.

Q. How do I access LAP services?A. LAP services are accessed voluntarily by calling 800.255.0569 or connecting to our website www.nysba.org/lap

Q. What can I expect when I contact LAP?A. You can expect to speak to a Lawyer Assistance professional who has extensive experience with the issues and with the

lawyer population. You can expect the undivided attention you deserve to share what’s on your mind and to explore options for addressing your concerns. You will receive referrals, suggestions, and support. The LAP professional will ask your permission to check in with you in the weeks following your initial call to the LAP office.

Q. Can I expect resolution of my problem?A. The LAP instills hope through the peer assistant volunteers, many of whom have triumphed over their own significant

personal problems. Also there is evidence that appropriate treatment and support is effective in most cases of mental health problems. For example, a combination of medication and therapy effectively treats depression in 85% of the cases.

1.800.255.0569

Personal Inventory

Personal problems such as alcoholism, substance abuse, depression and stress affect one’s ability to practice law. Take time to review the following questions and consider whether you or a colleague would benefit from the available Lawyer Assistance Program services. If you answer “yes” to any of these questions, you may need help.

1. Are my associates, clients or family saying that my behavior has changed or that Idon’t seem myself?

2. Is it difficult for me to maintain a routine and stay on top of responsibilities?

3. Have I experienced memory problems or an inability to concentrate?

4. Am I having difficulty managing emotions such as anger and sadness?

5. Have I missed appointments or appearances or failed to return phone calls?Am I keeping up with correspondence?

6. Have my sleeping and eating habits changed?

7. Am I experiencing a pattern of relationship problems with significant people in my life(spouse/parent, children, partners/associates)?

8. Does my family have a history of alcoholism, substance abuse or depression?

9. Do I drink or take drugs to deal with my problems?

10. In the last few months, have I had more drinks or drugs than I intended, or felt thatI should cut back or quit, but could not?

11. Is gambling making me careless of my financial responsibilities?

12. Do I feel so stressed, burned out and depressed that I have thoughts of suicide?

CONTACT LAP TODAY FOR FREE CONFIDENTIAL ASSISTANCE AND SUPPORT

The sooner the better!

Lawyer Assistance Program

1.800.255.0569

There Is Hope

Mortgage Foreclosures and Workouts

AGENDA

8:30 a.m. – 9:00 a.m. Registration

9:00 a.m. – 9:30 a.m. Pre-Foreclosure: Initial Steps

9:30 a.m. – 10:30 a.m. Special Rules for Foreclosures on Homes

10:30 a.m. – 10:40 a.m. Refreshment Break

10:40 a.m. – 11:40 a.m. Mortgage Foreclosure – The Steps for the Lender

11:40 a.m. – 12:05 p.m. The Foreclosure Sale and Post-Sale Issues

12:05 p.m. – 12:30 p.m. Judicial Foreclosure – The Court Appointed Officials

12:30 p.m. – 1:30 p.m. Lunch (on your own)

1:30 p.m. – 2:20 p.m. Mortgage Foreclosure – From the Defendant’s Perspective

2:20 p.m. – 2:45 p.m. Bankruptcy and Judicial Foreclosure

2:45 p.m. – 2:55 p.m. Refreshment Break

2:55 p.m. – 3:45 p.m. Mortgage Loan Workouts and Related Issues

3:45 p.m. – 4:35 p.m. Ethics

4:35 p.m. Adjournment

Program Faculty

Program Co-Chairs

Robert A. Wolf, Partner, Tarter Krinsky & Drogin LLP, New York Derek Tarson, Foreclosure Project Director, Legal Aid Society of Rockland County, Inc., New York

Program Faculty

Long Island Session

Chair: Michael S. Amato, Partner, Ruskin Moscou Faltischek P.C., Uniondale

John M. Brickman, Partner, Ackerman, Levine, Cullen, Brickman & Limmer,

LLP, Great Neck

Adam L. Browser, Of Counsel, Ruskin Moscou Faltischek, P.C., Uniondale

Adam Gross, Partner, Gross Polowy LLC, Williamsville

Roxanne L. Jones, Partner, Frenkel Lambert Weiss Weisman & Gordon, LLP,

Bay Shore

New York City Session

Chair: Robert A. Wolf, Partner, Tarter Krinsky & Drogin LLP, New York

Oda Friedheim, Supervising Attorney, The Legal Aid Society, Bronx

Michele Lippa Gartner, Special Counsel for Surrogate and Fiduciary Matters,

Office of Court Administration, New York

Thomas J. Hall, Partner, The Law Firm of Hall & Hall, LLP, Staten Island

Jacob Inwald, Director of Foreclosure Prevention, Legal Services NYC, New

York

Albany Session

Chair: William P. Hessney Jr., Partner, Martin, Shudt, Wallace, DiLorenzo &

Johnson, Troy

Steven D. Farer, President, Farer & Schwartz, P.C., Latham

Michael A. Kornstein, Partner, Cooper, Erving & Savage LLP, Albany

Robert Romaker, Managing Attorney, Legal Aid Society of Northeastern New

York, Albany

Greg Sanda, Associate, Schiller, Knapp, Lefkowitz & Hertzel, LLP, Latham

William B. Schiller, Partner, Schiller & Knapp, LLP, Latham

Buffalo Session

Chair: Vincent O. Hanley, Member, Bond, Schoeneck & King PLLC, Buffalo

Marjorie A. Bialy, Counsel, M&T Bank Legal Department, Buffalo

Garry M. Graber, Partner, Hodgson Russ LLP, Buffalo

Daniel J. Marren, Confidential Law Clerk, Supreme Court, Erie County, Buffalo

Peter A. Muth, Law Office of Peter A. Muth, Buffalo

Daniel F. Webster, Staff Attorney, Legal Services for the Elderly, Disabled or

Disadvantaged of WNY, Inc., Buffalo

Westchester Session

Chair: Derek Tarson, Foreclosure Project Director, Legal Aid Society of

Rockland County, Inc., New York

Suzanne M. Berger, Counsel, Bryan Cave LLP, New York

Mary Lynn Nicolas-Brewster, Court Attorney-Referee, Rockland Supreme

Court, White Plains

Jay Teitelbaum, Managing Member, Teitelbaum Law Group, LLC, White Plains

Mortgage Foreclosures and Workouts

7.5 MCLE Credits:

2.0 Professional Practice; 4.5 Skills; 1.0 Ethics

Table of Contents

PRE-FORECLOSURE: INITIAL STEPS .............................................................................. 001 SPECIAL RULES FOR FORECLOSURES ON HOMES ..................................................... 031 MORTGAGE FORECLOSURE – THE STEPS FOR THE LENDER ................................. 081 THE FORECLOSURE SALE AND POST-SALE ISSUES ................................................... 127 JUDICIAL FORECLOSURE – THE COURT APPOINTED OFFICIALS ......................... 159 MORTGAGE FORECLOSURE – FROM THE DEFENDANT’S PERSPECTIVE ........... 235 BANKRUPTCY AND JUDICIAL FORECLOSURE ............................................................. 311 MORTGAGE LOAN WORKOUTS AND RELATED ISSUES ........................................... 403 ETHICS ..................................................................................................................................... 421 FACULTY BIOGRAPHIES .................................................................................................... 463

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31

2016 Foreclosure Law Amendments

and Vacant and Abandoned

Property Legislation

November 2016

Jacob Inwald

Legal Services NYC

Two Major Prongs to Legislation

Addressing “Zombie” Properties:

Vacant and Abandoned Properties Substantial Amendments to NY

Foreclosure Law ConsumerProtections: Predicate Notices andForeclosure Settlement Conferences

2

33

Settlement Conference Law

Amendments: Scope

CPLR 3408 (a): Not just loanmodifications as subjects of settlementconferences: courts can no longer take itupon themselves to screen for loanmodification eligibility and deprivehomeowners of conference: other lossmitigation options, such as short salesand deeds in lieu are proper subjects ofsettlement conferences.

3


Amendments: Authority

CPLR 3408 (c): Stronger languagemandating appearance at conferences withauthority to settle: whether attorney orrepresentative, must be fully authorized toresolve the case.

Authorizes court to permit both defendant orplaintiff to appear by telephone or video(formerly this was specified as possibilityonly for plaintiff

4

34


Amendments: Information

CPLR 3408 (e): Language is now mandatory (“shall” replaces

“should”).

More detailed specification of documents plaintiff must bring,including loss mitigation options; summary of status of anypending applications and specific list of outstanding items;expected date of completion of evaluation; and, if applicationhas been denied, a denial letter or any other documentexplaining denial and data input fields and values used in netpresent value evaluation; if denied based on “investor

restriction,” documentation of such restriction, such as pooling

and servicing agreement. Defendants required to bring, if applicable, information on

current income tax returns, expenses, property taxes andpreviously-submitted applications, proof of rental income.

5


Amendments: Good Faith

CPLR 3408(f): Good faith negotiation standard is measured by“totality of circumstances,” with multiple factors specified as

possible indicia of failure to negotiate in good faith: Compliance with court rules and directives Compliance with mortgage servicing laws, rules, regulations,

investor directives and loss mitigation standards Conduct consistent with efforts to reach a mutually agreeable

resolution, avoiding unreasonable delay, appearing with authorityto settle, avoiding “dual tracking” and providing accurate

information to the court But, failure to make or accept a particular offer is not, in and of

itself, sufficient to establish absence of good faith.

6

35


Amendments: Good Faith (cont.)

CPLR 3408 (i): Procedures for Determining Good Faith: Courtmay determine good faith negotiation and order remedies either

on motion or sua sponte, on notice. Court of Office of Court Administration may establish procedures. Referee, judicial hearing officer or other court staff designated to

oversee settlement conference process may hear and reportfindings of fact and conclusions of law, and may make reportsand recommendations for relief to the court concerning failure tonegotiate in good faith.

Note: evidentiary hearing (trial) is not mandated: “hear and report”

means referee can hear oral argument, especially if conferenceshave been held before that referee.

7


Amendments: Good Faith (cont.)

CPLR 3408(J): Remedies upon finding of failure to negotiatein good faith:

If plaintiff: at a minimum, tolling of interest, fees, costs duringany period of undue delay plus, where appropriate: compellingproduction of documents; civil penalty up to $25,000 to detersimilar conduct; and any other relief court deems just andproper.

If defendant, removal from settlement conference calendar,but in making such determination, court shall considerequitable factors, including whether defendant wasrepresented by counsel: important recognition of disparities inresources and bargaining power.

8

36


Amendments: Late Answers

CPLR 3408 (l) First Settlement Conference: If D has not alreadyanswered or filed pre-answer motion to dismiss, court is required to: Explain requirement to “answer” complaint

Explain what is required to “answer” complaint

Advise that if answer not filed, ability to contest/assert defenses can be lost Provide information about available resources for help

CPLR 3408 (m): Defendant who appears at settlement conference butwho failed to answer complaint, pursuant to CPLR 320, “shall be

presumed to have a reasonable excuse for default” and “shall be

permitted to serve and file an answer, without any substantivedefenses deemed to have been waived within thirty days of initialappearance at the settlement conference.”

The default “shall be deemed vacated” upon service and filing of an

answer. CPLR 3408 (m). Much of case law from Second Department onlate answers in foreclosure cases effectively overruled.

9


Amendments: Consumer Bill of Rights

CPLR 3408(l): Consumer Bill of Rights (required byRPAPL 1303-3-a): to be provided to defendant atfirst settlement conference

RPAPL 1303-3-a: NYS Department of FinancialServices charged with publishing a Consumer Billof Rights, in consultation with all stakeholders,“”which shall detail the rights and responsibilities of

the plaintiff and defendant in a foreclosureproceeding.” To be updated on an annual basis as

appropriate

10

37

Settlement Conference Law Amendments:

Motions Held in Abeyance

CPLR 3408 (n): Motions shall be held inabeyance “while the settlement conference

process is ongoing, except for motionsconcerning compliance with this rule and itsimplementing rules.” Codifies existing

practice under Uniform Rule 202.12-a. “Good faith” motions, accordingly, are

contemplated while cases remain insettlement conference part.

11

Settlement Conference Law Amendments:

Notices of Discontinuance

CPLR 3408(g): Plaintiff must file notice ofdiscontinuance and vacatur of lis pendens

within 90 days after any settlementagreement of loan modification is executed.

Formerly 150 days. CPLR 3408 (h): Remains unlawful to

charge for any costs or attorneys’ fees for

appearance at or participation in settlementconference.

12

38

Predicate Notice Amendments

90 Day Notices—Pre-foreclosure Notices:CPLR 1304

Help for Homeowners in Foreclosure Notices:CPLR 1303

Both notices are conditions precedent which, ifnot strictly complied with, mandate dismissal:See Aurora Loan Servs., LLC v. Weisblum, 85A.D. 3d 95 (2d Dep’t 2011); First Nat’l Bank ofChicago v. Silver, 73 A.D. 3d 162 (2d Dep’t2010).

13

90-Day Notices Amendments

RPAPL 1304: Updates to language of notice to better provideborrowers with notice of the amount required to bring loan current andto be consistent with CFPB mortgage servicing rules barring “dual

tracking.”

Clarifies that requirement applied to borrower or borrowers, whether at the property address or any other address of record.

Language of notice updated to better communicate the amount required to bring loan current.

Language also revised to reflect prohibitions on dual tracking: now reads if “you have not taken any actions to resolve this matter”

within 90 days, we may commence legal action. Previously stated that if “the matter is not resolved” within 90 days. This is because CFPB

mortgage servicing rules would prohibit moving towards foreclosure if, in response to 90 Day Notice, borrower applied for loss mitigation.

14

39

90-Day Notices Amendments (cont.)

New notice language explaining right to remain in home,addressing vacant and abandoned issues resulting fromhomeowner confusion about nature of notice: Explains continued right to remain in home until receipt of

court order Explains continued right to remain in home even if foreclosure

action commenced Explains that homeowner legally remains owner of home and

remains homeowner’s responsibility until sale of property by

owner or by court. Explains that the 90-Day Notice is not an eviction notice and

that foreclosure case has not yet been commenced.

15


Amended notice language updates information about housingcounseling resources to reflect current information (RPAPL1304(1) and requires provision of a current list of at least 5housing counseling agencies serving the county where theproperty is located from a listing maintained by the Departmentof Financial Services (and requires DFS to maintain a list, bycounty, of housing counseling agencies.

Purpose is to provide homeowners with basic informationabout consequences of possible foreclosure and to connecthomeowners with foreclosure prevention services andencourage foreclosure-avoiding loss mitigation efforts.

16

40


Clarifications about applicability of 90-Day Notice requirement:90 day waiting period before filing foreclosure does notapply, or ceases to apply, if the borrower has filed forbankruptcy protection under federal law or if borrower no longeroccupies residcence as principal dwelling (previous referencewas to “application for adjustment of debts or an order for relief

from the payments of debts”). New amended language clarifies

that this exception applies only to the 90 day waiting period, notto the obligation to serve notice: “Nothing herein shall relieve

the lender…of the obligation to send such notice, which

notice shall be a condition precedent to commencing a

foreclosure proceeding.” RPAPL 1304(3)

17


Clarifications on when a new 90-Day Notice isrequired.

Notice and 90-Day period need only be provided once in a 12-month period to the same borrower inconnection with the same loan and samedelinquency. “Should a borrower cure a

delinquency but re-default in the same twelve

month period, the lender shall provide a new

notice pursuant to this section.”

18

41


New Language Access Requirements for 90-DayNotices

RPAPL 1304(5): For any borrower “known to

have limited English proficiency,” notice shall be in

borrower’s native language or a language in which

borrower is proficient, so long as it is one of the 6-most common non-English languages in NY based on U.S. census data. DFS shall post the notice on its website in the 6-most common non-English languages.

19

Help for Homeowners in

Foreclosure Notice Amendments

RPAPL 1303 Notice Accompanying ResidentialForeclosure Complaints: Amended languageclarifying homeowner’s rights and obligations similarto added language in RPAPL 1304 Notice, makingclear to homeowners that they are not required tovacate by virtue of commencement of foreclosureaction, that they have right to remain in the homeuntil the property is sold at auction after judgment offoreclosure and sale, and cautioning that borrowersin foreclosure remain responsible for maintenanceof the property and payment of property taxeswhether or not they vacate the home aftercommencement of foreclosure action.

20

42

Expedited Deadlines for Completion of

Foreclosure Sales After Judgment

RPAPL 1351, governing judgments, requires thatsale take place within 90 days of judgment.

RPAPL 1353, governing purchases from foreclosuresale, now specifies that if the plaintiff or affiliate is thepurchaser, it must place the property back on themarket for sale or other occupancy (a) within 180days of execution of deed of sale; or (b) within 180days of completion of construction, renovation orrehabilitation of the property, provided that such workproceeded diligently to completion, whichever comesfirst (but court can grant extension for good cause).

21

Vacant and Abandoned Provisions:

Generally

New RPAPL Provisions: 1308-1310

Duty to Inspect, Maintain and Secure Vacant &Abandoned (V & A) properties : RPAPL 1308

Creates a registry and hotline for V & A properties:RPAPL 1310

Creates “expedited” foreclosure process forlenders for V & A properties: RPAPL 1309

22

43

Lenders Must Track

and Maintain V & A

Properties:

RPAPL 1308

23

Maintenance of V & A Property:

RPAPL 1308

Which lenders must adhere to the

maintenance requirement? All 1st lien mortgage holders for 1-4 family homes

Exception for small lenders (lender originates,owns, services AND maintains a portion of theirmortgages and Lender has less than 3/10th of 1%of the total loans in the state as of December 31st,2014

24

44

Maintenance of V & A Property

Servicer’s Obligation to Inspect and Secure Property

Within 90 days of a borrower becomingdelinquent, the lender must inspect exterior ofproperty

Every 25-35 days, at different times of the dayafter the first inspection lender must conductadditional inspections

Within 7 days of determining the house is V & A,lender must post a notice with the lender’scontact information on the property

After 7 days from when notice is posted andevidence continues that home is V & A, lendermust secure the property

25


RPAPL 1308

When a Lender Shall Determine

a House is V & A:

Lender has conducted 3inspections 25-35 days apart AND at different times of the day AND found evidence that home is V & A

OR A court or government entity

has formally determined, with notice to the borrower, that the property is V & A

OR Each borrower has

separately provided a sworn statement stating their intent to vacate and abandon the property

When a Lender Shall Secure a

V & A Property:

After the notice is postedon the property for 7 daysand no borrower oroccupant contacts theservicer about the propertyand the property continuesto show evidence ofvacancy

OR Immediately if there is

emergency condition that could likely damage the property

26

45


RPAPL 1308

27

Day 1 Borrower misses

payment

Day 30 Borrower

is delinquent

Day 31 – 121

Servicer inspects property 1st time

Day 147-157

Servicer inspects property 2nd time

Day 173-193

Servicer inspects property 3rd time

Day 174 - 200

Servicer posts

notice on property

Day 182 - 208

Servicer secures property

TIMELINE FOR SERVICER TO

SECURE PROPERTY IF IT IS

VACANT SHORTLY AFTER

DELINQUENCY


RPAPL 1308

Indicia That Property is V & A Overgrown or dead vegetation Accumulation of newspapers and mail Past due utility notices, disconnected utilities, or

utilities not in use Accumulation of trash Absence of window coverings Boarded or broken windows Property is not locked up Property has a building on it that is structurally

unsafe or presents some other potential danger topeople

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RPAPL 1308

How a Servicer Must Secure a V & A Property1. Replace only 1 door lock if there are at least 2 doors2. Secure, replace or board up broken doors and windows3. Secure any part of the property considered an attractive nuisance4. Limit the discharge of harmful gases, vapors, odors, etc. to

neighboring properties5. Winterize the plumbing and heating systems6. Provide basic utilities as appropriate to maintain condition of the

home or neighboring properties7. Remove and fix any significant safety and health concerns including

code violations8. Prevent the growth of mold, through reasonable efforts9. Respond to government inquiries regarding the property10. Keep the notice on the property in a location that is easily visible

29


RPAPL 1308

Servicer Must Maintain the Security of V & AProperty Until One of the Following Occurs

An occupant asserts their right to occupy Servicer or their agent receives threats of

violence Borrower files bankruptcy A court orders the servicer to stop Servicer is prevented from gaining access by a

homeowner’s association or cooperative

Property is sold or transferred to a new owner Servicer or investor releases the lien Mortgage note is assigned, transferred, or sold

30

47


RPAPL 1308

Enforcement

NY DFS Superintendentcan sue the servicer incourt after giving 7 daysof notice to the servicer ofthe violations

Local municipalities cansue the servicer aftergiving the servicer 7 daysof notice AND giving NYDFS 10 days of notice

Penalties

Up to $500 for each dayand each property that aviolation persists

Servicer is immune fromliability if they peacefullyenter a property and ismaking reasonable effortsto comply with the statute

31


RPAPL 1308

• Conflicting Local Ordinances and Laws

• Local municipalities cannot impose arequirement to maintain properties that isinconsistent with the state law on lendersthat the state law applies

32

48

New Statewide

Registry and Hotline

for V & A Properties:

RPAPL 1310

33

Statewide Registry: RPAPL 1310

Who Must Submit to the

Vacancy Registry? Any servicer who services a loan in NY

which is secured by a residential property Includes owner-occupied and investor-

owned residential properties

34

49


NY Department of Financial Services willmaintain an electronic database

Lenders must submit information within 21days of learning the house is V & A If information changes, lenders must update

DFS no later than 30 days after the change Public officials may request information in

the database related to their locality

35


Lenders must give at least the

following information to DFS about the

V & A Property

1. Name, address and contact information forthe lender or the party responsible formaintaining the property, AND

2. Date when foreclosure was filed onproperty (if applicable), AND

3. Last known address and contactinformation of the mortgagor (the borrower)

36

50


• Conflicting Local Ordinances and Laws

Local municipalities cannot require lenderswho must submit to the statewide registry toalso submit to a local registry that isinconsistent with the state law

Local municipalities cannot imposepenalties or fees related to a local registry

37


DFS will create a toll-free hotline for

neighbors and community residents to

report a V & A property or any concerns

about a V & A property

1-800-342-3736

38

51

Expedited

Foreclosure Process

for V & A Properties:

RPAPL 1309

39

Expedited: Foreclosure Process:

RPAPL 1309

Lender has the right to apply for an expedited

foreclosure process if they can prove to the

court the home is V & A

Must wait to submit the application until after theborrower’s time to file an answer has expired

Must give notice to the borrower of the application

Must make an application to the court by motion ororder to show cause

40

52

Expedited Foreclosure Process:

RPAPL 1309

Lender can make an application

when -

A settlement conference is NOT scheduled the right to answer expires 20-30 days after

service of foreclosure A settlement conference is scheduled

the right to answer expires after the firstsettlement conference is held –assuming nohomeowner appears

41


RPAPL 1309

Notices to be Given to Borrowers

Lenders must serve a copy of application to borrower– even ifthe borrower has not answered the complaint or appeared inthe case

The Lender’s application must state: The lender is applying for expedited foreclosure process because

the lender found the home V & A; The borrower has a right to respond to the application to avoid the

expedited process by submitting something in writing or appearingin court on the dates provided; AND

The borrower has the right to stay in their home until eviction bythe court

Court must send a notice to borrower informing them that thelender is applying for a V&A expedited foreclosure

42

53


RPAPL 1309

Must make an application to the court by

motion or order to show cause

Application must include the following:

The last known address of the homeowner; The notice for the homeowner; An affidavit from lender supporting the claim the

house is V & A; Proof supporting the claim the house is V & A; The amount owed on the note and mortgage with

documents supporting the amount claimed; AND A request that the court confirm the amount owed on

the mortgage and note without a referee.

43


RPAPL 1309

After the court sends a notice to homeowner

about the application, the court may decide a

home is V & A and eligible for the faster

process IF –

• The lender proves it to the court,• A government entity has decided the home is V & A, OR• All borrowers and owners have provided sworn

statements that the house is V & A If the court decides the home is V & A

• The court will provide a written decision “as soon as

practicable” including the evidence relied upon to

determine the house is V & A

44

54

Faster Foreclosure Process:

RPAPL 1309

Protection for

Borrowers Lenders are prohibited from trying to intimidate, coerce, or try to convince a person lawfully living in the property to leave the property

Protections for

Lenders Lenders are immune from liability if they make a mistake when deciding a property is V & A if they make reasonable efforts to comply with the law

45

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Real Property Actions and Proceedings (Effective until December 20, 2016)

§ 1304. Required prior notices. 1. Notwithstanding any other provision of law, with regard to ahome loan, at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type which shall include the following:

"YOU COULD LOSE YOUR HOME. PLEASE READ THE FOLLOWING NOTICE CAREFULLY" "As of ___, your home loan is ___ days in default. Under New York State Law, we are required to send you this notice to inform you that you are at risk of losing your home. You can cure this default by making the payment of _____ dollars by ____. If you are experiencing financial difficulty, you should know that there are several options available to you that may help you keep your home. Attached to this notice is a list of government approved housing counseling agencies in your area which provide free or very low-cost counseling. You should consider contacting one of these agencies immediately. These agencies specialize in helping homeowners who are facing financial difficulty. Housing counselors can help you assess your financial condition and work with us to explore the possibility of modifying your loan, establishing an easier payment plan for you, or even working out a period of loan forbearance. If you wish, you may also contact us directly at __________ and ask to discuss possible options. While we cannot assure that a mutually agreeable resolution is possible, we encourage you to take immediate steps to try to achieve a resolution. The longer you wait, the fewer options you may have. If this matter is not resolved within 90 days from the date this notice was mailed, we may commence legal action against you (or sooner if you cease to live in the dwelling as your primary residence.) If you need further information, please call the New York State Department of Financial Services' toll-free helpline at (show number) or visit the Department's website at (show web address)".

2. Such notice shall be sent by such lender, assignee or mortgage loan servicer to the borrower, byregistered or certified mail and also by first-class mail to the last known address of the borrower, and if different, to the residence that is the subject of the mortgage. Such notice shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice. Notice is considered given as of the date it is mailed. The notice shall contain a list of at least five housing counseling agencies as designated by the division of housing and community renewal, that serve the region where the borrower resides. The list shall include the counseling agencies' last known addresses and telephone numbers. The department of financial services and the division of housing and community renewal shall make available on their respective websites a listing, by region, of such agencies. The lender, assignee or mortgage loan servicer shall use either of these lists to meet the requirements of this section.

3. The ninety day period specified in the notice contained in subdivision one of this section shall notapply, or shall cease to apply, if the borrower has filed an application for the adjustment of debts of the borrower or an order for relief from the payment of debts, or if the borrower no longer occupies the residence as the borrower's principal dwelling.

4. The notice and the ninety day period required by subdivision one of this section need only beprovided once in a twelve month period to the same borrower in connection with the same loan.

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5. (a) "Home loan" means a loan, including an open-end credit plan, other than a reverse mortgagetransaction, in which: (i) The borrower is a natural person; (ii) The debt is incurred by the borrower primarily for personal, family, or household purposes; (iii) The loan is secured by a mortgage or deed of trust on real estate improved by a one to four family dwelling, or a condominium unit, in either case, used or occupied, or intended to be used or occupied wholly or partly, as the home or residence of one or more persons and which is or will be occupied by the borrower as the borrower's principal dwelling; and (iv) The property is located in this state.

(b) "Lender" means a mortgage banker as defined in paragraph (f) of subdivision one of section five hundred ninety of the banking law or an exempt organization as defined in paragraph (e) of subdivision one of section five hundred ninety of the banking law.

6. The department of financial services shall prescribe the telephone number and web address to beincluded in the notice.

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Real Property Actions and Proceedings (Effective December 20, 2016)

§ 1304. Required prior notices. ** 1. Notwithstanding any other provision of law, with regard to ahome loan, at least ninety days before a lender, an assignee or a mortgage loan servicer commences legal action against the borrower, or borrowers at the property address and any other address of record, including mortgage foreclosure, such lender, assignee or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type which shall include the following:

"YOU MAY BE AT RISK OF FORECLOSURE. PLEASE READ THE FOLLOWING NOTICE CAREFULLY" "As of ___, your home loan is ___ days and ___ dollars in default. Under New York State Law, we are required to send you this notice to inform you that you are at risk of losing your home. Attached to this notice is a list of government approved housing counseling agencies in your area which provide free counseling. You can also call the NYS Office of the Attorney General's Homeowner Protection Program (HOPP) toll-free consumer hotline to be connected to free housing counseling services in your area at 1-855-HOME-456 (1-855-466-3456), or visit their website at http://www.aghomehelp.com/. A statewide listing by county is also available at http://www.dfs.ny.gov/consumer/mortg nys np counseling agencies.htm. Qualified free help is available; watch out for companies or people who charge a fee for these services. Housing counselors from New York-based agencies listed on the website above are trained to help homeowners who are having problems making their mortgage payments and can help you find the best option for your situation. If you wish, you may also contact us directly at __________ and ask to discuss possible options. While we cannot assure that a mutually agreeable resolution is possible, we encourage you to take immediate steps to try to achieve a resolution. The longer you wait, the fewer options you may have. If you have not taken any actions to resolve this matter within 90 days from the date this notice was mailed, we may commence legal action against you (or sooner if you cease to live in the dwelling as your primary residence.) If you need further information, please call the New York State Department of Financial Services' toll-free helpline at (show number) or visit the Department's website at (show web address). IMPORTANT: You have the right to remain in your home until you receive a court order telling you to leave the property. If a foreclosure action is filed against you in court, you still have the right to remain in the home until a court orders you to leave. You legally remain the owner of and are responsible for the property until the property is sold by you or by order of the court at the conclusion of any foreclosure proceedings. This notice is not an eviction notice, and a foreclosure action has not yet been commenced against you.

2. Such notice shall be sent by such lender, assignee (including purchasing investor) or mortgageloan servicer to the borrower, by registered or certified mail and also by first-class mail to the last known address of the borrower, and to the residence that is the subject of the mortgage. Such notice shall be sent by the lender, assignee or mortgage loan servicer in a separate envelope from any other mailing or notice. Notice is considered given as of the date it is mailed. The notice shall contain a current list of at least five housing counseling agencies serving the county where the property is located from the most recent listing available from department of financial services. The list shall include the counseling agencies' last known addresses and telephone numbers. The department of financial services shall make available on its websites a listing, by county, of such agencies. The lender, assignee or mortgage loan servicer shall use such lists to meet the requirements of this

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section.

3. The ninety day period specified in the notice contained in subdivision one of this section shall notapply, or shall cease to apply, if the borrower has filed for bankruptcy protection under federal law, or if the borrower no longer occupies the residence as the borrower's principal dwelling. Nothing herein shall relieve the lender, assignee or mortgage loan servicer of the obligation to send such notice, which notice shall be a condition precedent to commencing a foreclosure proceeding.

4. The notice and the ninety day period required by subdivision one of this section need only beprovided once in a twelve month period to the same borrower in connection with the same loan and same delinquency. Should a borrower cure a delinquency but re-default in the same twelve month period, the lender shall provide a new notice pursuant to this section.

5. For any borrower known to have limited English proficiency, the notice required by subdivisionone of this section shall be in the borrower's native language (or a language in which the borrower is proficient), provided that the language is one of the six most common non-English languages spoken by individuals with limited English proficiency in the state of New York, based on United States census data. The department of financial services shall post the notice required by subdivision one of this section on its website in the six most common non-English languages spoken by individuals with limited English proficiency in the state of New York, based on the United States census data.

6. (a) "Home loan" means a loan, including an open-end credit plan, other than a reverse mortgagetransaction, in which: (i) The borrower is a natural person; (ii) The debt is incurred by the borrower primarily for personal, family, or household purposes; (iii) The loan is secured by a mortgage or deed of trust on real estate improved by a one to four family dwelling, or a condominium unit, in either case, used or occupied, or intended to be used or occupied wholly or partly, as the home or residence of one or more persons and which is or will be occupied by the borrower as the borrower's principal dwelling; and (iv) The property is located in this state. (b) "Lender" means a mortgage banker as defined in paragraph (f) of subdivision one of section five hundred ninety of the banking law or an exempt organization as defined in paragraph (e) of subdivision one of section five hundred ninety of the banking law.

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MMoorrttggaaggee FFoorreecclloossuurree –– TThhee SStteeppss ffoorr tthhee LLeennddeerr

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Steps for the Lenderby Jay Teitelbaum: Teitelbaum Law Group, LLC

Traps and Pitfalls to be Avoided:

1. Address New RPAPL 1308, 1309 & 1310: The Zombie Home Statute. Coming to your

neighborhood December 2016 courtesy of the New York State Legislature. The legislation is

attached to the materials.

a. 1308 imposes an inspection and maintenance obligation on first lien holders who

are fortunate enough to have liens on “abandoned or vacant” (as defined in New

RPAPL 1309) one to four family residential real estate. First and most importantly,

the obligations arise when a loan is delinquent - -i.e. in default- - not when the secured

lender commences a foreclosure action or actually obtains title. Once a loan is

delinquent, if the secured lender has a property inspection right (which is included in

virtually all residential mortgages), within 90 days of the delinquency the lender (or

agent) must inspect the premises and then conduct inspections every 25-35 days. If the

lender has a “reasonable basis” to believe that the property is “abandoned or vacant”,

there is an obligation to secure and maintain the property. What does all of this mean?

Go into the bank inspection business. Review the key provisions of 1308

b. 1309 establishes procedures to try to expedite a foreclosure where the property is

abandoned or vacant. Review the key provisions of 1309

c. 1310 creates another cottage industry where the DFS will hire a consultant to

create and maintain an abandoned home database. This legislation imposes obligations

on lenders to provide the data. Look at key provisions of 1310.

2. Before commencing the action:

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a. Review the documents and the loan file. All things flow from this review: statute

of limitations, satisfaction of conditions precedent, standing and the NYCRR

§202.12 Attorney Affirmation.

b. Identify any unique attributes to the loan such as reverse mortgage, high cost

home loan, sub prime loan as these may trigger additional obligations and

defenses.

c. Foreclosure search to identify all potential defendants

d. Confirm role of plaintiff; holder of note or servicer

e. Review servicing agreement or syndication documents for authority to prosecute

and settle

f. Determine if client has possession of the original note with all allonges and

endorsements in proper order, i.e. firmly affixed so as to make it a part of the

instrument (NYUCC §3-202) and/or which adequately describes the note.

Indymac Bank FSB v. Garcia, 957 NYS2d 365 (Suffolk Co. Sup. Ct 2010); In re

Escobar, 457 B.R. 229, 241 (Bankr. EDNY 2011). In New York, the Note

controls the issue of standing. The holder of the Note has standing and the

mortgage is merely incident to the note. Under New York law:

[i]n a mortgage foreclosure action, a plaintiff has standing where it is both

the holder or assignee of the subject mortgage and the holder or assignee

of the underlying note at the time the action is commenced. (emphasis

added).

U.S. Bank, N.A. v. Cange, 96 A.D.3d at 826, 947 N.Y.S.2d at 524 (affirming trial court’s order

denying defendant’s motion to dismiss foreclosure action for lack of standing where the

uncontroverted evidence established that the plaintiff was in the possession of the original note

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at the time the action was commenced and at the time of the hearing and that the mortgage

passed to plaintiff incident to the note); Alderazi, 951 N.Y.S.2d at 900 (reversing trial court’s

denial of plaintiff’s motion for order of reference where plaintiff submitted the mortgage, note,

and evidence of mortgagor’s default); Deutsche Bank National Trust Co. v. Rivas, 95 A.D.3d at

1061-62 (reversing trial court’s granting of defendant’s motion to dismiss foreclosure action on

the grounds of lack of standing because there was a question of fact as to whether plaintiff was

holder of note); Bank of New York v. Silverberg, 86 A.D.3d 274, 279, 926 N.Y.S.2d 532, 537

(mortgage follows the note and holder of duly indorsed note has standing). See also U.S. Bank,

N.A. v. Collymore, 68 A.D.3d 752, 890 N.Y.S.2d 579, 580 (2d Dep’t 2009) (same); Rossrock

Fund II v. Osborne, 82 A.D.3d 737, 737, 918 N.Y.S.2d 514, 515 (2d Dep’t 2011) (plaintiff

meets its prima facie burden of demonstrating entitlement to judgment as a matter of law

through the production of the mortgage, the unpaid note and evidence of default); U.S. Bank,

N.A. v. Squadron VCD, LLC, 2011 WL 4582484, at *7 (S.D.N.Y. Oct. 4, 2011) (holding that

plaintiff satisfied prima facie case of foreclosure where plaintiff was holder of note and note was

validly assigned to plaintiff); Aurora Loan Services v. Sadek, 809 F.Supp.2d 235, 240 (S.D.N.Y.

Aug. 22, 2011) (holder of note and mortgage had standing to bring foreclosure action); In re

Gorman, 2011 WL 5117846, at *4 (Bankr. E.D.N.Y. Oct. 27, 2011) (party in possession of a

duly negotiated note and the mortgage, even without a written assignment of the mortgage, has

standing to enforce the mortgage); Deutsche Bank Nat’l Trust v. Pietranico, 928 N.Y.S.2d at

830 (possession of a duly indorsed note alone confers standing upon the holder to enforce the

mortgage in a foreclosure proceeding because “[t]he holder of the note is deemed the owner of

the underlying mortgage loan with standing to foreclose”); U.S. Bank, NA. v. Flynn, 27 Misc.

3d 802, 803, 897 N.Y.S.2d 855, 856 (Sup. Ct. Suffolk Cty. 2010) (“It is well established

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that a plaintiff who seeks summary judgment on its claims for foreclosure and sale

establishes a prima facie case for such relief by production of copies of the mortgage, the

unpaid note and evidence of a default under the terms thereof.”) .

The "holder" of a negotiable instrument under New York law is defined as:

a person who is in possession of a document of title or an instrument or an

investment certificated security drawn, issued or indorsed to him or to his

order or to bearer or in blank.

N.Y.U.C.C. §1-201(20); Bank of New York v. Asati, Inc., 1991 WL 322989 at *2 (Sup. Ct. N.Y.

Cty. July 8, 1991) (under section 1-201(20) of the Uniform Commercial Code, a party is a

“holder” if it is in possession of the instrument and the instrument was drawn, issued or indorsed

to it or to its order or to bearer or in blank).

Negotiation of a negotiable instrument to a holder is accomplished as follows:

a negotiable instrument payable to the order of a specified payee is

negotiated to a person who becomes a holder by delivery along

with an indorsement firmly affixed thereto in favor of the

transferee; and

a negotiable instrument payable to bearer or payable to the order of

a specific payee which is indorsed in blank becomes payable to

bearer when it is negotiated to a person who becomes a holder by

delivery alone.

N.Y.U.C.C. §3-202(1). Further, N.Y.U.C.C. §3-204(1) and (2) explicitly provide that an

indorsement in blank specifies no particular indorsee and an instrument payable to order and

indorsed in blank becomes payable to bearer and may be negotiated by delivery alone.

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g. Identify a contact at the Bank for purposes of CPLR §3408 proceedings.

h. Confirm compliance with the pre-filing notice requirements under RPAPL

§§1304 and 1306

i. Is there a recorded mortgage and assignment of mortgage:

i. NY Tax Law §258 provides that the mortgage is not admissible

into evidence unless the mortgage recording tax is paid. The statute

does not state that the tax must be paid before the action is

commenced and there is no statute expressly stating that the

mortgage must be recorded and the tax must be paid before an

action can be commenced. While it may be unsettled as to whether

the recording and tax payment is a condition precedent or a curable

defect that can be cured prior to entry of a judgment enforcing the

rights of the mortgagee, the better practice is to have the mortgage

recorded before the action is filed. In re Benjamin 2012 WL

1676996 (N.D.N.Y. 2012). N.Y. cases have held that the tax is for

the privilege of recording the mortgage not a tax on the property;

and thus arguably a toll to be paid before the mortgage can be

enforced in court. Silberblatt v. Tax Commission of State of N.Y. 5

N.y.2d 635 (1959). Hudson Valley Federal Credit Union v. NYS

Dep’t of Taxation, 906 N.Y.S.2d 680 (N.Y. Sup. 2010). Further,

as the mortgage is almost always attached to the complaint and the

recommended form of complaint contains an allegation that the

mortgage has been recorded and NYCRR 202.12 requires that the

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mortgage be brought to the settlement conference, there is an

argument that the mortgage can be disregarded if it is not recorded.

Finally, unless recorded, the mortgage will not be enforceable

against BFP transferees. NY RPL §291. This includes a trustee in

bankruptcy which will be treated as a hypothetical lien creditor

capable of avoiding the lien for the benefit of unsecured creditors.

ii. Unlike the mortgage, recording the assignment can be

accomplished during the case with less risk. There is no

requirement under N.Y. that an assignment of mortgage be

recorded. RPL 290(a) and 291. A conveyance may be recorded in

the land records where the property is situated, and any

conveyance not recorded is void as against a subsequent B.F.P. for

value who acquires from the same transferor as the unrecorded

conveyance.

iii. The formal written assignment of a mortgage to the plaintiff is not

a pre-requisite to the commencement of the action. For standing,

there needs to be a negotiation of the Note and the intent to transfer

the security as incident to the note. The assignment only needs to

be recorded prior to the issuance of the referee’s deed. RPAPL

1353(2), which provides:

Before a deed is executed to the purchaser, the plaintiff

shall file the mortgage and any assignment not shown to

have been lost or destroyed in the office of the clerk, unless

it is in a form which can be recorded; in which case it shall

be recorded in the counties where the lands are situated; the

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expense of filing or recording and entry shall be allowed in

the taxation of costs; and, if filed with the clerk, he shall

enter in the minutes the time of filing.

j. Determine if there is a statute of limitations issue:

i. The statute of limitations to enforce a defaulted mortgage is 6

years. CPLR 213(4). Thus, any payment default more than 6 years

old may be subject to a SOL defense. Once the mortgage is

accelerated, the 6 year period begins to run for the entire

obligation. Saini v. Cinelli Enters., 289 A.D.2d 770, 771, 733

N.Y.S.2d 824 (2001), lv. denied 98 N.Y.2d 602, 744 N.Y.S.2d 762,

771 N.E.2d 835 (2002) (“[t]he [s]tatute of [l]imitations in a

mortgage foreclosure action begins to run six years from the due

date for each unpaid installment or the time the mortgagee is

entitled to demand full payment, or when the mortgage has been

accelerated by a demand or an action is brought).

ii. Look at the default history and for any acceleration notices.

iii. Not all mortgages require a formal notice of acceleration before the

action can be commenced. Read the documents.

iv. Calendar any applicable SOL and the date 90 days prior to that

date (with appropriate reminders) and advise the client of same for

future reference. In most cases, once the action is commenced the

SOL issue is no longer pertinent; however, with all of the traps and

pitfalls in N.Y. foreclosure practice it is not uncommon for actions

to be dismissed, either sua sponte by a Judge, or upon motion, or

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voluntarily to correct pre-filing notice or other issues. In those

cases, the dismissal can come years after the commencement and

the SOL becomes an issue. The ability to start over is found in

either CPLR 205 or 3217.

v. NEW LEGISLATION; Before commencing any new action,

compliance with RPAPL 1304 and 1306 is required. Thus you

must add 90 days to the process or subtract 90 days from how long

you thought you had. As you are probably aware the legislature

has seen fit to amend the 90 day notice provision in Section 1303

which becomes effective on or around December 31, 2016. The

form of the notice is available on the State website. The changes

will create the potential for even more litigation and traps for the

unwary. Most notably (i) the language changed from “If this matter

is not resolved” to “If you have not taken any action to resolve this

matter” - - WHAT DOES THAT EVEN MEAN??--; (ii) while

only one 90 day notice per 12 months is required, now a new

notice is required for each new delinquency- - so the savy

borrower can perpetually remain 89 days in arrears.

vi. Proof of Service of 90 Day Notices: Recent decisions reaffirm that

proof of service upon the Banking Department via affidavit is

critical to demonstrate compliance with notice procedures. Article

13 of the NYRPAPL (and in particular Sections 1303, 1304 and

1306) requires service of a 90 day pre-foreclosure notice, Help for

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Homeowner Notice upon the homeowner and with the New York

State Department of Finance. It is now clear that compliance with

these notice requirements is a condition precedent to the

commencement of an action and cannot be waived, even if the

borrower defaults or actually participates in the pre-foreclosure

loan modification settlement process. Deutsche Bank Nat Trust

Co., v. Spanos, 102 A.D.3d 909 (2d Dep't 2013); Bank of America

v. Rexnik, 2015 WL 591830 (Sup Ct Kings Feb 2015). Also

attached is an opinion letter from the New York State Dep't of

Finance regarding the filing of notices with the State.

vii. Voluntary dismissal is covered by CPLR 3217. There is no

automatic extension of the SOL. The new action must be timely

commenced under CPLR 213(4). Before agreeing to a voluntary

dismissal, determine if the SOL is less than 90 days into the future.

If it is, you will need a tolling agreement or a waiver or need to

consider other options.

viii. If the case is dismissed by order of the Court, other than for lack of

personal jurisdiction, CPLR 205 (a) gives you the longer of the

SOL or 6 months from dismissal to start a new action. However,

the required 90 day notices eat into that time, so you must act

quickly.

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k. Prepare notice of Pendency and calendar three years from the filing with

appropriate reminders to file a new notice prior to the three year period. Notice of

Pendency is controlled by the CPLR and the RPAPL.

i. CPLR 6501 provides for the filing of a notice of pendency to put

the world on notice of any action relating to or affecting the real

property such that any conveyance of the property after the filing

of the notice will be bound by the outcome of the proceedings as if

made a party even if the right to the conveyance (i.e. the contract)

receded the filing of the notice of pendency and the person was not

formally named and served. In re DLJ Capital Inc. v. Windsor, 910

N.Y.S. 2d 160 (2d Dep’t 2010)( It is axiomatic that a person whose

conveyance or encumbrance is recorded after the filing of a notice

of pendency is bound by all proceedings taken in the action after

such filing to the same extent as if he were a party ( see CPLR

6501; see also Goldstein v. Gold, 106 A.D.2d 100, 483 N.Y.S.2d

375, affd.66 N.Y.2d 624, 495 N.Y.S.2d 32, 485 N.E.2d 239). A

person holding an interest that accrued prior to the filing of a

notice of pendency, but not recorded until after the filing of the

notice, is still so bound ( see generally Polish Natl. Alliance of

Brooklyn, v. White Eagle Hall Co., 98 A.D.2d 400, 404, 470

N.Y.S.2d 642). Thus, in order to cut off a prior lien, such as a

mortgage, the purchaser or encumbrancer must have no knowledge

of the outstanding lien and must win the race to the recording

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office ( see Goldstein v. Gold, 106 A.D.2d at 101–102, 483

N.Y.S.2d 375). Here, since a satisfaction of mortgage had been

recorded with respect to Novastar's mortgage on the 115 property,

there was no prior mortgage on that property that the Herzbergs

had to cut off. The filing of the notice of pendency did not create a

lien or any rights that did not already exist in the 115 property; it

only provided constructive notice of a claim by the plaintiff.)

ii. CPLR 6513 provides that a notice is effective for 3 years from the

date of filing, but that court, for good cause shown can extend the

duration for an additional 3 years.

iii. CPLR 6516 permits the filing of successive notices of pendency in

connection with mortgage foreclosure actions in order to comply

with RPAPL 1331, even if the prior notice of pendency had been

cancelled or expired.

iv. Thus, the effect of the Notice of Pendency under the CPLR is that

a filed Notice of Pendency will bind all parties whose rights arose

after filing and prior to expiration to the outcome of the action

(Pacific Lime Inc. v. Lowenberg Corp., 431 NYS2d 190 (3d Dep’t

1980)); but will not bind parties whose rights arise after the

expiration of the notice of pendency and who record such rights

prior to the recording of a new notice of pendency. Polish Natl.

Alliance of Brooklyn, v. White Eagle Hall Co., 98 A.D.2d 400,

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404, 470 N.Y.S.2d 642) Once it expires, the notice of pendency is

a nullity as to rights which are recorded after expiration.

v. RPAPL 1331 requires that a notice of pendency be filed at least 20

days prior to the entry of a judgment directing a sale in a

foreclosure action. This statute has been interpreted to be a

statutory pre-requisite essential to the action, rather than an added

privilege afforded litigants. Horowitz v. Griggs, 76 N.Y.S. 2d 860

(2d Dep’t 2003). As such, rather than requiring a motion for an

order authorizing an extension, the plaintiff has a right to file a

successive notice of pendency even after the prior notice expired.

Campbell v. Smith, 768 NYS 2d 182 (1st Dep’t 2003) (after the

expiration of the first notice of pendency the plaintiff filed a

second notice). The Court held:

The unique facts presented exempt this case from the rule articulated

in Matter of Sakow, 97 N.Y.2d 436, 741 N.Y.S.2d 175, 767 N.E.2d

666. InSakow, the Court of Appeals prohibited a plaintiff from filing a

notice of pendency after a previous one concerning the same cause of

action had expired. Recognizing that CPLR article 65 has created a

privilege whereby a party who files a notice of pendency can effectively

restrain the alienability of property, the Court of Appeals required

exacting compliance with the three-year statutory time limit for requesting

an extension, upon a showing of good cause therefor ( id. at 442, 741

N.Y.S.2d 175, 767 N.E.2d 666).

By contrast to Sakow, here the recorded mortgage itself gives notice of an

encumbrance on the property, and the concerns regarding the notice of

pendency restricting the alienability of the property are eliminated.

Further, pursuant to RPAPL article 13, plaintiff was required to file a

notice of pendency at least 20 days before the entry of final judgment. The

notice of pendency thus alerts the public that the mortgage will be merged

into the judgment of foreclosure. Because compliance with the required

filing is a prerequisite to a cause of action under RPAPL article 13,

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plaintiff may file a successive notice of pendency for the specific purpose

of prosecuting this mortgage foreclosure action to final judgment

( see Wasserman v. Harriman, 234 A.D.2d 596, 651 N.Y.S.2d 620, appeal

dismissed 89 N.Y.2d 1086, 659 N.Y.S.2d 860, 681 N.E.2d 1307; Slutsky v.

Blooming Grove Inn, 147 A.D.2d 208, 213, 542 N.Y.S.2d 721).

vi. NYRPAPL §1353(3) gives effect to the filed Notice of Pendency

in the foreclosure action:

The conveyance vests in the purchaser the same estate only

that would have vested in the mortgagee if the equity of

redemption had been foreclosed. Such a conveyance is as

valid as if it were executed by the mortgagor and

mortgagee, and, except as provided in section 1315 and

subdivision 2 of section 1341, is an entire bar against each

of them and against each party to the action who was duly

summoned and every person claiming from, through or

under a party by title accruing after the filing of the notice

of the pendency of the action.

vii. Although successive notices of pendency may be filed, the careful

plaintiff does not want any gaps wherein a party may be able to

record some new interest in the property which may be exempted

from the effect of the foreclosure judgment and sale.

3. After commencing the action: Mandatory Mediation CPLR 3408. Also recently amended

(see attached)

a. File an RJI within 20 days of the filing of proof of service to commence

the 3408 process, which is to be scheduled within 60 days following the

filing of the proof of service;

b. Send out your RMA forms asap so that the first meeting is productive

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c. Have all of your loan documents and relevant loan history and be able to

contact your client. Amendments in 3408(e) now mandate, rather than

suggests the documents to be brought to the settlement conference.

d. 3408 (f) attempts to quantify good faith by referring to the case law

standard “totality of the circumstances”. See e.g., Wells Fargo Bank v.

Miller, 26 N.Y.S.3d 176 (App Div. 2d Dep’t 2016). Both sides must be

prepared to entertain in good faith discussions for a loan modification.

Neither good faith nor bad faith is defined- - you know it when you see it.

U.S. Bank N.A. v. Sarmiento, 991 NYS2d 68 (2d Dep’t 2014) and Bank of

New York v. Castillo, 120 A.D. 3d 598 (2d Dep’t 2014). Under these and

similar decisions, a lender must follow its policies and any mandates it

may have under HAMP or otherwise to consider a party for a loan

modification. In Sarmiento, the second department rejected the argument

that good faith is an absence of common low bad faith and that the court

should consider only whether the party acted deliberately or recklessly in a

manner that evinced gross disregard of, or conscious or knowing

indifference to, another's rights. The court held:

Therefore, we hold that the issue of whether a party failed to negotiate in

“good faith” within the meaning of CPLR 3408(f) should be determined

by considering whether the totality of the circumstances demonstrates that

the party's conduct did not constitute a meaningful effort at reaching a

resolution. We reject the plaintiff's contention that, in order to establish a

party's lack of good faith pursuant to CPLR 3408(f), there must be a

showing of gross disregard of, or conscious or knowing indifference to,

another's rights. Such a determination would permit a party to obfuscate,

delay, and prevent CPLR 3408 settlement negotiations by acting

negligently, but just short of deliberately, e.g., by carelessly providing

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misinformation and contradictory responses to inquiries, and by losing

documentation. Our determination is consistent with the purpose of the

statute, which provides that parties must negotiate in “good faith” in an

effort to resolve the action, and that such resolution could include, “if

possible,” a loan modification (CPLR 3408[f]; see Wells Fargo Bank, N.A.

v. Meyers, 108 A.D.3d at 11, 18, 20, 23, 966 N.Y.S.2d 108; Wells Fargo

Bank, N.A. v. Van Dyke, 101 A.D.3d 638, 958 N.Y.S.2d 331 [the

defendants did not demonstrate that the plaintiff failed to act in good faith

because nothing in CPLR 3408 requires a plaintiff to make the exact

settlement offer desired by the defendants]; HSBC Bank USA v.

McKenna, 37 Misc.3d 885, 952 N.Y.S.2d 746 [Sup.Ct., Kings

County] [the plaintiff failed to act in good faith based upon, inter alia, a

referee's finding that the plaintiff rejected an all-cash short sale offer] ).

Where a plaintiff fails to expeditiously review submitted financial

information, sends inconsistent and contradictory communications, and

denies requests for a loan modification without adequate grounds, or,

conversely, where a defendant fails to provide requested financial

information or provides incomplete or misleading financial information,

such conduct could constitute the failure to negotiate in good faith to reach

a mutually agreeable resolution.

e. Perhaps to address the award of excessive sanctions, 3408 (j) and (k)

address sanctions for failure to negotiate in good faith. See, e.g., LaSalle

Bank v. Dono, 24 N.Y.S. 3d 827 (App Div 2d Dep’t 2016) (sanction

permanently tolling all interest and costs from the commencement of the

3408 process was excessive and reduced to disallowing interest, costs and

fees during for the period of the 3408 process); IndyMac Bank, F.S.B. v.

Yano–Haroski, 78 A.D.3d 895, 912 N.Y.S.2d 239(reversed the sanction of

cancellation of the note and mortgage based on the plaintiff's failure to

negotiate in good faith as required by CPLR 3408(f)); Wells Fargo Bank,

N.A. v. Meyers, 108 A.D.3d 9, 966 N.Y.S.2d 108 (2d Dep’t 2014)

(remedy imposed by the Supreme Court-compelling the plaintiff to

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permanently abide by the terms of a HAMP trial loan modification-was

“unauthorized and inappropriate.)” But there is a catch all “ Award any

other relief that the court deems just and proper.”

f. Before moving for summary judgment, revisit the pre-requisites for filing

the action, including standing and notices.

98

TThhee FFoorreecclloossuurree SSaallee aanndd PPoosstt--SSaallee IIssssuueess

127

RIGHTS OF TENANTS WHEN THEIR LANDLORD IS IN

FORECLOSURE OR HAS BEEN FORECLOSED ON

I. TENANTS’ RIGHTS DURING FORECLOSURE

A. Notice to Tenants at Commencement of Foreclosure

Recognizing the impact of foreclosures not only on homeowners but also

on tenants, the New York State Legislature as part of the Laws of 2009, c.507

amended the Real Property Actions and Proceedings Laws RPAPL §§ 13031 and

1305 to provide protections to tenants occupying dwelling units in residential

homes subject to foreclosures.

RPAPL § 1303(1)(b), effective January 14, 2010, requires the foreclosing

lender to serve tenants a notice when commencing a foreclosure action. The

notice must be delivered within ten days of the service of the summons and

complaint and shall follow the format specified in this section (font sizes, bold,

colored paper). For buildings with fewer than five dwelling units the notice must

be delivered to the tenant (if known) by regular and certified mail, return receipt,

or if the identity of the tenant is not known, to the occupant by regular mail. For

buildings with five or more dwelling units, the notice must be posted at the

entrances and exits of the building. RPAPL § 1303(4).

RPAPL § 1303(5) sets forth the specific language to be used which must

list the name, address and phone number of the foreclosing party and advise

tenants of their rights, including their right to receive a notice pursuant to RPAPL

§ 1305 from the person or entity who acquires the title to the property should the

property ultimately be foreclosed.

1 RPAPL 1303 was enacted by the Laws of 2006, c. 308 as part of the

Homeowner Equity Theft Protection Act (HETPA), RPL§ 265-a, as amended by the

Laws of 2007, c. 154 and further amended by the Laws of 2007, requiring the

foreclosing party in a residential foreclosure commenced on or after September 1, 2008

involving owner-occupied one-to-four family dwellings to deliver a notice to the

mortgagor, titled “Help for Homeowners in Foreclosure”, simultaneously with service of

the Summons and Complaint. The notice must be on colored paper, use specified font

size and statutorily defined language.

Compliance with the HETPA notice is a condition precedent to a foreclosure

action and failure to comply need not be raised as an affirmative defense but may be

raised at any time during the action. First Natl. Bank of Chicago v. Silver, 73 A.D.3d

162, 899 N.Y.S.2d 156 (2d Dept. 2010).

153

B. Pre-Judgment Rights and Responsibilities

Unless the court has appointed a receiver, the owner/mortgagor is

entitled to collect rent, enter into leases, and otherwise act as the landlord until his

or her right to redemption has expired pursuant to a judicial sale.2 The owner also

remains responsible for maintenance, repairs, common area utilities, and other

obligations of a landlord.

If the court appoints a receiver, the receiver stands in the shoes of

the landlord.3 Tenants have all the defenses against a receiver they would have

against a landlord. In order to sue a receiver, however, the tenant must get

permission from the court that appointed the receiver.4 Receivers are common in

multifamily buildings, but not in 1-4 family properties.

C. Rights and Responsibilities Between Judgment and Auction

The Laws of 2009, c. 507, § 6 also enacted a new section of the

Real Property and Proceeding Law. RPAPL § 1307, effective as of April 14,

2010, imposes on the plaintiff who obtained a judgment of foreclosure and sale

involving residential property the duty to maintain the property consistent with

the New York Maintenance Code if vacant, or if abandoned by

landlord/mortgagor but occupied by a tenant, to keep the property in safe and

habitable condition until ownership has been transferred and the deed has been

recorded. Tenants are entitled to a seven-day notice prior to plaintiff seeking entry

except in cases of emergency.

Plaintiff’s obligation may be enforced in a court of competent

jurisdiction by either the municipality, any tenant in lawful possession, the

2 A lease issued after the judgment of foreclosure and sale may be deemed a nullity.

Green point Sav. Bank v. Barbagallo, 247 A.D.2d 442, 443 (2d Dep’t 1998). 3 “A receiver in a foreclosure action, therefore, stands in the shoes of the owner,

and has a ‘legal duty to maintain the property in good repair . . . .’” Mercedes v. Menella,

34 A.D.3d 655, 656, 827 N.Y.S.2d 73, 74 (2d Dep’t 2006) (quoting Fourth Fed. Sav.

Bank v. 32-22 Owners Corp., 236 A.D.2d 300, 302, 653 N.Y.S.2d 588 (1st Dep’t 1997)).

4 See Independence Savings Bank v. Triz Realty Corp., 100 A.D.2d 613, 473

N.Y.S.2d 568, 569 (2d Dep't 1984) ("a receiver may not sue or be sued without the

express permission of the court that appointed him [cite omitted].").

154

managers of a condominium or a homeowner association after giving a seven-day

notice to plaintiff. 5

II TENANTS’ RIGHTS POST-FORECLOSURE

A. Regulated tenants’ rights are unaffected by the sale of their buildings in

foreclosure.6

B. State Legislation Providing Protections for Tenants in Unregulated

Buildings

In 2009 in response to the escalating foreclosure crisis, federal and state laws

were enacted to provide enhanced protection for unregulated tenancies post

judgment of foreclosures.

The Federal Protecting Tenants at Foreclosure Act of 2009 (“PTFA”), Title

VII of the Helping Families Save Their Homes Act of 2009 (Pub. L. 111-22)

(codified at 12 U.S.C. 5220) which took effect on May 20, 2009 and extended by

the Dodd-Frank Wall Street Reform and Consumer Protection Act to December

31, 2014 has unfortunately not been renewed.

However, mirroring the protections that had been provided by the PTFA, the

New York State legislature amended the Real Property Actions and Proceedings

Law by adding section 1305 as part of the Laws of 2009 which took effect

January 14, 2010.

5 NYCHPD v. Deutsche Bank Natl. Trust, 9/12/2013, N.Y.L.J. at *1 (Civ. Ct. R.I.

Co.)(holding that respondent/lender is subject to RPAPL § 1307) 6 See, e.g., Combined Ventures, LLC v. Fiske House Apt. Corp., 74 A.D.3d 1119,

906 N.Y.S.2d 568 (2d Dept. 2010). United Institutional Servicing Corp. v. Santiago, 62

Misc.2d 935, 310 N.Y.S.2d 733 (Civ. Ct. Kings County 1970) ("[i]n essence the courts

have held that statutory tenants are afforded the protection of the Rent and Eviction

Regulations whether they be Federal, State or city."). Thus, a state court judgment that

purports to extinguish a Section 8 lease may not eliminate the tenant’s protections under

the federal regulatory scheme. See German v. Federal Home Loan Mortgage Corp., 899

F. Supp. 1155, 1164 (S.D.N.Y. 1995). Until recently, section 8 voucher tenants were not

covered by this rule.

155

RPAPL § 1305:

requires the successor-in-interest to provide written notice to all

tenants that they are entitled to remain in occupancy for the remainder

of their lease term or for a period of 90 days from the date of mailing

the notice whichever is greater except limits the time to 90 days where

the successor intends to occupy one of the units (not subject to a

federal or statutory scheme);

defines “successor-in-interest” as a person or entity that acquired title

in a residential real property either as a result of a judgment of

foreclosure and sale or any other disposition during the pendency of

the foreclosure proceeding;

defines tenant as any person who at the time of the notice required by

RPAPL 1303 either had a lease or an oral or implied rental agreement

with the mortgagor to pay rent not substantially below the fair market

rent for a comparable unit. Under this section, tenant cannot not be the

former owner.

Note that the definition of tenant excludes tenant who moved into the property

ten days after the foreclosure action was commenced and the 1303 Notice to

Tenants had to be served.

III. ACTIONS TO REMOVE TENANTS POST-FORECLOSURE

A. Writ of Assistance

The common law writ of assistance, codified at RPAPL § 221 permits the

Supreme Court to issue an order requiring the Sheriff to put the purchaser into

possession of the property, subject to RPAPL § 1305. However, RPAPL § 221

applies by its terms only to a party, or his representative or successor, who is

joined as a party in the foreclosure and thus bound by the judgment of

foreclosure.7

7 Nationwide Assocs. v. Brunne, 216 A.D.2d 547 (2d Dept. 1995)(“Due process

requires that one be given notice and an opportunity to be heard before one's interest in

property may be adversely affected by judicial process. Enforcement of the writ of

assistance against one who was not joined as a party to the proceeding would violate due

process”). See, also, Si Bank and Trust v. Sheriff of the City of New York, 300 A.D.2d 667

(2d Dept. 2000).

156

B. Summary Proceedings

Where no landlord-tenant relationship exists, New York Real Property

Actions and Proceedings Law (“RPAPL”) Section 713 allows for the

commencement of a special proceeding to obtain possession of property. Post-

foreclosure eviction is governed by RPAPL § 713(5) which permits bringing a

summary proceeding after service of a ten-day notice to quit subject to RPAPL

§1305 and where the referee deed has been "exhibited" to the party in possession.

C. Tenant Defenses to Eviction after Foreclosure

1. Failure to exhibit a certified referee deed prior to the commencement of

eviction proceeding pursuant to either RPAPL § 713(5) or the issuance of

a writ of assistance.8

Failure to properly exhibit the deed: Substitute service or service by

“nail and mail” of the referee deed has been held insufficient to satisfy

the statutory mandate of “exhibiting” the deed; instead the deed must

be delivered in person.9

8 Lincoln Savings v. Warren, 156 A.D.2d 510, 548 N.Y.S.2d 783 (2d Dep't

1989)(exhibition of the deed prior to the issuance of the writ of assistance required,

holding that annexing the deed merely to the order to show cause not sufficient). 9 See, e.g., Home Loan Services, Inc. v. Moskowitz, 31 Misc.3d 39, 920 N.Y.S.2d

569 (App. Term, 2d & 11th and 13

th Dists. 2011)(delivery of a copy of the referee’s deed

by nail and mail fails to meet the requirement of the statute to exhibit the deed, instead

exhibition requires personal-in-hand service); Deutsche Bank Natl. Trust Co. v. Dirende,

49 Misc.3d 1159 (Just.Ct. West, Nov.2, 2015)(following Moskowitz, delivery of the deed

by substitute service similarly fails to meet statutory requirement); Lincoln Savings v.

Warren, supra; Colony Mortgage Bankers v. Mercado, 192 Misc.2d 704, 747 N.Y.S.2d

303 (Sup. Ct. Westchester County 2002) (“[t]o exhibit connotes actual presentation to

view the document.”); Nightingale v. Claro, N.Y.L.J., September 2, 2003, p. 26, c. 4

(Dist. Ct. Nassau County) (same). But see, Hudson City Sav. Bank v. Lorenz, 39 Misc.3d

538 (Dist. Ct. Suffolk Cty 2013) (declining to follow Moskowitz, holding that exhibiting

the deed by nail and mail is sufficient); see, also, Novastar Mortgage, Inc. v. Michael

Laforge, 12 Misc.3d 1179(A), 824 N.Y.S. 764 (Sup.Ct. Greene Cty. 2006)(to import

requirement of personal exhibition of the Referee’s deed would create “higher standard of

care for the notice and the deed than is required for the Notice of Petition and Petition.).

For a discussion of the issue, see, The Exhibiting Requirement in Post-

Foreclosure Evictions, by Warren A. Estis and Michael E. Feinstein, N.Y.L.J., February

3, 2016, Hidden Confusion: Eviction After Foreclosure Presents Roadblocks, by Bruce J.

Bergman, N.Y.L.J., January 28, 2004, p. 5, c. 2.

157

Exhibiting only a subsequent deed: Where the interest in the property

has been further transferred after a foreclosure sale, exhibiting merely

the subsequent deed to respondent has been grounds for dismissal. To

satisfy RPAPL § 713(5), both the referee deed and any subsequent

deed must be exhibited to respondent.10

Improper certification: The certification of the referee deed must bear

the original signature of the certifying attorney, a facsimile of the

signature does not comply with CPLR § 2105.11

2. Defective Notice to Quit: Courts have consistently rejected predicate

notices and petitions not signed by the owner but a purported agent unless

accompanied by proof of said agent’s authority.12

3. Failure to comply with the 90-day notice required by RPAPL § 1305.13

10 IFS Properties LLC v. Wllins, 41 Misc. 3d 370, 970 N.Y.S.2d 865 (Dist.Ct. Nassau

Co., 2013) 11

Retained Realty v. Ramdass, 30 Misc.3d 1217(A) (Dist.Ct. Nassau co. 2011); Security

Pacific National Trust Co. v. Cuevas, N.Y.L.J., May 27, 1998, p. 29, c. 3 (Civ. Ct. Kings

County) (petitioner’s failure to certify the deed that was exhibited to the respondents

required dismissal of the proceeding) 12

Siegel v. Kentucky Fried Chicken of Long Island, Inc., 108 A.D.2d 218, 488

N.Y.S.2d 744 (2d Dept. 1985, aff’d 67 N.Y.2d 792, 501 N.Y.S.2d 317 (1986). Following

Siegel, courts have repeatedly dismissed proceedings brought post-foreclosure where

predicate notice was signed by petitioner’s attorney or servicing agent without authority.

See, e.g., Deutsche Bank Natl. Trust Co. v. Resnik, 24 Misc.3d 1238(A), 899 N.Y.S.2d 58

(N.Y. Dist. Ct.2009); Fannie Mae v. Lindo, 177 Misc.2d 1003, 678 N.Y.S.2d 477 (Dist.

Ct. Nassau Co.1998); Washington Mutual Home Loans, Inc. v. Calderon, N.Y.L.J.,

September 25, 2002, p. 23, col.3 (Civ. Ct. Queens Cty.); Chen v. Villacis, N.Y.L.J.,

August 20, 2008 (Civ. Ct., Queens Cty); Deutsche Bank Natl. Trust v. Larke, N.Y.L.J. ,

April 27, 2010, p. 26, col. 3 (Civ. Ct. Queens Cty.); GMAC Mortgage Corp. v. Toureau,

15 Misc.3d 1139(A), 841 N.Y.S.2d 820 (Dist. Ct. Nassau Cty. 2007). See also, DLJ

Mortgage Capital , Inc. v. Grant, 51 Misc.3d 908, 28 N.Y.S.3d 820 (Dist.Ct. Nassau Co.

2016)(petition dismissed due to defective predicate notice executed by petitioner’s

mortgage servicer, Selene Finance LP, with a limited Power of Attorney which failed to

authorize agent to commence eviction proceedings)

For a discussion of the impact of securitization on post-foreclosure proceedings,

see, Giving Tenants Their Due: Housing Court and Post-Foreclosure Procedure, by

Dora Galacatos, Kristy Watson Milkov and April Newbauer, N.Y.L.J. March 9, 2011. 13

Investec Bank PLC v. Elite Internatl. Finance LTD, 42 Misc.3d 1207(A), 984

N.Y.S.2d 632 (Civ. Ct. New York Co. 2014)(dismissing holdover for failure to comply

with RPAPL § 1305 90-day notice as respondent/occupants had an implied lease as of

the relevant date and thus met the definition of tenants);

158

JJuuddiicciiaall FFoorreecclloossuurree –– TThhee CCoouurrtt AAppppooiinntteedd OOffffiicciiaallss

159

SUPREME COURT OF THE ST ATE OF NEW YORK . COUNTY OF

.•••••• ·-· --·-·. ------. ------- ---- ••• -·---·------- --- --· ·---------• ---- --------1

STA 1E BAR SAVINGS BANK, I i I

I l Plaintiff, !

I

-against-

DELINQUENT BORROWER ASSOCIATES, UNLEARNED X. GUARANTOR, SUBORDINATE

·MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF THE STATE OF NEW YORK, THE COM:MI~SIONER OF·TAXA1:10NAND FINANCE OF THE STATE OF NEW YORK, THE CITY OF TROUBLE, THE DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE, THE ENVIRONMENTAL CONTROL BOARD ·oF THE CITY OF TROUBLE, and JOHN DOE #1 through JOHN DOE #50, said John Doe defendants being fictitious, it being intended to name all other parties who may have some interest in or lien upon the .premises sought to be foreclosed,

i i i i IndexNo. I

i I I l i AFFIDAVIT IN SUPPORT l OF APPLICATION FOR l APPOINTMENT OF A ! RECEIVERIN A jMORTGAGE i FORECLOSURE ACTION I

i I i I i j

I Defendants. !

i ......... _ .. __ ..................................... -·· ...... _ .. --· __ ...................................... --·- ...................................... - ........ I .

STATE OF NEW YORK ) ss:

______ ___,: ?~ing duly sworn, deposes and ~ys: 1. I am a Vice.President of State B~ Savings Bank (the "Bank"), the i;>laintiffirt the

above-entitled action, and run familiar with the facts and circumstances stated herein; I submit

this affidavit in support of the Bank,s application for an order of this Court: (i) appointing ex:

parte a Receiver of the rents and profitS of the premises located at _____ Trouble; New

York, commonly known as _____ (the ''Premises"), . which are the subject of this

mo~age foreclosure action; (ii) designating [insert name· of individual, if any, yQu are

recommending be appointed as Receiver}, a qualified officer of the Court to serve as such

167

Receiver [this is optional -- only to be. used [f client wants to re~ommend a particular

individual as Receiver); and (iii) permitting the Receiver to employ as · the

managing agent of the Premis¥s [this is also optional].

Backgronnd

2. This is an ll-Ction to foreclose upon a mortgage (the "Mortgage») affecting the

Premises, which mortgage is mo~e·particularly described in the Verified Complaint dated_· __

___ , 2009 .filed herein and annexed hereto as Exhibit 1.

3. · The Mortgage and an accompanying mortgage note (the ''Note"). both dat~d __

----~ 2005, were made by defendant, Delinquent Borrower Associates ("Borrower")

to the Bank to secure repayment of a loan in the principal amount $2,000,000.0Q. The Mortgage,

a copy of which is annexed hereto as Exhibit 2, was recorded in the Office of the Clerk of __

___ County, in Reel, page_ on ____ __, 2005.

4. As appears frorri the Verified Coin.plaint, there is now due and unpaid to the Bank

under the Note and Mortgage, the principal sum of $2,000,000.00 with accrued interest thereon

at the Default Rate (as ·defined in_ the Note) and such other charges and _expenses due or to

become due thereunder as a result of the failure of Borrower to make payment to the Bank of

monthly interest due on August 1, 2009, September 1, 2009, and October 1, 2009, together with

fate payment charges !IS set forth in the Note.

5. The Summons, Verified Complaint and Notice of Pendency of Action were filed

in the Office of the Cierk: of · County on 2009. AB evidenced by the

Affidavits of Service, copies of which are annexed hereto as.Exhibit.3, service of the Summons

and Complaint has been effected upon the following defendants:

_______ _, _________ _,and _______ _

168

This Court Should AP)>o!nt A Rece~ver for the Premises

·6~ The Mortgage provides [what follows is an example of a mortgage clause

auth()rizing the ex parte appointment of a Receiver]:

I

Sectfon 2.04. After the happening of any Event of Default and immediately upon the. com¢encement of any action; suit or other legal proceedings. by the Mortgagee to obtain judgment for the principal of, or interest on, the Note and other sums required to be paid by the Mortgagor pursuant to any provisiotJ.S of this Mortgage, or· of the· Documents, or of any nature in aid of the ellforcement of the N9te or of this Mortgage, the Mortgagor does hereby (a) waive_personal service of' process and also c9:0Sents to service by certified mail to the address of the Mortgagor set forth on the cover page of this Mortgage (with copies to be .sent as provided in Section_:___), and (b) if required by the Mortgagee, consent to the · appointment of a receiver or receivers of the Mortgaged Property or any part thereof or .any business or businesses conducted thereon and of all the .earnings, revenues, rents, issues, profits and mcome thereof. After the happening of any Event of Default, or upon the commencement of any proceedings to foreclose this Mortgage or to enforce the specific performance hereof or fu aid hereof or upon the commencement of any other judicial proceeding to enforce any' right of th~ Mortgagee. the Mortgagee shall be entitled, as a matter of right, if· . it shall so elect. without tb.e giving of notice to any other party and without reruird. to the adequacy or inadequacy of any. security for the Mortgage indebtedness, forthwith either before or after declaring the unpaid pri:O.cipal of the Note to be due and payable, to the appointment of such. receiver or receivers [emphasis added]. . .

7. Thus, the Bank is entitled to the appointment of a Receiver ili the event of a

foreclosure action, without regard to the adequacy of the security for the subject indebtedness

and without notice to. Borrower.

The Premises

8. The Premises are improved by a ____ story building consisting of [give

details re number of commercial and/or residential writs and/Or other pertinent facts re nature and composition of property]. ·

169

)

....... ~ ._,J%~;ih:2_,,'

9. '?'PO~ information and belief, the Premi.Ses are occupied by appro:iilinately _

tenants paying 8.n aggregate monthly rental inco~e. of approximately $ _ _,_ __ as set forth on

the Schedule annexed hereto as Exhibit 4. ·

10. The Bank believes that absent the appointment of a Receiver, the Premises may . . . .

be materially injured or destroyed or will deteriorate to such ~ extent that on a sale at public

auction the Premises will not realize a sum sufficient to satisfy the indebtedness due to the Bank

with interest, costs and arrears of taxes.

11. · . The Bank respe~tfully submits that the security is insufficient to protect the

Bank's Mortgage with interest, water charges, sewer rent, ta.x.es,. and foreclosure expenses unless

the PreJilises are judicially managed pending adjudication of this suit. It is therefore necess_ary

that a Receiver be appointed to collect the rents and profits of the Premises so that the san:ie may_

not be dissipated.

The Bank Recommends That [n~me ofrecominended individual) Be Appointed as Receiver· [ optionalJ

12. The Ban1crespectfuUy requests that ___ ._.[n.._a=m""·e ..... J __ _, ___ . ._[a~d~dr~es_s_.l __

__ _, be appointed by this Court as the Receiver of the Preillises.

13. [If recommending a particular individual] Upon information and belief, [name

of reco~ended individual] is. on th~ list of qualified Receivers maintained by the Office of .

Court Administration. Moreover, [name of recommended individual] has advised the Bank that

he/she is not disqualified from being appointed as Receiver in this action by reason of the

compensation limitations, or any other provisions, contained in Part 36 of the Rules of the C~ef

Judge.

14. [Set forth particular credentials of recommended individual meriting his/her

appointment -- e.g., previous experience as Receiver of other properties and/or familiarity,

A

170

tlir~ugh experience as real estate manager, owner or otherwise; with pr~perties similar to

. subject Premises]. A copy of his/her resume is annexed hereto as Exhibit 5. . .

The Bank Recommends that this Court Authorize the Receiver to Appoint [name of recommended agentJ as the Managing Agent of the Premises [o.ptionall

15. In. addition, it is respectfully req~ested that this Court authorize the Receiver ·to

appoint as managing agent of the Premises, _____ __, a company highly experienced in

the management of properties similar tD the Premises. As the Premises are occupied by

numerous tenants and _also have a number of vacancies, it is essential that a qualified managing

agent be appointed to manage the property.

16. Upon infonnation and belief, [name of managing agent] is on the list of qualified

Managing Agents maintained by the Office of Court Admini~ation. In addition. [name of r

recommended managing agent] has ·advised the Bank that it is not disqualified· from being . . . .

appointed as Managing Agent for the Receiver of the. Premises by reason of the compensation

limitations, or an! other provisions, contained in Part 36 of the RUles of the ?hief Judge •.

17. · (State here pertinent facts as to experience and expertise of recommended

managing agent in managing property in general; and managing properties similar to

Premises .in particular]. A copy of _____ ' s resume is annexed hereto as Exhibit 6.

Accordingly, it is respectfully ~equested that the.Receiver be authorized to appoint -----. . ___ as managing agent of the Premises.

Conclusion

18. No previou8 application has been made for any of the relief requested herein. .

171

~REFORE, for all of the foregoing reasons, this Court should grant the

Bank's·moti.on in.all respects and should enter an Order Appointi.n~ Receiver in the proposed

form annexed hereto.

[N~e ~f Bank Officer]

Sworn to before me this day of ~009

Notary Public

172

PRESENT:

HON.

Justice.

At an IAS Part __ of the Supreme Court of the State of New York held in and for the County of at the County Courthouse, , New York on the __ day of , 2008

----------------------------x·

---------BANK,

Plaintiff,

- against -

BORROWER, GUARANTOR, SUBORDINATE MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF THE STA TE OF NEW YORK, THE COMMISSIONER OF TAXATION AND FINANCE OF THE STATE OF NEW YORK,: THE CITY OF TROUBLE, THE DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE,

Defendants. ----------------------------X

Index No.

ORDER APPOINTING A RECEIVER IN MORTGAGE FORECLOSURE ACTION

Upon the Summons, Verified Complaint and Notice of Pendency of Action filed

in the office of the Clerk of ________ County on the __ day of

-~---~ 2010, and upon reading and filing the annexed affidavit of [Bank's Officer]

sworn to the_ day of __ , 2010, and upon motion of __________ _

the attorneys for the plaintiff; it is

ORDERED,thm _____________ _

-------------------'be and [s]he hereby is appointed

Receiver during the pendency of this action for the benefit of the plaintiff herein, of all the rents

173

and profits of the mortgaged premises known as [set forth here address and/or commonly known

name of property], located in the City of ______ .• County of _______ ., State

of New York, and more particularly described in Schedule A annexed hereto; and it is

. FURTHER ORDERED, that the Receiver be and [s]he hereby is authorized and

directed to collect from the tenants of said mortgaged premises or from any persons liable

therefor all the rents thereof now due and unpaid or hereafter and during the pendency of this

action to become due, and that said tenants be, and they hereby are, directed to pay over to the

Receiver all the rents now due and unpaid or hereafter and during the pendency of this action to

become due, and that all persons in possession other than lawful tenants be, and they hereby are,

directed to surrender possession to the Receiver, subject to the Emergency Rent Laws, if any;

and it is

FURTHER ORDERED, that the Receiver be, and [s]he hereby is authorized to

· lease for a term not exceeding[__] year(s) or such other term as inay be mandated by statute,

said premises or any part thereof which is or may become vacant; to keep the premises in a

proper state of repair in compliance with law and insured against loss or damage by fire, and to

make the expenditures necessary for said purposes and for the purpose of paying the necessary

running expenses of the premises subject to the qualification that the Receiver shall not expend

in excess of$ __ for any repair without· further application to this Court; to pay any taxes,

water rates or assessments now due upon said premises or hereafter and during the pendency of

this action to become due; to pay the principal and interest and other charges in connection with

any prior encumbrances of the Premises; and to institute and carry on such legal proceeding as

may be necessary for the protection or recovery of the mortgaged premises, for the collection of

the rents and profits thereof, or for the removal of any tenant or other person from the premises,

174

subject, however, to the qualification that the Receiver shall not retain counsel without further

application to this Court; [if property is a multiple dwelling in New York City, registration

and hazardous violations provisions that are required under RPAPL § 1325(3)(a) and (b)

must be recited here also] and it is

FURTHER ORDERED, that the Receiver be permitted to appoint

----------------as the managing agent of the Premises and to

compensate said managing agent the fair and reasonable value of the managing agent's services

solely out of the rents and profits of the Premises, subject to the qualification that ifthe rents and

profits are insufficient to compensate the managing agent, the managing agent shall be so

notified and shall perform no further services without further order of this Court; and it is

FURTHER ORDERED, that during the pendency of this action the defendants

and their agents be, and they hereby are, enjoined and restrained from leasing, renting or

collecting the rents or profits of the said premises, and from interfering with the Receiver or in

any way with the premises or its possession, and that all lawful tenants of the premises and any

persons liable for such rents be, and they hereby are, enjoined and restrained from paying the

same to any of the said defendants or to anyone except the Receiver; and it is

FURTHER ORDERED, that the Receiver be, and [s]he is hereby authorized to

receive, and the defendants, Borrower and Guarantor be, and they hereby are directed, to tum

over to the Receiver, all leases, rent rolls, security deposits of tenants of the premises, and any

and all records, service contracts and agreements relating to the management of the premises

held by said defendants, together with any and all monies held or received by said defendants in

connection with the premises during the period commencing with the date of this Order to and

including the date upon which said Receiver files with the Clerk of this Court his bond as set

175

forth below, except for those monies disbursed by said defendants during said period for the

operation of the premises; and it is

FURTHER ORDERED, that the Receiver be, and [s]he hereby is directed to

retain the moneys which may come to [her] his hands as such Receiver, except.such moneys as

[ s ]he is hereinbefore authorized to expend, until the mortgaged premises are sold under a

judgment to be entered herein, and then, after deducting therefrom [her] his disbursements and

all other payments directed by the order of this Court, [s]he retain the moneys in [her] his hands

until further order of this Court; and it is

FURTHER ORDERED, that before entering upon [her] his duties as such

Receiver [s]he execute to the People of the State of New York, and file with the Clerk of this

Court, a bond in the form prescribed by law, in the sum of$ with a surety company as

surety, for the faithful discharge of [her] his duties as such Receiver; and it is

FURTHER ORDERED, that in accordance with the provisions of Section

202.52(a) and (b) of the Uniform Civil Rules for the Supreme Court and the County Court, the

Receiver shall promptly deposit all monies received by [her] him in a checking account [or an

interest-being account] at [Court inserts name of bank] (the "Depository"), such account to be

in [her] his name, as Receiver, and to show the name of the instant case; the Depository shall

furnish monthly statements regarding such account to the Receiver and to plaintiff's counsel, and

it is

FURTHER ORDERED, that the appointee named as Receiver herein shall

comply with the provisions of Section 35(a) of the Judiciary Law, Sections 6401-6405 of the

Civil Practice Law and Rules, and Article 13 of the Real Property Actions and Proceedings Law;

and it is

176

FURTHER ORDERED, that by accepting this appointment, the Receiver

certifies that he (she) is in compliance with 22 NYCRR Part 36, including, but not limited to,

§ 36.2( c) ("Disqualifications from appointment") and § 36.2( d) ("Limitations on appointments

based on compensation").

ENTER:

J.S.C.

177

SCHEDULE A

[Set forth here legal metes and bounds description of Premises contained in

Mortgage]

178

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF~~~~------------------------------- x

'. Plaintiff,

EXP ARTE APPLICATION FOR APPOINTMENT OF REFEREE TO COMPUTE AND RELATED RELIEF

- against~ Index No.

BORROWER, GUARANTOR, SUBORDINATE MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF THE STATE OF.NEW YORK, THE : COMMISSIONER OF TAXATION AND FINANCE OF THE STATE.OF NEW YORK, THE CITY OF TROUBLE, THE DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE,

Defendants~ ----------------------------- x

APPLICATION BY: Plaintiff _____ _

SUPPORTING PAPERS: Affidavit of Esq. dated 20 _with Exhibits, including Verified Complaint, Affidavits of Service and Notices of Appearance and Waiver

RELIEF DEMANDED: (1) Pursuant to New York Real Property Actions Proceedings Law ("RP APL")§ 1321, refening this action to some suitable person as a referee (the "Referee"), to (a) ascertain· and compute the amount due Plaintiff for principal and interest under the mortgage set forth in Plaintiff's Verified Complaint, and for any other amounts due and owing Plaintiff, including reasonable attorneys' fees and any sums advanced by Plaintiff under the tenns of the mortgage, and (b) examine and report whether the mortgaged premises · should be sold in one parcel or in multiple parcels, and directing that upon presentation and coming in of the Referee's report, Plaintiff have the usual judgment of foreclosure and sale; and

179

(2) for such other, further and different relief as this Court may deem just and proper.

Dated: _, _ 20_ BRYAN CAVE LLP

Attorneys for Plaintiff

180

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ---------------------------------x

Plaintiff,

- against-

BORROWER, GUARANTOR,. SUBORDINATE MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF THE STATE OF NEW YORK, THE COMMISSIONER OFT AXA TION AND FINANCE OF THE STATE OF NEW YORK,: THE CITY OF TROUBLE, THE DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE,

Defendants. ----------------------------x STATEOFNEWYORK )

ss.: COUNTY OF ____ _,

Index No.

AFFIDAVIT IN SUPPORT OF MOTION FOR ORDER OF REFERENCE TO COMPUTE

________ _, an attorney duly admitted to practice in the Courts of

the State of New York, affinns as follows:

l. I run counsel with _______ __, attorneys of record for the

plaintiff _______ Bank (the "Plaintiff") in the above-entitled action.

2. I submit this Affidavit in Support of Plaintiff's Application for an Order of

Reference to Compute the amount due Plaintiff in this foreclosure action.

3. This action was commenced by filing a Summons and Verified Complaint

with the ____ County Clerk's Office on _____ , 20_, a copy of which is

annexed hereto as Exhibit 1.

181

4. As more fully set forth in the Verified Complaint. this action is brought to

foreclose a first mortgage lien in t"he original principal sum of$ wherein one of the

defendants, defendant Borrower (all defendants are collectively referred to as "Defendants" or

individually as the "Defendant") mortgaged to Plaintiff its interest in a parcel of real property

more particularly described. therein (the "Mortgage"). Said Mortgage was dated ____ __,

200_ and recorded on 20_ in the County Clerk's office in

Liber of Mortgages at Page __ . A copy of the Mortgage is annexed as Exhibit B to the

Verified Complaint.

5. On 20_, a Notice of Pendency in this action in the form

prescribed by statute and containing correctly, as this deponent believes, all the particulars

required by law to be stated in such notice was filed in the County Clerk's Office

wider Index Number . A copy of the Notice of Pendency is attached hereto as

Exhibit2.

6. Since filing the Summons and Verified Complaint, neither have been

amended or supplement~d by making new parties to the action, or as to_ affect other properties

now described in the original Verified Complaint, ?I so as to extend Plaintiff's claim against the

mortgaged premises, or in any way whatsoever.

7. Upon information and belief, all Defendants are of full age and of sowid

min:d. No defendants are absentees.

8. All Defendants have been properly served as appears from the Affidavits

of Service; copies of which are attached hereto as Exhibit 3.

9. Defendants [individuals] were served with additional notice of this

foreclosure action pursuant to CPLR § 3215(g)(3). An additional copy of the Summons and

182

Verified Complaint were mailed to said defendants at each individual's respective place of

residence on 20 _ by first class mail. Copies of the Affidavits of Mailing Pursuant

to CPLR § 3215 are attached hereto as Exhibit 4. The requisite twenty days has now passed and

judgment may be entered against these individual Defendants.

10. Upon information and belief and after due diligence having been done,

neither [individual] defendant is presently in the. military service of the United States .

Government as demonstrated by the Affidavits of Non-Military Service; copies of which are

attached hereto as Exhibit 5.

11. More than thirty (30) days have elapsed since the service of the Summons

and Verified Complaint upon Borrower. See Exhibit 3 hereto. Said Defendant has not answered

the Verified Complaint, has not appeared in this action and has not requested an extension of its

time to appear or answer.

12. Defendants Subordinate Mortgagee Corp. and Mechanic's Lien Ltd. have

filed a Notice of Appearance and Waiver, a copy of which is attached hereto as Exhibit 6.

13. Defendant People of the State of New York, Commissioner of Taxation

and Finance of the State of New York, has filed a Notice of Appearance and Waiver, a copy of

which is attached hereto as Exhibit 7.

14. Defendant Guarantor, a natural person, was served pursuant to

CPLR § 308(2). See Exhibit 3 hereto. Proof of service on Defendant Guarantor was duly filed

on ____ _,, 200_, within the required twenty (20) days. Service was complete ten (10)

days after the filing of proof of service of the Summons and Verified Complaint upon Defendant

Spitzer in accordance with CPLR § 308(2). More than thirty (30) days have elapsed since

183

service was completed upon said Defendant and said Defendant has not answered the Verified

Complaint and has not appeared in this action.

15. "Jolm Doe" Defendants# 1-50 were not served with the Summons and

Verified Complaint and their names should be deleted from the caption of this case.

16. No previous application has been made for the relief requested herein.

WHEREFORE, affiant respectfully requests an Order appointing a Referee to

· compute the amounts due to Plaintiff and to examine and report whether the mortgaged premises

should be sold in one parcel or more than one parcel, and for such other and further relief as this

Court may deem just and proper.

NAME

Sworn to before me this _· dayof ,20_

NOTARY PUBLIC

184

PRESENT:

Justice.

At an IAS Part_ of the Supreme Court -of the State of held· in and for the County of _____ _ at the Courthouse, located at ___ _ Street, New York, on the _day of , 2010

-----------------------~----x

________ BANK,

Plaintiff,

·against·

BORROWER, GUARANTOR, SUBORDINATE MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF THE STATE OF NEW YORK, THE COMMISSIONER OF TAXATION AND Ffi\iANCE OF THE STATE OF NEW YORK,: THE CITY OF TROUBLE, THE DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE,

Defendants. ----------------------------X

Index No.

ORDER OF REFERENCE TO COMPUTE THE . AMOUNT DUE PLAINTIFF

The plaintiff ___________ (the "Plaintiff") having duly

moved this Court for an order pursuant to New York Real Property Actions Proceedings Law

§ 1321 referring this action to some suitable person as a referee (the "Referee'') to (a) ascertain

and compute the amount due Plaintiff (or principal and interest under the mortgage set forth in

Plaintiff's Verified Complaint, and for any other amounts due and owing Plaintiff, including

reasonable attorneys' fees and any sums advanced by Plaintiff under the terms of the mortgage,

and (b) examine and report whether the mortgaged premises should be sold in one parcel or in

185

multiple parcels, and for such other, further.and different relief as this Court may deem just and

proper;

NOW, upon reading and filing the Summons, Verified Complaint, and Notice of

Pendency of Action filed herein in the County of on 2010; the

Affidavit of Service evidencirig service of said Summons and Verified Complaint upon all of the

defendants herein; the Notices of Appearance. and Waiver served on behalf of the defendants

People of the State of New York, The Commissioner of Taxation and Finance of the State of

New York, City of _______ ___, from all of which it appears that this action was

brought to foreclosure upon a first fee mortgage affecting real property located in the City of

___________ County, State ofNew York; that the whole outstanding

amollllt secured by said mortgage is due; and it appearing that none of the defendants herein are

infants or absentees, and that the Notice of Pendency of Action was herein filed more than 20

days ago and that since the filing of said Notice ofPendency, the Summons and Verified

Complaint herein have not been amended (i) by adding new parties to the action, (ii) so as to

affect premises not described in said Notice of Pendency, or (iii) so as to extend the claim of

Plaintiff against the mortgaged premises; and upon the Affidavit of _______ __,,

Esq., attorney for Plaintiff, dated ----.........J showing what proceedings have heretofore

been had herein, and setting forth the various facts· which entitle the Plaintiff to the order prayed

for, and,upon all the proceedings heretofore had herein, and all the papers on file in this action;

ON MOTION of • attorneys for Plaintiff it is hereby

ORDERED, that the portion of Plaintiffs motion requesting appointment of a

Referee to compute the amount due Plaintiff be and hereby is granted; and it is further

ORDERED, that this action be referred to

186

as Referee to compute the amount due to Plaintiff as sought in Plaintiff's Verified Complaint

herein, including without limitation any and all sums for principal, interest, water and sewer

rents, taxes, insurance premiums, and for any other charges and liens upon the subject premises,

including without limitation any such charges or liens arising by virtue of any payment or

advance made by Plaintiff pursuant to the tenns of the subject mortgage or pursuant to the order

of any Court, with interest on said sums from the dates of the respective payments and advances

thereof, and a sum in respect of reasonable attorneys' fees and expenses incurred by Plaintiff in

connection with the collection of the indebtedness due upon the subject mortgage and the

foreclosure of said mortgage; and to examine and to report whether the mortgaged premises

should be sold in one parcel or in multiple parcels; and that the .said Referee make him or her

report to the Court with all convenient speed; and it is further

ORDERED, that by accepting this appointment, the Referee certifies that the

Referee is in compliance with 22 NYCRR Part 36, including but not limited to,

§ 36.2(c)("Disqualifications from appointment") and §3(i.2(d)("Limitations on appointments

based upon compensation11).

ENTER:

J.S.C.

187

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF _____ _

----------------------------x

Plaintiff,

- against -

BORROWER, GUARANTOR, SUBORDINATE MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF 1HE STATE OF NEW YORK, THE COMMISSIONER OF TAXATION AND FINANCE OF TILE STATE OF NEW YORK,: THE CITY OF TROUBLE, THE DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE,

Defendants. ----------------------------x

Index No.

NOTICE OF HEARING BEFORE REFEREE TO COMPUTE

PLEASE TAKE NOTICE that the matters herein referred to

----------------Referee to Compute, by Order of the Honorable

_______ ,,dated ______ 200_, will be brought on for hearing at the

offices of -------· New York ----~

on _____ , 200 _, at 10:00 a.m., at which time you shall present your proof and

witnesses, if any.

PLEASE TAKE FURTHER NOTICE that in the event you plan to attend the

hearing in person, you must so notify the undersigned Referee and Plaintiff's counsel set forth on

188

the service list below in writing, so that such notice is received not later than [select a date 2-3

business days prior to hearing date].

Dated: , New York -----· ____ ,,200_

Referee [Address and Phone Number)

TO: [SERVICE LIST]

189

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ----------------------------------- x

Plaintiff,

- against-.

BORROWER, GUARANTOR, SUBORDINATE MORTGAGEE CORP., MECHANIC'S LIEN . LTD., THE PEOPLE OF THE STATE OF NEW YORK, THE COMMISSIONER OF TAXATION AND FINANCE OF THE STATE OF NEW YORK,: THE CITY OF TROUBLE, THE DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE,

Defendants. ----------------------------x

Index No.

OATH OF REFEREE TO COMPUTE

I, ESQ., ~e Referee appointed by an Order of this Court, made

and entered in the above action on , 20 _,, to ascertain and compute the amount

due to the Plaintiff for principal and interest and otherwise under the Note and Mortgage which

this action was brought to foreclose, and to examine and report whether the mortgaged premises

should be sold in one or more parcels, do solemnly swear that I will faithfully and fairly

determine the questions so referred to me and make a just and true report thereon according to

the best of my understanding and as said order requires.

Sworn to before me on _____ ,20_

Notary Public

-------'ESQ. Referee

190

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF

~---------------------------------x _________ BANK,

Plaintiff,

- against-

Index No.

REPORT OF REFEREE BORROWER, GUARANTOR, SUBORDINATE TO COMPUTE MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF THE STATE OF NEW YORK, THE COMMISSIONER OF TAXATION AND FINANCE OF TIIE STATE OF NEW YORK,: THE CITY OF TROUBLE, THE DEPARTMENT

. OF FINANCE OF THE CITY OF TROUBLE,

Defendants. ----------------------------x

TO THE SUPREME COURT, . . COUNTY: ---Pursuant to an Order of this Court, made and entered in this action on

____ , 20 _,whereby it was referred to the undersigned ______ ESQ. as

Referee, to ascertain and compute the amount due to the Plaintiff for principal and interest and

otherwise under the Note and Mortgage which this action was brought to foreclose, and to

examine and report whether in his/her opinion the mortgaged premises should be sold in one or

more parcels, I do report that:

1. Before proceeding to hear the testimony I first was duly sworn faithfully

and fairly to detennine the questions referred to me, and to make a just and true report thereof,

according to the best of my understanding.

2. I have computed and ascertained the amount due to the Plaintiff under said

Note and Mortgage, and I find, and accordingly report, that there is due to the Plaintiff for

191

principal and interest on said Note and Mortgage, as of the date of this report, the sum of

$ __ _

3. Annexed hereto is the Affidavit of[ name of Plaintiff's officer who

signed Affidavit] introduced before me, showing the amounts due for principal and interest

respectively, the period of the computation of the interest and its rate and other amounts.

4. Schedule A annexed hereto contains a schedule of documentary evidence

introduced before me.

5. Schedule B annexed hereto contains the sums due to Plaintiff on the said

Note and Mortgage sought to be foreclosed herein to the date hereof.

6. I have made inquiry as to the advisability of selling the mortgaged . .

premises in one or more parcels. As the ·premises comprises a single tax lot and is improved by a

single building, I find that the mortgaged premises should be sold in one parcel.

This report is respectfully submitted.

Dated; , 20 ------

_______ ESQ. Referee

192

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ---------------------------------x ________ ·BANK,

Plaintiff,

- against-

BORROWER, GUARANTOR, SUBORDINATE MORTGAGEE CORP., MECHANIC'S LIEN LTD., THE PEOPLE OF THE STATE OF NEW ·yoRK, THE COMMISSIONER OF TAXATION AND FINANCE OF THE STATE OF NEW YORK,: THE CITY OF TROUBLE, TH;J3 DEPARTMENT OF FINANCE OF THE CITY OF TROUBLE,

Defendants. -------------~--------------x

Sl;ATEOFNEWYORK ) ss.:

COUNTY OF ---- )

Index No.

AFFIDAVIT OF REGULARITY IN SUPPORT OF MOTION TO CONFIRM REFEREE'S COMPUTATION REPORT AND FOR JUDGMENT OF FORECLOSURE AND SALE

[Plaintiff's counsel), being duly sworn, deposes and says:

1. I am a member of the firm of _______ __, attorneys for the

plaintiff in this action and am familiar with all of the proceedings had herein.

2. This is an action to foreclose a first mortgage on real property situated· in

the City of _____ , County of ___ ,, and State of New York.

3. On-----' 20_, the Honorable

of this Court made and entered an Order which, inter alia, appointed------- as

Referee to Compute.

4. As is more fully set forth in my affidavit sworn to ------

20 _ submitted in support of the relief granted in Justice _____ 's Order, each of the

193

defendants has been served with the Summons and Verified Complaint in this action. None of

the defendants has answered or otherwise moved with respect to the Verified Complaint, nor has

their time to do so been extended, except that: (i) defendant Borrower ("Borrower"), on or about

------• 20 _, served a Verified Answer to the Verified Complaint; (ii) defendant

Guarantor ("Guarantor"), on or about , 20 _, served a Verified Answer to the

Verified Complaint; (iii) defendant Subordinate Mortgagee Corp. ("Subordinate Mortgagee''), on

or about-----~ 20 _, served a Verified Answer to the Verified Complaint; and (iv)

defendant Mechanic's Lien Ltd. ("Mechanic's"), on or about ______ 20_, served a

Verified Answer to the Verified Complaint.

5. In connection with the plaintiff's motion for summary judgment and

related relief.in this action, served on , 20_, Justice made and

entered her aforesaid Order dated 20 _in which she: (i) entered judgment in

favor of the plaintiff for all of the relief requested in plaintiff's Verified Complaint; (ii)

dismissed each of the coWJterclaims asserted by defendants Borrower, Guarantor, Subordinate

Mortgagee and Mechanic's; (iii) referred this action to ________ as Referee to

compute the amount due to plaintiff as sought iii plaintiff's Verified Complaint, and to examine

and report whether the mortgaged premises should be sold in one parcel or in multiple parcels;

(iv) amended the caption of this action to excise therefrom the names of the "John Doe"

defendants; and (v) ordered that upon presentation and coming in of the Referee's Report, and on

motion for confirmation thereof, the plaintiff have the usual judgment of foreclosure and sale,

together with the costs, disbursements, and allowances of this action.

194

6. No defendant has demanded notice of this application, except for

defendants Borrower, Guarantor, Subordinate Mortgagee, and Mechanic's, each of whom is

being given notice hereof.

7. This action stands in the same position as set forth in my aforesaid

affidavit sworn to ____ , 20 _{Note: the affidavit being referred to is the previous one

submitted in support of plaintiff's motion for summary judgment and related relief or for

the appointment of a referee to compute the amount due - see ,5 above] except that Justice

____ has entered her aforementioned Orde'r dated _________ ~ 20 _,and

that pursuant to that Order, _______ ___, Referee, has computed the amount due the

plaintiff to be in the sum of$ ______ , which includes interest as more particularly set

forth in the Referee's Report, and has found that the mortgaged premises should be sold in one

parcel. The Referee's Report, a true copy of which is annexed hereto as Exhibit A, has

previously been filed with this Court.

WHEREFORE, the plaintiff respectfully requests that the Referee's Report be

ratified and confirmed in all respects, and that the annexed Judgment of Fore~losure and Sale,

with costs and allowances, be granted and entered herein.

Sworn to before me this __ day of , 20_

Notary Public

195

Part 36

THE RULES

of

THE CHIEF JUDGE

“Appointments by the Court”

22 N.Y.C.R.R. § 36 et. seq.

Part 36 Appointments

in

Mortgage Foreclosure Actions

Referees (foreclosure)

Receivers

Guardians Ad Litem

Those performing specific services

for Receivers:

• Counsel• Accountants• Auctioneers• Appraisers• Property managers

205

Part 36 Application

www.nycourts.gov/ip/gfs

DisqualificationsThose Not Eligible for Appointment

• Relatives of Judge and spouse and the spousesof those relatives to 1st cousins

• Includes housing judges, town and village judges• Former Judges and close relatives for two years,

within jurisdiction• All court employees & close relatives of court

employees grade 24 and above, within jurisdiction• County and state political party officials & their

close relatives• 2 year prohibition for official and family• Members, Associates, Counsel, Employees of

“law firms or entities” while official is associatedwith the firm

206

http://www.nycourts.gov/ip/gfs



Disqualifications cont’d

• Judge’s campaign staff, their families andassociates of their law firms for 2 years, by thatJudge

• JHOs in the particular court where the JHO ison the panel

• Disbarred or suspended attorneys• Felons, unless certificate of relief, and

misdemeanants for 5 years post sentence,unless waived by CAJ

• Persons removed from the list for cause

Receiver Secondary Appointment

Limitations

NLESS court finds “Compelling Reason”

• Receivers may NOT be appointed counsel tothemselves

• Law firm “associated” with a receiver may NOT becounsel to that receiver

207

Limitations Based Upon

Compensation

“The Caps”

$75,000 Rule

• If past year ’s compensation for all Part 36Appointments > $75k

• ineligible for appointment for one year

$15,000 Rule

• One appointment per year:• $15k anticipated compensation in any year

• Good Faith

“THE CAPS”

General Rules

• Compensation = Award by the Court

• Eligibility determined on date of Appointment.

• Applies to new appointments only, may keep inventory.

• One Exception:

• Necessary to maintain continuity of representation orservice

• Must be same person or entity

• Same appointment category

208

Appointment Process

• All Appointees:

• Judicial Order• UCS Form 872: Notice of Appointment & Certification

of Compliance• Sent to appointee• Appointee certifies to eligibility• Appointee returns form to court• No compensation if form not signed!

• Exception for Foreclosure Referees whereCompensation ≤ $750

UCS - 876 - Effective J an uary I , 2004

REPORT OF COMPENSATION RECEIVED BY LAW FIRMS FOR APPOINTMENTS PURSUA NT TO PART 36 OF THE RULES OF THE CHTEF JUDGE (§ 36.4(c))

(Complet e if total compe11satio11 from a p p o i11tme111 of lawfi rm' s members, associates a11d employees pur s uant t o Part 36 of tlte

Rules of the Ch ief Jud ge excee1/ s SS0,000 itt a sing le ca lelf dllr J'ear (J a1111ory I to December 3 1). File by March J i u followi11g the

cale11dar year reported.)

I . Calend ar Year Rep orted :

Year D OD D 3. ame of Law Firm:

2. Law Firm Tax ID umber

T IO# D D-D DD D D DD

4. Address/ Phone/FAX / E-mail:

Sunc Zip Sm ct Cityffo\\11Nillagc

Phone Fax E-Mail

5. l..ist the nam es and Fiduciar y ldenlifical ion umbers of the memb ers, associates and employees of the law firm for w hom

comp ensation from appointments has been ap1>ro ved durin g the calendar yea r reported , and enter for each th e total

com pen sation ap p ro ,•ed du r ing that yea r . For a member , associat e or employee with no Fid uciary Identificat ion umb er

(FIO #), enter " on-List" an d his/ her Socia l ecur ity N u mb er in space p ro,•ided ror F I O#, (attac h add itiona l sheets as needed).

s 6. Tota l of all com1>ensat ion ent ered in item S:

Date : Signatur e:

Print ame:

Title :

NAME FIOUCIARV IDENTIF CATION NUMBER TOTAL APPROVED COMPENSATIONIN CALENDAR

\'EAR REPORTED

s

s

s

s

s

s

s

209

PART 36

The Rules of the Chief Judge

Michele GartnerSpecial Counsel for Surrogate & Fiduciary Matters

Office of Court Administration

25 Beaver Street, New York, New York 10004

(212) 428-5533

[email protected]

211

PART 36The Rules of the Chief Judge

Part 36: The Rules of the Chief Judge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Part 36: Explanatory Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

UCS Form 870: Application for Appointment to Part 36 List . . . . . . . . . . . . . . . . 9

Instructions to Amend Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

UCS Form 872: Notice of Appointment & Certification of Compliance. . . . . . . . . . . 16

Sample Secondary Appointment Forms:

Application for Approval of Secondary Appointment . . . . . . . . . . . . . . . . 21

Decision and Order Approving Application for Secondary Appointment . . . . . . 22

UCS Form 876: Report of Law Firm Compensation . . . . . . . . . . . . . . . . . . . . 24

Materials

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REV. 9/16

§ 36.0 PREAMBLEPublic trust in the judicial process demands that appointments by judges be fair, impartial and beyond reproach. Accordingly, these rules are intended to ensure that appointees are selected on the basis of merit, without favoritism, nepotism, politics or other factors unrelated to the qualifications of the appointee or the requirements of the case.

The rules cannot be written in a way that foresees every situation in which they should be applied. Therefore, the appointment of trained and competent persons, and the avoidance of factors unrelated to the merit of the appointments or the value of the work performed are the fundamental objectives that should guide all appointments made, and orders issued, pursuant to this Part.

§ 36.1 APPLICATION(a) Except as set forth in subdivision (b), this Part shall apply to the following

appointments made by any judge or justice of the Unified Court System:(1) guardians;(2) guardians ad litem, including guardians ad litem appointed to investigate

and report to the court on particular issues, and their counsel and assistants;(3) law guardians who are not paid from public funds, in those judicial

departments where their appointments are authorized;(4) court evaluators;(5) attorneys for alleged incapacitated persons;(6) court examiners;(7) supplemental needs trustees;(8) receivers;(9) referees (other than special masters and those otherwise performing judicial

functions in a quasi-judicial capacity);(10) the following persons or entities performing services for guardians or

receivers:(i) counsel(ii) accountants(iii) auctioneers(iv) appraisers(v) property managers(vi) real estate brokers

(11) a public administrator within the City of New York and for the counties of Westchester, Onondaga, Erie, Monroe, Suffolk and Nassau and counsel to the public administrator, except that only sections 36.2(c) and 36.4(e) of this Part shall apply, and that section 36.2(c) shall not apply to incumbents in these positions until one year after the effective date of this paragraph.

(b) Except for sections 36.2(c)(6) and 36.2(c)(7), this Part shall not apply to:(1) appointments of law guardians pursuant to section 243 of the Family Court

Act, guardians ad litem pursuant to section 403-a of the Surrogate’s Court Procedure Act, or the Mental Hygiene Legal Service;

(2) the appointment of, or the appointment of any persons or entities performing services for, any of the following:(i) a guardian who is a relative of (A) the subject of the guardianship

proceeding or (B) the beneficiary of a proceeding to create a supplemental needs trust; a person or entity nominated as guardian by the subject of the proceeding or proposed as guardian by a party to the proceeding; a supplemental needs trustee nominated by the beneficiary of a supplemental needs trust or proposed by a proponent of the trust; or a person or entity having a legally recognized duty or interest with respect to the subject of the proceeding;

(ii) a guardian ad litem nominated by an infant of 14 years of age or over;(iii) a nonprofit institution performing property management or personal

needs services, or acting as court evaluator;(iv) a bank or trust company as a depository for funds or as a supplemental

needs trustee;(v) except as set forth in section 36.1(a)(11), a public official vested with the

powers of an administrator;(vi) a person or institution whose appointment is required by law;(vii) a physician whose appointment as a guardian ad litem is necessary

where emergency medical or surgical procedures are required.(3) an appointment other than above without compensation, except that the

appointee must file a notice of appointment pursuant to section 36.4(a) of this Part.

§ 36.2 Appointments(a) Appointments by the judge. All appointments of the persons or entities set

forth in section 36.1, including those persons or entities set forth in section 36.1(a)(10) who perform services for guardians or receivers, shall be made by the judge authorized by law to make the appointment. In making appointments of persons or entities to perform services for guardians or receivers, the appointing judge may consider the recommendation of the guardian or receiver.

(b) Use of lists.(1) All appointments pursuant to this Part shall be made by the appointing judge

from the appropriate list of applicants established by the Chief Administrator of the Courts pursuant to section 36.3 of this Part.

(2) An appointing judge may appoint a person or entity not on the appropriate list of applicants upon a finding of good cause, which shall be set forth in writing and shall be filed with the fiduciary clerk at the time of the making of the appointment. The appointing judge shall send a copy of such writing to the Chief Administrator. A judge may not appoint a person or entity that has been removed from a list pursuant to section 36.3(e).

(3) Appointments made from outside the lists shall remain subject to all of the requirements and limitations set forth in this Part, except that the appointing judge may waive any education and training requirements where completion of these requirements would be impractical.

(c) Disqualifications from appointment.(1) No person shall be appointed who is a judge or housing judge of the Unified

Court System of the State of New York, or who is a relative of, or related by marriage to, a judge or housing judge of the Unified Court System within the fourth degree of relationship.

(2) No person serving as a judicial hearing officer pursuant to Part 122 of the Rules of the Chief Administrator shall be appointed in actions or proceedings in a court in a county where he or she serves on a judicial hearing officer panel for such court.

(3) No person shall be appointed who is a full-time or part-time employee of the Unified Court System. No person who is the spouse, sibling, parent or child of an employee who holds a position at salary grade JG24 or above, or its equivalent, shall be appointed by a court within the judicial district where the employee is employed or, with respect to an employee with statewide responsibilities, by any court in the state.

(4) (i) No person who is [the] a chair or executive director, or their equivalent, of a state or county political party (including any person or persons who, in counties of any size or population, possess or perform any of the titles, powers or duties set forth in Public Officers Law §73[l][k]), or the spouse, sibling, parent or child of that official, shall be appointed while that official serves in that position and for a period of two years after that official no longer holds that position. This prohibition shall apply to the members, associates, counsel and employees of any law firms or entities while the official is associated with that firm or entity.(ii) No person who has served as a campaign chair, coordinator, manager, treasurer or finance chair for a candidate for judicial office, or the spouse, sibling, parent or child of that person, or anyone associated with the law firm of that person, shall be appointed by the judge for whom that service was performed for a period of two years following the judicial election. If the candidate is a sitting judge, the disqualifications shall apply as well from the time the person assumes any of the above roles during the campaign for judicial office.

(5) No former judge or housing judge of the Unified Court System, or the spouse, sibling, parent or child of such judge, shall be appointed, within two years from the date the judge left judicial office, by a court within the jurisdiction where the judge served. Jurisdiction is defined as follows:(i) The jurisdiction of a judge of the Court of Appeals shall be statewide.(ii) The jurisdiction of a justice of an Appellate Division shall be the judicial

department within which the justice served.(iii) The jurisdiction of a justice of the Supreme Court and a judge of the

Court of Claims shall be the principal judicial district within which the justice or judge served.

(iv) With respect to all other judges, the jurisdiction shall be the principal county within which the judge served.

(6) No attorney who has been disbarred or suspended from the practice of law shall be appointed during the period of disbarment or suspension.

(7) No person convicted of a felony, or for five years following the date of sentencing after conviction of a misdemeanor (unless otherwise waived by the Chief Administrator upon application), shall be appointed unless that person receives a certificate of relief from disabilities.

PART 36. APPOINTMENTS BY THE COURT

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(8) No receiver or guardian shall be appointed as his or her own counsel, and no person associated with a law firm of that receiver or guardian shall be appointed as counsel to that receiver or guardian, unless there is a compelling reason to do so.

(9) No attorney for an alleged incapacitated person shall be appointed as guardian to that person, or as counsel to the guardian of that person.

(10) No person serving as a court evaluator shall be appointed as guardian for the incapacitated person except under extenuating circumstances that are set forth in writing and filed with the fiduciary clerk at the time of the appointment.

(d) Limitations on appointments based upon compensation.(1) No person or entity shall be eligible to receive more than one appointment

within a calendar year for which the compensation anticipated to be awarded to the appointee in any calendar year exceeds the sum of $15,000.

(2) If a person or entity has been awarded more than an aggregate of $75,000 in compensation by all courts during any calendar year, the person or entity shall not be eligible for compensated appointments by any court during the next calendar year.

(3) For purposes of this Part, the term “compensation” shall mean awards by a court of fees, commissions, allowances or other compensation, excluding costs and disbursements.

(4) These limitations shall not apply where the appointment is necessary to maintain continuity of representation of or service to the same person or entity in further or subsequent proceedings.

§ 36.3 PROCEDURE FOR APPOINTMENT(a) Application for appointment. The Chief Administrator shall provide for the

application by persons or entities seeking appointments pursuant to this Part on such forms as shall be promulgated by the Chief Administrator. The forms shall contain such information as is necessary to establish that the applicant meets the qualifications for the appointments covered by this Part and to apprise the appointing judge of the applicant’s background.

(b) Qualifications for appointment. The Chief Administrator shall establish requirements of education and training for placement on the list of available applicants. These requirements shall consist, as appropriate, of substantive issues pertaining to each category of appointment -- including applicable law, procedures, and ethics -- as well as explications of the rules and procedures implementing the process established by this Part. Education and training courses and programs shall meet the requirements of these rules only if certified by the Chief Administrator. Attorney participants in these education and training courses and programs may be eligible for continuing legal education credit in accordance with the requirements of the Continuing Legal Education Board.

(c) Establishment of lists. The Chief Administrator shall establish separate lists of qualified applicants for each category of appointment, and shall make available such information as will enable the appointing judge to be apprised of the background of each applicant. The Chief Administrator may establish more than one list for the same appointment category where appropriate to apprise the appointing judge of applicants who have substantial experience in that category. Pursuant to section 81.32(b) of the Mental Hygiene Law, the Presiding Justice of the appropriate Appellate Division shall designate the qualified applicants on the lists of court examiners established by the Chief Administrator.

(d) Reregistration. The Chief Administrator shall establish a procedure requiring that each person or entity on a list reregister every two years in order to remain on the list.

(e) Removal from list. The Chief Administrator may remove any person or entity from any list for unsatisfactory performance or any conduct incompatible with appointment from that list, or if disqualified from appointment pursuant to this Part. A person or entity may not be removed except upon receipt of a written statement of reasons for the removal and an opportunity to provide an explanation and to submit facts in opposition to the removal.

§ 36.4 PROCEDURE AFTER APPOINTMENT(a) Notice of appointment and certification of compliance.

(1) Every person or entity appointed pursuant to this Part shall file with the fiduciary clerk of the court from which the appointment is made, within 30 days of the making of the appointment, (i) a notice of appointment and (ii) a certification of compliance with this Part, on such form as promulgated by the Chief Administrator. Copies of this form shall be made available at the office of the fiduciary clerk and shall be transmitted by that clerk to the appointee immediately after the making of the appointment by the appointing judge. An appointee who accepts an appointment without compensation need not complete the certification of compliance portion of the form.

(2) The notice of appointment shall contain the date of the appointment and the nature of the appointment.

(3) The certification of compliance shall include: (i) a statement that the appointment is in compliance with sections 36.2(c) and (d); and (ii) a list of all appointments received, or for which compensation has been awarded, during the current calendar year and the year immediately preceding the current calendar year, which shall contain (A) the name of the judge who made each appointment, (B) the compensation awarded, and (C) where compensation remains to be awarded, (i) the compensation anticipated to be awarded and (ii) separate identification of those appointments for which compensation of $15,000 or more is anticipated to be awarded during any calendar year. The list shall include the appointment for which the filing is made.

(4) A person or entity who is required to complete the certification of compliance, but who is unable to certify that the appointment is in compliance with this Part, shall immediately so inform the appointing judge.

(b) Approval of compensation. (1) Upon seeking approval of compensation of more than $500, an appointee

must file with the fiduciary clerk, on such form as is promulgated by the Chief Administrator, a statement of approval of compensation, which shall contain a confirmation to be signed by the fiduciary clerk that the appointee has filed the notice of appointment and certification of compliance.

(2) A judge shall not approve compensation of more than $500, and no compensation shall be awarded, unless the appointee has filed the notice of appointment and certification of compliance form required by this Part and the fiduciary clerk has confirmed to the appointing judge the filing of that form.

(3) Each approval of compensation of $5,000 or more to appointees pursuant to this section shall be accompanied by a statement, in writing, of the reasons therefor by the judge. The judge shall file a copy of the order approving compensation and the statement with the fiduciary clerk at the time of the signing of the order.

(4) Compensation to appointees shall not exceed the fair value of services rendered. Appointees who serve as counsel to a guardian or receiver shall not be compensated as counsel for services that should have been performed by the guardian or receiver.

(c) Reporting of compensation received by law firms. A law firm whose members, associates and employees have had a total of $50,000 or more in compensation approved in a single calendar year for appointments made pursuant to this Part shall report such amounts on a form promulgated by the Chief Administrator.

(d) Exception. The procedure set forth in this section shall not apply to the appointment of a referee to sell real property and a referee to compute whose compensation for such appointments is not anticipated to exceed $750.

(e) Approval and Reporting of Compensation Received by Counsel to the Public Administrator.(1) A judge shall not approve compensation to counsel to the public administrator

in excess of the fee schedule promulgated by the administrative board of the public administrator under SCPA 1128 unless accompanied by the judge’s statement, in writing, of the reasons therefor, and by the appointee’s affidavit of legal services under SCPA 1108 setting forth in detail the services rendered, the time spent, and the method or basis by which the requested compensation was determined.

(2) Any approval of compensation in excess of the fee schedule promulgated by the administrative board of the public administrator shall be reported to the Office of Court Administration on a form promulgated by the Chief Administrator and shall be accompanied by a copy of the order approving compensation, the judge’s written statement, and the counsel’s affidavit of legal services, which records shall be published as determined by the Chief Administrator.

(3) Each approval of compensation of $5,000 or more to counsel shall be reported to the Office of Court Administration on a form promulgated by the Chief Administrator and shall be published as determined by the Chief Administrator.

§ 36.5 PUBLICATION OF APPOINTMENTS(a) All forms filed pursuant to section 36.4 shall be public records.

(b) The Chief Administrator shall arrange for the periodic publication of the names of all persons and entities appointed by each appointing judge, and the compensation approved for each appointee.

214

PART 36 OF THE RULES OF THE CHIEF JUDGE: AN EXPLANATORY NOTEPart 36 of the Rules of the Chief Judge creates a system that broadens the eligibility for appointment toa wide range of applicants well-trained in their category of appointment, establishes procedures thatpromote accountability and openness in the selection process, and insulates that process from appear-ances of favoritism, nepotism or politics.

2/08

1. APPLICABILITYPart 36 governs ten categories of primary appointments andsix categories of secondary appointments (§ 36.1 [a]), as setforth below.

a. GuardiansPart 36 applies to guardians appointed for: 1) incapacitatedpersons pursuant to Mental Hygiene Law article 81; 2) minorspursuant to Surrogate’s Court Procedure Act article 17 or CivilPractice Laws and Rules article 12; and 3) the mentally retardedor developmentally disabled pursuant to Surrogate’s CourtProcedure Act article17-A (§ 36.1 [a][1]). If a person is appointedguardian upon a ward’s nomination or a party’s proposal,appointment is exempt from Part 36 (§ 36.1 [b][2][i]).A guardianship where the appointee is a nonprofit institution,department of social services, or other public agency withlegally recognized duties or interests is exempt from Part 36 (§36.1 [b][2]][i], [iii]). Guardianships in proceedings for the termi-nation of parental rights (see Social Services Law § 384-b,Surrogate’s Court Procedure Act § 403-a, Family Ct. Act article6) are also exempt, since only persons or entities authorized bylaw may be appointed guardian in such proceedings (§ 36.1[b][2][i], [vi]).

b. Guardians Ad LitemPart 36 applies to guardians ad litem appointed under the gen-eral provisions of Surrogate’s Court Procedure Act § 403 andCivil Practice Laws and Rules 1202, including guardians adlitem appointed to investigate and report to the court onparticular issues (§ 36.1 [a][2]). Where a court appoints counselor assistants to guardians ad litem, these appointees also aregoverned by the rules. If appointed a guardian ad litem uponthe nomination of an infant of 14 years of age or over, theappointee is exempt (§ 36.1[b][2][ii]). Similarly exempt is aphysician whose appointment as a guardian ad litem is neces-sary where emergency medical or surgical procedures arerequired (§ 36.1 [b][2][vii]).

c. Law GuardiansPrivately paid law guardians who are appointed in domesticrelations matters in those Departments of the AppellateDivision where authorized are subject to the provisions of Part36 (§ 36.1 [a][3]). Law guardians appointed and paid from pub-lic funds are exempt (§ 36.1 [b][1]). (As a general rule, Part 36applies only to appointees compensated at the expense of pri-vate parties, and not those compensated from public fundssuch as appointments pursuant to Family Court Act § 243,Surrogate’s Court Procedure Act § 403-a, 407, Judiciary Law §35, and County Law article 18-B.)

d. Court Evaluators, Attorneys For AllegedIncapacitated Persons, Court ExaminersIn proceedings for the appointment of guardians for incapaci-tated persons pursuant to article 81 of the Mental HygieneLaw, the court may appoint an attorney for the alleged inca-pacitated person (Mental Hygiene Law § 81.10) or appoint acourt evaluator as an independent witness to investigate andreport to the court (Mental Hygiene Law § 81.09). These

appointments are governed by Part 36 (§ 36.1 (a)(4), (5)), exceptthat a nonprofit institution appointed court evaluator isexempt (§ 36.1 [b][2][iii]). The Mental Hygiene Legal Service,which may serve as attorney for an alleged incapacitated per-son or court evaluator, is also exempt (§ 36.1 [b][1]).If a guardian is appointed pursuant to article 81 of the MentalHygiene Law, the court may also assign a court examiner toaudit and report on accountings required to be filed in suchguardianship proceedings (Mental Hygiene Law § 81.30, 81.31).Court examiners are designated by the Presiding Justice ofeach Department of the Appellate Division (Mental HygieneLaw § 81.32), and, upon designation, must comply with all theprovisions of Part 36 (§§ 36.1 [a][6]; 36.3 [c]).

e. Supplemental Needs TrusteesSupplemental needs trustees (see Omnibus BudgetReconciliation Act of 1993 (42 USC 1396p[d][4], EPTL § 7-1.12, SSL§ 366 [2][b][2][iii], 18 NYCRR § 360-4.5) may be appointed in anumber of contexts in Supreme Court or Surrogate’s Court,e.g., in infants’ compromise orders, or in proceedings underarticle 17-A of the Surrogate’s Court Procedure Act or article 81of the Mental Hygiene Law. When selected by the court andappointed by judgment or order, a supplemental needs trusteeis subject to the provisions of Part 36 (§ 36.1 [a][7]), unless theappointee is a bank or trust company (§ 36.1 [b][2][iv]), or isappointed upon nomination by the beneficiary, or by the pro-ponent, of the trust (§ 36.1 [b][2][i]).

f. ReceiversPart 36 applies to receivers almost without exception (§ 36.1[a][8]). In rare cases where the choice of receiver would be dic-tated by law, such an appointee would be exempt (§ 36.1[b][2][vi]).

g. RefereesReferees are treated differently under Part 36 depending onthe purpose for which they are appointed. Under articles 31and 43 of the Civil Practice Laws and Rules, referees, sometimescalled “special masters”, are often used in a quasi-judicialcapacity to supervise discovery or conduct trials in civil actionsor proceedings. No matter what their title, if referees are usedto perform a judicial function, they are exempt from Part 36 (§36.1 [a][9]). Referees appointed for all other purposes are gov-erned by the rules. These appointments are usually for the pur-pose of performing an act outside of court, e.g., conducting thesale of real property in a mortgage foreclosure action or super-vising a labor union election.Referees to compute the value of, and sell, real property in theordinary mortgage foreclosure action, and who receive com-pensation of $750 or less, are subject to all of the provisions ofPart 36 preliminary to appointment, including the disqualifica-tion provisions of section 36.2 (c), the limitations based oncompensation of section 36.2 (d), and list enrollment undersection 36.3. Upon appointment, however, these referees arenot required to file the notice of appointment or certificationof compliance that all other Part 36 appointees must file (§36.4 [d]). They and the court are also excepted from filing astatement of approval of compensation pursuant to JudiciaryLaw § 35-a (1) (a) and 22 NYCRR § 26.1 (a) (see section 5. B. infra),

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because the $750 total compensation results from two sepa-rate appointments which are below the statutory threshold of$500 for each appointment (up to $250 for computation; $500for sale).

h. Secondary Appointments Of Guardians AndReceivers: Counsel, Accountants, Appraisers,Auctioneers, Property Managers, Real EstateBrokersWhen a guardian or receiver subject to the provisions of Part36 seeks to retain counsel, or an accountant, appraiser, auc-tioneer, property manager or real estate broker, the retainedprofessional becomes a Part 36 appointee (§ 36.1[a][10]). Theguardian or receiver must request that the judge appoint sucha professional (§ 36.2 [a]), and the professional must complywith all the provisions of Part 36, including those governing listenrollment (§ 36.3), disqualification and limitation based oncompensation (§ 36.2), and all filing requirements (§ 36.4).

i. Public Administrator And Counsel To PublicAdministratorCertain sections of Part 36 apply to the appointment of aPublic Administrator within the City of New York and for thecounties of Westchester, Onondaga, Erie, Monroe, Suffolk andNassau and counsel to the public administrator. Those sectionsinclude the disqualifications due to family relationship,employment, former employment, political party office or judi-cial campaign office found in section 36.2 (c) and the approvalof compensation reporting requirements found in section36.4(e).

2. APPROVED LISTS: APPLICATION, ENROLLMENT, USEAll persons or entities whose appointments are governed byPart 36 (§ 36.1 [a][1]–[10]), and who are not exempt under sec-tion 36.1 (b), must be enrolled on an approved list establishedby the Chief Administrator of the Courts (§ 36.3 [c]) from whichall names for appointment must be selected (§ 36.2 [b][1]),except when good cause exists to appoint outside the list (§36.2 [b][2]). In those exceptional circumstances, the court mustmake a finding of good cause, in writing, and file its findingwith the fiduciary clerk, who has the duty of supervising thefiling of all papers in the Part 36 appointment process (see §§36.2 [b][2]; 36.4 [a][1], [b][1]-[3]). A copy of the finding also willbe sent to the Chief Administrator of the Courts (§ 36.2[b][2]).A person or entity not appointed from an appropriate list stillmust comply with all the other provisions of Part 36, e.g., theappointee must not be disqualified from appointment undersection 36.2(c) or (d) and must file all Part 36 forms pursuant tosection 36.4, but any education and training requirementsmay be waived (§ 36.2 [b][3]). At no time may a court appoint aperson or entity removed from a list for cause (§ 36.2 [b][2]).(See § 36.3 [e] for the procedure for removal upon the ChiefAdministrator’s determination of unsatisfactory performanceor conduct incompatible with appointment from a list.)To enroll on a list maintained by the Chief Administrator of theCourts, an applicant must have completed the required train-ing for each category of appointment for which enrollment isrequested (§ 36.3 [b]). Once all required training is completed,an application must be submitted on the application formpromulgated by the Chief Administrator (UCS-870) (§ 36.3 [a]).Court examiners for proceedings under article 81 of the MentalHygiene Law and privately paid law guardians in domesticrelations actions first must be approved by the AppellateDivision before being eligible for placement on a list.Section 36.3 (d) provides for biennial re-registration, which willpermit the Chief Administrator to keep all lists current.

3. DISQUALIFICATIONSThe following persons are disqualified from appointment(§ 36.2[c]):a. a judge or housing judge of the Unified Court System, or a

relative of, or a person related by marriage to, a judge orhousing judge of the Unified Court System within thefourth degree of relationship;

b. a judicial hearing officer in a court in a county in which heor she serves as a judicial hearing officer;

c. a full-time or part-time employee of the Unified CourtSystem;

d. the spouse, brother/sister, parent or child of a full-time orpart-time employee of the Unified Court System at orabove salary grade JG24, or its equivalent: 1) employed in ajudicial district where the relative is applying for appoint-ment or 2) with statewide responsibilities;

e. a person who currently serves, or has served within the lasttwo years (commencing January 1, 2003), as chair, execu-tive director, or the equivalent, of a state or county politicalparty; the spouse, brother/sister, parent or child of suchpolitical party official; or a member, associate, counsel oremployee of a law firm or entity with which such politicalparty official is currently associated;

f. a former judge or housing judge of the Unified CourtSystem who left office within the last two years (com-mencing January 1, 2003) and who is applying for appoint-ment within the jurisdiction of prior judicial service, asdefined by section 36.2(c)(5) of the Rules of the ChiefJudge; or the spouse, brother/sister, parent or child of suchformer judge;

g. an attorney currently disbarred or suspended from thepractice of law by any jurisdiction;

h. a person convicted of a felony for which no certificate ofrelief from disabilities has been received;

i. a person convicted of a misdemeanor for which sentencewas imposed within the last five years and for which nocertificate of relief from disabilities, or waiver by the ChiefAdministrator of the Courts, has been received; or

j. a person who has been removed from an appointment listof the Chief Administrator of the Courts for unsatisfactoryperformance or conduct incompatible with appointment.

The disqualifications for disbarred or suspended attorneys (seeparagraph [g], supra) and convicted criminals (see paragraphs[h] and [i], supra) apply to any appointments under section 36.1(a), even if otherwise exempted under the rules pursuant tosection 36.1 (b).Additionally, there are three disqualifications that do not limitlist enrollment, but may render an enrollee disqualified fromappointment due to the circumstances of a particular case.These disqualifications are: 1) receivers or guardians, or personsassociated with the law firm of a receiver or guardian, are pro-hibited from being appointed counsel to the receiver orguardian (§ 36.2 [c][8]); 2) counsel to alleged incapacitated per-sons in Mental Hygiene Law article 81 proceedings are prohib-ited from being appointed guardian, or counsel to theguardian, for an incapacitated person they have represented (§36.2 [c][9]); and 3) court evaluators in Mental Hygiene Law arti-cle 81 proceedings are prohibited from being appointedguardian for an incapacitated person in a proceeding in whichthey served as court evaluator (§ 36.2 [c][10]). In the first andthird of these disqualifications, exceptions may be made. Ifthere is a compelling reason, such as savings to the estate ofthe receivership or guardianship, the receiver or guardian may

216

2/08

be appointed counsel. Similarly, if there are extenuating cir-cumstances, such as the unavailability of others to be appoint-ed guardian and a familiarity and trust developed betweencourt evaluator and incapacitated person, a court evaluatormay be appointed guardian upon a written finding by thecourt of extenuating circumstances.There is also a disqualification relating to judicial campaignactivity. This does not prevent list enrollment, but limitsappointment by a judge for whom the enrollee acted as cam-paign chair, coordinator, manager, treasurer or finance chair ina campaign for a judicial election that took place less than twoyears prior to the proposed appointment (§ 36.2 [c][4][ii]). If thecandidate is a sitting judge, the disqualification also applies toa person who assumes any of the above roles during the cam-paign for judicial office. Included in this disqualification are thespouse, brother/sister, parent or child of the campaign official,or anyone associated with the campaign official’s law firm.

4. LIMITATIONS ON APPOINTMENTS BASED UPONCOMPENSATIONSubdivision (d) of section 36.2 establishes two additional dis-qualifications from appointment, not related to list eligibility,but based upon anticipated or previously awarded compensa-tion. These restrictions do not limit compensation per se, butuse compensation as a basis for determining availability forfuture appointment. There are no exceptions to the applica-tion of these limitations, unless the court determines theappointment is necessary to maintain continuity of represen-tation of the same person or entity in further or subsequentproceedings.

a. The $15,000 RuleSection 36.2 (d)(1) prohibits appointees from receiving morethan one appointment in the same calendar year (i.e., January1 to December 31) for which compensation in excess of $15,000is awarded in that calendar year or anticipated to be awardedin any calendar year. Two examples illustrate the rule. 1) Ifappointed as attorney for an alleged incapacitated person in2003, and compensation of, for example, $20,000 for thatappointment is awarded or anticipated to be awarded in thatsame year, then the appointee is precluded from receivinganother appointment in 2003 for which compensation inexcess of $15,000 is anticipated either in 2003 or in any singlefuture year. 2) If appointed as guardian in 2003, for which anannual commission of, for example, $20,000 is anticipated tobe awarded in the following year (2004), the appointee is pre-cluded from receiving another appointment in 2003 for whichcompensation in excess of $15,000 is anticipated to be award-ed either in 2003 or in any single future year.

b. The $75,000 RuleSection 36.2 (d) (2) establishes a limitation on appointmentsbased on an annual, aggregate amount of compensation. Forcalendar year 2007 and thereafter, if compensation is awardedin an aggregate amount of more than $75,000 during anycalendar year (no matter what year the appointment wasmade), the appointee will be ineligible for any compensatedappointments during the next calendar year. It is the year ofthe award of compensation, and not the year of its actualreceipt, that activates the application of the rule. Like its$15,000 counterpart, the $75,000 rule is a limitation onappointments, and not on compensation; nothing in the$75,000 rule prevents a court’s award, or an appointee’sreceipt, of total compensation exceeding $75,000 in any calen-dar year. Excess compensation in one year simply preventscompensated appointments in the following year.

5. PROCEDURE AFTER APPOINTMENTa. Combined Notice Of Appointment And Certification

Of CompliancePart 36 appointees must complete and file with the fiduciaryclerk within 30 days of appointment a two-part form contain-ing a notice of appointment and certification of compliance (§36.4 [a][1]), which will be sent to the appointee by the courtimmediately after appointment. If the appointee cannot certi-fy qualification for appointment in the certification of compli-ance section of the combined form, or cannot accept appoint-ment for any other reason, the appointee must immediatelynotify the court (§ 36.4 [a][4]).The notice of appointment contains the date and nature of theappointment (§ 36.4 [a][2]), and the certification of compliancecertifies that the appointee is not disqualified from serviceand is not otherwise precluded by any limitation based oncompensation (§ 36.4 [a][3][i]; see § 36.2 [c], [d]). The appointeemust list all appointments received during the current calen-dar year (§ 36.4 [a][3][ii]), report the amount of compensationawarded for each (§ 36.4 [a][3][ii][B]), or, if not awarded, thetotal amount of compensation anticipated for each (§ 36.4(a)(3)(ii)(C)(i)), and separately identify appointments for whichcompensation is anticipated to exceed $15,000 in any calendaryear (§ 36.4 [a][3][ii][C][ii]). The appointee must also list allappointments for which compensation was awarded in theyear immediately preceding the current calendar year (§ 36.4[a][3][ii]) and report the amount awarded for each (§ 36.4[a][3][ii][B]). For all appointments, the name of the appointingjudge must be given (§ 36.4 [a][3][ii][A]).There are two exceptions to this procedure. Although exemptfrom the application of Part 36 (see § 36.1 [b][3]), uncompen-sated appointees must still file the combined notice and certi-fication form, but need only complete the notice of appoint-ment section of the form (§ 36.4 [a][1]). This will allow uncom-pensated fiduciary activity to be recorded and appropriatelyrecognized. The other exception applies to referees to computethe value of, and sell, real property. Although subject to theapplication and list process of Part 36 (see § 36.1 [a][9]), refer-ees to compute and sell are relieved from the obligation to filethe combined notice and certification form for appointmentswhere total compensation is not anticipated to exceed $750 (§36.4 [d]).

b. Approval Of CompensationJudges who approve compensation of more than $500 arerequired to file a statement of approval of compensation withthe Office of Court Administration pursuant to Judiciary Law §35-a (1)(a) and 22 NYCRR Part 26. Whenever a court is request-ed to approve compensation in excess of $500 for a Part 36appointee, a statement of approval of compensation on a formpromulgated by the Chief Administrator of the Courts must besubmitted for signature to the approving judge. The statementmust contain a confirmation signed by the fiduciary clerk thatthe combined notice of appointment and certification of com-pliance form was filed (§ 36.4 [b][1]). No judge may approvecompensation of more than $500 without this statement andthe signed confirmation of the fiduciary clerk (§ 36.4 [b][2]).Additionally, every approval of compensation in excess of$5000 must contain the judge’s written statement of thereasons for such approval (§ 36.4 [b][3]). After signing the orderawarding compensation and the statement of approval ofcompensation, the judge must file a copy of the order and theoriginal statement with the fiduciary clerk. The fiduciary clerkwill then forward the statement of approval of compensationto the Office of Court Administration for entry of the amountof compensation in its database under the name of the

217

appointee. This will keep the database current for periodicpublication under section 36.5.The rules cite the standard for judicial approval of compensa-tion, viz., fair value for all services rendered that are necessaryto the performance of the appointee’s duties (§ 36.4 [b][4]).This determination remains in the sound discretion of thecourt and depends on the factual circumstances of each case.

6. REPORTING LAW FIRM COMPENSATIONSection 36.4 (c) obligates law firms to report, in writing, to theChief Administrator of the Courts whenever total compensa-tion in a single calendar year is $50,000 or more for Part 36appointments of law firm members, associates or employees.The report of compensation received by law firms is to be filedon form UCS-876 on or before March 31st following thecalendar year reported.

The reporting of law firm compensation is for informationalpurposes only. Limitations based on compensation apply onlyto the individual appointee, not the firm, and the appointmentand compensation of one person in the firm are only consid-ered in certifying the availability of that individual for appoint-ment and do not affect the availability for appointment of anyother person in the firm.

7. PUBLICATIONThe notice of appointment and certification of compliance,statement of approval of compensation, and report of com-pensation received by law firms, filed pursuant to section 36.4,are public records, and the names of appointees and ofappointing judges, and the amounts of approved compensa-tion, are subject to periodic publication by the ChiefAdministrator of the Courts (§36.5).

2/08218

Instructions To Amend The UCS 870Application for Appointment Pursuant to Part 36

TO AMEND THE CATEGORIES OR COUNTIES OF ENROLLMENT:

• Send an e-mail to [email protected]

• Send a fax to (212) 428-2819or

• Write to OCA at the address listed below.

Include the foilowing information:

• Your full name• Your Fiduciary ID Number (FID#)• The first five digits of your Social Security Number

A link to (or copy of) your application will be sent to you by returne-mail (or fax or mail) along with a copy of your receipt. Pleaseprint both and make the changes, additions or deletions in ink onthe appiication and receipt. Sign and date each, attach anyrequired documentation (e.g. resume), and mail to:

Office of Court AdministrationP.O. Box 3171Church Street StationNew York, NY 10008

TO AMEND YOUR NAME, ADDRESS OR OTHER CONTACT INFORMATION:

• Send an e-mail to [email protected] with your changes,or

• Send a fax to (212) 428-2819 with your changes

Include the following information:

• Your fuil name• Your Fiduciary ID Number (FID#)• The first five digits of your Sociai Security Number

You may also mail a copy of your receipt with the changes marked in ink to:

Office of Court AdministrationP.O. Box 3171Church Street StationNew York, NY 10008

225

(Mark "X" in appropriate boxes and provide all requested information.)

SUPREME COURT OF THE STATE OF NEW YORK

County: COUNTY

------------------------------------------------------------------------X

Title of Action

---------------------------------------------------------------------X

EX PARTE APPLICATION

for

APPROVAL OF SECONDARY APPOINTMENT(Pursuant to 22 NYCRR § 36.1(a)(10)

INDEX NO. / No. Yr.

APPROVAL of the following SECONDARY APPOINTEE is respectfully requested (attach one page

resume):

Name:

Address;

Phone/FAX/Email

The secondary appointee will serve as: G COUNSEL G ACCOUNTANT G APPRAISER

G AUCTIONEER G REAL ESTATE BROKER G PROPERTY MANAGER.

The secondary appointee G is on the list established by the Chief Administrator of the

Courts for the category of appointment requested.

G is NOT on the list established by the Chief Administrator of the

Courts for the category of appointment requested, but is otherwise

qualified for appointment pursuant to Part 36 of the Rules of the

Chief Judge.

The reasons for the request are as follows (If a NON-LIST appointment is requested, include

explanation of good cause for the appointment; if the Guardian or Receiver requests that he/she, or a person

associated with his/her law firm, be appointed counsel, include an explanation of the compelling reason for

the appointment.):

.

DATED: Signature:

Print Name:

Sworn to before me this day G GUARDIAN G RECEIVERof . 200 .

Address:

Notary Public

Phone

FAX

Email231

(Mark "X" in appropriate boxes and provide all requested information.)

2. (Choose (a) or (b) by marking “X” in appropriate box.)

a. G The appointee is on the list established by the Chief Administrator of the Courts for the category of appointment requested;

OR

b. G The appointee is NOT on the list established by the Chief Administrator of the Courts for the category of appointment requested,

but is otherwise qualified for appointment pursuant to Part 36 of the Rules of the Chief Judge, and the Court is filing with the fiduciaryclerk form UCS 872.5 (STATEMENT OF REASONS FOR NON-LIST APPOINTMENT (§ 36.2(b)(2));

3. (If this is an appointment of Guardian or Receiver, or person associated with his/her law firm, as COUNSEL, mark “X” infollowing box and provide compelling reason.)

G The compelling reason for appointment of the Guardian or Receiver, or a person associated with his/her law firm, as counsel is

as follows:

;


County: COUNTY

------------------------------------------------------------------------X

Title of Action

---------------------------------------------------------------------X

DECISION AND ORDER

APPROVING

EX PARTE APPLICATION

for

SECONDARY APPOINTMENT(Pursuant to 22 NYCRR § 36.1(a)(10)

INDEX NO. / No. Yr.

Name of Judge:

Upon ex parte application of , asName

G GUARDIAN G RECEIVER , dated , for approval of a Secondary Appointment,

it is determined that

1. A Secondary Appointment is necessary and

Name:

Address;

Phone/FAX/Email

is appropriate for appointment as: G COUNSEL G ACCOUNTANT G APPRAISER

G AUCTIONEER G REAL ESTATE BROKER G PROPERTY MANAGER;

1232

Title of Action: Index No. / No. Yr.

ACCORDINGLY, it is

ORDERED that this application for approval of a secondary appointment as

G COUNSEL G ACCOUNTANT G APPRAISER G AUCTIONEER

G REAL ESTATE BROKER G PROPERTY MANAGER is GRANTED.

ORDERED that the secondary appointee shall immediately

Name of Secondary Appointee

file form UCS 872;

ORDERED that compensation for the secondary appointee is subject to PRIOR court approval upon

submission of an application showing experience/expertise, services rendered, time expended, prevailing rate in

the community, rate charged, challenges presented and results achieved;

ORDERED that the applicant shall serve a copy of this order upon the secondary appointee and all

persons entitled to notice in this action/proceeding by certified mail.

DATED: Signature:

File copy of this order with the Fiduciary Clerk

2233

UCS - 876 - Effective January 1, 2004

3. Name of Law Firm:

Street ZipCity/Town/Village State

Phone Fax E-Mail

$

REPORT OF COMPENSATION RECEIVED BY LAW FIRMS FORAPPOINTMENTS PURSUANT TO PART 36 OF THE RULES OF THECHIEF JUDGE (§ 36.4(c))

(Complete if total compensation from appointment of law firm’s members, associates and employees pursuant to Part 36 of the

Rules of the Chief Judge exceeds $50,000 in a single calendar year (January 1 to December 31). File by March 31 following thest

calendar year reported.)

1. Calendar Year Reported: 2. Law Firm Tax ID Number

Year GGGG TID# GG-GGGGGGG

4. Address/Phone/FAX/ E-mail:

5. List the names and Fiduciary Identification Numbers of the members, associates and employees of the law firm for whom

compensation from appointments has been approved during the calendar year reported, and enter for each the total

compensation approved during that year. For a member, associate or employee with no Fiduciary Identification Number

(FID#), enter “Non-List” and his/her Social Security Number in space provided for FID#, (attach additional sheets as needed).

NAME FIDUCIARY IDENTIFICATIONNUMBER

TOTAL APPROVEDCOMPENSATION IN CALENDAR

YEAR REPORTED

$

$

$

$

$

$

$

6. Total of all compensation entered in item 5:

Date: Signature:

Print Name:

Title:

(e.g., managing attorney, member)

Mail to: OCA, Appointment Processing Unit, 25 Beaver Street, Room 84New York NY 10004234

MMoorrttggaaggee FFoorreecclloossuurree –– FFrroomm tthhee DDeeffeennddaanntt’’ss

PPeerrssppeeccttiivvee

235

Where Do We Stand on Standing: Standing to

Sue in Foreclosure Actions and Plaintiff’s

Prima Facie Case And Other Defenses and

Issues

November 2016

Jacob Inwald

Legal Services NYC

Saratoga County Chamber of Commerce, Inc. v. Pataki,

100 N.Y. 801, 766 N.Y.S.2d 654, 798 N.E.2d 1047 (2003):

• “Standing to sue is critical to the proper functioning of thejudicial system. It is a threshold issue. If standing is denied,the pathway to the courthouse is blocked. The plaintiff whohas standing, however, may cross the threshold and seekjudicial redress….The rules governing standing help courtsseparate the tangible from the abstract or speculativeinjury, and the genuinely aggrieved from the judicialdilettante or amorphous claimant.”

• But, New York courts have treated standing as a commonlaw concept, in contrast to federal approach, where it restson constitutional and prudential grounds.

2

237

Capacity to Sue Versus Standing

• Capacity to sue goes to the litigant’s status, i.e., its power

to appear and bring its grievance before the court. Ex.:foreign corporation or llc may not bring an action unless it isregistered with Secretary of State; minors lack legalcapacity, etc.

• Standing requires an inquiry into whether the litigant has aninterest in the claim at issue that the law will recognize as asufficient predicate for determining the issue at the litigant’s

request. Is the relief sought in the case properly sought bythis plaintiff?

• These distinct issues should not be conflated.

3

Standing in a Foreclosure Case

• Foreclosing plaintiff must own the note and the mortgageat the inception of the action. Deutsche Bank NationalTrust Co. v. Barnett, 88, A.D. 3d 636, 931 N.Y.S. 2d 630,(2d Dep’t 2011); Kluge v. Fugazy, 145 A.D. 2d 537, 536N.Y. S. 2d 92 (2d Dep’t 1988)

• Note and Mortgage: assignment of the mortgage withoutassignment of the debt, i.e. the note, is a nullity.

• Note: represents contractual debt obligationMortgage: represents collateral security for debt

4

238

Assignment Must Be Complete Before

Foreclosure Action Commenced

• Assignment can be by written assignment or by physical delivery of noteand mortgage. Aurora v. Taylor, 25 NY 3d 355 (2015) (“physical delivery of

the note to the plaintiff from its owner prior to commencement of aforeclosure action may, in certain circumstances, be sufficient to transferthe mortgage obligation and create standing to foreclose”)

• Difficult to prove physical delivery prior to commencement.

• If written assignment, execution date generally controls and conclusoryaffidavits of prior physical delivery devoid of detail are suspect.

• Back dated assignment ineffective absent proof of prior physical delivery.Wells Fargo v. Marchione, 69 A.D. 3d 204, 887 N.Y. S. 2d 615 (2d Dep’t

2009); see also New Century Mtge. Corp. v. Kogan, 2013 NY Slip Op50047(U) (Kings Cty. Jan. 14, 2013 (no standing where plaintiffcommenced foreclosure action twelve days after it assigned mortgageand note to another party and therefore did not own note and mortgagewhen it commenced the action.)

5

Retroactive Assignments

LaSalle Bank N.A. at Trustee v. Ahearn, 59 A.D.3d 911 (3dDep’t 2009) (retroactive assignment ineffective where

foreclosure action commenced prior to execution ofassignment). Accord, Countrywide Home Loans, Inc. v. Gress,68 A.D.3d 709, 888 N.Y.S.2d 914 (2d Dep’t 2009) (retroactive

assignment executed after commencement of actionineffective to confer standing on assignee in foreclosure actioncommenced before execution of assignment).

Commencement: measured by filing, not service; Wells Fargo

Bank N.A. v. Marchione, 69 A.D.3d 204, 887 N.Y.S.2d 615 (2dDep’t 2009) (affirming dismissal where assignment was

executed after filing of action but before service of summonsand complaint;; execution date of assignment is controlling)ineffective)

6

239

Particular Issues Implicated in

Foreclosure Cases

Assignments and Chain of Title, including timing,suspicious endorsements and allonges, assignmentsfrom MERS as nominee, lack of documentedauthority of parties signing assignments, assigneessigning on behalf of assignors

Robo-signing of assignment documents

Mortgage-Backed Securities Investment Vehicles:Pooling and Servicing Agreements and non-compliance with trust closing dates and other terms

7

Assignments and Physical Delivery

• Assignment can be by written assignment or byphysical delivery of note and mortgage.

• Difficult for plaintiff to prove physical delivery prior tocommencement: what is plaintiff’s evidence of physical

delivery? Affiants often lack personal knowledge, maynot even be employed by the correct party, and cannotprovide any specifics—affidavits typically do not meetstandards for grant of summary judgment.

• If written assignment involved, execution dategenerally controls.

8

240

MERS and Standing

• Assignment from MERS whenMERS is designated merely asnominee of lender, and neverowned note, is ineffective to conferstanding on its assignee. Bank of

New York v. Silverberg, 86 A.D. 3d274, 926 N.Y.S. 2d 532 (2d Dep’t

2011).

9

MERS, STANDING,

SUMMARY JUDGMENT

Homecomings Financial, LLC v. Guldi, 108 A.D.3d 506, 969N.Y.S.2d 470 (2d Dep’t 2013) Plaintiff failed to prove MERS washolder of mortgage and note when action commenced. Mortgage language identifying MERS as nominee insufficient

to overcome requirement that foreclosing party be both holderor assignee of subject mortgage and holder of the underlyingnote when the action is commenced.

Note specifically identified lender as a different party andplaintiff failed to submit any evidence demonstrating that notewas physically delivered to MERS prior to action'scommencement.

Evidence that MERS assigned mortgage instrument to plaintiffwhile action was pending was ineffectual because "MERScould not transfer that which id did not hold."

Plaintiff's servicing agent's affidavit stating that the note wasdelivered to custodian of records of plaintiff during the courseof the action was also insufficient, and, in any event, providedno factual details of the physical delivery of the note.

10

241

MERS Issues Are Still With Us

• HSBC Bank USA, N.A. v. Roumiantseva, 130 A.D. 3d 983 (2dDep’t 2015). Affirming dismissal for lack of standing; ondefendants' motion to dismiss, defendant had burden to proveplaintiff's lack of standing as a matter of law. To defeat motion,plaintiff needed to submit evidence raising a question of fact onstanding. Here, defendants submitted documents from plaintiff'sdocument request responses including MERS assignment anddocuments showing that MERS was never holder of note andtherefore lacked authority to assign. Plaintiff submitted copy ofendorsement in blank, prompting court to direct plaintiff toproduce original note and endorsement. Because endorsementwas attached to note only by a paper clip, it was not "firmlyaffixed" as required by UCC 3-202, and was therefore not a validtransfer of the underlying note to plaintiff.

11

Summary Judgment and Issues of Proof

Deutsche Bank Natl. Trust v. Haller, 100 A.D. 3d 680, 954N.Y.S.2d 551 (2d Dep’t 2012) Plaintiff failed todemonstrate prima facie entitlement to foreclosure: (a) it lacked sufficient evidence of physical delivery of

the note prior to commencement of action whereservicer’s affidavit gave no details of physical delivery;

(b) it failed to prove that it was holder of note andmortgage by virtue of endorsement or written assignment where endorsement was undated and was not annexed to copy of note attached to complaint and where written assignment presented in support of motion lacked any evidence that party who purported to execute assignment was authorized to do so by putative assignor.

12

242


(cont.)

Deutsche Bank Natl. Trust Co. v. Spanos,102 A.D.3d 909, 961 N.Y.S.2d 200 (2dDep’t 2013)

Plaintiff failed to establish its prima facie

standing to commence the action, as itsevidence did not demonstrate physicaldelivery of the note prior tocommencement of the action or that itwas the assignee by virtue of a writtenassignment prior to commencement.

13

Aurora v. Taylor: What Did it Hold?

Aurora Loan Servs., LLC v Taylor, 25 NY3d 355 (2015) (affirmingsummary judgment: affidavit established possession of note prior tocommencement. Plaintiff's affidavit sufficient to establish physicalpossession of note prior to commencement even if plaintiff failed toproduce original note for inspection (defendant had not requestedproduction of original) and no legal authority suggested best evidencerule required production of original note. Affidavit by "legal liason"asserting that she examined original note herself and note and allongesattached to plaintiff's moving papers clearly showed the note's chain ofownership. Although "the better practice would have been for Aurora tostate how it came into possession of the note in its affidavit to clarify thesituation completely, ...under the circumstances of this case” granting

summary judgment was not error. Court did not probe basis of plaintiff’s

affiant’s “personal knowledge” or mention evidentiary standards

governing motions for summary judgment.

14

243

Inconsistent Case Law:

Summary Judgment Standards

Some cases evaluate evidence to assesswhether plaintiff satisfied criteria for summaryjudgment, while others recite, without analysisof evidence presented, that plaintiffestablished requisite standing. Post Aurora v.

Taylor, some courts seem to think rules ofevidence and requirements of CPLR 3212 nolonger apply, while others still recognize that asummary judgment motion must be based onadmissible evidence.

15

Example: Evidence Reviewed with

Respect to Admissibility of Evidence

Deutsche Bank Natl. Trust Co. v Brewton, 142 A.D. 3d683 (2d Dep’t 2016) (affirming denial of summary

where plaintiff failed to establish that it was a holder or

assignee of the note prior to commencement of the

action; plaintiff failed to demonstrate that records

relied upon were admissible under the business

records exception to the hearsay rule because affiant

did not attest that she was personally familiar with

plaintiff's record-keeping practices. Plaintiff also failed

to establish through submission of excerpts of Pooling

and Servicing Agreement standing by virtue of a

written assignment of note prior to commencement.

16

244

Example: No Consideration of Summary

Judgment Standards in Affirming

Rose Land & Fin. Corp. v Vassiliades, 142 A.D. 2d658 (2016) (affirming summary judgment for plaintiff,holding that plaintiff established its standing as holderof the note by submitting evidence including the note,which contained signed endorsements, and theaffidavit of its vice president stating that plaintiffobtained physical possession of the note prior tocommencement of the action. No mention ofrequirement that summary judgment motions besupported by admissible evidence nor considerationof admissibility of vice president's affidavit.

17


–Some Trial Level Decisions

U.S. Bank Natl. Assn. v. Guy, 2013 NY Slip Op 51532(U) (Kings Cty., Schmidt, J. August 22, 2013) (Plaintifffailed to prove delivery of note prior to commencementwhere “possession affidavit” offered by documentcustodian was not based on personal knowledge andasserted physical delivery on a date that wasinconsistent with complaint's allegations. Plaintiff'sreliance on undated allonge was misplaced where thenote had room for further endorsements and allonge wasnot firmly affixed to the note as required by the UCC.Court also rejected Plaintiff's assertion that Defendant'sacceptance of a HAMP modification was a ratification ofplaintiff's ownership of the note, which was unsupportedby any legal authority).

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–Trial Level Decisions (cont.)

Bank of N.Y. Mellon v. Dean, 2013 NY Slip Op 23224(Kings Cty., Battaglia, J. July 11, 2013) (plaintiff failedto establish prima facie entitlement to judgment offoreclosure: Assignment of mortgage from MERS toplaintiff, which did not purport to assign note, wasinsufficient to confer standing; unauthenticated Poolingand Servicing Agreement excerpts did not suffice toestablish plaintiff's standing; affidavit in support ofsummary judgment motion of physical delivery wasneither based on personal knowledge nor adequatelyspecific and failed to establish that assignor to plaintiffever had possession of the note).

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DECISIONS UPHOLDING STANDING

Redrock Kings, LLC v. Kings Hotel, Inc., 109 A.D.3d 602, (2dDep’t 2013) (plaintiff established prima facie entitlement tojudgment by providing the subject note and mortgage and proofof default, reciting without analysis that defendant failed to raise atriable issue of fact concerning plaintiff's standing, validity ofextension agreement or plaintiff's contractual right to foreclose).

Citimortgage, Inc. v. Friedman, 109 A.D.3d 573 (2d Dep’t 2013)(defendant waived standing defense by failing to raise in answeror a pre-answer motion to dismiss, and in any event defensefailed on merits because plaintiff demonstrated that when itcommenced foreclosure action it was holder of the mortgage andtwo slightly different versions of the note, both of which wereindorsed in blank, and because plaintiff agreed to proceed on theversion of the note that defendant conceded was validly signedand was not altered).

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Waiver of Standing Defenses

• Is standing defense waived if not raised in the answer or pre-answermotion to dismiss?

• Wells Fargo Bank v. Mastropaolo, 42 A.D. 3d 239, 837 N.Y.S. 2d247 (2d Dep’t 2007); HSBC v. Dammond, 59 A.D. 3d 679, 875N.Y.S. 2d 490, 875 N.Y. S. 2d 490, (2d Dep’t 2009); Countrywidev. Delphonse, 64 A.D. 3d 624, 883 N.Y. S. 2d 135 (2d Dep’t2009).

• Cf. Security Pacific Nat’l Bank v. Evans, 31 A.D. 2d 278, 820N.Y.S. 2d 2 (1st Dep’t 2006) (plaintiff lender commenced actionafter merging with another bank; lack of legal capacity waived; notan issue of standing)

• CPLR 3211(e) only provides that capacity to sue is waived; nomention of standing

Mastropaolo equated standing to capacity to sue for CPLR 3211(e) purposes, but in Mastropaolo,significantly, defendant hadappeared by counsel and answered without asserting standingdefense.

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DOES MASTROPAOLO MAKE ANY SENSE?

Does its reasoning make sense for:

a) an unrepresented party who answers pro se?

b) a party who fails to answer at all?c) ever? Why do we want to award judgments of foreclosure to

plaintiffs who cannot establish that the debt is owed to them?Would we allow someone who is not a party to a contract tosue for breach of contract without proving that the rightsunder the contract on which they sue were assigned to them

d) Policy reasons for waiver of capacity defense embodied inCPLR 3211(e): does that apply to standing?

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Exceptions/Limitations on Waiver

Some courts: No waiver of standing defensewhere plaintiff had not appeared oranswered altogether:E.g., Deutsche Bank v. McRae, 894 N.Y. S.2d 720 (Allegheny Cty. 2010); Citigroup v.

Bowling, 25 Misc. 3d 1244A, 906 N.Y. S. 2d778 (Kings Cty. 2009).

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Some Courts Have Recognized That

Mastropaolo Makes No Sense!

Citimortgage, Inc. v Finocchiario, 2013 NY Slip Op30003(U) (Richmond Cty. January 4, 2013) (grantingorder to show cause seeking vacatur of order ofreference entered on default and dismissing for lack ofstanding. Court determined that defendant possessedmeritorious standing defense where plaintiff's chain oftitle derived from MERS and where MERS never heldany interest in the note. Court expressly consideredMastropaolo and nonetheless held that standing defensecould not be waived, dismissing the action for lack ofstanding. In rejecting Mastropaolo, the Court stated that"it has become evident in the realm of foreclosurelitigation that it would be a miscarriage of justice tocontinue to treat standing as a defense that can bewaived."

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Leave to Amend Answer to Assert

Standing Defense is Permitted

• U. S. Bank, Natl. Assn. v. Sharif, 89A.D. 3d 723,933 N.Y.S. 2d293, 2011 NY Slip Op 07835 (2d Dep’t Nov. 1, 2011) (reversingdenial of leave to amend to assert standing and denial of motionto dismiss for lack of standing where plaintiff demonstrated noprejudice and failed to establish its standing to foreclose). Seealso Deutsche Bank Trust Co. Ams. v. Cox, 2013 NY Slip Op06543 (2d Dep’t Oct. 9, 2013) (reversing grant of summaryjudgment to plaintiff and denial of cross motion for leave toamend answer to assert standing and other waived defenses inan equitable mortgage action, reiterating that “defenses waivedunder CPLR 3211(e) can nevertheless be interposed in ananswer amended by leave of court pursuant to CPLR 3025(b)so long as the amendment does not cause the other partyprejudice or surprise resulting directly from the delay and is notpalpably insufficient or patently devoid of merit (see CPLR3025(b)”)

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Standing as Meritorious Defense (for leave to

file untimely answer or to vacate default)

Deutsche Bank National Trust Co. v. Ibaiyo, 20910-08 (Queens Ct. 2009) (meritorious defense criteriafor CPLR 3012 motion to extend defendant’s time to

answer—standing defense permitted) Maspeth Federal Av. & Loan Ass’n v. McGown, 77

A.D. 3d 890, 909 N.Y. S. 2d 642 (2d Dep’t 2010)

(trial court has considerable discretion onapplications to vacate default and extend time toanswer when determining existence of meritoriousdefense and reasonable excuse for default)

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Sua Sponte Dismissals on Standing

Grounds/Robosigning Concerns

HSBC Bank USA, N.A. v. Taher, 104 A.D.3d815, 962 N.Y.S.2d 301 (2d Dep’t 2013)(reversing sua sponte dismissal with prejudicebased on judge’s independent researchestablishing absence of standing andprosecution of foreclosure based on robo-signeddocuments, and reversing subsequent sanctionsordered against HSBC and plaintiff’s law firmresulting therefrom. Standing had been waivedby failure to answer and was not proper basis forsua sponte dismissal.

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Attorney Affirmation Rule to Address

Robo-Signing and the Shadow Docket

OCA Court Rule (AO/431/11) Plaintiff's counsel in foreclosure actions required

to file an affirmation certifying that counsel hastaken reasonable steps – including inquiry tobanks and lenders and careful review of thepapers filed in the case – to verify the accuracy ofdocuments filed in support of residentialforeclosures.

Filing Requirement tied to RJI filing instead ofsummons and complaint let to un-filed RJIs andShadow Docket limbo

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Certificate of Merit Now Required for

Cases Filed After 8/30/13

New CPLR 3012-B: For residentialmortgage foreclosures, counsel must signcertificate with complaint certifying review offacts that plaintiff is currently creditor entitledto enforce rights of the loan document andfile with the complaint, and if not attached tocomplaint, must attach copies of mortgageand note to such certificate.

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RPAPL 1302

Plaintiff Must Plead Ownership of Noteand Mortgage for High-Cost/Sub PrimeLoans

Applicable to loans subject to BankingLaw 6-l and 6-m (high cost and subprime loans).

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Capacity to Sue Issues

BCL 1372 (prohibits lawsuits by foreigncorporations not authorized to do businessin NY) with exception for foreign bankingcorporations via BCL 103(a) and BankingLaw 200(4).

Sutton Funding LLC v. Parris, 24 Misc. 3d889, 878 N.Y.S.2d 610 (Kings Cty. 2009)(dismissing foreclosure where plaintiff wasnot a foreign bank and was not authorized todo business in NY)

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Other Common Defenses and Issues

1. Service of process2. Conditions precedent to suit: statutory notices

and acceleration notices3. Statute of Limitations/Quiet Title Counterclaim4. Banking Law 6-L and 6-M5. Truth in Lending Act & HOEPA6. Equitable defenses: HAMP, FHA, unclean

hands and CPLR 3408 Non-Compliance7. Fraud

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Common Defenses and

Counterclaims (cont’d.)

7. Real Estate Settlement ProceduresAct (RESPA)

8. General Business Law 349(Deceptive Practices Act)

9. Unconscionability

Not an exhaustive list

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Conditions Precedent

RPAPL 1303 notice “Help for

homeowners in foreclosure” is a

condition precedent to suit.

First National Bank of Chicago v. Silver, 899 NYS2d 256 (2d Dep’t 2010)

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Similarly, RPAPL 1304 90-Day notice is a condition precedent to suit.

Aurora Loan Servs., LLC v. Weisblum, 85 A.D. 3d 95 (2d Dep’t 2011)

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30-day notice of default andacceleration required by mostmortgages and is a conditionprecedent to suit.

Failure to send notice warrantsdismissal.

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Statute of Limitations

6 Year Statute of LimitationsCPLR 213(4)

Increasingly Important Issuewith Abandonment of EarlierCases/Dismissals of EarlierCases

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Equitable Defenses: HAMP

HAMP: Home Affordable Modification Program promotes affordable loan modifications in order to stem the foreclosure crisis. Most major mortgage servicers signed up and obligated themselves to a loan modification process governed by detailed federal loan modification regime. Handbook section entitled “Protections Against

Unnecessary Foreclosure,” prohibits a referral to

foreclosure until either: - Borrower has been evaluated and determined ineligible

for HAMP; - Reasonable solicitation efforts have failed. - MHA Handbook Version 3.2, Section 3. Dual Tracking Issues

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HAMP Decision in 2d Dept

Aames Funding Corp. v. Houston, 2011 NY Slip Op 05642 (2d Dep’t 2011): Trial court should

have granted borrower’s OSC to stay sale where

borrower’s HAMP application was still under

review. Settlement Conferences: typically involve

applications for HAMP modifications and courts routinely cite violations of HAMP requirements as indicia of plaintiffs’ failure to comply with

settlement conference law

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No Private Right of Action for

HAMP Violations

But HAMP violations can be evidence of failureto negotiate in good faith at settlementconferences

And violation of HAMP loan modifications cansupport breach of contract action, possibleFDCPA claim, RESPA violations, and NewYork Deceptive Practices Act violations

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Counterclaims: RESPA

For example: Failure to respond to a Qualified Written Request, 12 USC 2605(e):

Actual damages, costs and attorneys’

fees; plus $1000 per violation if pattern and practice of noncompliance

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Counterclaims: GBL 349

Prohibits “deceptive acts or practices in

the conduct of any business, trade or commerce or in the furnishing of any service in this state…”

Can apply to loan servicing and loan origination issues.

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GBL 349

Must show (1) deceptive acts were directed at consumers, (2) acts are misleading in a material way, and (3) plaintiff has been injured as a result.

Unlike fraud, does not require showing of intent.

Broadly construed.

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GBL 349

Remedies include: 1. Injunctive relief against deceptive

acts and practices2. Actual damages3. Treble damages up to $1000 if

violation was willful or knowing, and4. Attorneys’ fees.

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MORTGAGE FORECLOSURE FROM THE DEFENDANT’S PERSPECTIVE

by

Derek Tarson, Esq. Legal Aid Society of Rockland County, Inc.

New City, New York

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Mortgage Foreclosure from the Defendant’s Perspective

Derek Tarson Foreclosure Project Director

Legal Aid Society of Rockland County, Inc.

I. Notice of Appearance and Waiver in Foreclosure

• Generally used by creditors or governmental agencies named as defendants who do notintend to defend against foreclosure, but merely seek their share of any surplus monies.

• A standard notice of appearance and waiver in foreclosure will state that said defendantwaives service of all papers and notice of all proceedings except certain enumeratedpapers (such as amended complaints, notice of application for discontinuance of action,referee’s report of computation, application for judgment of foreclosure and sale, andnotice of proceedings to obtain surplus monies).

• If United States of America appears, it has a standard provision in its notices ofappearance that the United States will object to any judgment of foreclosure and sale thatdoes not provide the United States a period of 120 days from the date of sale to redeemthe property (or a year if the United States’ lien does not arise from a tax liability, whichis not very common). 28 U.S.C. 2410(c).

II. Answer with Affirmative Defenses

• As a general rule, a homeowner must answer the complaint within the statutory timeperiod or else bear the risk of waiving affirmative defenses—most importantly, thedefense of lack of standing.

A. Standing and Capacity Issues

1. Standing in a Foreclosure Case

o Foreclosing plaintiff must hold the note and the mortgage at the inception of theaction. Bank of New York v. Silverberg, 86 A.D.3d 274, 279 (2d Dept. 2011)(collecting cases); Kluge v. Fugazy, 145 A.D.2d 537 (2d Dept. 1988).

o Note: represents contractual debt obligationMortgage: represents collateral security for debt.

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o Assignment of the mortgage without assignment of the debt, i.e. the note, is anullity. Silverberg, supra, 86 A.D.3d at 280; Merritt v. Bartholick, 36 N.Y. 44, 45(1867).

o For a party to hold the note, the UCC (UCC 1-201[20]) requires both:

That the note be indorsed to the foreclosing party (or indorsed in blank) –see examples of different types of indorsements in materials; and

That the note be in the physical possession of the foreclosing party

o A “red flag” that could indicate a lender’s lack of standing is the existence ofcontradictory indorsements and allonges.

o If the note is lost or destroyed, it is possible for a plaintiff to prosecute aforeclosure action, but only upon meeting the requirements of UCC § 3-804,which requires the requires that the plaintiff post a bond for double the amountunpaid on the note to indemnify the defendant in case of a competing claim.

o It is not necessary that there be a written assignment of either the note or themortgage—only that the note and mortgage have been physically delivered to theforeclosing party prior to the commencement of the foreclosure action; BUT

If an assignment of the mortgage (or note and mortgage) exists, theexecution date of the assignment generally controls absent proof thatphysical delivery of the note and mortgage was previously effectuated.LaSalle Bank, N.A. v. Ahearn, 59 A.D.3d 911, 912 (3d Dept. 2009); WellsFargo v. Marchione, 69 A.D.3d 204, 210 (2d Dept. 2009).

A conclusory affidavit devoid of factual details surrounding delivery ofthe note and mortgage to the foreclosing party is not sufficient toovercome the presumption that the date of the written assignment controls.HSBC Bank USA v. Hernandez, 92 A.D.3d 843, 844 (2d Dept. 2012).

However, if the plaintiff produces evidence that the note and mortgagewas previously delivered on a particular date, such evidence is probablysufficient to overcome the presumption that the execution date of theassignment of mortgage controls. Deutsche Bank Nat’l Trust Co. v.Whalen, 107 A.D.3d 931 (2d Dept. 2013); Aurora Loan Svces, LLC v.Taylor, 114 A.D.3d 627 (2d Dept. 2014).

o Assignments of mortgage should be checked to ensure that the execution date isprior to the commencement date of the foreclosure action. If it is not, and if thereis no evidence of prior delivery of the mortgage, then the plaintiff did not hold themortgage when the action commenced and the action must be dismissed for lackof standing.

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2. Why Standing is so Often Questioned in Foreclosure Cases(Robo-Signing)

o “Robo-Signing” is a broad term encompassing many different kinds of conduct onthe part of lenders

The conduct that caused headlines in 2010 was the execution of affidavits,including questionable notarizations, by individuals who signed theaffidavits without verifying that the content of the affidavits was true.

Also sometimes called “robo-signing” is the application of indorsementsor the execution of assignments of mortgage by individuals withoutauthority to do so.

• Linda Tirelli’s discovery regarding the Wells Fargo HomeMortgage Foreclosure Attorney Procedure Manual

• Steven J. Baum attorneys signing assignments of mortgage

• Lenders Processing Services (Dakota County, Minnesota andDuval County, Florida)

o MERS – What It Is and What It Isn’t

MERS (Mortgage Electronic Registration System) originated to permittransfers of mortgages without paying county clerk’s recording fees.

MERS acts only as “nominee” for lender. It does not hold the note,though it may assign the mortgage.

MERS has tens of thousands of authorized signers.

While there is case law questioning the assignments of mortgages byplaintiff’s counsel who are MERS signatories, see e.g. U.S. Bank, N.A. vGuichardo, 22 Misc 3d 1116(A), 2009 NY Slip Op 50151(U) (Sup Ct,Kings County 2009) (Schack, J.), rev’d on other grounds by 90 A.D.3d1032 (2d Dept 2011), there is no appellate court decision holding saidassignments to be invalid. Similarly, there is no binding decision holdingthat assignments by the employees of the assignee, who happen to besignatories of MERS, are invalid.

Therefore, MERS is a “red flag” that a standing issue may exist, but it isnot a “free pass” to a homeowner.

Nonetheless, assignment from MERS when MERS is designated merely asnominee of lender, and never owned note, is ineffective to confer standingon its assignee where there is no evidence that the note was effectivelytransferred by the lender. Bank of New York v_Silverberg, 86 A.D. 3d 274,

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926 N.Y.S. 2d 532 (2d Dep't 2011). See also In re Lippold, 457 B.R. 293 (Bankr. S.D.N.Y. 2011) (MERS, as assignor, could not legally assign the note as prior holder of note and mortgage only conferred legal rights with respect to the mortgage); In re Agard, 444 B.R. 231 (Bankr. S.D.N.Y. 2011) (mortgage naming MERS as nominee did not authorize it to assign)

o Remedies for Robo-Signing

As discussed previously, the Lippman/Pfau Affirmation and theCertificate of Merit are effective ways to prevent robo-signed documentsfrom being used to foreclose, but it leaves open the issue of how to dealwith orders that were granted upon robo-signed affidavits

Lower courts have held that such orders must be vacated because inabilityto verify an affidavit upon which an order was granted “calls into questionthe methodology used by the plaintiff to procure the order.” US BankNatl. Assn. v. Perez, 2012 NY Slip Op. 31812[U] (Sup. Ct. QueensCounty 2012). Nonetheless, the Second Department has held that a trialcourt did not abuse its discretion in allowing an order to be corrected nuncpro tunc, rather than vacated, where there was no evidence that the orderwas procured by fraud. U.S. Bank, N.A. v. Eaddy, 109 A.D.3d 908 (2dDept. 2013). This area of law is still developing.

3. Difference between Standing and Capacity to Sue

o Standing requires an inquiry into whether the litigant has an interest in the claimat issue that the law will recognize as a sufficient predicate for determining theissue at the litigant’s request. Is the relief sought in the case properly sought bythis plaintiff.

o Capacity to sue goes to the litigant’s status, i.e., its power to appear and bring itsgrievance before the court. For example, a foreign corporation or LLC may notbring an action unless it is registered with the Secretary of State; minors lack legalcapacity, etc.

o Why this is important – CPLR § 3211 expressly states that a defense based onthe plaintiff’s lack of capacity to sue is waived if not raised in the answer or a pre-answer motion to dismiss. CPLR §§ 3211(a)(3), 3211(e). But the CPLR does notaddress a defense of lack of standing.

In foreclosure actions, it is rare that a defendant can claim that a plaintifflacks capacity to sue (though some such cases will be discussed underLicensing). As discussed previously, the inquiry is whether the plaintiffpossesses standing.

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BUT, the Second Department in Wells Fargo Bank Minnesota, N.A. v.Mastropaolo, 42 A.D.3d 239, 241-44 (2d Dept. 2007), while admittingthat the case law was “unsettled” determined “that, for purposes of thewaiver rule set forth in CPLR 3211 (e), standing and capacity to sue aresufficiently related that they should be afforded identical treatment.”

For the time being, for practical purposes, therefore, the distinctionbetween standing and capacity to sue is largely academic.

4. Waiver of Standing Defense and How to Circumvent Waiver

o Multiple Second Department decisions have held that if lack of standing is waivedif not asserted in the defendant’s answer or pre-answer motion to dismiss. See,e.g., Wells Fargo Bank Minn., N.A. v. Mastropaolo, 42 A.D. 3d 239 (2d Dep't2007) (standing waived where defendant raised lack of standing in opposition toPlaintiff’s motion for summary judgment without seeking to amend answer);Countrywide v. Delphonse, 64 A.D. 3d 624 (2d Dep't 2009) (same); HSBC v.Dammond, 59 A.D. 3d 679, (2d Dep't 2009) (standing waived where defendantdid not answer and raised standing as a meritorious defense in an effort to vacatejudgment of foreclosure and sale).

o Notwithstanding the above decisions, defendants may amend their answers (if noprejudice accrues to the plaintiff) to interpose the lack of standing defense, ormove to compel a late answer (if a reasonable excuse for delay is shown) tointerpose that defense.

o Amendment of Answers: Leave to amend should be freely given absent“significant prejudice” to opposing party. CPLR § 3025(b); EdenwaldContracting Co., Inc. v. City of New York, 60 N.Y.2d 957 (1983). In mortgageforeclosure context, “significant prejudice” is a high bar.

Leave to amend granted: HSBC Bank v. Picarelli, 110 A.D.3d 1031 (2dDept. 2013); U.S. Bank, National Association v. Sharif, 89 A.D.3d 723 (2dDept. 2011) (trial court abused its discretion in not granting defendants’cross-motion to amend their answer interposed in response to plaintiff’smotion for summary judgment).

Leave to amend denied: HSBC Bank USA v. Philistin, 99 A.D.3d 667 (2dDept. 2012) (affirming trial court’s decision denying leave to amendanswer where motion was made seven months after plaintiff had obtainedsummary judgment).

o Compelling Late Answers: The court may compel the acceptance of a late answer“upon a showing of reasonable excuse for delay or default.” CPLR § 3012(d).“The determination of what constitutes a reasonable excuse lies within the sounddiscretion of the trial court.” Maspeth Fed. Sav. & Loan Assn. v. McGown, 77A.D.3d 889 (2d Dept. 2010).

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Motion to Compel granted: HSBC Bank USA, N.A. v. Cayo, 34 Misc. 3d850 (Sup. Ct., Kings County 2011); Zara Realty Holding Corp. v. E & JDeli and Grocery, 34 Misc. 3d 1234(A), 2012 NY Slip. Op. 50364(U)(Sup. Ct., Queens County 2012); Scarlett v. McCarthy, 2 A.D.3d 623 (2dDept. 2003) (in personal injury action, trial court property vacated defaultwhere defendant showed that his insurance carrier was “actively engagedin settlement negotiations”)

Motion to Compel denied: Three Second Department decisions havefound that trial court did not abuse its discretion in denying motion tocompel answer where defendants claimed delay based on good faithnegotiations with lenders in foreclosure settlement conferences. HSBCBank USA, N.A. v. Lafazan, 115 A.D.3d 647 (2d Dept. 2013) (261 dayspassed between expiration of time to answer and first settlementconference); Deutsche Bank Nat’l Trust Co. v. Gutierrez, 102 A.D.3d 825(2d Dept. 2013) (Defendant’s reliance on loan modification negotiationswas unsubstantiated); Mannino Development, Inc. v. Linares, 117 A.D.3d995 (2d Dept. 2014) (Defendants appearance at settlement conferences donot provide a reasonable excuse for delay).

5. Burden of Proof on Defense of Lack of Standing

o Unlike other affirmative defenses upon which the burden of proof is entirely onthe defendant (e.g. Statute of Limitations), the burden of proof on the defense oflack of standing shifts to the plaintiff to prove standing. The Second Departmenthas stated, “[w]here, . . . , the issue of standing is raised by a defendant, a plaintiffmust prove its standing in order to be entitled to relief.” Bank of New York v.Silverberg, 86 A.D.3d 274, 279 (2d Dept. 2011).

o Since, as noted above, a necessary element to prove standing is that the plaintiffphysically possessed the note at the commencement of the action, Plaintiff bearsthe burden of producing evidence “from a person having knowledge of the facts,”CPLR § 3212(b), that the Plaintiff held the note at the relevant time.

o Where there has been a servicing transfer after the commencement of aforeclosure action, the statement of an employee of the new servicer is notadmissible evidence as to whether the old servicer or the Plaintiff (not necessarilythe same party) physically possessed the note at commencement of the action.See Standard Textile Co. v. Nat’l Equip. Rental, Ltd., 80 A.D.2d 911 (2d Dept.1981) (employee of one entity cannot testify as to the record keeping, under thebusiness records hearsay exception, of another entity); Residential Credit Sol’ns,Inc. v. Amsterdam, 36 Misc. 3d 1234(A), 2012 NY Slip Op 51606(U) (Sup. Ct.,Kings County 2012) (same in mortgage foreclosure context).

This same principle holds true for other defenses – such as mailing of thenotice of default or the RPAPL § 1304 notice. An employee of a newservicer has no personal knowledge that such mailings were completed,

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and cannot testify as to business records of the old servicer. This can be a very effective means for defense counsel to defend against a summary judgment motion or even a motion for order of reference.

PRACTICE POINT FOR LENDERS: To avoid this problem, lenderscounsel should probably obtain an affidavit of an employee of the servicerat the time the action was commenced when a servicing transfer is aboutto occur.

B. Federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692-1692p

1. Scope of FDCPA Coverage

a) Who is covered

• Applies to debt collectors. § 1692a(6)

• Debt collector is any person who uses any instrumentality ofinterstate commerce or the mails in any business the principal purpose of which is the collection of any debts

• For § 1692f(6) purposes, it also includes any business the principalpurpose of which is the enforcement of security interests.

• Or, any person who regularly collects, directly or indirectly, debtsowed or due or asserted to be owed or due another.

• Includes debt buyers• Includes attorneys who regularly collect consumer debts.

b) Who is not covered

• Original creditors. § 1692a(6)(F)(ii)

• It does include any creditor who, in the process of collectinghis own debts, uses any name other than his own which wouldindicate that a third person is collecting or attempting tocollect such debts. § 1692a(6)

• Creditors employees or agents collecting in the name of thecreditor. § 1692a(6)(A)

• State and federal officials performing their duties, such as the IRSor U.S. Dept. of Education. § 1692a(6)(C)

• Persons collecting debts not in default, such as some servicers. §1692a(6)(F)(iii)

• Process servers. §1692a(6)(D)

• At least one court has held that they are covered if they areengaging in sewer service. Mel Harris v. Sykes, 757F.Supp.2d 413 (2010)

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c) What transactions are covered

• Consumer debts

• Consumer is defined in § 1692a(3) as “any natural personobligated or allegedly obligated to pay any debt”

• Does not apply to artificial entities, such as corporations

• Debts are defined in § 1692a(5) as any obligation of a consumer topay money

• underlying transaction must be for money, property,insurance, or services

• must be primarily for personal, family or householdpurposes

• no business debts or fines

• Communications - § 1692a(2)

• Means the conveying of information regarding a debtdirectly or indirectly to any person through any medium

• Also applies to statements and activities during the course oflitigation. Heintz v. Jenkins, 514 U.S. 291 (1995)

• Recent amendments to FDCPA clarify that a legal pleadingcannot be considered an “initial communication” underFDCPA.

• Note that this is a narrow amendment; other provisions ofFDCPA still apply.

2. Substantive Consumer Protections:

• Cease communications. § 1692c

• Dispute/verification. § 1692g

• Notice within 5 days of initial communication

• Right to dispute within 30 days of receiving notice

• Once debt collector receives dispute in writing, must stop all debtcollection activity (including filing a lawsuit) until it provides"verification" of the debt.

• NOTE: Local NYC law expands these dispute rights.Under local law, consumers can request verification at anytime. NYC Admin Code § 20-493.2.

• Verification must include (1) copy of the contract or otheragreement creating the obligation to pay (2) copy of final

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account statement (3) an accounting itemizing the total amount do, specifying principal, interest, and other charges. For each additional charge, the debt collection must state the date and basis for the charge. See § 2-190 of the Rules of the City of New York.

3. Prohibited Activities

a) Communications. §§1692b & 1692c –

• Contacting consumer after consumer sends cease communicationletter

• Contacting consumer who is represented by counsel

• Contacting third parties about a consumer's debt

• Contacting consumer at work if debt collector has reason to knowthat consumer's employer prohibits such communication

• Common scenario: Debt collector can't reach consumer, socalls consumer's neighbor/family member/employer and leavestelephone number and message for the consumer to call back aboutan important matter. This is a violation.

b) Harassment or Abuse. § 1692d

• Debt collector may not engage in conduct the natural consequence ofwhich is to harass, oppress, or abuse any person in connection withcollection of debt

• Includes: threats of violence, use of profanity, repeated telephone calls forpurpose of harassment, calling without disclosure of identity (e.g. threatsto repossess property)

c) False or Misleading Representations. § 1692e

• False representation of character, amount, or legal status of any debt (e.g.,suing for more interest and fees than is actually owed)

• Threat to take any action that cannot legally be taken or is not intended tobe taken

• Implying that consumer could be arrested or children taken away fornonpayment of debt

• Pretending to be attorney, marshal

• Making false or inaccurate reports to credit reporting agencies

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d) Unfair Practices. § 1692f

• Using unfair or unconscionable means to collect a debt Collection of anyamount (including interest and fees) that is not actually owed

• Threatening to take or repossess property (a) without the right; (b) withoutthe intent; (c) if property is exempt

4. FDCPA Litigation and Remedies

a) Statute of Limitations

• One year from the date on which the violation occurs - § 1692k(d)

• No continuing violations doctrine

b) Jurisdiction

• May bring in either state or federal court

• May also bring as a counterclaim in a debt collection suit

c) Construction

• Strict liability statute — proof of the debt collector’s intent is not requiredintent is a factor that can be used when calculating damages

• Courts apply a “least sophisticated consumer” standard to analyze violations

d) Remedies

• Up to $1000.00 statutory damageso A majority of courts hold that capped at $1,000 per action no

matter how many violations are joined in the lawsuito Per Plaintiffo Sometimes per Defendant, depending on the violation

• Factors used by courts in determining statutory awards:o Intent to commit the violation or evade the protectionso Repetition of the violationso Timely correction of the violationso Multiple consumers affected by the violationso Prior violations by the collector for similar acts

• Actual damages

• Attorneys’ fees

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• Declaratory relief

• No injunctive relief

C. NYS Banking Law Defenses

1. Banking Law 6-l

• Applies to loans made after April 1, 2003.

• Covers "high-cost home loans": a first lien residential mortgage loan,not exceeding conforming loan size for a comparable dwelling as establishedby the Federal National Mortgage Association in which (1) the APR exceedseight percentage points over the yield on Treasury securities havingcomparable periods of maturity; or (2) total points and fees exceed 5% of thetotal loan amount, excluding certain bona fide discount points if total loanis $50,000 or more.

• Prohibits, inter alia, (1) lending without regard to a borrower's ability torepay; (2) financing of points and fees in excess of 3% of the loan; (3) loanflipping; (4) kickbacks to mortgage brokers; (5) points and fees when lenderrefinances its own high-cost loan; (6) balloon payments, negativeamortization, and default interest rates.

• Provides private right of action with 6-year statute of limitations (fromorigination); actual and statutory damages; attorney fees; possible rescissionof the loan.

• Intentional violation may result in voiding of the loan.

2. Banking Law § 6-m

• Covers "subprime home loan": a loan where the fully indexed APR for thefirst- lien loan exceeds by more than 1.75, or for a subordinate loan bymore than 3.75, the average commitment rate for loans in the northeastregion with a comparable duration as published in the Freddie MacPrimary Mortgage Market Survey (PMMS) in the week prior to the weekin which the lender received a completed loan application.

• Lenders must take reasonable steps to verify that the borrower has theability to repay the loan, including taxes and insurance.

• Prohibitions similar to those in Banking Law §6-1.

• Lenders must disclose charges for taxes and insurance and must escrowsuch payments after July 1, 2010.

• No private right of action, but borrowers can raise violations as defensesto foreclosure. Allows actual damages, injunctive or declaratory relief, andattorney fees.

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D. Licensing

• BCL § 1312 (prohibits lawsuits by foreign corporations not authorized to dobusiness in NY)

• Exception for foreign banking corporations via BCL § 103(a) and Banking Law §200(4).

• Sutton Funding LLC v. Parris, 24 Misc. 3d 889 (Sup. Ct. Kings County 2009)(dismissing foreclosure where plaintiff had not proved it was a foreign bank licensedby the Superintendent of Banking nor that it was a foreign corporation authorized todo business in NY)

E. Equitable Defenses

• Foreclosure is an action in equity. Norstar Bank v. Morabito, 201 A.D.2d 545,546 (2d Dept. 1994) (“Once equity is invoked, the court’s power is as broad asequity and justice require.”)

• Consider equitable defenses—unclean hands, waste, estoppel—when a mortgagemodification is viable (affordable to the homeowner and more profitable tothe holder than foreclosure), but the plaintiff:

• refuses to offer a modification

• has acted in violation of applicable servicing standards

• has acted in violation of applicable loan modification programs, such asHAMP, FHA, or Fannie/Freddie guidelines

• has not negotiated in good faith in mandatory foreclosure settlementconferences.

• Always consider whether the lender has violated its duty of contractual good faithand fair dealing.

F. Other Statutory Defenses

1. RPAPL § 1304

• Sending of the 90-day notice (previously mentioned) is a mandatoryprecondition to foreclosure. Aurora Loan Servs. v. Weisblum, 85 A.D.3d95 (2d Dept. 2011)

2. RPAPL § 1303

• Attaching the notice on colored paper stating “Help for Homeowners inForeclosure” with the required statutory text and in the required print size

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is a mandatory precondition to foreclosure. First Nat’l Bank of Chicago v. Silver, 73 A.D.3d 162, 169 (2d Dept. 2010).

• As a practical matter, it is difficult to prove that the homeowner did notreceive this notice, since process servers’ affidavits are accepted as primafacie evidence and the affidavits invariably state the summons andcomplaint were served with the RPAPL § 1303 notice.

3. NY General Business Law § 349 (Deceptive Practices Act)

• Prohibits "deceptive acts or practices in the conduct of any business, tradeor commerce or in the furnishing of any service in this state..."

• Plaintiff must show that (1) the defendant's deceptive acts were directed atconsumers; (2) the acts were misleading in a material way; and (3) theplaintiff was injured as a result.

• No intent showing required.• May cover violations of relevant statutes which do not have a private

right of action (e.g. Real Estate Settlement Procedures Act; NY BankingLaw §6-m; NY Dept. of Financial Services Business Conduct Rules forServicing Mortgage Loans, 3 NYCRR 419.11)

• Statute of limitations is 3 years from when the plaintiff was injured bythe violation.

• Remedies: injunctive relief actual damages; treble damages up to $1,000 forwillful or knowing violations; and attorney fees. A defendant whose deceptiveconduct is perpetrated against an elderly person (65 years and older) may beliable for an additional civil penalty of up to $10,000.00. N.Y. Gen. Bus. Law§ 349- c(2)(a).

4. NY Judiciary Law § 487

• Prohibits attorneys from engaging in acts of deceit or collusion with intent todeceive the court or any party.

• Relief includes treble damages

5. Truth in Lending Act 15 U.S.C. §1601 et seq; 12 C.F.R. §226 etseq. (Regulation Z)

• The cost of credit (finance charge, amount financed, and APR) must beaccurately disclosed to the borrower in a statement provide at closing

• Borrower has a right to rescind up to 3 business days after closing of arefinance loan, delivery of the notice of right to cancel or deliver of materialdisclosures, whichever is last.

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• “Finance charge” is “any charge payable directly or indirectly by theconsumer and imposed directly or indirectly by the creditor as an incident toor condition of the extension of credit.”

• Remedies: statutory damages up to $2,000 per violation; actual damages;rescission (including against the holder); and attorney fees.

• Statute of limitations is 1 year, but can be raised in recoupment as a defense inforeclosure, and up to 3 years for rescission.

6. Homeownership and Equity Protection Act (HOEPA), 15 U.S.C.§ 1639

• Applies to “high-cost loans” a loan with an APR more than 8% over the yieldon treasury securities of a comparable maturity, or where the total points andfees exceed 8% of the principal.

• Prohibits: negative amortization; some prepayment penalties; engaging in apattern and practice of extending credit based on collateral without regard toborrower's ability to repay.

• Assignee liability.

• Remedies: rescission; actual damages; enhanced statutory damages; andattorney fees.

7. Real Estate Settlement Procedures Act (RESPA) 12 U.S.C. §2601 et seq, 24 C.F.R § 3500 et seq.

• Prohibits kickbacks and unearned fees in real estate closings.

• Is not a defense to foreclosure, but provides statutory damages of 3 times thesettlement charge as a counterclaim.

8. Fair Housing Act, 42 U.S.C. §3604, 3605

• Prohibits (1) refusing to sell, or otherwise making unavailable or denyinghousing because of race, color, national origin, gender, disability, or otherprotected class; (2) discriminating against any person in the terms, conditions,or privileges or sale or rental of a dwelling, or in the provision of hosingbecause of race, color, national origin, gender, disability or other protectedclass.

• Reverse redlining put borrowers at risk of losing their property and can makehousing unavailable within the meaning of the FHA. Hargraves v. CapitalCity Mortgage, 140 F.Supp.2d 7 (D.D.C. 2000). Barkley v. Olympia MortgageCo., 04-CV-0875, 2007 WL 2437810 (E.D.N.Y. Feb. 27, 2007).

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• Remedies: actual damages; statutory damages; injunctive relief; and attorneyfees.

9. Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691

• Prohibits discrimination against applicants for credit in “any aspect of a credittransaction.”

• Applies to any entity or person that “regularly” extends, renews or continuescredit, or arranges for the extension, renewal or continuation of credit.

• Applies to assignees.

• Requires a written notice of a counteroffer by a lender within 30 days ofreceiving a complete application, if the terms of the loan will differ from theterms applied for. Regulation B, 12 C.F.R. §202.9(a)(1)(i).

• Remedies: actual and punitive damages; and attorney fees.

• Statute of limitations is 2 years for affirmative claims.

III. Discovery

• As a general rule, there is not very much discovery in foreclosure actions, but, to theextent that it is needed, discovery operates under CPLR article 31 the same way that itwould for any other civil litigation.

A. Notice to Produce

• For a foreclosure defense attorney, the one discovery device that is highlyrecommended is a Notice to Produce the “Wet Ink” note pursuant toCPLR § 3120(1) to verify that the Plaintiff, in fact, holds the original note.A sample is provided in the materials

B. Interrogatories, Demands for Bills of Particular, Requests for Documents, Depositions

• Depending on the facts of the case, all these discovery devices may beused.

• Fact-specific to each individual case.

• Samples of interrogatories and request for production of documentsincluded in materials.

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SAMPLE DEFENDANT DOCUMENT REQUEST


COUNTY OF RICHMOND

------------------------------------------------------------X

AS

TRUSTEE FOR …

Index No.

Plaintiff,

-against-

DEFENDANTS’ FIRST

REQUEST TO PLAINTIFF

FOR PRODUCTION OF

DOCUMENTS

Defendants.

------------------------------------------------------------X

PLEASE TAKE NOTICE that, pursuant to Sections 3101 and 3120 of the New

York Civil Practice Law and Rules, Plaintiff as Trustee

for …… ”) is required to produce all documents and things responsive to the

requests for inspection and copying in accordance with the definitions and instructions set

forth herein. All responsive documents and things are required to be produced on or

before September 4, 2012, during normal business hours at the office of the undersigned,

at which time they will

be inspected and/or copied. In lieu of producing the originals of the documents requested

at the specified date (unless originals are specifically requested), true copies may be

delivered to the undersigned on or before the above date, at the address listed below.

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PLEASE TAKE FURTHER NOTICE that this is a continuing demand. Pursuant

to Section 3101(h) of the New York Civil Practice Law and Rules, you are required to

amend or supplement any response previously given to these demands promptly upon

obtaining information that the previous response was incorrect or incomplete when made,

or that the previous response, though current and complete when made, no longer is

correct and/or complete.

DEFINITIONS

1. Party to this Action. The term “party to this action” means any person or entity

named as a party to any unresolved judicial action concerning the subject property,

including those designated by fictitious names.

2. You/Your; . The terms “you,” “your” or “ ” mean Plaintiff

U.S. Bank and the officers, directors, employees, corporate parents, subsidiaries,

and affiliates thereof, and, unless stated otherwise, and the

officers, directors, employees, corporate parents, subsidiaries, and affiliates thereof.

3. MERS. The term “MERS” means Mortgage Electronic Registration Systems, Inc.

and the officers, directors, employees, corporate parents, subsidiaries, and affiliates

thereof.

4. Defendants. The terms “Defendant” or “Defendants” mean _____.

5. Subject Property. The term “subject property” means the property located at

[address].

6. Subject Loan. The term “subject loan” means the mortgage loan originated on

[date] between defendants and , concerning the property

located at [address].

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7. Subject Note. The term “subject note” means the promissory note executed by

________ in favor of on [date] in the amount of

$________.

8. Subject Mortgage. The term “subject mortgage” means the mortgage given by

[defendants] to on [date] securing the subject note.

9. Agreement. The term “agreement” means any formal, informal, oral or written

contract between two or more parties.

10. Communication. The term “communication” shall include any transmission or

transfer of information of any kind, whether orally, electronically, in writing, or in

any other manner, at any time or place, and under any circumstances whatsoever.

11. Document. The term “document” shall mean the original and any nonidentical

copy, regardless of origin or location, of correspondence, records, agreements,

contracts, publications, periodicals, fliers or books produced or held by you,

applications, manuals, tables, charts, graphs, schedules, reports, records,

memoranda, notes, letters, emails, messages (including reports of telephone or

other oral conversations and conferences), checks (front and back), check vouchers,

check stubs or receipts, studies, analyses, journals, ledgers, circulars, bulletins,

instructions, minutes or other communications, diaries, diagrams, photographs,

recordings, tapes, microfilms, questionnaires, surveys and any other written or

printed matter of any kind, including but not limited to any handwritten or

machine-made copy and nonpaper storage, such as tape, film and computer

memory devices, information stored in any internal, industry-specific software and

metadata (including but not limited to any digital information stored in computers

285

used for administration and management of the computers, the telephones, the

applications or individual records such as document properties, management data,

hidden properties, access controls, activity logs, router logs, phone records in

digital format and security permissions). All metadata in relevant digital files must

be preserved and produced. A draft or nonidentical copy is a separate document

within the meaning of the term.

12. Parties. The terms “Plaintiff” and “Defendants” as well as a party’s full or

abbreviated name or a pronoun referring to a party means a party to this action and,

where applicable, its officers, directors, partners, corporate parent, subsidiaries or

affiliates.

13. Person. The term “person” is defined as any natural person or any business, legal

or governmental entity or association.

14. Employee. The term “employee” means employee, independent contractor,

representative or agent.

15. Interrogatories. The term “Interrogatories” refers to Defendants’ First Set of

Interrogatories to Plaintiff as Trustee ….., dated

August 3, 2012.

16. The following rules of construction apply to all discovery requests:

i. Concerning. The term “concerning” means relating to, referring

to, describing, evidencing or constituting.

ii. Include/Including. “Include” and “including” do not in any way

limit a request to specific items or concepts listed, but rather shall

be read to mean “including, but not limited to.”

286

iii. Each/Every and Any/All. “Each” includes the word “every,” and

“every” includes the word “each.” “Any” includes the word “all,”

and “all” includes the word “any.”

iv. And/Or. The connectives “and” and “or” shall be construed either

disjunctively or conjunctively as necessary to bring within the

scope of the discovery request all responses that might otherwise

be construed to be outside of its scope.

v. Number. The use of the singular form of any word includes the

plural and vice versa.

vi. Tense. The use of the present tense includes the past and vice

versa.

INSTRUCTIONS

1. Documents covered by the document requests include all documents in the

possession, custody, or control of or any of its employees, officers,

directors, agents, or other persons purporting to act on behalf of and/or

its employees.

2. Each document request requires production of all documents described therein and

any attachments, appendices, or exhibits to such documents, and any file or other

folders in which such documents are stored or filed, in the possession, custody, or

control of each employee or any of its attorneys, agents, or

representatives, or which or any of its attorneys, agents, or

representatives has the legal right to obtain, or has the ability to obtain from sources

under its respective control.

287

3. With respect to each document maintained in an electronic medium (i.e., a

spreadsheet or an electronic mail message), produce the document on a CD-ROM,

or ZIP cartridge (in each case in a format readable on a computer running the

Microsoft Windows® operating system) and label the media appropriately. If it is

impractical to copy the document onto electronic media as set forth in the

preceding sentence, contact the undersigned in advance to arrange a solution to the

technical issue.

4. If any document within the scope of this request has been lost, discarded, or

destroyed, that document shall be identified, including identification of its

author(s), intended or unintended recipient(s), addressee(s), intended or unintended

recipient(s) of blind copies, date, and subject matter. The circumstances of its

destruction shall be set forth, and any documents relating to such destruction shall

be produced.

5. If it is claimed that any document called for in this discovery demand is subject to

any applicable privilege, work product doctrine, or otherwise protected from

disclosures, identify for each document the nature of the privilege (including work

product) that is being claimed and the author of the document, the recipients of the

document, the subject matter of the document and the date on which the document

was created.

6. The fact that a document is produced by another party does not relieve

of its obligation to produce its copy of the same document, even if the two

documents are identical.

288

7. These document requests are continuing in character so as to require you to file

prompt supplementary and amended answers or responses as required by the New

York Civil Practice and Rules if you obtain further or different information relevant

to any of these document requests prior to trial herein.

DOCUMENT REQUESTS

1. The complete closing file from the origination of the loan concerning the subject note

and subject mortgage, including all underwriting documentation.

2. The complete original custodial file loan file for the subject note and subject

mortgage, including photocopies of the inside and outside of any physical file, as

defined by the CSMC Mortgage-Backed Pass-Through Certificates, Series 2007-1

securitization documents, including but not limited to the pooling and servicing

agreement.

3. Complete copies of all documents to which is entitled that are in the

possession of any third party document custodian and relate to the subject loan.

4. If any documents relating to this loan are in the possession of a third party document

custodian, provide complete copies of the related Custodial Agreement, Master

Document Custodial Agreement, and any other contract between you and any

document custodian pertaining to custodial services. This includes but is not limited

to all exhibits, schedules, or attachments referred to in those agreement(s).

5. All documents concerning the servicing history for the subject note and subject

mortgage from the date of the loan origination to the date of this request, including

receipts by way of payment or otherwise, any loan payment histories, and all charges

to the loan in whatever form.

289

6. A complete copy of your consolidated notes log as well as your collection notes,

servicing notes, correspondence and messages, incoming and outgoing, and all other

documents and other entries relating to this loan in any files or data storage devices or

services of any kind.

7. All documents and correspondence with or concerning the Defendant(s), including

transcripts of any phone contacts, emails and mailed correspondence. This includes,

but is not limited to, any communications regarding loss mitigation options or

restrictions on loss mitigation options, made between you and a third party.

8. All documents and correspondence that constitute, describe, reflect, record, mention,

comment upon or otherwise refer to the Defendant(s), including files (including

copies of the front and back covers), notes, memoranda, emails, notices, reports,

applications, letters, warnings, phone messages, notes, diaries, appointment books, or

calendars.

9. All documents concerning any foreclosure expenses, late charges, NSF check

charges, appraisal fees, broker price opinions, property inspection/preservation fees,

force-placed insurance charges, legal fees, recoverable corporate advances, and other

expenses or costs that have been charged and/or assessed in connection with the

subject note or subject mortgage.

10. All documents indicating the identities, duties, functions, and responsibilities of all

employees, agents, or representatives of who were directly or indirectly

involved with the defendant(s), any other party to this action, the subject property, the

subject note or the subject mortgage. Limit your response to only those documents

that were relevant or operative at the time of the person’s involvement.

290

11. All documents concerning the CSMC Mortgage-Backed Pass-Through Certificates,

Series 2007-1 securitization, including the pooling and servicing agreement, any

documents identifying the loans held in CSMC Mortgage-Backed Pass-Through

Certificates, Series 2007-1, any documents concerning the transfer of loans, notes,

and/or mortgages in or out of CSMC Mortgage-Backed Pass-Through Certificates,

Series 2007-1, and all documents concerning any person authorized to act on the

behalf of CSMC Mortgage-Backed Pass-Through Certificates, Series 2007-1 and the

scope of any such person’s authority.

12. All documents detailing the complete chain of title of the subject note and subject

mortgage from the originator through all subsequent owners and holders to the

current owner and holder, including the original subject note, a true copy of the

original subject note including any and all endorsements of the subject note and the

back side of any allonge or endorsement page, a true copy of the subject mortgage,

assignments of the subject mortgage, assignments of the subject note, assignments in

blank, lost note affidavits, any and all digital records of the complete chain of title

and any other records of the complete chain of title. Concerning the original subject

note, because this document is an original, please contact the undersigned to set up a

time for the original subject note to be inspected and copied at the undersigned’s

office on or before September 4, 2012.

13. All documents in possession or available to that establish that

is the legal and/or equitable owner of the subject note and the subject

mortgage. This includes but is not limited to any asset purchase agreements,

mortgage loan purchase agreements, or any other document, contract or agreement

291

detailing the transfer of the subject note and subject mortgage whether individually or

as part of a transfer of a larger group of mortgage loans.

14. All powers of attorney or any other documents that purport to grant authority to any

person to sign any of the documents requested herein, including but not limited to any

powers of attorney to endorse the subject note and any powers of attorney to sign

assignments of the subject note and/or subject mortgage.

15. The notary registration book for any public notary who certified the signature of any

person on any document requested herein.

16. All powers of attorney or any other documents that purport to grant authority to

MERS or any other entity to act on behalf of any holder of the subject note and

subject mortgage in the chain of title, including but not limited to any powers of

attorney or other document purporting to grant authority to assign, convey, and/or

transfer the subject note and/or subject mortgage.

17. Copies of all receipts for payments made by and/or received by concerning

a transfer of the subject note and subject mortgage.

18. All documents concerning any payments received by concerning the

subject note or subject mortgage from any governmental entity pursuant to or in

connection with any loan modification program.

19. All documents identifying the extent to which ultimate liability in this

matter, along with legal fees incurred, may be covered under an insurance policy, and

any claims made under such policy.

20. Any and all documents containing policies and procedures with respect

to lost notes, lost or incomplete assignments, or other lost or incomplete documents

related to a loan’s chain of title.

292

21. All documents concerning any physical delivery or transfer of the subject note,

including but not limited to all documents concerning and/or reflecting the physical

delivery of the subject note to any person or entity, including but not limited to any

delivery to .

22. All documents concerning any transfer of servicing rights concerning the subject note

and the subject mortgage.

23. All documents in possession, custody, or control that establish what

entity or entities have serviced the subject loan since its origination.

24. All documents concerning authority to sign the assignment dated

August 6, 2008 that is referenced in Paragraph 3 of the complaint.

25. All documents concerning review of the subject loan for modification,

including but not limited to documentation of any investor restrictions.

26. All documents concerning your policies, guidelines, or criteria regarding loss

mitigation, including but not limited to any restrictions on loan modification, from

August 1, 2008 to the present.

27. All documents concerning the authority of the purported signatory to the endorsement

on page 3 of the note attached to Order of Reference.

28. Any documents used, referenced, or referred to when responding to Defendants’

Interrogatories in this case.

29. Provide a glossary, legend, and/or detailed explanation in plain English sufficient to

allow for a layman’s full understanding of all the data reflected in each and every

document provided in response to each of the Requests set forth above, including but

not limited to all accounting and transaction codes, abbreviations, and acronyms

displayed or used anywhere herein.

293

30. A privilege log of all documents requested to be produced herein which U.S. Bank

did not produce because of a claim of privilege. The privilege log must include the

title of each document, the date the document was created, the author(s) of the

document, the recipient(s) of the document, an identification of each author or

recipient who is an attorney for Plaintiff and a brief description of the content of the

document in order to enable the undersigned to evaluate your claim of privilege.

294

Dated: August 3, 2012

Staten Island, New York

_______________________________


To:


295


COUNTY OF RICHMOND

-----------------------------------------------------------X

AS

TRUSTEE FOR ….

Index No.

Plaintiff,

-against-

DEFENDANTS’ FIRST SET OF

INTERROGATORIES TO

PLAINTIFF

Defendants.

-----------------------------------------------------------X

PLEASE TAKE NOTICE that, pursuant to Sections 3101, 3123, and 3130

through 3133 of the New York Civil Practice Law and Rules, Plaintiff

as Trustee for ….. (“U.S. Bank”), or a duly-authorized

representative thereof, is required to answer fully in writing the Interrogatories set forth

herein on or before September 4, 2012.

PLEASE TAKE FURTHER NOTICE that this is a continuing demand. Pursuant

to Section 3101(h) of the New York Civil Practice Law and Rules, you are required to

amend or supplement any response previously given to these Interrogatories promptly

upon obtaining information that the previous response was incorrect or incomplete when

made, or that the previous response, though current and complete when made, no longer

is correct and/or complete.

DEFINITIONS

296

1. Party to this Action. The term “party to this action” means any person or entity

named as a party to any unresolved judicial action concerning the subject property,

including those designated by fictitious names.

2. You/Your; . The terms “you,” “your” or “ ” mean Plaintiff

and the officers, directors, employees, corporate parents, subsidiaries,

and affiliates thereof, and, unless stated otherwise, and the

officers, directors, employees, corporate parents, subsidiaries, and affiliates thereof.

3. MERS. The term “MERS” means Mortgage Electronic Registration Systems, Inc.

and the officers, directors, employees, corporate parents, subsidiaries, and affiliates

thereof.

4. Defendants. The terms “Defendant” or “Defendants” mean ….

5. Subject Property. The term “subject property” means the property located at ….

6. Subject Loan. The term “subject loan” means the mortgage loan originated on

[DATE] between defendants and , concerning the

property located at ….

7. Subject Note. The term “subject note” means the promissory note executed by

[mortgagor] in favor of on [date] in the amount of $[ ].

8. Subject Mortgage. The term “subject mortgage” means the mortgage given by

[defendants] to on [date] securing the subject note.

9. Agreement. The term “agreement” means any formal, informal, oral or written

contract between two or more parties.

297

10. Communication. The term “communication” shall include any transmission or

transfer of information of any kind, whether orally, electronically, in writing, or in

any other manner, at any time or place, and under any circumstances whatsoever.

11. Document. The term “document” shall mean the original and any nonidentical

copy, regardless of origin or location, of correspondence, records, agreements,

contracts, publications, periodicals, fliers or books produced or held by you,

applications, manuals, tables, charts, graphs, schedules, reports, records,

memoranda, notes, letters, emails, messages (including reports of telephone or

other oral conversations and conferences), checks (front and back), check vouchers,

check stubs or receipts, studies, analyses, journals, ledgers, circulars, bulletins,

instructions, minutes or other communications, diaries, diagrams, photographs,

recordings, tapes, microfilms, questionnaires, surveys and any other written or

printed matter of any kind, including but not limited to any handwritten or

machine-made copy and nonpaper storage, such as tape, film and computer

memory devices, information stored in any internal, industry-specific software and

metadata (including but not limited to any digital information stored in computers

used for administration and management of the computers, the telephones, the

applications or individual records such as document properties, management data,

hidden properties, access controls, activity logs, router logs, phone records in

digital format and security permissions). All metadata in relevant digital files must

be preserved and produced. A draft or nonidentical copy is a separate document

within the meaning of the term.

298

12. Identify. When referring to a person, “identify” means to give, to the extent

known, the person’s full name, present or last known address, and when referring

to a natural person, additionally, the present or last known place of employment.

a. When referring to documents, “identify” means to give, to the extent

known, the (i) type of document; (ii) general subject matter; (iii) date of

the document; and (iv) author(s), addressee(s) and recipient(s).

b. When referring to an entity, “identify” means to give, to the extent known,

the entity’s full name and present or last known contact address.

13. Parties. The terms “Plaintiff” and “Defendants” as well as a party’s full or

abbreviated name or a pronoun referring to a party means a party to this action and,

where applicable, its officers, directors, partners, corporate parent, subsidiaries or

affiliates.

14. Person. The term “person” is defined as any natural person or any business, legal

or governmental entity or association.

15. Employee. The term “employee” means employee, independent contractor,

representative or agent.

16. Document Requests. The term “Document Requests” refers to Defendants’ First

Request to Plaintiff for Production of Documents and Things, dated August 3,

2012.

17. The following rules of construction apply to all discovery requests:

i. Concerning. The term “concerning” means relating to, referring

to, describing, evidencing or constituting.

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ii. Include/Including. “Include” and “including” do not in any way

limit a request to specific items or concepts listed, but rather shall

be read to mean “including, but not limited to.”

iii. Each/Every and Any/All. “Each” includes the word “every,” and

“every” includes the word “each.” “Any” includes the word “all,”

and “all” includes the word “any.”

iv. And/Or. The connectives “and” and “or” shall be construed either

disjunctively or conjunctively as necessary to bring within the

scope of the discovery request all responses that might otherwise

be construed to be outside of its scope.

v. Number. The use of the singular form of any word includes the

plural and vice versa.

vi. Tense. The use of the present tense includes the past and vice

versa.

INSTRUCTIONS

1. Unless otherwise specified, the period of time covered by these Interrogatories is

from the time in or around July 1, 2008, up to and including the date of these

Interrogatories. The Defendants reserve their right to pose additional

interrogatories or to extend this time period.

2. These Interrogatories are continuing in character, requiring the filing of prompt

supplementary and amended answers if Plaintiff obtains further or different

information relevant to any of these Interrogatories prior to trial pursuant to CPLR

3101(h).

300

3. If it is claimed that an answer to any Interrogatory calls for information or an

identification of documents that are privileged, work product, or otherwise

protected from disclosures and such privilege or work product is asserted, you must

(a) identify the nature of the privilege (including work product) that is being

claimed and (b) provide the following information (unless divulgence of such

information would cause disclosure of the allegedly privileged information): (i) for

documents: (1) the type of document (e.g., letter, memorandum, etc.); (2) the

general subject matter of the document; (3) the date of the document; and (4) such

other information as is sufficient to identify the document for a subpoena duces

tecum, including, where appropriate, the author, addressee, and any other recipient

to each other; (ii) for oral communications: (1) the name of the person making the

communication and the names of persons present while the communication was

made and, where not apparent, the relationship of the persons present to the person

making the communication; (2) the date and place of communication; and (3) the

general subject matter of the communication. Any part of an answer to which you

do not claim privilege or work product should be given in full.

4. If any document required to be identified in these Interrogatories was at one time in

existence, but has been lost, discarded or destroyed, identify such document by

date, type and subject matter, and describe the circumstances under which the

document was lost, discarded or destroyed.

5. Plaintiff must answer each Interrogatory separately and fully, unless it is objected

to, in which event the reasons for the objections should be specifically and

separately stated. Answers to these Interrogatories should set forth each question

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before each answer. No part of an Interrogatory should be left unanswered merely

because an objection is interposed to another party of the Interrogatory.

INTERROGATORIES

1. Identify the current owner and holder of the subject note and subject mortgage.

2. Identify the date on which the current owner and holder obtained its interest in the

subject note and subject mortgage and describe the transaction by which such interest

was transferred to such current owner or holder, including but not limited to the

consideration paid in connection with such transaction. If the subject note and subject

mortgage were acquired on separate dates, please specify the date for each

respectively.

3. Identify the terms on which the subject note and subject mortgage were sold or

transferred to the current owner and holder. Indicate the total consideration paid to

any other person or entity in connection with such purchase or transfer, any fees,

charges, or discounts applied to the consideration and any other terms with which the

current owner and holder was bound to comply as a condition of the transfer or sale.

4. Identify all entities that have held any type of ownership interest in the subject note

and subject mortgage since their origination, identifying the date of transfer to each

such entity, the prices paid for and terms of each transfer, and the documents that

evidence the entity’s legal title to the subject note and subject mortgage.

5. Identify all documents concerning the chain of title of the subject note and subject

mortgage, including but not limited to any mortgage loan purchase agreements, asset

purchase agreements, endorsed notes, allonges, assignments, and pooling and

servicing agreements.

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6. Identify each person having knowledge of the chain of title or any transfers or

assignments of the subject note and/or subject mortgage. For each such person,

identify his or her area of knowledge, including but not limited to information

concerning any endorsements of the subject note, any assignments of the subject note

and/or subject mortgage, and/or any transfers of the subject note and/or subject

mortgage.

7. Identify each person who has knowledge of the assignment transferring the subject

mortgage and note from MERS as nominee for to

executed on August 6, 2008 and recorded in the office of the county clerk,

Richmond County, State of New York on September 5, 2008, and for each such

person, identify the area of his or her knowledge.

8. Identify the basis and/or source of MERS’s authority to transfer the subject note and

subject mortgage to and identify all documents concerning such authority.

9. Set forth the basis and/or source of authority to sign the August

6, 2008 assignment on behalf of MERS and identify all documents concerning such

authority.

10. List the name, business and residence address, business and residence telephone

number, employer, title, email address and job description for the purported signatory

to an alleged endorsement on page 3 of the note that was attached to Plaintiff’s Order

of Reference.

11. Identify the date that the purported signatory signed and/or stamped his signature on

page 3 of the note that was attached to Plaintiff’s Order of Reference.

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12. Identify each person or entity who is or has been responsible for the servicing of the

subject loan since its origination to the present and for each, identify the time period

during which such person serviced the loan, his or her responsibilities concerning the

servicing of the subject loan, and any actions he or she has taken in regards to the

subject loan, including but not limited to reviewing the loan for qualification for loss

mitigation programs.

13. Identify each person at with knowledge and information concerning the

subject loan, including but not limited to all persons involved in reviewing the loan

for loss mitigation programs, overseeing the loan during the loss mitigation process,

making approval and denial decisions regarding loss mitigation, and initiating and

prosecuting this foreclosure action.

14. Identify all correspondence, internal memoranda, analyses, and communications

concerning the loss mitigation options considered for the subject loan, including but

not limited to loss mitigation options available pursuant to the federal Home

Affordable Modification Program or the National Mortgage Servicing Settlement.

15. State the name(s) of any securitization and/or loan pool in which the subject note and

subject mortgage have ever been held since origination of the mortgage loan.


number, employer, title, email address and job description for

whose name appears on an alleged assignment dated August 6, 2008 that is

referenced in the complaint. Identify her present employer and her

employer at the time her name was placed on the above-referenced assignment.

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number, employer, title, and job description for all persons beyond

and the purported signatory to the alleged endorsement on the note that was

attached to Plaintiff’s Order of Reference who are believed or known by to

have knowledge of any facts that establish the plaintiff’s ownership of the subject

note and subject mortgage and specify the facts about which each person has

knowledge.

18. For each of the persons listed in response to the above Interrogatory, please state their

employment history (attach pages if necessary) and whether they have personal

knowledge regarding the subject loan transaction.

19. Where are the original subject note and original subject mortgage signed by

Defendants? Give details of their physical location including the address, the person

or entity that is currently in possession of the original subject note and original

subject mortgage and whether any person or entity is holding the subject note and/or

subject mortgage as a custodian or trustee.


number, employer, title, email address, and job description of the person who

delivered the original subject note to along with the date of delivery,

provided such delivery was ever made. If subsequently delivered the

original subject note to a third party, state to whom the original note was delivered,

along with such person’s or entity’s address.


number, employer, title, email address, and job description for all persons who are

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believed or known by to have knowledge of any facts concerning the

delivery of the original subject note to and/or by provided such delivery

was ever made.

22. Set forth the total amount currently alleged to be due on the subject loan (including

all fees and charges resulting from this proceeding), an itemization of the amounts

included in such total, the method of calculating this debt, and identify all documents

that will rely upon to establish such amounts.

23. Identify each person with knowledge of the recordkeeping system utilized by

from August 1, 2008 to the present and for each such person, identify his or her

area of knowledge, including but not limited to the receipt and recordation of written

correspondence, and the receipt and application of payments.

24. Identify each person with knowledge of loss mitigation programs and

procedures from August 1, 2008 to the present and for each such person, identify his

or her area of knowledge.

25. State whether the subject loan is eligible for the Home Affordable Modification

Program, including all stated limitations on participation in the Home

Affordable Modification Program.

26. State whether the subject loan is eligible for modification pursuant to the National

Mortgage Servicing Settlement, including all stated limitations on ability

to modify loans pursuant to the National Mortgage Servicing Settlement.

27. State whether any limitations exist regarding the ability of to modify the

subject loan.

28. Identify all documents and/or communications concerning any limitations on

ability to modify mortgage loans.

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29. Describe the results of any loss mitigation review concerning the Defendant(s),

including the reasoning for any denial of a loan modification.

30. Identify all persons with knowledge of the mortgage loans included in CSMC

Mortgage-Backed Pass-Through Certificates, Series 2007-1.

31. Identify all persons with knowledge of the loss mitigation policies, procedures, and/or

restrictions applicable to loans governed by the pooling and servicing agreement of

CSMC Mortgage-Backed Pass-Through Certificates, Series 2007-1.

32. State whether the subject note and/or subject mortgage is subject to the pooling and

servicing agreement of CSMC Mortgage-Backed Pass-Through Certificates, Series

2007-1.

33. If U.S. Bank is not able to produce the original subject note pursuant to Defendants’

First Request to Plaintiff for Production of Documents and Things dated August 3,

2012, then state who had possession of the original subject note before it was lost,

when it was lost, who discovered it was lost, what type of report was prepared at that

time, when U.S. Bank requested the original subject note, when any lost note affidavit

was prepared, who prepared it and who ordered it.

34. Identify when precisely began (and ended, if applicable) servicing the loan

at issue and describe each agreement, guide, document, or other authority under

which you have serviced the loan. If has begun or ended servicing the

loan at issue more than once, identify each start and end date and describe the

agreements, guides, documents, and other authority under which you have serviced

the loan for each period.

307

35. State whether is entitled to keep any payments made pursuant to the

subject note and subject mortgage if the loan is brought current, not including any

fees for servicing the loan. If the answer is no, state who is entitled to the payments.

36. State whether has ever been entitled to keep any payments made pursuant

to the subject note and subject mortgage, not including any fees for servicing the loan.

If the answer is no, state who was entitled to the payments.

37. Do you agree that the Single Family Servicing Guides posted by Fannie Mae and

Freddie Mac are the industry standards for the servicing of mortgage loan accounts

securing 1-4 unit residential properties? If you disagree, please state which mortgage

servicing guidelines you recognize as the industry standard and explain why you

believe that they are the industry standard.

38. Identify any industry standards you recognize that govern your accounting procedures

and practices with respect to the mortgage loans that you service.

39. Identify all documents that you intend to introduce at trial.

40. Identify any person you may call as a witness.

41. Identify any person whose affidavit you may use to support a summary judgment

motion.

42. Identify any person you have communicated with and/or may communicate with to

determine if he or she:

a. personally reviewed Plaintiff’s documents and records relating to this case for

factual accuracy; and

b. confirmed the factual accuracy of the allegations set forth in the complaint and

any supporting affirmations filed with the Court, as well as the accuracy of the

notarizations contained in the supporting documents filed therewith.

308

43. Identify each expert whom you intend to call as a witness at trial.

44. If you or your expert witnesses intend to rely upon or offer into evidence any

textbook, paper, journal, treatise, or other authority to substantiate any opinions and

conclusions, state the exact title and author of each textbook, paper, journal, treatise,

or authority.

45. State the name, employer, and job title of every person who assisted in the

preparation of the answers to these Interrogatories or the responses to Defendants’

First Request to Plaintiff for the Production of Documents and Things dated August

3, 2012.

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Dated: August 3, 2012

Staten Island, New York

_______________________________


To:


310

BBaannkkrruuppttccyy aanndd JJuuddiicciiaall FFoorreecclloossuurree

311

BANKRUPTCY AND JUDICIAL FORECLOSURE

by

Jay Teitelbaum, Esq. & Ron Baskin, Esq. Teitelbaum & Baskin, LLP

White Plains, New York

313

The following is an important update regarding developments in the state of the law regarding lien stripping in individual Chapter 7, 11, 13 and 20 cases pending in New York.

Issue and Overview:

There is a split among Bankruptcy Courts throughout the country as to whether a Chapter

20 debtor can strip off a lien secured only by the debtor’s principal residence (a “Home

Mortgage”) or strip down the value of a secured creditor’s claim to the value of the collateral

with respect to other types of secured loans. In general, individual debtors in Chapter 11 and 13

cases cannot modify a Home Mortgage but may modify other liens to bifurcate the treatment of

the claim as a secured claim to the extent of the value of the collateral and an unsecured claim

for the deficiency. The ability to affect liens is generally subject to the debtor obtaining a

discharge (11 U.S.C. §1325(a)(5)), which occurs upon completion of the plan, perhaps 3 to 5

years after confirmation (11 U.S.C. §1328(a)).

However, a case law exception is developing, which permits so called Chapter 20

Debtors to strip off and strip down liens.

Terms:

• Chapter 20 Case: Short hand for a pending Chapter 13 case filed within 4 years of the

filing of a Chapter 7 Case where the debtor received a discharge. In such a case, the

Debtor is not entitled to a discharge pursuant to 11 U.S.C. §1328(f).

• Home Mortgage: a mortgage given to secure a loan which is secured only by the

borrower’s principal residence. If there is other collateral pledged or if the property is not

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mailto:[email protected]


http://www.tblawllp.com/

the residence (i.e. vacation home, investment property), statutory protections applicable

to Home Mortgages do not apply.

• Strip Off: Where a debtor is able to treat a junior secured claim as wholly unsecured

because the value of the collateral is less than the amount necessary to satisfy senior

liens.

• Strip Down: Where a debtor is able to bifurcate a secured claim into a secured claim to

the extent of the value in the property for that creditor and an unsecured claim for the

deficiency.

General Rules:

• Liens ride through a Chapter 7 case unimpaired and cannot be stripped down or stripped

off in a Chapter 7 case. Dewsnup v. Timm, 502 U.S. 410 (1992) (liens). In New York,

the Second Circuit in In re Pond, 252 F3d 122 (2d Cir 2001), following Dewsnup, held

that a lien upon a Home Mortgage cannot be stripped in a chapter 7 case, but can be

stripped off in a Chapter 13 case upon completion of the Chapter 13 plan. In such a case

the creditor is left with an unsecured claim which is treated under the Chapter 13 Plan.

We note that in In re Smoot, 2011 WL 5240365 (Bankr E.D.N.Y. 2011), Judge Eisenberg

permitted lien stripping in a Chapter 7 case, but other Judges have declined to follow.

• The ability to bifurcate or strip down is predicated upon 11 U.S.C. §506(a) which

provides that a claim is treated as a secured claim to the extent of the value of the

collateral. This was affirmed by the Supreme Court in United States v. Ron Pair, 489

U.S. 235 (1989) (section 506 provides for the bifurcation of a claim such that it is secured

to the extent of the value of the collateral and unsecured for the balance).

• Home Mortgages cannot be stripped down in in either a Chapter 11 or 13 Cases pursuant

to 11 U.S.C. §§ 1123(b)(5) and 1322(b)(2). These sections were enacted to protect home

mortgage lenders and encourage home mortgage lending. There were efforts to challenge

this protection in the courts, but the Supreme Court in Nobleman v. American Savings

Bank, 508 U.S. 324 (1998) held that so long as there is some value in the property for the

lien holder, section 1322(b)(2) prevents reliance upon Code section 506 to strip down the

value of an undersecured lien to the value of the premises where the loan is secured only

by a lien upon the debtor’s principal residence. In addition, there have been efforts

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through the legislative process to modify the Code, but no such legislation has been

approved.

• Strip down and strip off can be used in Chapter 11 or 13 cases for loans, which are not

Home Mortgages.

The Case Law At Issue

The issue in dispute is whether a lien can be stripped off or stripped down in a Chapter 20

case. The reason this arises is that the Chapter 20 Debtor already received a Chapter 7 discharge

and cannot receive a discharge in the newly filed Chapter 13. The Chapter 20 Debtor, having

been relieved of his in personam obligations in the Chapter 7 case, is now trying eliminate to the

creditor’s recourse to the property. This is a great country – isn’t it?

The leading reported cases in New York are In re Wapshare, 492 B.R. 211 (Bankr.

S.D.N.Y. 2013) (Judge Morris); In re Wong, 488 B.R. 537 (Bankr. E.D.N.Y. 2013) (Judge

Stong); In re Miller, 462 BR 434 (Bankr E.D.N.Y. 2011) (Judge Trust) and In re Orkwis, 457

BR 243 (Bankr E.D.N.Y. 2011) (Judge Grossman).

In Wapshare, the Court permitted a Chapter 20 debtor to strip off a junior Home

Mortgage, which was wholly unsupported by any equity in the mortgaged property once a

chapter 13 plan was confirmed and all plan payments had been made. In Wapshare, Judge

Morris required that the case and plan were filed in good faith. The Wapshare court followed the

numerous cases that heave also permitted lien stripping in a Chapter 20 where the Chapter 13

plan was confirmed and all plan payments have been made. In re Miller, 462 B.R at 433 (“Only

upon the completion of the plan payments may a debtor strip off an inferior wholly unsecured

mortgage lien”); In re Okosisi, 451 B.R. 90, 103 (Bankr. D. Nev. 2011) (“The permanence of

lien avoidance is conditioned upon the successful completion of all plan payments”); In re Tran,

431 B.R. 230, 236-37 (Bankr. N.D. Cal. 2010) (“[T]he court can condition any permanent

modification or stripping on the debtor’s performance and completion of the debtor’s chapter 13

plan”). The Wapshare court also failure to confirm a plan will lead to dismissal or conversion of

the case. Upon dismissal, the liens will be restored. Wapshare, 491 B.R. at 217.

The Eastern District has been divided on the issue. In In re Wong, 488 B.R. 537 (Bankr.

E.D.N.Y. 2013), Judge Stong held that a chapter 13 debtor that was discharged in a Chapter 7

could confirm a plan where the junior mortgage liens were “stripped off,” holding that the junior

mortgagors’ claims were unsecured under 506(a) and therefore unsecured with respect to

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Sections 1322(b)(2) and 1325(a)(5). In re Miller, Judge Trust permitted a Chapter 20 debtor to

strip off of a junior Home Mortgage where the value of the property was less than the amount of

the first Home Mortgage. Strip off was permitted despite the unavailability of a discharge,

provided that Debtor completed the plan payments (over 5 years) and based upon a finding that

the new Chapter 13 was filed in good faith (i.e. the case was not filed solely to strip the lien after

the Chapter 7 discharge). Judge Trust did preserve the unsecured claim for treatment in the

Chpater 13 plan despite the prior discharge. On the other side of the same Courthouse, Judge

Grossman, with identical facts as Miller, prohibited the Chapter 20 Debtor from stripping off a

junior Home Mortgage based upon the inability of the Debtor to modify such liens and to obtain

a discharge pursuant to 11 U.S.C. §§ 1322, 1325 and 1328. Also, based upon her decision in In

re Smoot, we believe that Judge Eisenberg would follow Judge Trust in allowing a strip off in a

Chapter 20. Thus, while bankruptcy courts are split across the country, the majority of the courts

in the Second Circuit permit lien stripping in a Chapter 20 case.

If these cases had been regular Chapter 13 cases (as opposed to Chapter 20 cases), under

In re Pond, strip off would have been allowed and, assuming a claim is filed, the secured creditor

would have an unsecured claim for the amount due. This may result in only a few pennies on the

dollar to the creditor, even assuming the creditor was permitted to retain an unsecured claim.

The Second Circuit has not yet decided the issue, but the courts in the Fourth and

Eleventh Circuits and Bankruptcy Appellate Panels of the Sixth Circuit and Eighth Circuit have

all permitted lien stripping in a Chapter 20 case. SeeWells Fargo Bank, N.A. v. Scantling (In re

Scantling), 754 F.3d 1323 (11th Cir. 2014) (strip off of unsecured mortgage on debtor’s principal

residence “is accomplished through the 506(a) valuation procedure that determines that the

creditor does not hold a secured claim”); Branigan v. Davis (In re Davis), 716 F.3d. 331 (4th Cir.

2013) (affirming district court’s affirmation of bankruptcy court’s confirmation orders stripping

off the in rem component of valueless junior liens against debtors’ residences in a Chapter 20

case but not reaching the good faith issue); In addition, the Bankruptcy Appellate Panel in the

Sixth Circuit in In re Cain, 513 B.R. 316 (BAP 6th Cir. 2014) held that a valueless lien can be

stripped, regardless of discharge eligibility; In re Fisette, 455 B.R. 177 (8th Cir. BAP 2011),

appeal dismissed by In re Fisette, 695 F.3d 803 (8th Cir. 2012).

As a result, the courts are likely to permit a lien strip off of a Home Mortgage and a lien strip

down with respect to other secured claims in Chapter 20 cases. The issues for the lender will be:

318

1. Valuation Junior Home Mortgages: If the appraisal reflects any value above the senior

liens there should be a basis to prevent the lien strip. The caveat is that minimal value

may not suffice. As with all appraisals, the odds are that the Debtor will have a lower

valuation. It will then come down to credibility of the appraisers and the appraisal. The

Judge is likely to split the baby unless one appraisal is simply incredible as a matter of

law. Thus, unless the appraisal reflects an adequate cushion taking into account up to

10% cost of sale, there is a risk that the Court will find no value and permit a strip off

2. Valuation Junior Liens Other Collateral: The issue is the same with respect to the

integrity of the appraisal, but it is not an all or nothing result. The secured claim will be

stripped down to the determined value of the collateral.

3. Good faith: Was the chapter 20 case and plan filed in good faith. This will be fact

specific and likely turn on the amount of time between the two filings and whether the

debtor had a reason to file the second case independent of the strip off or strip down.

4. Unsecured Claim: The treatment of the remaining unsecured claim is an open issue.

The question will be whether there is enough of a payout to make the fight worthwhile.

This issue increases the importance of filing a proof of claim to try to preserve the issue.

5. Settlement Posture: if the lien is clearly under water or close, try to negotiate the

treatment of an unsecured claim.

Example 1 : Value of debtor’s principal residence is $500; first Home Mortgage lien $400; second Home Mortgage lien $200. There can be no lien strip off or strip down of the second lien in either a Chapter 7 or 13 or 11.

Example 2 : Value of debtor’s principal residence is $500; first Home Mortgage lien $500; second Home Mortgage lien $200. There can be no lien strip off of the second Home Mortgage lien in a Chapter 7; but there can be a lien strip off in a Chapter 20, 13 or 11 if the Chapter 20 was filed in good faith and the debtor completes the plan payments. In a Chapter 11 or 13 it is clear that the resulting unsecured claim should be provided for under the plan. In a Chapter 20, it remains an open issue as to whether the claim will be treated as unsecured or discharged.

Example 3 : Value of other collateral is $500; first lien $400; second lien $200. In a Chapter 11 or 13, there can be a strip down to treat the junior lien as secured to the extent of $100 and unsecured for $100.

Example 4 : Value of other collateral is $500; first lien $500; second lien $200. The second lien will be stripped off in a Chapter 20, 13 or 11 if the Chapter 20 was filed in good faith and the debtor completes the plan payments. In a Chapter 11 or 13 the resulting unsecured claim should

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be provided for under the Plan. In a Chapter 20, it remains an open issue as to whether the claim will be treated as unsecured or discharged.

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2016 Bankruptcy Update

Lien Stripping in Chapter 20 Cases

As noted in the previous section, the Second Circuit has not yet determined if a

completely unsecured junior mortgage can be stripped off in a Chapter 20 case; but the Ninth

Circuit has joined the growing majority of circuits that have determined that such strip-off is

available. In re Blendheim, 803 F. 3d 477 (9th

Cir. 2015). See generally Curwen v. Wilton (In re

Curwen), No. 3:15-cv-1824 (SRU), 2016 U.S. Dist. LEXIS 114608 (D. Conn. Aug. 26, 2016)

(discussing various approaches and decisions toward lien stripping in Chapter 20 cases).

Lien Stripping in Chapter 7 Cases

While most courts had previously determined that wholly unsecured junior mortgages

could not be stripped off in a Chapter 7 Case, because of the holding and rationale in Dewsnup v.

Timm, 502 U.S. 410 (1992), some courts, and (locally) Judge Dorothy Eisenberg in the

Bankruptcy Court for the Eastern District of New York, had determined that Dewsnup’s holding

was limited to partially unsecured and not wholly unsecured junior mortgages. See In re Lavelle,

Case No.: 09-72389-478, 2009 Bankr. LEXIS 3811 (Bankr. E.D.N.Y. 2009). That dispute was

laid to rest with the United States Supreme Court’s decision in Bank of America v. Caulkett, 135

S. Ct. 1995 (2015) [which is included in these materials], which held that, under Dewsnup,

wholly unsecured junior liens cannot be stripped off and are treated the same way as partially

unsecured junior liens. While critical of the holding in Dewsnup, the majority noted that no

party had requested that Dewsnup be overruled.

Vesting Title to Real Property to a Secured Creditor in a Chapter 13 Plan

There is an ongoing controversy in the bankruptcy and district courts as to whether a

Chapter 13 debtor may both surrender property to a secured creditor and simultaneously vest title

321

to the property in a secured creditor. The latest word on the subject from District Judge, Arthur

D. Spatt of the Eastern District of New York is that vesting and surrender are incompatible.

HSBC Bank USA, NA v. Zair, 550 B.R. 188 (E.D.N.Y. 2016). In Zair, the debtors possessed real

property that had been severely damaged by Superstorm Sandy, and the debtors requested in

their plan not only to surrender the property to the secured creditor—giving the creditor a limited

time to file a deficiency claim, but also to vest title to the property in HSBC.

Examining the statutory language, and disagreeing with a number of courts that had held

that surrender and vesting were compatible—citing the purpose of the Bankruptcy Code to give

the debtor a fresh start, Judge Spatt held that the statutory framework of the Bankruptcy Code

did not allow such an option. This is scarcely the final word on the subject.

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1 (Slip Opinion) OCTOBER TERM, 2014

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as isbeing done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has beenprepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

BANK OF AMERICA, N. A. v. CAULKETT

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

No. 13–1421. Argued March 24, 2015—Decided June 1, 2015*

Respondent debtors each filed for Chapter 7 bankruptcy, and each owned a house encumbered with a senior mortgage lien and a junior mortgage lien, the latter held by petitioner bank. Because the amount owed on each senior mortgage is greater than each house’scurrent market value, the bank would receive nothing if the proper-ties were sold today. The junior mortgage liens were thus wholly un-derwater. The debtors sought to void their junior mortgage liens un-der §506 of the Bankruptcy Code, which provides, “To the extent that a lien secures a claim against the debtor that is not an allowed se-cured claim, such lien is void.” 11 U. S. C. §506(d). In each case, the Bankruptcy Court granted the motion, and both the District Courtand the Eleventh Circuit affirmed.

Held: A debtor in a Chapter 7 bankruptcy proceeding may not void a junior mortgage lien under §506(d) when the debt owed on a seniormortgage lien exceeds the current value of the collateral if the credi-tor’s claim is both secured by a lien and allowed under §502 of theBankruptcy Code. Pp. 2–7.

(a) The debtors here prevail only if the bank’s claims are “not . . .allowed secured claim[s].” The parties do not dispute that the bank’s claims are “allowed” under the Code. Instead, the debtors argue thatthe bank’s claims are not “secured” because §506(a)(1) provides that“[a]n allowed claim . . . is a secured claim to the extent of the value ofsuch creditor’s interest in . . . such property” and “an unsecured claim to the extent that the value of such creditor’s interest . . . is less than the amount of such allowed claim.” Because the value of the bank’s

—————— *Together with No. 14–163, Bank of America, N. A. v. Toledo-

Cardona, also on certiorari to the same court.

323

2 BANK OF AMERICA, N. A. v. CAULKETT

Syllabus

interest here is zero, a straightforward reading of the statute would seem to favor the debtors. This Court’s construction of §506(d)’s term “secured claim” in Dewsnup v. Timm, 502 U. S. 410, however, fore-closes that reading and resolves the question presented here. In de-clining to permit a Chapter 7 debtor to “strip down” a partially un-derwater lien under §506(d) to the value of the collateral, the Courtin Dewsnup concluded that an allowed claim “secured by a lien withrecourse to the underlying collateral . . . does not come within the scope of §506(d).” Id., at 415. Thus, under Dewsnup, a “secured claim” is a claim supported by a security interest in property, regard-less of whether the value of that property would be sufficient to cover the claim. Pp. 2–4.

(b) This Court declines to limit Dewsnup to partially underwater liens. Dewsnup’s definition did not depend on such a distinction. Nor is this distinction supported by Nobelman v. American Savings Bank, 508 U. S. 324, which addressed the interaction between the meaningof the term “secured claim” in §506(a)—a definition that Dewsnup de-clined to use for purposes of §506(d)—and an entirely separate provi-sion, §1322(b)(2). See 508 U. S., at 327–332. Finally, the debtors’suggestion that the historical and policy concerns that motivated the Court in Dewsnup do not apply in the context of wholly underwater liens is an insufficient justification for giving the term “secured claim” a different definition depending on the value of the collateral.Ultimately, the debtors’ proposed distinction would do nothing to vindicate §506(d)’s original meaning and would leave an odd statuto-ry framework in its place. Pp. 5–7.

No. 13–1421, 566 Fed. Appx. 879, and No. 14–163, 556 Fed. Appx. 911, reversed and remanded.

THOMAS, J., delivered the opinion of the Court, in which ROBERTS, C. J., and SCALIA, GINSBURG, ALITO, and KAGAN, JJ., joined, and inwhich KENNEDY, BREYER, and SOTOMAYOR, JJ., joined except as to the footnote.

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_________________

_________________

1 Cite as: 575 U. S. ____ (2015)

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in thepreliminary print of the United States Reports. Readers are requested tonotify the Reporter of Decisions, Supreme Court of the United States, Wash-ington, D. C. 20543, of any typographical or other formal errors, in orderthat corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

Nos. 13–1421 and 14–163

BANK OF AMERICA, N. A., PETITIONER 13–1421 v.

DAVID B. CAULKETT

BANK OF AMERICA, N. A., PETITIONER 14–163 v.

EDELMIRO TOLEDO-CARDONA

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

[June 1, 2015]

JUSTICE THOMAS delivered the opinion of the Court.* Section 506(d) of the Bankruptcy Code allows a debtor

to void a lien on his property “[t]o the extent that [the] liensecures a claim against the debtor that is not an allowed secured claim.” 11 U. S. C. §506(d). These consolidated cases present the question whether a debtor in a Chapter 7 bankruptcy proceeding may void a junior mortgageunder §506(d) when the debt owed on a senior mortgageexceeds the present value of the property. We hold that a debtor may not, and we therefore reverse the judgments ofthe Court of Appeals.

I The facts in these consolidated cases are largely the

——————

* JUSTICE KENNEDY, JUSTICE BREYER, and JUSTICE SOTOMAYOR jointhis opinion, except as to the footnote.

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same. The debtors, respondents David Caulkett and Edelmiro Toledo-Cardona, each have two mortgage liens on their respective houses. Petitioner Bank of America (Bank) holds the junior mortgage lien—i.e., the mortgagelien subordinate to the other mortgage lien—on eachhome. The amount owed on each debtor’s senior mortgagelien is greater than each home’s current market value. The Bank’s junior mortgage liens are thus wholly under-water: because each home is worth less than the amount the debtor owes on the senior mortgage, the Bank would receive nothing if the properties were sold today.

In 2013, the debtors each filed for Chapter 7 bank-ruptcy. In their respective bankruptcy proceedings, theymoved to “strip off ”—or void—the junior mortgage liens under §506(d) of the Bankruptcy Code. In each case, the Bankruptcy Court granted the motion, and both the Dis-trict Court and the Court of Appeals for the EleventhCircuit affirmed. In re Caulkett, 566 Fed. Appx. 879 (2014) (per curiam); In re Toledo-Cardona, 556 Fed. Appx.911 (2014) (per curiam). The Eleventh Circuit explainedthat it was bound by Circuit precedent holding that §506(d) allows debtors to void a wholly underwater mort-gage lien.

We granted certiorari, 574 U. S. ___ (2014), and now reverse the judgments of the Eleventh Circuit.

II Section 506(d) provides, “To the extent that a lien se-

cures a claim against the debtor that is not an allowed secured claim, such lien is void.” (Emphasis added.)Accordingly, §506(d) permits the debtors here to strip off the Bank’s junior mortgages only if the Bank’s “claim”—generally, its right to repayment from the debtors,§101(5)—is “not an allowed secured claim.” Subject tosome exceptions not relevant here, a claim filed by a credi-tor is deemed “allowed” under §502 if no interested party

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objects or if, in the case of an objection, the Bankruptcy Court determines that the claim should be allowed under the Code. §§502(a)–(b). The parties agree that the Bank’sclaims meet this requirement. They disagree, however,over whether the Bank’s claims are “secured” within the meaning of §506(d).

The Code suggests that the Bank’s claims are not se-cured. Section 506(a)(1) provides that “[a]n allowed claimof a creditor secured by a lien on property . . . is a secured claim to the extent of the value of such creditor’s interest in . . . such property,” and “an unsecured claim to the extent that the value of such creditor’s interest . . . is less than the amount of such allowed claim.” (Emphasis added.)In other words, if the value of a creditor’s interest in the property is zero—as is the case here—his claim cannot be a “secured claim” within the meaning of §506(a). And given that these identical words are later used in the samesection of the same Act—§506(d)—one would think this“presents a classic case for application of the normal rule of statutory construction that identical words used indifferent parts of the same act are intended to have the same meaning.” Desert Palace, Inc. v. Costa, 539 U. S. 90, 101 (2003) (internal quotation marks omitted). Under that straightforward reading of the statute, the debtorswould be able to void the Bank’s claims.

Unfortunately for the debtors, this Court has already adopted a construction of the term “secured claim” in §506(d) that forecloses this textual analysis. See Dewsnupv. Timm, 502 U. S. 410 (1992). In Dewsnup, the Courtconfronted a situation in which a Chapter 7 debtor wantedto “ ‘strip down’ ”—or reduce—a partially underwater lien under §506(d) to the value of the collateral. Id., at 412– 413. Specifically, she sought, under §506(d), to reduce her debt of approximately $120,000 to the value of the collat-eral securing her debt at that time ($39,000). Id., at 413. Relying on the statutory definition of “ ‘allowed secured

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claim’ ” in §506(a), she contended that her creditors’ claimwas “secured only to the extent of the judicially deter-mined value of the real property on which the lien [wa]s fixed.” Id., at 414.

The Court rejected her argument. Rather than applythe statutory definition of “secured claim” in §506(a), theCourt reasoned that the term “secured” in §506(d) con-tained an ambiguity because the self-interested parties before it disagreed over the term’s meaning. Id., at 416, 420. Relying on policy considerations and its understand-ing of pre-Code practice, the Court concluded that if a claim “has been ‘allowed’ pursuant to §502 of the Code and is secured by a lien with recourse to the underlying collat-eral, it does not come within the scope of §506(d).” Id., at 415; see id., at 417–420. It therefore held that the debtor could not strip down the creditors’ lien to the value of the property under §506(d) “because [the creditors’] claim [wa]s secured by a lien and ha[d] been fully allowed pur-suant to §502.” Id., at 417. In other words, Dewsnupdefined the term “secured claim” in §506(d) to mean aclaim supported by a security interest in property, regard-less of whether the value of that property would be suffi-cient to cover the claim. Under this definition, §506(d)’sfunction is reduced to “voiding a lien whenever a claim secured by the lien itself has not been allowed.” Id., at 416.

Dewsnup’s construction of “secured claim” resolves the question presented here. Dewsnup construed the term “secured claim” in §506(d) to include any claim “secured by a lien and . . . fully allowed pursuant to §502.” Id., at 417. Because the Bank’s claims here are both secured by liensand allowed under §502, they cannot be voided under the definition given to the term “allowed secured claim” by Dewsnup.

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III

The debtors do not ask us to overrule Dewsnup,† but instead request that we limit that decision to partially—asopposed to wholly—underwater liens. We decline to adopt this distinction. The debtors offer several reasons why we should cabin Dewsnup in this manner, but none of them is compelling.

To start, the debtors rely on language in Dewsnup stat-ing that the Court was not addressing “all possible fact situations,” but was instead “allow[ing] other facts toawait their legal resolution on another day.” Id., at 416– 417. But this disclaimer provides an insufficient founda-tion for the debtors’ proposed distinction. Dewsnup con-sidered several possible definitions of the term “securedclaim” in §506(d). See id., at 414–416. The definition it settled on—that a claim is “secured” if it is “secured by a lien” and “has been fully allowed pursuant to §502,” id., at 417—does not depend on whether a lien is partially orwholly underwater. Whatever the Court’s hedging lan-guage meant, it does not provide a reason to limit Dewsnup in the manner the debtors propose.

The debtors next contend that the term “secured claim” ——————

† From its inception, Dewsnup v. Timm, 502 U. S. 410 (1992), has been the target of criticism. See, e.g., id., at 420–436 (SCALIA, J., dissenting); In re Woolsey, 696 F. 3d 1266, 1273–1274, 1278 (CA10 2012); In re Dever, 164 B. R. 132, 138, 145 (Bkrtcy. Ct. CD Cal. 1994);Carlson, Bifurcation of Undersecured Claims in Bankruptcy, 70 Am. Bankr. L. J. 1, 12–20 (1996); Ponoroff & Knippenberg, The ImmovableObject Versus the Irresistible Force: Rethinking the Relationship Between Secured Credit and Bankruptcy Policy, 95 Mich. L. Rev. 2234,2305–2307 (1997); see also Bank of America Nat. Trust and Sav. Assn. v. 203 North LaSalle Street Partnership, 526 U. S. 434, 463, and n. 3(1999) (THOMAS, J., concurring in judgment) (collecting cases and observing that “[t]he methodological confusion created by Dewsnup has enshrouded both the Courts of Appeals and . . . Bankruptcy Courts”). Despite this criticism, the debtors have repeatedly insisted that they are not asking us to overrule Dewsnup.

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in §506(d) could be redefined as any claim that is backed by collateral with some value. Embracing this reading of§506(d), however, would give the term “allowed securedclaim” in §506(d) a different meaning than its statutorydefinition in §506(a). We refuse to adopt this artificial definition.

Nor do we think Nobelman v. American Savings Bank, 508 U. S. 324 (1993), supports the debtors’ proposed dis-tinction. Nobelman said nothing about the meaning of the term “secured claim” in §506(d). Instead, it addressed the interaction between the meaning of the term “secured claim” in §506(a) and an entirely separate provision,§1322(b)(2). See 508 U. S., at 327–332. Nobelman offersno guidance on the question presented in these casesbecause the Court in Dewsnup already declined to applythe definition in §506(a) to the phrase “secured claim” in§506(d).

The debtors alternatively urge us to limit Dewsnup’s definition to the facts of that case because the historical and policy concerns that motivated the Court do not apply in the context of wholly underwater liens. Whether or not that proposition is true, it is an insufficient justification for giving the term “secured claim” in §506(d) a different definition depending on the value of the collateral. We are generally reluctant to give the “same words a differentmeaning” when construing statutes, Pasquantino v. United States, 544 U. S. 349, 358 (2005) (internal quota-tion marks omitted), and we decline to do so here based on policy arguments.

Ultimately, embracing the debtors’ distinction would not vindicate §506(d)’s original meaning, and it would leavean odd statutory framework in its place. Under the debt-ors’ approach, if a court valued the collateral at one dollarmore than the amount of a senior lien, the debtor could not strip down a junior lien under Dewsnup, but if it val-ued the property at one dollar less, the debtor could strip

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off the entire junior lien. Given the constantly shiftingvalue of real property, this reading could lead to arbitraryresults. To be sure, the Code engages in line-drawing elsewhere, and sometimes a dollar’s difference will have a significant impact on bankruptcy proceedings. See, e.g., §707(b)(2)(A)(i) (presumption of abuse of provisions ofChapter 7 triggered if debtor’s projected disposable incomeover the next five years is $12,475). But these lines were set by Congress, not this Court. There is scant support forthe view that §506(d) applies differently depending onwhether a lien was partially or wholly underwater. Even if Dewsnup were deemed not to reflect the correct meaningof §506(d), the debtors’ solution would not either.

* * * The reasoning of Dewsnup dictates that a debtor in a

Chapter 7 bankruptcy proceeding may not void a junior mortgage lien under §506(d) when the debt owed on asenior mortgage lien exceeds the current value of thecollateral. The debtors here have not asked us to overrule Dewsnup, and we decline to adopt the artificial distinctionthey propose instead. We therefore reverse the judgmentsof the Court of Appeals and remand the cases for furtherproceedings consistent with this opinion.

It is so ordered.

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11 U.S.C.A. § 362

§ 362. Automatic stay

Effective: December 22, 2010

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of

this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970,

operates as a stay, applicable to all entities, of--

(1) the commencement or continuation, including the issuance or employment of process, of a judicial,

administrative, or other action or proceeding against the debtor that was or could have been commenced

before the commencement of the case under this title, or to recover a claim against the debtor that arose

before the commencement of the case under this title;

(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before

the commencement of the case under this title;

(3) any act to obtain possession of property of the estate or of property from the estate or to exercise

control over property of the estate;

(4) any act to create, perfect, or enforce any lien against property of the estate;

(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien

secures a claim that arose before the commencement of the case under this title;

(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement

of the case under this title;

(7) the setoff of any debt owing to the debtor that arose before the commencement of the case under this

title against any claim against the debtor; and

(8) the commencement or continuation of a proceeding before the United States Tax Court concerning a

tax liability of a debtor that is a corporation for a taxable period the bankruptcy court may determine or

concerning the tax liability of a debtor who is an individual for a taxable period ending before the date of

the order for relief under this title.

(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section

5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay--

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(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or

proceeding against the debtor;

(2) under subsection (a)--

(A) of the commencement or continuation of a civil action or proceeding--

(i) for the establishment of paternity;

(ii) for the establishment or modification of an order for domestic support obligations;

(iii) concerning child custody or visitation;

(iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine

the division of property that is property of the estate; or

(v) regarding domestic violence;

(B) of the collection of a domestic support obligation from property that is not property of the estate;

(C) with respect to the withholding of income that is property of the estate or property of the debtor for

payment of a domestic support obligation under a judicial or administrative order or a statute;

(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational

license, or a recreational license, under State law, as specified in section 466(a)(16) of the Social

Security Act;

(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as

specified in section 466(a)(7) of the Social Security Act;

(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security

Act or under an analogous State law; or

(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act;

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(3) under subsection (a) of this section, of any act to perfect, or to maintain or continue the perfection of,

an interest in property to the extent that the trustee’s rights and powers are subject to such perfection

under section 546(b) of this title or to the extent that such act is accomplished within the period provided

under section 547(e)(2)(A) of this title;

(4) under paragraph (1), (2), (3), or (6) of subsection (a) of this section, of the commencement or

continuation of an action or proceeding by a governmental unit or any organization exercising authority

under the Convention on the Prohibition of the Development, Production, Stockpiling and Use of

Chemical Weapons and on Their Destruction, opened for signature on January 13, 1993, to enforce such

governmental unit’s or organization’s police and regulatory power, including the enforcement of a

judgment other than a money judgment, obtained in an action or proceeding by the governmental unit to

enforce such governmental unit’s or organization’s police or regulatory power;

[(5) Repealed. Pub.L. 105-277, Div. I, Title VI, § 603(1), Oct. 21, 1998, 112 Stat. 2681-886]

(6) under subsection (a) of this section, of the exercise by a commodity broker, forward contract

merchant, stockbroker, financial institution, financial participant, or securities clearing agency of any

contractual right (as defined in section 555 or 556) under any security agreement or arrangement or

other credit enhancement forming a part of or related to any commodity contract, forward contract or

securities contract, or of any contractual right (as defined in section 555 or 556) to offset or net out any

termination value, payment amount, or other transfer obligation arising under or in connection with 1 or

more such contracts, including any master agreement for such contracts;

(7) under subsection (a) of this section, of the exercise by a repo participant or financial participant of

any contractual right (as defined in section 559) under any security agreement or arrangement or other

credit enhancement forming a part of or related to any repurchase agreement, or of any contractual right

(as defined in section 559) to offset or net out any termination value, payment amount, or other transfer

obligation arising under or in connection with 1 or more such agreements, including any master

agreement for such agreements;

(8) under subsection (a) of this section, of the commencement of any action by the Secretary of Housing

and Urban Development to foreclose a mortgage or deed of trust in any case in which the mortgage or

deed of trust held by the Secretary is insured or was formerly insured under the National Housing Act

and covers property, or combinations of property, consisting of five or more living units;

(9) under subsection (a), of--

(A) an audit by a governmental unit to determine tax liability;

(B) the issuance to the debtor by a governmental unit of a notice of tax deficiency;

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(C) a demand for tax returns; or

(D) the making of an assessment for any tax and issuance of a notice and demand for payment of such

an assessment (but any tax lien that would otherwise attach to property of the estate by reason of such

an assessment shall not take effect unless such tax is a debt of the debtor that will not be discharged in

the case and such property or its proceeds are transferred out of the estate to, or otherwise revested in,

the debtor).

(10) under subsection (a) of this section, of any act by a lessor to the debtor under a lease of

nonresidential real property that has terminated by the expiration of the stated term of the lease before

the commencement of or during a case under this title to obtain possession of such property;

(11) under subsection (a) of this section, of the presentment of a negotiable instrument and the giving of

notice of and protesting dishonor of such an instrument;

(12) under subsection (a) of this section, after the date which is 90 days after the filing of such petition,

of the commencement or continuation, and conclusion to the entry of final judgment, of an action which

involves a debtor subject to reorganization pursuant to chapter 11 of this title and which was brought by

the Secretary of Transportation under section 31325 of title 46 (including distribution of any proceeds of

sale) to foreclose a preferred ship or fleet mortgage, or a security interest in or relating to a vessel or

vessel under construction, held by the Secretary of Transportation under chapter 537 of title 46 or

section 109(h) of title 49, or under applicable State law;

(13) under subsection (a) of this section, after the date which is 90 days after the filing of such petition,

of the commencement or continuation, and conclusion to the entry of final judgment, of an action which

involves a debtor subject to reorganization pursuant to chapter 11 of this title and which was brought by

the Secretary of Commerce under section 31325 of title 46 (including distribution of any proceeds of

sale) to foreclose a preferred ship or fleet mortgage in a vessel or a mortgage, deed of trust, or other

security interest in a fishing facility held by the Secretary of Commerce under chapter 537 of title 46;

(14) under subsection (a) of this section, of any action by an accrediting agency regarding the

accreditation status of the debtor as an educational institution;

(15) under subsection (a) of this section, of any action by a State licensing body regarding the licensure

of the debtor as an educational institution;

(16) under subsection (a) of this section, of any action by a guaranty agency, as defined in section 435(j)

of the Higher Education Act of 1965 or the Secretary of Education regarding the eligibility of the debtor

to participate in programs authorized under such Act;

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(17) under subsection (a) of this section, of the exercise by a swap participant or financial participant of

any contractual right (as defined in section 560) under any security agreement or arrangement or other

credit enhancement forming a part of or related to any swap agreement, or of any contractual right (as

defined in section 560) to offset or net out any termination value, payment amount, or other transfer

obligation arising under or in connection with 1 or more such agreements, including any master

agreement for such agreements;

(18) under subsection (a) of the creation or perfection of a statutory lien for an ad valorem property tax,

or a special tax or special assessment on real property whether or not ad valorem, imposed by a

governmental unit, if such tax or assessment comes due after the date of the filing of the petition;

(19) under subsection (a), of withholding of income from a debtor’s wages and collection of amounts

withheld, under the debtor’s agreement authorizing that withholding and collection for the benefit of a

pension, profit-sharing, stock bonus, or other plan established under section 401, 403, 408, 408A, 414,

457, or 501(c) of the Internal Revenue Code of 1986, that is sponsored by the employer of the debtor, or

an affiliate, successor, or predecessor of such employer--

(A) to the extent that the amounts withheld and collected are used solely for payments relating to a

loan from a plan under section 408(b)(1) of the Employee Retirement Income Security Act of 1974 or

is subject to section 72(p) of the Internal Revenue Code of 1986; or

(B) a loan from a thrift savings plan permitted under subchapter III of chapter 84 of title 5, that

satisfies the requirements of section 8433(g) of such title;

but nothing in this paragraph may be construed to provide that any loan made under a governmental

plan under section 414(d), or a contract or account under section 403(b), of the Internal Revenue Code

of 1986 constitutes a claim or a debt under this title;

(20) under subsection (a), of any act to enforce any lien against or security interest in real property

following entry of the order under subsection (d)(4) as to such real property in any prior case under this

title, for a period of 2 years after the date of the entry of such an order, except that the debtor, in a

subsequent case under this title, may move for relief from such order based upon changed circumstances

or for other good cause shown, after notice and a hearing;

(21) under subsection (a), of any act to enforce any lien against or security interest in real property--

(A) if the debtor is ineligible under section 109(g) to be a debtor in a case under this title; or

(B) if the case under this title was filed in violation of a bankruptcy court order in a prior case under

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this title prohibiting the debtor from being a debtor in another case under this title;

(22) subject to subsection (l), under subsection (a)(3), of the continuation of any eviction, unlawful

detainer action, or similar proceeding by a lessor against a debtor involving residential property in

which the debtor resides as a tenant under a lease or rental agreement and with respect to which the

lessor has obtained before the date of the filing of the bankruptcy petition, a judgment for possession of

such property against the debtor;

(23) subject to subsection (m), under subsection (a)(3), of an eviction action that seeks possession of the

residential property in which the debtor resides as a tenant under a lease or rental agreement based on

endangerment of such property or the illegal use of controlled substances on such property, but only if

the lessor files with the court, and serves upon the debtor, a certification under penalty of perjury that

such an eviction action has been filed, or that the debtor, during the 30-day period preceding the date of

the filing of the certification, has endangered property or illegally used or allowed to be used a

controlled substance on the property;

(24) under subsection (a), of any transfer that is not avoidable under section 544 and that is not

avoidable under section 549;

(25) under subsection (a), of--

(A) the commencement or continuation of an investigation or action by a securities self regulatory

organization to enforce such organization’s regulatory power;

(B) the enforcement of an order or decision, other than for monetary sanctions, obtained in an action

by such securities self regulatory organization to enforce such organization’s regulatory power; or

(C) any act taken by such securities self regulatory organization to delist, delete, or refuse to permit

quotation of any stock that does not meet applicable regulatory requirements;

(26) under subsection (a), of the setoff under applicable nonbankruptcy law of an income tax refund, by

a governmental unit, with respect to a taxable period that ended before the date of the order for relief

against an income tax liability for a taxable period that also ended before the date of the order for relief,

except that in any case in which the setoff of an income tax refund is not permitted under applicable

nonbankruptcy law because of a pending action to determine the amount or legality of a tax liability, the

governmental unit may hold the refund pending the resolution of the action, unless the court, on the

motion of the trustee and after notice and a hearing, grants the taxing authority adequate protection

(within the meaning of section 361) for the secured claim of such authority in the setoff under section

506(a);

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(27) under subsection (a) of this section, of the exercise by a master netting agreement participant of any

contractual right (as defined in section 555, 556, 559, or 560) under any security agreement or

arrangement or other credit enhancement forming a part of or related to any master netting agreement, or

of any contractual right (as defined in section 555, 556, 559, or 560) to offset or net out any termination

value, payment amount, or other transfer obligation arising under or in connection with 1 or more such

master netting agreements to the extent that such participant is eligible to exercise such rights under

paragraph (6), (7), or (17) for each individual contract covered by the master netting agreement in issue;

and

(28) under subsection (a), of the exclusion by the Secretary of Health and Human Services of the debtor

from participation in the medicare program or any other Federal health care program (as defined in

section 1128B(f) of the Social Security Act pursuant to title XI or XVIII of such Act).

The provisions of paragraphs (12) and (13) of this subsection shall apply with respect to any such petition

filed on or before December 31, 1989.

(c) Except as provided in subsections (d), (e), (f), and (h) of this section--

(1) the stay of an act against property of the estate under subsection (a) of this section continues until

such property is no longer property of the estate;

(2) the stay of any other act under subsection (a) of this section continues until the earliest of--

(A) the time the case is closed;

(B) the time the case is dismissed; or

(C) if the case is a case under chapter 7 of this title concerning an individual or a case under chapter 9,

11, 12, or 13 of this title, the time a discharge is granted or denied;

(3) if a single or joint case is filed by or against a debtor who is an individual in a case under chapter 7,

11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but

was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under

section 707(b)--

(A) the stay under subsection (a) with respect to any action taken with respect to a debt or property

securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th

day after the filing of the later case;

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(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a

hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such

conditions or limitations as the court may then impose) after notice and a hearing completed before

the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later

case is in good faith as to the creditors to be stayed; and

(C) for purposes of subparagraph (B), a case is presumptively filed not in good faith (but such

presumption may be rebutted by clear and convincing evidence to the contrary)--

(i) as to all creditors, if--

(I) more than 1 previous case under any of chapters 7, 11, and 13 in which the individual was a

debtor was pending within the preceding 1-year period;

(II) a previous case under any of chapters 7, 11, and 13 in which the individual was a debtor was

dismissed within such 1-year period, after the debtor failed to--

(aa) file or amend the petition or other documents as required by this title or the court without

substantial excuse (but mere inadvertence or negligence shall not be a substantial excuse unless

the dismissal was caused by the negligence of the debtor’s attorney);

(bb) provide adequate protection as ordered by the court; or

(cc) perform the terms of a plan confirmed by the court; or

(III) there has not been a substantial change in the financial or personal affairs of the debtor since

the dismissal of the next most previous case under chapter 7, 11, or 13 or any other reason to

conclude that the later case will be concluded--

(aa) if a case under chapter 7, with a discharge; or

(bb) if a case under chapter 11 or 13, with a confirmed plan that will be fully performed; and

(ii) as to any creditor that commenced an action under subsection (d) in a previous case in which the

individual was a debtor if, as of the date of dismissal of such case, that action was still pending or

had been resolved by terminating, conditioning, or limiting the stay as to actions of such creditor;

and

339

(4)(A)(i) if a single or joint case is filed by or against a debtor who is an individual under this title, and if

2 or more single or joint cases of the debtor were pending within the previous year but were dismissed,

other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b), the

stay under subsection (a) shall not go into effect upon the filing of the later case; and

(ii) on request of a party in interest, the court shall promptly enter an order confirming that no stay is in

effect;

(B) if, within 30 days after the filing of the later case, a party in interest requests the court may order the

stay to take effect in the case as to any or all creditors (subject to such conditions or limitations as the

court may impose), after notice and a hearing, only if the party in interest demonstrates that the filing of

the later case is in good faith as to the creditors to be stayed;

(C) a stay imposed under subparagraph (B) shall be effective on the date of the entry of the order

allowing the stay to go into effect; and

(D) for purposes of subparagraph (B), a case is presumptively filed not in good faith (but such

presumption may be rebutted by clear and convincing evidence to the contrary)--

(i) as to all creditors if--

(I) 2 or more previous cases under this title in which the individual was a debtor were pending

within the 1-year period;

(II) a previous case under this title in which the individual was a debtor was dismissed within the

time period stated in this paragraph after the debtor failed to file or amend the petition or other

documents as required by this title or the court without substantial excuse (but mere inadvertence or

negligence shall not be substantial excuse unless the dismissal was caused by the negligence of the

debtor’s attorney), failed to provide adequate protection as ordered by the court, or failed to perform

the terms of a plan confirmed by the court; or

(III) there has not been a substantial change in the financial or personal affairs of the debtor since

the dismissal of the next most previous case under this title, or any other reason to conclude that the

later case will not be concluded, if a case under chapter 7, with a discharge, and if a case under

chapter 11 or 13, with a confirmed plan that will be fully performed; or

(ii) as to any creditor that commenced an action under subsection (d) in a previous case in which the

individual was a debtor if, as of the date of dismissal of such case, such action was still pending or had

340


been resolved by terminating, conditioning, or limiting the stay as to such action of such creditor.

(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay

provided under subsection (a) of this section, such as by terminating, annulling, modifying, or

conditioning such stay--

(1) for cause, including the lack of adequate protection of an interest in property of such party in interest;

(2) with respect to a stay of an act against property under subsection (a) of this section, if--

(A) the debtor does not have an equity in such property; and

(B) such property is not necessary to an effective reorganization;

(3) with respect to a stay of an act against single asset real estate under subsection (a), by a creditor

whose claim is secured by an interest in such real estate, unless, not later than the date that is 90 days

after the entry of the order for relief (or such later date as the court may determine for cause by order

entered within that 90-day period) or 30 days after the court determines that the debtor is subject to this

paragraph, whichever is later--

(A) the debtor has filed a plan of reorganization that has a reasonable possibility of being confirmed

within a reasonable time; or

(B) the debtor has commenced monthly payments that--

(i) may, in the debtor’s sole discretion, notwithstanding section 363(c)(2), be made from rents or

other income generated before, on, or after the date of the commencement of the case by or from the

property to each creditor whose claim is secured by such real estate (other than a claim secured by a

judgment lien or by an unmatured statutory lien); and

(ii) are in an amount equal to interest at the then applicable nondefault contract rate of interest on the

value of the creditor’s interest in the real estate; or

(4) with respect to a stay of an act against real property under subsection (a), by a creditor whose claim

is secured by an interest in such real property, if the court finds that the filing of the petition was part of

a scheme to delay, hinder, or defraud creditors that involved either--

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(A) transfer of all or part ownership of, or other interest in, such real property without the consent of

the secured creditor or court approval; or

(B) multiple bankruptcy filings affecting such real property.

If recorded in compliance with applicable State laws governing notices of interests or liens in real

property, an order entered under paragraph (4) shall be binding in any other case under this title purporting

to affect such real property filed not later than 2 years after the date of the entry of such order by the court,

except that a debtor in a subsequent case under this title may move for relief from such order based upon

changed circumstances or for good cause shown, after notice and a hearing. Any Federal, State, or local

governmental unit that accepts notices of interests or liens in real property shall accept any certified copy

of an order described in this subsection for indexing and recording.

(e)(1) Thirty days after a request under subsection (d) of this section for relief from the stay of any act

against property of the estate under subsection (a) of this section, such stay is terminated with respect to

the party in interest making such request, unless the court, after notice and a hearing, orders such stay

continued in effect pending the conclusion of, or as a result of, a final hearing and determination under

subsection (d) of this section. A hearing under this subsection may be a preliminary hearing, or may be

consolidated with the final hearing under subsection (d) of this section. The court shall order such stay

continued in effect pending the conclusion of the final hearing under subsection (d) of this section if there

is a reasonable likelihood that the party opposing relief from such stay will prevail at the conclusion of

such final hearing. If the hearing under this subsection is a preliminary hearing, then such final hearing

shall be concluded not later than thirty days after the conclusion of such preliminary hearing, unless the

30-day period is extended with the consent of the parties in interest or for a specific time which the court

finds is required by compelling circumstances.

(2) Notwithstanding paragraph (1), in a case under chapter 7, 11, or 13 in which the debtor is an individual,

the stay under subsection (a) shall terminate on the date that is 60 days after a request is made by a party in

interest under subsection (d), unless--

(A) a final decision is rendered by the court during the 60-day period beginning on the date of the

request; or

(B) such 60-day period is extended--

(i) by agreement of all parties in interest; or

(ii) by the court for such specific period of time as the court finds is required for good cause, as

described in findings made by the court.

342

(f) Upon request of a party in interest, the court, with or without a hearing, shall grant such relief from the

stay provided under subsection (a) of this section as is necessary to prevent irreparable damage to the

interest of an entity in property, if such interest will suffer such damage before there is an opportunity for

notice and a hearing under subsection (d) or (e) of this section.

(g) In any hearing under subsection (d) or (e) of this section concerning relief from the stay of any act

under subsection (a) of this section--

(1) the party requesting such relief has the burden of proof on the issue of the debtor’s equity in

property; and

(2) the party opposing such relief has the burden of proof on all other issues.

(h)(1) In a case in which the debtor is an individual, the stay provided by subsection (a) is terminated with

respect to personal property of the estate or of the debtor securing in whole or in part a claim, or subject to

an unexpired lease, and such personal property shall no longer be property of the estate if the debtor fails

within the applicable time set by section 521(a)(2)--

(A) to file timely any statement of intention required under section 521(a)(2) with respect to such

personal property or to indicate in such statement that the debtor will either surrender such personal

property or retain it and, if retaining such personal property, either redeem such personal property

pursuant to section 722, enter into an agreement of the kind specified in section 524(c) applicable to the

debt secured by such personal property, or assume such unexpired lease pursuant to section 365(p) if the

trustee does not do so, as applicable; and

(B) to take timely the action specified in such statement, as it may be amended before expiration of the

period for taking action, unless such statement specifies the debtor’s intention to reaffirm such debt on

the original contract terms and the creditor refuses to agree to the reaffirmation on such terms.

(2) Paragraph (1) does not apply if the court determines, on the motion of the trustee filed before the

expiration of the applicable time set by section 521(a)(2), after notice and a hearing, that such personal

property is of consequential value or benefit to the estate, and orders appropriate adequate protection of

the creditor’s interest, and orders the debtor to deliver any collateral in the debtor’s possession to the

trustee. If the court does not so determine, the stay provided by subsection (a) shall terminate upon the

conclusion of the hearing on the motion.

(i) If a case commenced under chapter 7, 11, or 13 is dismissed due to the creation of a debt repayment

plan, for purposes of subsection (c)(3), any subsequent case commenced by the debtor under any such

chapter shall not be presumed to be filed not in good faith.

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(j) On request of a party in interest, the court shall issue an order under subsection (c) confirming that the

automatic stay has been terminated.

(k)(1) Except as provided in paragraph (2), an individual injured by any willful violation of a stay

provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in

appropriate circumstances, may recover punitive damages.

(2) If such violation is based on an action taken by an entity in the good faith belief that subsection (h)

applies to the debtor, the recovery under paragraph (1) of this subsection against such entity shall be

limited to actual damages.

(l)(1) Except as otherwise provided in this subsection, subsection (b) (22) shall apply on the date that is 30

days after the date on which the bankruptcy petition is filed, if the debtor files with the petition and serves

upon the lessor a certification under penalty of perjury that--

(A) under nonbankruptcy law applicable in the jurisdiction, there are circumstances under which the

debtor would be permitted to cure the entire monetary default that gave rise to the judgment for

possession, after that judgment for possession was entered; and

(B) the debtor (or an adult dependent of the debtor) has deposited with the clerk of the court, any rent

that would become due during the 30-day period after the filing of the bankruptcy petition.

(2) If, within the 30-day period after the filing of the bankruptcy petition, the debtor (or an adult dependent

of the debtor) complies with paragraph (1) and files with the court and serves upon the lessor a further

certification under penalty of perjury that the debtor (or an adult dependent of the debtor) has cured, under

nonbankruptcy law applicable in the jurisdiction, the entire monetary default that gave rise to the

judgment under which possession is sought by the lessor, subsection (b)(22) shall not apply, unless

ordered to apply by the court under paragraph (3).

(3)(A) If the lessor files an objection to any certification filed by the debtor under paragraph (1) or (2), and

serves such objection upon the debtor, the court shall hold a hearing within 10 days after the filing and

service of such objection to determine if the certification filed by the debtor under paragraph (1) or (2) is

true.

(B) If the court upholds the objection of the lessor filed under subparagraph (A)--

(i) subsection (b)(22) shall apply immediately and relief from the stay provided under subsection (a)(3)

shall not be required to enable the lessor to complete the process to recover full possession of the

property; and

344

(ii) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of the

court’s order upholding the lessor’s objection.

(4) If a debtor, in accordance with paragraph (5), indicates on the petition that there was a judgment for

possession of the residential rental property in which the debtor resides and does not file a certification

under paragraph (1) or (2)--

(A) subsection (b)(22) shall apply immediately upon failure to file such certification, and relief from the

stay provided under subsection (a)(3) shall not be required to enable the lessor to complete the process

to recover full possession of the property; and

(B) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of the

docket indicating the absence of a filed certification and the applicability of the exception to the stay

under subsection (b)(22).

(5)(A) Where a judgment for possession of residential property in which the debtor resides as a tenant

under a lease or rental agreement has been obtained by the lessor, the debtor shall so indicate on the

bankruptcy petition and shall provide the name and address of the lessor that obtained that pre-petition

judgment on the petition and on any certification filed under this subsection.

(B) The form of certification filed with the petition, as specified in this subsection, shall provide for the

debtor to certify, and the debtor shall certify--

(i) whether a judgment for possession of residential rental housing in which the debtor resides has been

obtained against the debtor before the date of the filing of the petition; and

(ii) whether the debtor is claiming under paragraph (1) that under nonbankruptcy law applicable in the

jurisdiction, there are circumstances under which the debtor would be permitted to cure the entire

monetary default that gave rise to the judgment for possession, after that judgment of possession was

entered, and has made the appropriate deposit with the court.

(C) The standard forms (electronic and otherwise) used in a bankruptcy proceeding shall be amended to

reflect the requirements of this subsection.

(D) The clerk of the court shall arrange for the prompt transmittal of the rent deposited in accordance with

paragraph (1)(B) to the lessor.

(m)(1) Except as otherwise provided in this subsection, subsection (b) (23) shall apply on the date that is

345

15 days after the date on which the lessor files and serves a certification described in subsection (b)(23).

(2)(A) If the debtor files with the court an objection to the truth or legal sufficiency of the certification

described in subsection (b)(23) and serves such objection upon the lessor, subsection (b)(23) shall not

apply, unless ordered to apply by the court under this subsection.

(B) If the debtor files and serves the objection under subparagraph (A), the court shall hold a hearing

within 10 days after the filing and service of such objection to determine if the situation giving rise to the

lessor’s certification under paragraph (1) existed or has been remedied.

(C) If the debtor can demonstrate to the satisfaction of the court that the situation giving rise to the lessor’s

certification under paragraph (1) did not exist or has been remedied, the stay provided under subsection

(a)(3) shall remain in effect until the termination of the stay under this section.

(D) If the debtor cannot demonstrate to the satisfaction of the court that the situation giving rise to the

lessor’s certification under paragraph (1) did not exist or has been remedied--

(i) relief from the stay provided under subsection (a)(3) shall not be required to enable the lessor to

proceed with the eviction; and

(ii) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of the

court’s order upholding the lessor’s certification.

(3) If the debtor fails to file, within 15 days, an objection under paragraph (2)(A)--

(A) subsection (b)(23) shall apply immediately upon such failure and relief from the stay provided under

subsection (a)(3) shall not be required to enable the lessor to complete the process to recover full

possession of the property; and

(B) the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of the

docket indicating such failure.

(n)(1) Except as provided in paragraph (2), subsection (a) does not apply in a case in which the debtor--

(A) is a debtor in a small business case pending at the time the petition is filed;

(B) was a debtor in a small business case that was dismissed for any reason by an order that became final

346

in the 2-year period ending on the date of the order for relief entered with respect to the petition;

(C) was a debtor in a small business case in which a plan was confirmed in the 2-year period ending on

the date of the order for relief entered with respect to the petition; or

(D) is an entity that has acquired substantially all of the assets or business of a small business debtor

described in subparagraph (A), (B), or (C), unless such entity establishes by a preponderance of the

evidence that such entity acquired substantially all of the assets or business of such small business

debtor in good faith and not for the purpose of evading this paragraph.

(2) Paragraph (1) does not apply--

(A) to an involuntary case involving no collusion by the debtor with creditors; or

(B) to the filing of a petition if--

(i) the debtor proves by a preponderance of the evidence that the filing of the petition resulted from

circumstances beyond the control of the debtor not foreseeable at the time the case then pending was

filed; and

(ii) it is more likely than not that the court will confirm a feasible plan, but not a liquidating plan,

within a reasonable period of time.

(o) The exercise of rights not subject to the stay arising under subsection (a) pursuant to paragraph (6), (7),

(17), or (27) of subsection (b) shall not be stayed by any order of a court or administrative agency in any

proceeding under this title.

347

MMoorrttggaaggee LLooaann WWoorrkkoouuttss aanndd RReellaatteedd IIssssuueess

403

Mortgage Loan Workouts/Modifications of Homeowner Loans

A. Overview Of Major Modification Programs

i. Home Affordable Modification Program (HAMP)

1. Goal: to reach a monthly payment of principal, interest, taxes and insurance(PITI) that is 31% of the borrower’s monthly gross income

2. Follows a “waterfall” analysis to get to the 31% target paymenta. Reduce interest rate to as low as 2%b. Extend term of years to 40 yearsc. Forbear principal (to non-interest bearing balloon payment at maturity)

3. Modification is not required – dependent on “positive” NPV test, meaning that amodification is more profitable to the mortgagee than continued foreclosure

ii. HAMP Tier 2

1. Modification program for:a. Homeowners who did not qualify for or defaulted on a HAMP Tier 1 trial

or permanent modificationb. Investment properties (meaning: properties occupied by tenants or

mortgagor’s 2nd home)c. Homeowners whose loan payments (PITI) are less than 31% of monthly

gross income

iii. FHA Loans

1. Most modification / forbearance programs are based on monthly net income2. Programs

a. Forbearance (Formal and Informal)b. FHA Loan Modificationc. Partial Claimd. FHA HAMP

iv. 2MP (for 2nd Liens)

1. Part of HAMP2. Requires modification of 2nd lien when 1st lien is modified under HAMP and 2nd

lienholder participates in 2MP

v. Home Affordable Unemployment Program (UP)

1. Temporary forbearance program

405

vi. Traditional Modification Programs

1. FNMA and FHLMC Standard Loan Modifications (prior to HAMP)2. Lender / Servicer in-house modification programs

B. Related Issues: i. Negotiations in Good Faith; Findings of Bad Faith

1. Interpretation of CPLR § 3408ii. Investor Guidelines (ex: Hudson City)

iii. Private Investorsiv. Trusts

1. FNMA2. FHLMC3. REMIC

C. Proposals After HAMP: 1. One Mod

406

EEtthhiiccss

421

1262084.2 10/13/2016

ETHICAL ISSUES

IN

MORTGAGE FORECLOSURES

Submitted* by:

Vincent O. Hanley, Esq.

Bond Schoeneck & King, PLLC

October 2016

*Riane F. Lafferty, an associate of Bond Schoeneck & King, PLLC assisted with the research

and drafting of these materials.

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Ethical Issues in Mortgage Foreclosures

Table of Contents

I. Recent NYSBA Committee on Professional Ethics Opinions ................................................ 1

A. Opinion 924 – 5/21/2012 ................................................................................................... 1 B. Opinion 921 -- 4/26/2012 .................................................................................................. 1 C. Opinion 893 – 12/1/2011 ................................................................................................... 2 D. Opinion 927 -- 8/2/2012 .................................................................................................... 2

E. Opinion 1031 -- 8/1/2014 ................................................................................................... 2

II. Conflicts of Interest................................................................................................................. 3

A. Timing of Conflict Review .............................................................................................. 3 B. Waivers of Conflicts of Interest Must be Confirmed in Writing. .................................... 3

III. Mandatory Settlement Conferences ........................................................................................ 4

A. Current Statutory Requirements ...................................................................................... 4 B. Zombie Properties Bill (S08159) ..................................................................................... 4 C. The Good Faith Standard ................................................................................................. 5

1. What Constitutes Good Faith? ................................................................................ 5

a. The Uniform Rules ........................................................................................ 5

b. Judicial Guidance ........................................................................................... 5

c. Zombie Properties Bill (S08159). ................................................................... 7

2. Potential Ethical Violations .................................................................................... 7

3. Sanctions for Violations of Good Faith .................................................................. 8

a. Zombie Properties Bill (S08159) ................................................................... 8

b. Wells Fargo Bank, N.A. v. Ronci, 15 Misc.3d 531 (Sup. Ct. Kings Co.

November 9, 2015). ....................................................................................... 8 c. U.S. Bank Nat. Ass’n v. Sarmiento, 991 N.Y.S.2d 68 (2nd Dept. 2014). ...... 9

d. HSBC Bank USA, Nat. Ass’n v. McKenna, 37 Misc.3d 885 (Sup. Ct. Kings

Co. 2012)........................................................................................................ 9 e. One W. Bank, FSB v. Greenhut, 2012 N.Y. Misc. LEXIS 3052, 10-23

(2012) ............................................................................................................. 9

IV. Attorney Affirmation Requirement ......................................................................................... 9

A. Basis for Enactment ......................................................................................................... 9 B. Effect of Enactment ....................................................................................................... 10

1. Initial Decrease in Filings ..................................................................................... 10

2. “Shadow Docket” & the Unified Court System Pilot Programs........................... 10

C. Certificate of Merit Bill (A005582A) ............................................................................ 11 1. Mandatory Attorney Affirmation .......................................................................... 12

2. Elimination of Shadow Docket ............................................................................. 13

3. Ohio Attorneys Combat a Similar Requirement ................................................... 13

a. Affirmation Requirements in Cuyahoga County and Franklin County ....... 13

b. Opinion Letter .............................................................................................. 13

c. Ohio Supreme Court Ruling ........................................................................ 14

V. Legal Services to Distressed Homeowners ........................................................................... 15

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ii 1262084.2 10/13/2016

A. Zombie Properties Bill (S08159) ................................................................................... 15

B. RPL 265-a: Home Equity Theft Prevention Act ............................................................ 15 1. Background and Application ................................................................................ 15

2. Contract Requirements (RPL §265-a(4)) .............................................................. 16

3. Seller’s Right to Cancel and Right of Recession (RPL §265-a(5)) ...................... 17

4. Purchaser’s Limitations and Restrictions (RPL §265-a(7)) .................................. 18

5. Criminal Penalties (RPL §265-a(10)(a)) ............................................................... 19

C. RPL 265-b: Distressed Property Consulting Contract ................................................... 19 1. Application ............................................................................................................ 19

a. Who is a Distressed Homeowner ................................................................. 19

b. Who is a Property Consultant ...................................................................... 20

c. What are Consulting Services (RPL §265-b(1)(c)) ..................................... 20

2. Prohibitions on Distressed Property Consultants (RPL §265-b(2)) ..................... 21

3. Contract Requirements (RPL §265-b(3)(a)) ......................................................... 21

4. Ability to Cancel (RPL §265-b(3)(b)) .................................................................. 22

5. Penalties (RPL §265-b(4)) .................................................................................... 22

6. Advertisements (RPL §265-b(3-a)(a)) .................................................................. 22

D. Attorney Arrangements with “Foreclosure Consultants” .............................................. 23 1. August 2, 2012 N.Y. Committee on Professional Ethics Opinion........................ 24

2. Case Study: Cincinnati Bar Ass’n v. Mullaney, 119 Ohio St.3d 412 (2008) ........ 26

a. Facts ............................................................................................................. 26

b. Disciplinary Violations ................................................................................ 27

c. Sanctions ...................................................................................................... 28

VI. The Steven Baum, P.C. Firm ............................................................................................... 28

A. Background and Chronology of Events ......................................................................... 28

B. Lawsuits & Other Investigations ................................................................................... 30 C. Lessons from the Baum Firm’s Demise......................................................................... 31

VII. Forged/Faked Attorney Signatures ....................................................................................... 32

A. Statutory Requirements .................................................................................................. 32 1. Presence of an Attorney Signature ........................................................................ 32

2. Defects in Form..................................................................................................... 33

3. Sanctions ............................................................................................................... 33

B. Case Study ..................................................................................................................... 33

1. Civil Law Violations ............................................................................................. 33

2. Sanctions for Professional Misconduct ................................................................. 34

C. Cases Involving Faked Attorney Signatures in Foreclosure Filings .............................. 35 1. Stewart v. Bierman, 10-CV-2822, 2012 WL 1655716 (D. Md. May 8, 2012) ..... 35

a. Facts ............................................................................................................. 35

b. Holding ........................................................................................................ 35

c. Court of Appeals of Maryland Rule............................................................. 35

2. Loughren v. Bair, et al., GD-10-021437 ............................................................... 36

a. Facts ............................................................................................................. 36

b. Status of the Lawsuit .................................................................................... 37

c. Renaming ..................................................................................................... 37

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Ethical Issues in Mortgage Foreclosures

I. Recent NYSBA Committee on Professional Ethics Opinions

Opinion Question Opinion

A. Opinion 924 –

5/21/2012

May an attorney accept

appointment as a referee in a

mortgage foreclosure

proceeding in which a client

of the inquirer is a judgment

creditor of record, but not the

holder of the mortgage being

foreclosed?

An attorney may accept appointment as a referee in a mortgage

foreclosure proceeding where a client of the attorney holds a judgment

on the mortgaged property, provided that: (a) the attorney makes any

necessary disclosures, (b) the circumstances are not such that his

impartiality might be reasonably questioned, and (c) in acting as a

referee, absent client consent, the attorney does not reveal or use any

confidential information of the client and does not use to the

disadvantage of the client any information relating to the representation.

In determining whether to accept, the attorney should consider (1)

whether his impartiality might reasonably be questioned, particularly in

regards to the scope of the appointment, (2) whether there is any dispute

as to the amount of the mortgage debt that will be incorporated into the

judgment of foreclosure and the referee’s role in resolving the dispute,

and (3) the amount of the client’s judgment in relation to the likely

amount of surplus funds and other judgment creditors.

B. Opinion 921 --

4/26/2012

May an attorney market his

services to persons facing

foreclosure of their homes

with an advertisement that

states, “We will stop your

foreclosure”?

A statement made in any attorney advertisement, without more, that the

attorney can “stop” a foreclosure proceeding is prohibited under Rule

7.1(a)(1) as false, misleading and deceptive.

Here the advertisement “we will stop your foreclosure,” was misleading

because a lay person may reasonably infer that the foreclosure

proceeding will cease and terminate. This creates a type of “false hope,”

as the attorney’s strategy was merely to delay proceedings in order to

achieve a negotiated settlement.

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Opinion Question Opinion

C. Opinion 893 –

12/1/2011

May a full-time Assistant

District Attorney seek and

accept appointments to a

court-appointed referee

foreclosure panel?

A full-time prosecutor may accept appointment to a referee foreclosure

panel and may oversee foreclosure proceedings, provided there is no

conflict under the Rules of Professional Conduct.

There is no per se rule that prohibits an ADA from accepting

appointment to a referee panel. However, it was suggested an ADA

avoid situations in which his or her own interests in being a referee

would create a conflict under Rule 1.7(a)(2).

D. Opinion 927 --

8/2/2012

May a lawyer enter into an

arrangement to (a) accept

referrals of mortgage

foreclosure cases from a non-

lawyer who will pay the

lawyer a monthly fee and (b)

have the lawyer’s legal fees

paid by a third party that

referred the client to the

lawyer?

A lawyer may not ethically enter an arrangement with a non-lawyer to

accept referrals for a fixed monthly fee for each case referred by the

non-lawyer where the client has been obtained by the non-lawyer by

telephonic solicitation and receives a fee from the client that includes

the lawyer’s fee.

A full description of the underlying facts, and a discussion of the

Opinion issued by the Committee and Professional Ethics are included

below in Section “V(C)” under the topic of “Attorney Arrangements

with Foreclosure Consultants”.

E. Opinion 1031 –

8/1/2014

May an attorney who works

as a broker at a brokerage

firm represent an owner of

property in foreclosure

proceedings for the purposes

of preventing the foreclosure

and allowing the attorney to

subsequently act for the

brokerage firm in its purchase

of the property?

An attorney who works as a broker at a brokerage firm cannot represent

an owner of property in foreclosure proceedings for the purposes of

preventing the foreclosure and allowing the attorney to subsequently act

as a broker for the brokerage firm to purchase the property

A nonconsentable conflict of interest arises when a lawyer represents a

defendant owner in mortgage foreclosure proceedings with the intention

of thereafter purchasing the property for a prospective purchaser. The

lawyer’s judgment is inherently tainted by the desire to subsequently

broker the property’s purchase from the client, which is necessarily

contingent on the outcome of the foreclosure proceedings.

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II. Conflicts of Interest

A. Timing of Conflict Review

In mortgage foreclosure actions, a title search or foreclosure certificate is obtained

before the summons, complaint, and notice of pendency are prepared to identify

subordinate lienors who will be named as defendants in the action.

Plaintiff’s counsel must confirm during the initial review of the title search or

foreclosure certificate that there are no conflicts of interest with respect to the

subordinate lienors, and again when the title search or foreclosure certificate is

updated immediately prior to the filing of the summons, complaint, and notice of

pendency.

B. Waivers of Conflicts of Interest Must be Confirmed in Writing.

New York’s Rules of Professional Conduct became effective April 1, 2009.

Under Rule 1.7(b), where a lawyer has a conflict of interest arising out of the

lawyer’s representation of two or more clients or out of the lawyer’s own

financial, business, property or other personal interests, the lawyer may proceed

with the representation or representations if:

o the lawyer reasonably believes that the lawyer will be able to provide

competent and diligent representation to each affected client;

o the representation is not prohibited by law;

o the representation does not involve the assertion of a claim by one client

against another client represented by the lawyer in the same litigation or

other proceeding before a tribunal; and

o each affected client gives informed consent, confirmed in writing.

However, requirements in the Rules of Professional Conduct that govern

obtaining consents to conflicts, including the new requirement that consents be

“confirmed in writing,” do not apply to consents validly given before the effective

date of those Rules. Client consents to conflicts validly given prior to April 1,

2009 do not need to be obtained anew solely on account of the adoption of the

new Rules1.

1 See Opinion of the NYS Bar Association Committee on Professional Ethics No. 829 – 04/29/2009 (17-09).

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III. Mandatory Settlement Conferences

A. Current Statutory Requirements

CPLR § 3408 requires the court to hold a mandatory settlement conference within

60 days after proof of service is filed with the county clerk. This section:

o Applies to all home loans.

o Imposes a duty to negotiate in good faith.

o Requires the court to compile and report certain information.

o Requires parties to bring certain documents to settlement conferences.

Courts must send a notice to parties advising the parties of

documents they should bring to the settlement conference.

o Requires plaintiffs to file a motion of discontinuance and vacatur within

150 days following execution of a settlement agreement or loan

modification.

o Prohibits parties from charging other parties for or requiring payment by

other parties of attorneys’ fees and costs related to appearances at or

participation in settlement conferences.

o Requires plaintiff to appear in person or by counsel at the conference.

Between October 14, 2014 and October 12, 2015, the most current reporting

period for this report, the courts conducted 101,523 foreclosure settlement

conferences. This is a reduction of 14% from the high of 118,394 conferences

reported in the 2014 Annual Report.2

B. Zombie Properties Bill (S08159)3

The Zombie Properties Bill, which was signed into law on June 23, 2016, amends

CPLR § 3408 to enhance the effectiveness of mandatory settlement conferences.

The amendments are effective December 20, 2016. The amendments:

o Formally adopt a good faith definition based upon existing case law.

o Provide additional guidance about other mandatory settlement

conference requirements.

Clarify that the parties’ representatives at the conference must

appear with authority to dispose of the case.

Strengthen the language concerning the parties’ obligations to

bring required information to conferences.

2 See 2015 Report of the Chief Administrator of the Courts, Lawrence K. Marks, Chief Administrative Judge, State

of New York Unified Court System, p. 4, https://www.nycourts.gov/publications/pdfs/2015ForeclosureReport.pdf

3 http://nyassembly.gov/leg/?default_fld=&leg_video=&bn=S08159&term=2015&Text=Y.

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Specifies the information and documentation each party is required

to provide.

Clarify that either party’s representative may be permitted to

appear by video or telephone.

o Provide a process for adjudicating disputes under the statute.

o Enumerate prescribed remedies for violations.

o Address issues concerning defendant participation.

At the first settlement conference, the court must: (i) advise the

defendant in connection with the requirement to answer the

complaint; (ii) provide information about available resources for

assistance; and (iii) provide the defendant with a copy of a

Consumer Bill of Rights, which is to be published by the Ney York

State Department of Financial Services within 60 days after the

December 20, 2016 effective date pursuant to a recent amendment

to Section 3-a of RPAPL 1303.

A defendant who has defaulted in answering but appears at

settlement conferences is presumed to have a reasonable excuse for

the default and is permitted to serve and file an answer within 30

days of the initial appearance at a settlement conference. The

defendant’s default is deemed vacated upon service of same.4

C. The Good Faith Standard

1. What Constitutes Good Faith?

a. The Uniform Rules

The Uniform Rules for The Trial Courts, 22 NYCRR

§202.12-A(c) (4) gives the court an affirmative duty in

residential mortgage foreclosure actions to “ensure that

each party fulfills its obligations to negotiate in good faith

and see that conferences are not unduly delayed or subject

to willful dilatory tactics so that the rights of both parties

may be adjudicated in a timely manner.”

b. Judicial Guidance

As good faith is currently undefined in the statute, several

courts have provided guidance on what constitutes a

violation of the duty to proceed in good faith:

4 This amendment overrules much of the current appellate case law effectively barring non-answering defendants

who participated in settlement conferences from vacating defaults and interposing late answers.

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Case Holding

Wells Fargo Bank, N.A. v. Ronci, 15

Misc.3d 531 (Sup. Ct. Kings Co.

November 9, 2015)

Ignoring or violating directives, repeatedly delaying

and forestalling and denying requests for loan

modifications without adequate grounds.

U.S. Bank Nat. Ass’n v. Sarmiento, 991

N.Y.S.2d 68 (2nd Dept. 2014)

Failure to expeditiously review submitted financial

information, sending inconsistent and contradictory

communications, and denial of requests for loan

modifications without adequate grounds, or,

conversely, failure to provide requested financial

information or the provision of incomplete or

misleading financial information

HSBC Bank USA v. McKenna, 37

Misc.3d 885 (Sup. Ct. Kings Co. 2012)

Rejecting a short sale at a sum the mortgagor had

previously stated was its minimum sale amount.

Wells Forgo Bank, N.A. v. Ruggiero, 39

Misc.3d 1233[A] (Sup. Ct. Kings Co.

2013)

Providing conflicting information, refusing to honor

agreements, unexcused delay, imposition of

unexplained charges, and misrepresentations.

Flagstar Bank FSB v. Walker, Misc.3d

(Sup. Ct. Kings. Co. 2012).

Failing to follow the U.S. Department of Treasury

Home Affordable Modification Program Guidelines

(HAMP) guidelines5.

HSBC Bank USA, N.A. v. Sene, 34 Misc.

3d 1232[A] (Sup. Ct. Kings. Co. 2012).

Producing to the court two different versions of a

mortgage note or assignment.

BAC Home Loans Servicing v.

Westervelt, 29 Misc. 3d 1224(A) (Sup Ct.

Dutchess Co. 2010).

Missing a settlement conference without adequate

explanation.

US Bank Nat. Ass’n v. Padilla, 31 Misc.

3d 1208(A), 929 N.Y.S.2d 203 (Sup. Ct.

Dutchess Co. 2011).

Engaging in dilatory tactics such as making

piecemeal document requests or providing a

defendant with contradictory information that

substantially impedes settlement negotiations.

5 The HAMP Guidelines require servicers to provide the borrower with clear written information designed to help

the borrower understand the modification process, and require servicers to carefully screen borrowers eligible for

HAMP. If a borrower expresses interest in HAMP, a servicer must send written communication clearly describing

the initial package. If the borrower requests a HAMP modification, the servicer must suspend the foreclosure sale

while evaluating the borrower. Once a borrower enters a trial plan pursuant to HAMP, the foreclosure process must

be suspended. After a borrower has made 3 or 4 monthly payments under the trial plan, the modification will

become permanent. A servicer may refer a loan to foreclosure or conduct a schedule sale only if: (1) the borrower

has been evaluated and determined to be ineligible for HAMP, (2) the borrower has failed to make the required trial

plan payments, (3) the borrower has failed to provide the required documents after at least two written requests, or

(4) the borrower has failed to respond entirely to the servicer after the servicer has complied with HAMP’s

requirements of reasonable solicitation.

For a detailed explanation of the HAMP Guidelines see the Making Home Affordable Program – Handbook for

Servicers of Non-GSE Mortgages, version 5.1 (May 2016)

https://www.hmpadmin.com/portal/programs/docs/hamp_servicer/mhahandbook_51.pdf.

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IndyMac Bank F.S.B. v. Yano-Horoski,

26 Misc. 3d 717, 890 N.Y.S.2d 313 (Sup.

Ct. Suffolk Co. 2009).

Refusing reasonable settlement offers.

One W. Bank, FSB v. Greenhut, 2012

N.Y. Misc. LEXIS 3052, 10-23 (2012).

Violating the CPLR 3408(c) duty to appear with

counsel fully authorized to dispose of the case, or

using reliance on a third party to unreasonably delay

a settlement conference or otherwise substantially

impede disposal of the case.6

HSBC v. Cayo, 34 Misc. 3d 856, 934

N.Y.S.2d 792 (2011).

Refusal to accept deed-in-lieu of foreclosure.

c. Zombie Properties Bill (S08159). 7

Amends CPLR § 3408 effective December 20, 2016.

Good faith shall be measured by the totality of the circumstances,

including but not limited to the following factors:

1. Compliance with the requirements of CPLR 3408 and

applicable court rules, orders or directives of the court or its

designees;

2. Compliance with applicable mortgage servicing laws, rules or

regulations and loss mitigation standards; and

3. Conduct consistent with efforts to reach a mutually agreeable

resolution, including avoiding unreasonable delay, appearing at

conferences with authority to settle, avoiding prosecution of

foreclosure proceedings while loss mitigation applications are

proceeding (known as “dual tracking”), and providing accurate

information to the court and parties.

2. Potential Ethical Violations

The following are ethical rules that could be violated by the failure

to negotiate in good faith during a settlement conference:

6 The court found that the duty pursuant to CPLR 3408(c) does not prevent a plaintiff’s representative from

engaging in telephonic or other electronic consultations as “appropriate” to facilitate settlement negotiations.


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Rule

No.

Standard

3.1(b)(2) a lawyer’s conduct is frivolous if the conduct has no reasonable purpose other than to

delay or prolong the resolution of litigation.

3.2 prohibits a lawyer from using means that have no substantial purpose other than to

delay or prolong a proceeding.

3.3(f)(2) a lawyer shall not engage in undignified or discourteous conduct when appearing

before a tribunal.

3.4(a) a lawyer shall not suppress any evidence or knowingly engage in conduct contrary to

the Rules.

4.1 a lawyer is prohibited from knowingly making a false statement of fact or law to a

third person.

8.4 a lawyer shall not engage in conduct involving dishonesty, deceit or

misrepresentation, or engage in conduct prejudicial to the administration of justice.

3. Sanctions for Violations of Good Faith

a. Zombie Properties Bill (S08159)8

Amends CPLR § 3408 effective December 20, 2016.

When plaintiffs fail to negotiate in good faith, the court shall, at

a minimum, toll interest and fees during any undue delay caused

by the plaintiff. The court may also compel production of

documents requested during conferences, impose a civil penalty

not to exceed $25,000, and award any other relief deemed just

and proper.

For defendants who fail to negotiate in good faith, the court

shall, at a minimum, remove the case from the conference

calendar. In considering such a finding, however, the court

shall take into account equitable factors, including whether the

defendant was represented by counsel.

b. Wells Fargo Bank, N.A. v. Ronci, 15 Misc.3d 531 (Sup. Ct. Kings

Co. November 9, 2015).

All interest accrued on the subject note and mortgage was

tolled from the commencement of the mandatory conferencing

until the date this Order was filed; Plaintiff barred from

recovering attorneys’ fees and costs from the commencement


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of the mandatory conferencing until the date this Order was

filed; and Plaintiff directed to review defendants’ application

for a loan modification without regard to interest or fees

accrued from the commencement of the mandatory

conferencing until the date this Order was filed.

c. U.S. Bank Nat. Ass’n v. Sarmiento, 991 N.Y.S.2d 68 (2nd Dept.

2014).

Plaintiff barred from collecting interest or fees that accrued

on the loan during the action or recovering any costs or

attorneys’ fees incurred in the action.

d. HSBC Bank USA, Nat. Ass’n v. McKenna, 37 Misc.3d 885 (Sup.

Ct. Kings Co. 2012).

Plaintiff barred from collecting interest on the loan from

the date of default and required to establish its standing to

maintain the foreclosure action. The court declined to

require the plaintiff to pay the defendant’s attorney’s fees

and legal costs associated with the action absent any

frivolous conduct pursuant to 22 NYCRR § 130-1.1(c)(2).

e. One W. Bank, FSB v. Greenhut, 2012 N.Y. Misc. LEXIS 3052, 10-

23 (2012)

Plaintiff had to pay a sanction of $1,000 to the IOLA Fund.

Amount was based on the fact that the plaintiff’s conduct

did not inflate defendant’s interest costs, but that it did

squander resources of the court, contributed to a need for

adjournment and was not the first time that plaintiff failed

to produce a representative with authority to settle.

IV. Attorney Affirmation Requirement

A. Basis for Enactment

In 2010, in response to the numerous defects with foreclosure filings9, Chief

Judge Lippman enacted the attorney affirmation requirement in residential

mortgage foreclosure actions. Under the affirmation requirement, attorneys

must certify under the penalties of perjury, that they have communicated with

a representative of the plaintiff bank or lender and that they have personally

9 These defects include the failure of counsel to review documents and establish standings, bogus notarized

affidavits and the “robosignature” of piles of documents by parties and their counsel.

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reviewed all documents and records related to the case (an “Attorney

Affirmation”). Attorneys must then attest that “to the best of my knowledge,

information and belief, the Summons and Complaint, and other papers filed or

submitted to the Court in this matter contain no false statements of fact or

law.” See Attorney Affirmation, Administrative Order 548-10, Revised Nov.

18, 2010. Note that this affirmation requirement was superseded by the

Certificate of Merit discussed below.

Although Rules 3.1(b)(3) and 3.3 of the Rules of Professional Conduct

already imposed an obligation on attorneys to ensure that the documents they

present to the court are valid, Judge Lippman told the Associated Press that

forcing lawyers to sign something to certify that all papers have gotten a

proper review will hold them accountable like never before. He further stated

the requirement “puts them on notice […] to make doubly sure that we are

doing what we should be doing in the first place.” Andrew Keshner, New

Court Rule Says Attorneys Must Verify Foreclosure Papers, New York Law

Journal, Oct. 21, 2010.

In addition, the new Attorney Affiliation requirement promulgated by Chief

Judge Lippman, overlaid the long-standing Uniform Rule 130-1.1(a), which

imposes the signature requirement for pleadings, motions and papers filed

with the court and provides that such signature is a certification of, among

other things, the attorney’s reasonable inquiry, non-frivolous nature of the

contents of the paper.

B. Effect of Enactment

1. Initial Decrease in Filings

2. “Shadow Docket” & the Unified Court System Pilot Programs

The “shadow docket” refers to the residential foreclosure cases that

have been commenced, but are not on the court’s docket of active

cases. For example, a foreclosure is considered inactive when a

lender files a foreclosure complaint, but has not yet filed the papers

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required to trigger a mandatory settlement conference. Under 22

NYCRR 202.12-a, lenders must file proof of service of the

summons and complaint within 120 days, but are not required to

file the Request for Judicial Intervention (RJI) or Attorney

Affirmation at the same time. As a result of the delay in filing the

RJ I, judges cannot take steps to resolve the case and therefore

homeowners are stuck in a legal limbo.10

In 2012, the Chief Administrative Judge of the Court, amended the

Uniform Civil Rules of the Supreme and County Courts by adding

section 202.12-a(b)(3), which was effective for pilot purposes

only. The new pilot program applied to cases where the plaintiff

failed to file proof of service within 120 days of service, or failed

to file the RJI at the time of the filing of proof of service. This

section was later amended to authorize special calendars (no longer

as pilots) for certain residential foreclosure actions. The order

authorized any court to schedule foreclosure cases even though a

RJI had not been filed.

The court launched its pilot programs in Brooklyn and Queens.

While shadow inventories exist in counties outside of New York

City, the 2013 Report of the Chief Administrator of the Courts

indicated that most county clerks are not equipped to readily

identify shadow docket cases and electronically share information

with the courts in a useable format. As a result of the lack of

resources, only a handful of counties were able to make any

inroads with this inventory. The conferences held as a result of the

program had resulted in approximately 7,000 appearances as of the

date of the 2013 report (in addition to those previously discussed).

The Certificate of Merit Bill (discussed below) eliminated the

shadow docket, and as of August 30, 2013, no new cases will enter

this docket.

C. Certificate of Merit Bill (A005582A)

The Bill added a new section 3012-b to the CPLR which became effective

on August 30, 2013. The new section applies to residential mortgage

foreclosure actions involving a home loan in which the defendant is a

resident of the property subject to foreclosure.

10 See New Report Puts a Spotlight on New York’s Foreclosure “Shadow Docket,” Legal Services E-lert, Brennan

Center, June 13, 2012 available at

http://www.brennancenter.org/content/elert/new_report_puts_a_spotlight_on_new_yorks_foreclosure_shadow_dock

et/.

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1. Mandatory Attorney Affirmation

A Certificate of Merit must be filed at the time a mortgage

foreclosure action is commenced. This differs with the prior

Administrative Order which required attorney affirmation at or

after the filing of the request for judicial intervention.

The Certificate of Merit must be attached to the summons and

complaint.

The Certificate of Merit must include certification by the attorney

that:

o the attorney has reviewed the facts of the case;

o the names of representatives of the plaintiff who the

attorney consulted with in connection with the case;

o based on such consultation, the attorney’s review of

documents, and to the best of such attorney’s knowledge,

information and belief, there is a reasonable basis for the

commencement of the action and that plaintiff is currently

the creditor entitled to enforce rights under the documents.

The law also requires that copies of the relevant documents giving

rise to the plaintiff’s right to commence the action (for example,

the note, mortgage, any assignments, and any modifications of the

foregoing) must be filed with the summons and complaint or the

Certificate of Merit.

The law also amended CPLR §3408 to require that the plaintiff file

proof of service within 20 days of service, regardless of how

service is made, and requiring that the court schedule a mandatory

conference within 60 days after the date when proof of service

upon such defendant is filed with the County Clerk.

Willful failure to provide the requisite Certificate of Merit and

documentation allows the court to issue sanctions including, but

not limited to, dismissal of the complaint or denial of the accrual of

interest, costs, attorneys’ fees and other fees relating to the

underlying mortgage debt.

Form available:

https://www.nycourts.gov/ATTORNEYS/foreclosures/CertificateO

fMerit.pdf

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2. Elimination of Shadow Docket

To address the transition from the affirmation requirement under

the prior Administrative Order to the new Certificate of Merit

requirement, Judge Prudenti issued Administrative Order 208/13

on August 30, 2013. The order provides that the prior

Administrative Order requiring an affirmation at or after the filing

of a request for judicial intervention shall not apply to residential

mortgage foreclosure actions commenced on or after August 30,

2013.

All new cases filed on or after August 30, 2013 must comply with

the Certificate of Merit requirements. Actions commenced prior to

the August 30, 2013 effective date may comply with either the

attorney affirmation or Certificate of Merit requirements.

3. Ohio Attorneys Combat a Similar Requirement

Although New York was the first state to enact such a requirement,

several states have followed suit.

a. Affirmation Requirements in Cuyahoga County and Franklin

County

In Cuyahoga County, Ohio, the court has adopted a

requirement that the plaintiff’s attorney personally execute

and file an affirmation stating that the attorney has

personally reviewed the documents and confirmed the

factual accuracy of those documents.

Three judges in Franklin County, Ohio, went one step

farther and required the attorney for the plaintiff to file a

certification that the attorney personally verified that the

plaintiff is the holder of the original note, which is in the

plaintiff’s possession.

b. Opinion Letter

Several law firms representing plaintiffs in foreclosures

claimed that these orders forced violations of the attorney-

client privilege, and further that waiving the attorney-client

privilege for this purpose could open the door to exposure

on the part of both the attorney and the client.

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Based on these problems, a number of the firms who

handle a large volume of foreclosures joined together and

obtained an opinion letter from Richard Koblentz, a

prominent attorney and legal ethics expert. Kobeltz argued

that the Ohio Rules of Professional Conduct, expressly

prevent an attorney from testifying relative to

communications made to the attorney by a client or the

advice provided by an attorney to a client at trial or during

discovery. He further argues that past experiences of

uncooperative or unreliable plaintiffs is not sufficient to

overcome attorney client privilege without first discovering

any actual or specific evidence of a crime, fraud or

misconduct.

Koblentz concludes that the required affirmations are

forcing plaintiff attorneys to either forego their claim for

foreclosure or to waive their attorney client privilege

“thereby potentially opening the door for opposing parties

to freely discover information protected by the attorney

client privilege in all matters in which the client is

represented by that attorney.” As a result attorneys cannot

legally or ethically comply with the orders of Cuyahoga or

Franklin counties.

c. Ohio Supreme Court Ruling

In spite of the ethics opinion and resistance from plaintiffs’

attorneys, courts have refused to modify those orders.

Furthermore, in a recent ruling the Ohio Supreme Court

refused to order the courts to do so. The Ohio Supreme

Court dismissed a Complaint for Writ of Prohibition by a

number of law firms against the three Franklin County

judges who were issuing the Case Management Orders.

The Complaint alleged that the orders violated attorney

client privilege, that the judges had no authority to require

such certification and that the lawyers had no adequate

remedy at law.11

In an entry dated April 6, 2011 signed

only by the Chief Justice, the Ohio Supreme Court, without

an opinion or any indication of the basis for its decision,

11 See Stephen R. Buchenroth, Ohio Courts React to Robo-Signers by Placing Burden Upon Lawyers, American Bar

Publications, June 6, 2011 available at

http://www.americanbar.org/content/dam/aba/publications/rpte_ereport/2011/2011_aba_rpte_ereport_03_rp_buchen

roth.authcheckdam.pdf.

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granted the respondent judges’ Motion to Dismiss. [State

ex rel.] Sassano v. Bender, 128 Ohio St. 3d 1441, 944

N.E.2d 692 (2011).

V. Legal Services to Distressed Homeowners

A. Zombie Properties Bill (S08159)12

In addition to the amendments to CPLR § 3408 discussed above, the Zombie

Properties Bill:

o Creates the Community Restoration Fund (CRF), a new tool for the

State of New York Mortgage Agency (SONYMA) to assist

homeowners facing mortgage foreclosure. CRF will purchase

defaulted mortgage notes from other lenders and offer favorable

mortgage modifications to keep homeowners in their residences. CRF

will have the ability to forgive a portion of a loan’s principal and make

the loan affordable in areas where home values have declined or where

a homeowner has experienced a decrease in income;

o Requires lenders and servicers to supply notices to borrowers that

emphasize their right to stay in their homes until the foreclosure

actually takes place; and

o Establishes a Consumer Bill of Rights informing property owners of

their rights in foreclosure proceedings. The Consumer Bill of Rights is

to be published by the Department of Financial Services within 60

days after the December 20, 2016 effective date.

B. RPL 265-a: Home Equity Theft Prevention Act

1. Background and Application

The purpose of RPL 265-a is to help protect particularly vulnerable

homeowners in financial distress from aggressive equity

purchasers during the time period between the default on mortgage

and the scheduled foreclosure sale date. To accomplish its purpose

the law requires that the sales agreement be expressed in writing,

prohibits representations that tend to mislead, restricts unfair

contract terms, provides a cooling off period for equity sellers who

12 http://nyassembly.gov/leg/?default_fld=&leg_video=&bn=S08159&term=2015&Text=Y. See also

https://www.governor.ny.gov/news/governor-cuomo-signs-sweeping-legislation-combat-blight-vacant-and-

abandoned-properties.

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enter into covered contracts, and affords equity sellers a reasonable

and meaningful opportunity to rescind sales to equity purchasers.

The law applies to any contract, agreement or arrangement

involving:

o The sale of a property currently in foreclosure or on a tax

lien, or

o The sale of a property when the owner is in default and the

sale involves a reconveyance agreement.13

See RPL §265-

a(2)(c).

The law does not apply when the purchaser acquires title

o To use, and then actually uses, the property as his/her

primary residence;

o By a deed from a referee in a foreclosure sale;

o At any sale of property authorized by statute;

o By order or judgment of any court;

o From a spouse, or from a parent grandparent, child,

grandchild or sibling of such person or such person’s

spouse;

o As a not-for-profit housing organization or as a public

housing agency; or

o As a bona fide purchaser or encumbrancer for value.

See RPL §265-a(2)(e)

2. Contract Requirements (RPL §265-a(4))

All covered contracts must contain the entire agreement of the

parties, be fully completed, written in at least 12 point bold type

font, written in English, or in both English and Spanish, if Spanish

is the primary language of the equity seller and shall include:

o Name, address and phone number of the equity purchaser;

o Address of the foreclosure property;

o Total consideration to be paid;

o Complete description of terms of payment;

13 A reconveyance agreement means (1) a transfer of title either by sale, mortgage, lien or encumbrance that allows

the equity purchaser to obtain legal or equitable title to all or part of the property, and (2) the subsequent conveyance

or promise to the equity seller that he or she can regain ownership of the property.

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o Time, if any, at which physical possession is to be

transferred;

o Terms of any rental or lease agreement;

o Terms of any reconveyance agreement; and

o A notice of cancellation in immediate proximity to the

equity seller’s signature. The notice must be in the form

prescribed by the statute, in 14 point bold type font and

attached to the contract. (See Exhibit A for sample notice).

3. Seller’s Right to Cancel and Right of Recession (RPL §265-a(5))

The equity seller has the right to cancel the contract until midnight

of the 5th

business day following the day on which the contract was

signed.

o The cancellation becomes effective if written

communication indicates intent of equity seller not to be

bound by the contract.

o Once the equity seller cancels the contract, the equity

purchaser must return all original contracts and other

documents within 10 days, along with any fee or other

consideration received by the equity purchaser.

o Cancellation releases the equity seller from all obligations

to pay fees to the equity purchaser.

Any transaction which violates any of the provisions in subsections

3, 4, 6, 7 or 11 is voidable and may be rescinded by the equity

seller within 2 years from the date the deed was recorded. See RPL

§265-a(8)

o Once written notice has been given, the equity purchaser,

or its successor in interest, has 20 days to reconvey the

property free and clear of any encumbrances, on the

condition of repayment of any consideration paid to the

equity seller

o Failure to reconvey the property allows the equity seller to

bring an action to enforce recession and for cancellation of

the deed.

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o Courts may also award actual damages plus reasonable

attorneys’ fees and costs. The court can authorize an award

for equitable relief up to 3 times the actual damages.14

4. Purchaser’s Limitations and Restrictions (RPL §265-a(7))

Before midnight of the 5th

business day after the date on which the

covered contract is executed, an equity purchaser shall not:

o Accept any instrument of conveyance or any interest in the

residence;

o Record any documents signed by the equity seller;

o Transfer any interest in the residence;

o Pay the equity seller any consideration; or

o Suggest, encourage or provide any form which allows an

equity seller to waive his/her rights to cancel or rescind.

The equity purchaser shall make no false or misleading statements

regarding

o The value of the residence;

o Amount of proceeds the equity seller will receive after the

sale;

o Timing of the judicial process;

o Any contract term; or

o The equity seller’s rights and obligations.

The equity purchaser may not represent, directly or indirectly, that

the:

o Equity purchaser is acting as advisor, consultant or on

behalf of equity seller;

o Equity purchaser has a certification or license that the

equity purchaser does not have;

o Equity purchaser is assisting the equity seller to save the

residence, unless the equity purchaser has a good faith basis

for such representation, or

14 This section does not affect the rights of a bona fide purchaser or encumbrancer him and him and him for value if

their conveyance occurred before the recording of the notice of recession

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o Equity purchaser is assisting the equity seller in preventing

a completed foreclosure, unless the equity purchaser has a

good faith basis for such representation.

5. Criminal Penalties (RPL §265-a(10)(a))

An equity purchaser with intent to defraud would be guilty of a

class E felony, subject to imprisonment and a fine of not more than

$25,000.

An equity purchaser who knowingly violates subsection 7 is guilty

of a class A misdemeanor, subject to imprisonment and a fine of

not more than $25,000.

Under RPL §265-a(10)(b) an equity purchaser who, acting in good

faith, violates subsection 7 is not liable if he or she:

o Acted in good faith;

o Proves that the violation was not intentional;

o Proves that the violation resulted from a bona fide error (ie:

clerical, calculation or printing error, not an error of legal

judgment);

o Notifies the equity seller within 90 days of the contract

date; and

o Makes appropriate restitution within 90 days of the contract

date.

C. RPL 265-b: Distressed Property Consulting Contract

1. Application

a. Who is a Distressed Homeowner

A distressed homeowner is a natural person who is the

mortgagor with respect to a distressed home loan15

or who

is in danger of losing a home for nonpayment of taxes.

RPL §265-b(1)(a).

15 A distressed home loan means a home loan that is in danger of being foreclosed because the homeowner has one

or more defaults under the mortgage that entitle the lender to accelerate full payment of the mortgage, or a home

loan where the lender has commenced a foreclosure action

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b. Who is a Property Consultant

An individual or corporation, partnership or other business

entity that, directly or indirectly, solicits or undertakes

employment to provide consulting services to a homeowner

with respect to a distressed home loan or potential loss of

home for nonpayment of taxes. RPL §265-b(1)(e).

o An attorney is not a distressed property consultant

when the attorney is directly providing consulting

services to a homeowner in the course of his or her

regular legal practice. RPL §265-b(1)(e)(i).

c. What are Consulting Services (RPL §265-b(1)(c))

Services provided by a distressed property consultant to a

homeowner that the consultant represents will help to

achieve any of the following:

o Stop, enjoin, delay, void, set aside, annul, stay or

postpone foreclosure filing, a foreclosure sale or the

loss of a home for nonpayment of taxes;

o Obtain forbearance from any servicer, beneficiary

or mortgagee or relief with respect to the potential

loss of the home for nonpayment of taxes;

o Help the homeowner to exercise a right of

reinstatement or similar right provided in the

mortgage documents or any law or to refinance a

distressed home loan;

o Obtain any extension of the period within which the

homeowner may reinstate or otherwise restore his

or her rights with respect to the property;

o Obtain a waiver of an acceleration clause contained

in any promissory note or contract secured by a

mortgage on a property in foreclosure;

o Help the homeowner to obtain a loan or advance of

funds;

o Help the homeowner in answering or responding to

a summons and complaint, or otherwise providing

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information regarding the foreclosure complaint and

process;

o Avoid or ameliorate the impairment of the

homeowner’s credit resulting from the

commencement of a foreclosure proceeding or tax

sale; or

o Save the homeowner’s property from foreclosure or

loss for non-payment of taxes.

2. Prohibitions on Distressed Property Consultants (RPL §265-b(2))

A distressed property consultant is prohibited from:

o Performing consulting services without a written, fully

executed consulting contract;

o Charging for or accepting payment for consulting services

before the full completion of all such services;

o Taking a power of attorney from a homeowner;

o Retaining any original loan document or other original

document related to the distressed home loan, the property

or the potential loss of the home; and

o Inducing or attempting to induce a homeowner to enter a

consulting contract that does not fully comply with the

applicable provisions of RPL §265-b.

3. Contract Requirements (RPL §265-b(3)(a))

A distressed property consultant contract shall:

o Contain entire agreement of the parties;

o Be provided in writing to the homeowner before signing;

o 12 point font and written in the language used by the

homeowner;

o Fully disclose the exact nature of services to be provided;

o Fully disclose total amount and terms of compensation for

such consulting services;

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o Contain names, business address and telephone number of

consultant;

o Be dated and personally signed by homeowner and

consultant and acknowledged by notary public, and

o Contain a statutorily prescribed notice, printed in at least 14

point boldface type and located in immediate proximity to

the space reserved for the homeowner’s signature.

4. Ability to Cancel (RPL §265-b(3)(b))

A homeowner can cancel, without any penalty or obligation, any

contract with a distressed property consultant until midnight of the

5th

business day following execution of the contract.

o A “notice of cancellation” form must accompany the

contract and be written in at least 12 point font and in the

same language as used in the contract.

5. Penalties (RPL §265-b(4))

For violations of any provision of this section:

o The court may make null and void any agreement;

o The homeowner may recover actual and consequential

damages and costs if he or she suffered damage from the

violation; and

o For intentional or reckless violations the court may award

treble damages, attorneys’ fees and costs.

6. Advertisements (RPL §265-b(3-a)(a))

All advertisements disseminated in New York or to homeowners

with property located in New York must prominently include the

following statement clearly and legibly printed or displayed in not

less than twelve-point bold type, or, if the advertisement is printed

to be displayed in print that is smaller than twelve point, in bold

type print that is no smaller than the print in which the text of the

advertisement is printed or displayed:

o “In New York State, Housing Counselors, who are

approved by the U.S. Department of Housing & Urban

Development or the New York State Banking Department,

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may provide the same or similar services as a distressed

property consultant for free. A list of approved Housing

Counselors can be found on the New York State Banking

Department website at www.banking.state.ny.us or by

contacting the New York State Banking Department toll-

free at 1-877-BANK-NYS (1-877-226-5697). You should

consider consulting an attorney or a government-approved

housing counselor before signing any legal document

concerning a distressed property consultant.”

D. Attorney Arrangements with “Foreclosure Consultants”

Many states have enacted statutes similar to New York’s RPL 265-a,

which place restrictions on foreclosure consultants. In order to avoid these

restrictions, especially the one prohibiting collection of fees, foreclosure

consultants are contacting attorneys, as they are exempt from the

requirements. See Justin Wagner, Assisting Distressed Homeowners to

Avoid Foreclosure: An Advocate’s Role in an Evolving Judicial and

Policy Environment, 17 Geo. J. Poverty Law & Pol’y 423, 442 (2010).

Ethics Bars of several states, including New York, California and Florida

have had inquiries by lawyers being contacted by nonlawyers, including

mortgage brokers and foreclosure consultants, proposing a variety of

arrangements.16

In response to the attorney inquiries, Florida and California have issued

Ethics Alerts to members of the bar, warning of the potential ethical

violations associated with such arrangements. See California Comm. on

Prof’l Responsibility and Conduct, Ethics Alert, Legal Services to

Distressed Homeowners and Foreclosure Consultants on Loan

Modifications (Feb. 2009); Elizabeth Tarbert, Ethics Alert: Lawyers

should be very wary of loan modifiers, The Florida Bar News, March 15,

2009 available at https://www.floridabar.org.

Many of the ethical rules mentioned in California and Florida Ethics

Alerts have parallel rules in New York, including, without limitation, the

following New York Rules which should be considered by attorneys

before they participate in any venture involving foreclosure consultants:

o Rule 1.1 - Prohibition against intentionally or recklessly failing to

perform legal services with competence;

16 Examples of such arrangements include: offering a large number of referrals and a promise of easy money,

requesting the lawyer to pay a referral or marketing fee, or asking the attorney to enter into a joint venture with the

distressed homeowner and consultant.

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o Rule 1.5(a) - Prohibition against charging excessive fees (i.e.

accepting fees for little or no work);

o Rule 1.5(b) - requirement to provide notice to client of scope of

representation and basis of fee;

o Rule 1.8(f) – Restrictions against third party payment of legal fees

(prohibited unless client gives informed consent);

o Rule 3.1 - Prohibition against bringing an action without a good

basis in law and fact (i.e. filing a lawsuit or motions simply

intended to delay or impede a foreclosure sale);

o Rule 5.3(a) –Responsibility for conduct of a non-lawyer associated

with lawyer. (A violation by the non-lawyer means a violation by

the lawyer. See Rule 8.4(a));

o Rule 5.4(a) - Prohibition against directly or indirectly splitting any

attorneys’ fees with a non-lawyer;

o Rule 5.4(b) - Prohibition against forming a partnership or joint

venture with a non-lawyer, which would involve the provision of

legal services;

o Rule 5.5(b) - Prohibition against assisting in the unauthorized

practice of law;

o Rule 7.2(b) - Restrictions against paying a referral fee to a non-

lawyer (only certain entities are permitted to be a referral agent);

o Rule 7.3(a)(1) - Prohibition against soliciting clients over the

phone or in-person;

1. August 2, 2012 N.Y. Committee on Professional Ethics Opinion

In response to this developing trend, the New York State Bar

Association, Committee on Professional Ethics on August 2, 2012

released an opinion, N.Y. Comm. on Prof’l Ethics, Formal Op. 927

(2012), on whether an attorney may accept referrals from a non-

lawyer for a fixed monthly fee.

o The non-lawyer involved in this situation was a corporation

(the “Corporation”). It was proposed that the Corporation

would identify prospective clients whose homes were being

foreclosed upon by reviewing lists of pending foreclosures.

The Corporation would then contact the prospective clients

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by telephone to solicit their legal business, and would refer

clients to the lawyer (on a nonexclusive basis). Under the

proposed arrangement, the Corporation would enter into an

agreement with the clients, and there would be no

agreement directly between the lawyer and the clients. The

Corporation would charge the clients for the legal services

that were rendered, and would pay the lawyer a flat fee of

$300 each month for the lawyer’s services – regardless of

how many or how few hours the lawyer devoted to the

matter. The lawyer would not be informed as to the

amount being charged by the Corporation to the client, nor

would the lawyer know the extent to which the fees being

charged by the Corporation exceeded the $300 monthly fee

which the Corporation paid the lawyer. There would be no

obligation on behalf of the Corporation to refer clients to

the lawyer, and no obligation on behalf of the lawyer to

accept referrals from the Corporation.

The Committee on Professional Ethics opined that this type of

arrangement would violate several rules of professional conduct

and, therefore, should not be entered into. Specifically, the

Committee’s opinion addressed the following:

o Excessive Fees: Fixed Fees, while not prohibited, cannot

be excessive. While the information provided to the

Committee was insufficient to determine whether the

proposed combined attorney and corporation fee here

would be excessive, the Committee found that there is a

rebuttable presumption that a flat or fixed fee unrelated to

the service performed for a lengthy period at some time

becomes excessive. Citing Jacobson v. Sassower, 66

N.Y.2d 991, 993 (1985) (rebuttable presumption that a flat

or fixed fee unrelated to service performed for a lengthy

period at some point becomes excessive), the Committee

found the combined fees of the Corporation and attorney

here to be presumptively excessive “for lack of a stated

justification”.

o Notice to Client: Here the arrangement violated Rule 1.5(b)

and 22 NYCRR 1215.1 because the attorney did not, at the

commencement of the representation or within a reasonable

time afterward, advise the client of the scope of

representation or the basis of the fee.

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o Telephone Solicitation: Rule 7.3(a)(1) prohibits telephone

solicitation by an attorney. Even though the Corporation

would be the one soliciting clients, an attorney is liable for

any violations based on the conduct of a non-lawyer who is

associated with the attorney.

o Division of Legal Fees: An attorney may not share fees

with a non-lawyer and the proposed arrangement with the

Corporation here would be equivalent to a lawyer billing a

client and remitting a portion of the fee to the Corporation.

A lawyer cannot do indirectly what a lawyer cannot due

directly. Rule 8.4(a). In addition, Corporation would be

acting as a referral agent for a fee, in violation of Rule

7.2(b).

o Third Party Payor of Legal Fees: While there is nothing

per se unethical about a third party paying attorneys’ fees

for a client, the client must be fully informed and must give

consent. Here, there was no indication that the client would

ever be fully informed of the arrangement or would be

giving informed consent.

2. Case Study: Cincinnati Bar Ass’n v. Mullaney, 119 Ohio St.3d 412 (2008)

a. Facts

A foreclosure consulting company, Foreclosure Solutions,

LLC, purported to serve homeowners threatened with

foreclosure by negotiating with lenders to reinstate the loan

and avoid foreclosure. As part of its consulting services the

company promised that it would retain an attorney to

provide legal services. Foreclosure Solutions would obtain

a limited power of attorney from the client to hire the

attorney, and would then pay the attorney a flat fee of $125

for each client matter the attorney handled.

The client had no choice in the lawyer’s selection and, after

the lawyer was hired, the Foreclosure Solutions agents

would continue to negotiate directly with the foreclosing

creditors. This case involved three attorneys, who accepted

clients from Foreclosure Solutions. The attorneys would

receive several client files at a time, with one check. The

attorneys did not oversee the solicitation or have any

involvement with clients before Foreclosure Solutions

forwarded the files. The attorneys generally responded with

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standardized pleadings and other filings. As a rule, the

attorneys did not meet with clients to determine their

particular objectives or to obtain complete information

regarding the clients’ circumstances.

b. Disciplinary Violations

The attorneys were found guilty of violating ethics rules

involving:

o Referral Services. While certain lawyer referral

services that serve the public interest are

permissible under the Disciplinary Rules, lawyers

are generally prohibited from using a person or

organization to recommend or promote the use of

the lawyer’s services The lawyers’ use of

Foreclosure Solutions under these circumstances

violated the Disciplinary Rules.

o Unauthorized Practice of Law. Through their use

of Foreclosure Solutions, the lawyers here had aided

nonlawyers in the unauthorized practice of law by

facilitating the nonlawyers in their negotiations with

creditors on behalf of debtors who were facing

foreclosure.

o Sharing Legal Fees. By accepting a portion of the

compensation that the clients paid Foreclosure

Solutions, the lawyers here violated the Disciplinary

Rule prohibiting lawyers from sharing fees with

nonlawyers.

o Partnership with Nonlawyers. By partnering with

Foreclosure Solutions in representing debtors facing

foreclosure, the lawyers here violated the

Disciplinary Rule prohibiting lawyers from forming

a partnership with nonlawyers.

o Adequate Preparation. By not investigating and

evaluating each client’s debts and assets the

attorneys were inadequately prepared to represent

their respective clients.

o Lawful Objectives. By using stall tactics and

failing to access the opportunities presented by

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existing law for each client, the attorneys failed to

seek the client’s lawful objectives.

c. Sanctions

The court disciplined the three attorneys according to their

experience level and involvement. The inexperienced

associate received a public reprimand. The seasoned

practitioner received a one-year suspension. The seasoned

practitioner not admitted in Ohio received an injunction

prohibiting his pro hac vice practice in Ohio for two years.

He also received reciprocal discipline in Kentucky, the

state in which he was admitted to practice. See Ky. Bar

Ass’n v. Moeves, 297 S.W.3d 552 (Ky. 2009).

VI. The Steven Baum, P.C. Firm

A. Background and Chronology of Events

Steven J. Baum, P.C. (the “Baum Firm”), a large foreclosure law firm that was

headquartered in Amherst, New York, attracted considerable media attention

in 2011 and ultimately closed its doors following investigations by the New

York State Attorney General’s and the U.S. Attorney General’s office related

to the firm’s foreclosure practice during the housing crisis, and allegations of

overcharging, filing false documents and representing parties on both sides of

a mortgage transaction. See Thom Weidlich and Karen Freifeld, ‘Twilight

Zone’ Foreclosure Law Firm Draws Fine, Suits in New York Courts,

Bloomberg News, Dec. 8, 2010 available at

http://www.bloomberg.com/news/2010-12-08/-twilight-zone-foreclosure-law-

firm-in-n-y-draws-fine-suits.html

The Baum firm represented some of the largest lenders and servicers of

residential mortgage loans, and handled a significant share of the mortgage

foreclosure actions brought in New York State. Between 2007 and 2010

alone, the Baum Firm reportedly handled over 100,000 mortgage foreclosure

actions – representing plaintiffs in approximately 40% of the foreclosure

actions commenced in the state during that period. Andrew Keshner, Baum

Firm Reaches Settlement with Attorney General, New York Law Journal

March 22, 2012.

In April of 2011, at a time when the attorneys general in all 50 states were

investigating banks, loan servicers, and law firms to determine whether papers

used to commence hundreds of thousands of mortgage foreclosure actions

nationwide were properly prepared, the office of New York State Attorney

General, Eric T. Schneiderman, issued subpoenas to the Baum Firm and a

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related company and commenced investigations regarding the firm’s

foreclosure practices. The Attorney General’s office alleged that the Baum

Firm had repeatedly filed papers in foreclosure and bankruptcy proceedings

without taking appropriate steps to verify the accuracy of allegations or the

lender’s right to foreclose. The purpose of the investigation was to determine

whether the Baum Firm knowingly or recklessly filed misleading pleadings,

affidavits, and mortgage assignments in the state and federal courts.

In October of 2011, the Baum Firm and Pillar Processing LLC agreed to pay

$2 million to resolve a separate investigation by the U.S. Attorney’s office for

the Southern District of New York regarding the firm’s foreclosure filings.

The settlement agreement, however, did not constitute a finding that the firm

engaged in any unlawful practice or wrongdoing.17

On October 28, 2011, New York Times columnist, Joe Nocera, published an

article and photos he had received from a former Baum employee of a 2010

Baum Firm office Halloween party at which employees had reportedly

dressed as people whose homes had been foreclosed upon.18

The article did

not, however, indicate that the principals of the Baum Firm were involved in

or even aware of the theme of the party.

Shortly after the Halloween party story was published, the Baum Firm was

blacklisted by both national mortgage servicing giants, Freddie Mac and

Fannie Mae.

Due in large part to the decrease in foreclosure business, the Baum Firm,

which, at the time, employed 67 full and part-time employees in Amherst,

New York, and 22 full and part-time employees at its West Perry, New York

location, announced that it would be closing its doors in November 2011. Joe

Palazzolo, The Demise of Steven J. Baum PC: A Chronology, WSJ Law Blog,

Nov. 21, 2011 available at http://blogs.wsj.com/law/2011/11/21/the-demise-

of-steven-j-baum-pc-a-chronology/

In March of 201219

, New York State Attorney General, Eric T. Schneiderman,

issued a press release announcing that the Baum Firm had reached a

settlement agreement with the New York Attorney General’s office pursuant

to which the Baum Firm and Pillar Processing LLC (a separate document

17 See The Demise of Steven J. Baum PC: A Chronology, WSJ Law Blog, Nov. 21, 2011 available at

http://blogs.wsj.com/law/2011/11/21/the-demise-of-steven-j-baum-pc-a-chronology/

18 See Joe Nocera, What the Costumes Reveal, New York Times (October 28, 2011)

(http://www.nytimes.com/2011/10/29/opinion/what-the-costumes-reveal.html?_r=2)

19 See Press Release, NYS Attorney General’s Office , March 22, 2012 ( http://www.ag.ny.gov)

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processing company that was used by the Baum Firm for processing

foreclosure documents) would be jointly responsible for paying a $4 million

fine, and Steven J. Baum and Baum Firm attorney Brian Kumiega each agreed

not to handle foreclosure cases for lenders or servicers for two years. While

the Baum Firm did not admit wrongdoing as part of the settlement, the

Attorney General’s office, in its press release, indicated that its investigation

found that the Baum Firm: (1) routinely brought foreclosure proceedings

without taking appropriate steps to verify the accuracy of the allegations or the

plaintiff’s right to foreclose; (2) repeatedly verified foreclosure complaints

stating that the plaintiff was the “owner and holder of the note and mortgage

being foreclosed” when, in many securitized loans, the Baum Firm did not

have documentary proof that the plaintiff was the owner and holder of the

note and mortgage; (3) foreclosure complaints were prepared in an assembly-

line fashion by non-attorney Pillar Processing LLC employees with

inadequate attorney supervision; (4) attorneys routinely signed complaint

verifications stating that they had read the complaints and knew the contents

thereof without reviewing the complaints or the underlying documents; (5) in

some cases Baum Firm attorneys had pre-signed and notarized verification

and certification pages that were subsequently attached to the complaints and

filed with the foreclosure papers; (6) even after the practice of attaching pre-

signed and notarized verification and certification pages was discontinued,

attorneys in the firm continued to verify complaints without reading them; (7)

until sometime in 2011, Baum Firm attorneys routinely signed documents

without being in the notaries’ presence; (8) the Baum Firm repeatedly failed to

timely file Requests for Judicial Intervention (“RJIs”) and Attorney

Affirmations attesting to the accuracy of the foreclosure summons and

complaint; and (9) failure to timely file the RJIs and Attorney Affirmations

delayed the triggering of mandatory settlement conferences, denying

homeowners the benefit of potential loan modification options.20

B. Lawsuits & Other Investigations

The Baum Firm was also accused in a federal court in Central Islip on Long

Island of charging homeowners illegally for attending foreclosure-settlement

conferences (Menashe v. Steven J. Baum P.C., 10-cv-5155, U.S. District

Court, Eastern District of New York), was named in a civil suit in federal

court in Brooklyn accusing the firm of racketeering by forcing false

foreclosures (Campbell v. Baum, 10-cv-3800, U.S. District Court, Eastern

District of New York (Brooklyn)), and in Nassau County District Court, Judge

Scott Fairgrieve, fined the Baum Firm $5,000 related to papers which

contained numerous falsities. (Fed. Home Loan Mortg. Corp. v. Raia, 918

N.Y.S.2d 397 (Dist. Ct. 2010))

20 See Baum Firm Reaches Settlement With Attorney General, New York Law Journal, March 22, 2012.

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In addition to the numerous lawsuits, the Committee on Oversight and

Government Reform of the United States House of Representatives initiated

an investigation in February of 2011 into the allegations of abuse by

foreclosure attorneys and law firms. On November 4, 2011 Elijah Cummings,

Ranking Member of the Committee sent a letter to Steven Baum requesting

copies of all documents, records, court filings or pleadings, communications,

reports and audits relating to false or misleading documents and to attempts by

the firm to foreclose on borrowers attempting to obtain loan modifications.

The letter referred to the October 6, 2011 settlement between the Baum Firm

and the U.S. Attorney General’s Office for the Southern District of New York,

quoted at length from the October 28, 2011 New York Times article regarding

the Halloween party, and stated that the allegations (contained in the New

York Times article), if true, demonstrate a culture of distain for families

suffering from foreclosure and a disregard for the rule of law.

C. Lessons from the Baum Firm’s Demise

Many local attorneys who had interacted with the Baum Firm for years were

taken aback by the intensity of the investigations of the firm because the

principals and staff attorneys of the Baum Firm are generally held in high

regard within the legal community. On the other hand, similar investigations

were being undertaken across the nation following the subprime mortgage

market disaster, the decline in housing values, and near collapse of global

financial markets.

In its defense, the Baum Firm asserted that it made “inadvertent errors in its

legal filings in state and federal court, which it attributes to human error in

light of the high volume of mortgage defaults and foreclosures throughout the

State of New York in the wake of the national subprime mortgage crisis”.21

Lessons can be taken from the findings of the New York State Attorney

General that were announced in connection with the March 2012 settlement,

including:

o Take appropriate steps to verify the accuracy of the allegations of

foreclosure (and other) pleadings;

21 See November 4, 2011 letter from Elijah Cummings, Ranking Member of the Committee on Oversight and

Government Reform, to Steven J. Baum, citing the Press Release - U.S. Attorney’s Office, Southern District of New

York, October 6, 2011 (www.appellate-brief.com/images/stories/PDF/10-6-11USATTYPR.pdf)

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o Before commencing a foreclosure, obtain documentation from

your client showing that your client is the owner and holder of the

mortgage and underlying note;

o Properly supervise any nonlawyer employees who assist in the

preparation of papers;

o Do not verify pleadings or sign any certifications without actually

reading the papers and any attachments;

o Be sure that any notarized documents are actually signed in the

presence of the Notary Public;

o Proceed with foreclosure actions diligently and without any

unnecessary delay so as not to prejudice the rights of other parties;

and

o Finally, as a matter of professionalism, we need to ensure that the

culture of our firm or law office includes respect for opposing

parties.

VII. Forged/Faked Attorney Signatures

A. Statutory Requirements

1. Presence of an Attorney Signature

22 NYCRR 130-1.1a (a) requires that an attorney sign all

documents prepared by that attorney, which are served on another

party or submitted to the court. The attorney’s signature is

intended to certify that the presentation of the papers or the

contents are not frivolous22

.

22 For purposes of this 22 NYCRR 130.1, conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension,

modification or reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure

another; or

(3) it asserts material factual statements that are false.

Frivolous conduct shall include the making of a frivolous motion for costs or sanctions under this section. In

determining whether the conduct undertaken was frivolous, the court shall consider, among other issues the

circumstances under which the conduct took place, including the time available for investigating the legal or factual

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CPLR 2106 authorizes an attorney to sign his or her own statement

and to affirm its truth without a notary. Therefore, an officer of the

court has an ongoing professional duty to state the truth in papers

filed with the court. See MZ Dental P.C. v. Progressive

Northeastern Ins. Co., 6 Misc.3d 649, 653 (2004).

2. Defects in Form

CPLR 2101 governs the form of legal papers in civil practice, and

requires that leave to correct be freely given. “A defect in the form

of a paper, if a substantial right of a party is not prejudiced, shall

be disregarded by the court.” Furthermore, the party upon whom

the paper is served is deemed to have waived objection to the

defect in form, unless within two days after receiving it, it is

returned to the party serving it with a statement of particular

objections.

3. Sanctions

22 NYCRR 130-1.1 allows the court to impose financial sanctions

upon any attorney who engages in frivolous conduct. The signing

requirement is contained in the sanctions rule to stress the

individual responsibility of the lawyer to make a reasonable effort

to ascertain the truth or accuracy of the content of the paper signed.

Siegel, NY Prac. §414A, at 710 (4th ed).

B. Case Study

1. Civil Law Violations

In MZ Dental P.C. v. Progressive Northeastern Ins. Co., 6 Misc.3d

649 (2004) the court found that two attorneys engaged in deceptive

practices and frivolous conduct, by failing to sign the summons

and complaint and affirmations submitted to the court. As the

attorneys had full knowledge of the false signatures on the

summons and complaint, but never made an effort to correct them

the complaint was dismissed without prejudice. The court found

that the false signatures were part of deceptive practices and

imposed a sanction of $5,000 per case, for a total of $35,000.

basis of the conduct, and whether or not the conduct was continued when its lack of legal or factual basis was

apparent, should have been apparent, or was brought to the attention of counsel or the party. 22 NYCRR 130.1-1b .

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Based on the above violations, the law firm was required to attend

a status conference as the attorneys had admitted that papers filed

in excess of 11,000 actions contained attorney signatures which

were not in fact their signatures. The attorneys used a computer

program to record and view documents, which were printed out at

a later time. One of the attorneys believed that because he had

already viewed the material on the computer screen, he could

delegate the signing of his name. In order to deal with the large

workload the attorneys took shortcuts and delegated authority to

sign papers to others. It became part of the firm’s regular practice

to have someone else sign the attorneys’ names.

Although the court found that the attorneys abdicated their

responsibilities, the court found that the conduct was the result of

an overwhelming workload, not an improper attempt to deceive the

court. Here, because the attorney made an effort to correct, the

court treated the submission of papers with false signatures the

same as if they were submitted without a signature. Therefore,

rather than dismiss the cases, the court required the attorneys to

submit sworn statements ratifying the signature. The firm was also

fined $40,000 for using false signatures. See In re Edward Shapiro,

P.C., 9 Misc.3d 369 (2003)

2. Sanctions for Professional Misconduct

The two attorneys involved in the above cases were suspended for

six months for professional misconduct. See In re Shapiro, 55

A.D.3d 291 (2d Dept. 2008); In re Moroff, 55 A.D.3d 200 (2d

Dept. 2008). By submitting documents to the court which did not

bear their true signatures, the two attorneys were charged with the

following ethical violations:

o Rule 8.4(c): engaging in dishonesty, fraud, deceit or

misrepresentation (formerly a violations of DR 1-102(a)(4));

o Rule 8.4(h): engaging in conduct that adversely reflects on the

fitness to practice law (formerly a violation of DR 1-

102(a)(7));

o Rule 8.4(d) engaging in conduct prejudicial to the

administration of justice (formerly a violation of DR 1-

102(a)(5));

o Rule 5.1: engaging in conduct that failed to ensure that all

lawyers in the firm conformed to the disciplinary rule and for

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failing to adequately supervise an associate (formerly a

violation of DR 104(a)(b) and (c));

C. Cases Involving Faked Attorney Signatures in Foreclosure Filings

1. Stewart v. Bierman, RWT 10CV2822, 2012 WL 1655716 (D. Md. May 8,

2012)

a. Facts

Bierman, Geesing, Ward and Wood, LLP was charged with

participating in fraudulent “robo-signings” to initiate

foreclosure proceedings. Attorneys instructed firm

employees to sign for them and instructed firm notaries to

certify those documents as having been signed by them.

When the notaries were too busy, the firm began requiring

clerical employees to forge notary signatures. Forged

signatures were submitted with court documents and also

on trustees’ deeds of foreclosure.

The lawsuit against the firm was brought by homeowners

alleging violations of the federal Fair Debt Collection

Practices Act (the “FDCPA”), along with state violations of

the Maryland Consumer Protection Act and the Maryland

Consumer Debt Collection Act for submitting false

signatures to expedite the foreclosure process. No

allegations were made that the existence of the secured debt

or delinquency was factually inaccurate.

b. Holding

The court dismissed all actions against the defendants even

though the foreclosure practices did not comply with the

signature requirements because there were no material

violations. The method of applying signatures to an

otherwise substantially correct legal foreclosure document

is immaterial. Furthermore, the plaintiffs in this action were

still living in their home with no foreclosure actions

pending.

c. Court of Appeals of Maryland Rule

The Rules Committee of the Court of Appeals responded to

this practice by enacting emergency rules, which allow

courts to screen for falsified affidavits and order parties to

show cause why those affidavits should not be stricken and

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cases relying on them dismissed. If the courts have reason

to believe that an affidavit may be invalid, they may enter

an order directing the affiant, and where applicable, the

notary, to appear before the court and establish that the

affidavit is genuine. Steve Lash, Maryland Court of

Appeals Adopts New Foreclosure Rules, The Daily Record,

Oct. 19, 2010 available at

http://thedailyrecord.com/2010/10/19/maryland-court-of-

appeals-adopts-new-foreclosure-rule/

Soon after the filing of the emergency rule, Judge W.

Michael Pierson appointed Elizabeth Ritter, as special

master, to review a sampling of files from firms believed to

have signature irregularities.

o Thomas Dore, of Covahey Boozer Devan and Dore,

was one of the first attorneys questioned by Judge

Pierson and Ritter. Dore conceded that five pending

foreclosure proceedings should be dismissed

because he could not vouch for his signature. He

admitted that other individuals would sign his name,

and the firm’s notaries would certify that Dore’s

signature appeared on the document, even though

they did not witness him signing it.

Eighteen of the current and former notaries

employed by the firm were called to testify,

but invoked their Fifth Amendment right

and were subsequently excused by the judge

without any charges against them. Steve

Lash, Notaries Invoke Fifth Amendment in

Foreclosure Hearings, The Daily Record,

Jan. 25, 2011 available at

http://thedailyrecord.com/2011/01/25/notari

es-invoke-fifth-amendment-in-foreclosure-

hearings/

2. Loughren v. Bair, et al., GD-10-021437

a. Facts

Goldbeck, McCafferty & McKeever, a law firm that

represents lenders in residential foreclosure disputes, was

sued for allegedly using paralegals instead of lawyers to

sign legal papers related to foreclosures. The Complaint

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accuses the law firm of engaging in fraud in mortgage

foreclosures and of participating in the unauthorized

practice of law.23

The equity suit was filed by Patrick

Loughren, a Pennsylvania attorney, against the firm and

thirty-three non-lawyer employees. Jeff Blumenthal,

Goldbeck McCafferty law firm sued, Philadelphia Business

Journal Dec. 3, 2010 available at

http://www.bizjournals.com/philadelphia/blogs/law/2010/1

2/goldbeck-mccafferty-law-firm-sued.html?page=all

Three of the firm’s partners have admitted that the firm

authorized its administrative staff to sign attorneys’ names

and file court documents in hearings or depositions in other

cases. See Kimberley A. Robinson v. Countrywide Home

Loans, Inc. et al., No 08-cv-01563 (W. Dist. Pa. 2010);

DeAngelis v. Countrywide Home Loans, Inc., 2012 Bankr.

LEXIS 3313 (Bankr. WD Pa. 2010).

b. Status of the Lawsuit

The case is currently before Judge Christine A. Ward in

Allegheny County Court. The case not yet been decided,

but preliminary motions have been ruled on. The latest

updates are available at:

https://dcr.alleghenycounty.us/CaseDetails. Case No: GD-

10-021437

c. Renaming

In an effort to rebrand itself after the filing of the lawsuit,

Goldbeck, McCafferty & McKeever has changed its name

to the KML Law Group. Jeff Blumenthal, Facing Legal

Issues, Goldbeck McCafferty becomes KML, Philadelphia

Business Journal, Sept. 30, 2011 available at

http://www.bizjournals.com/philadelphia/print-

edition/2011/09/30/facing-legal-issues-

goldbeck.html?page=all

23 The 78 page Complaint is available at

https://dcr.alleghenycounty.us/DisplayImage.asp?gPDFOH=vol911%20%20%20%20%20%20%20%20%20%20%2

0%20%20%20000002D8&CaseID=GD%2D10%2D021437&DocketType=COMPL&SeqNumber=2

462

BBiiooggrraapphhiieess

463

Michael S. Amato Partner Ruskin Moscou Faltischek P.C.

Michael Amato is a Partner at Ruskin Moscou Faltischek, where he is a member of the

Financial Services, Banking & Bankruptcy Department, and Litigation Department.

Michael is a skilled bankruptcy attorney with considerable experience representing

debtors, creditors, trustees and creditor committees in complex restructuring and

reorganization matters. He focuses his practice on debtor and creditor rights, business

reorganizations and bankruptcy litigation. Michael has advised clients in negotiating,

structuring and drafting complex Chapter 11 plans and debtor-in-possession financing

agreements. He regularly represents parties in interest in bankruptcy litigation, including

complex fiduciary duty and fraud claims, actions to avoid preferential transfers and

fraudulent conveyances, turnover proceedings and actions to recover assets.

Michael’s litigation experience includes both jury and non-jury trials in federal and state

courts. He has represented clients in numerous complex commercial matters, including

shareholder valuation and dissolution actions, unfair competition and labor matters,

including wage and hour claims.

Michael has extensive experience in alternative dispute resolution, and is an approved

mediator in the United States Bankruptcy Court for both the Eastern and Southern District

of New York.

Michael is an active member of the Suffolk County Bar Association and is currently Co-Chair

of the Bankruptcy and Insolvency Committee, as well as a member of the American

Bankruptcy Institute.

465

Suzanne M. Berger Counsel Bryan Cave LLP

Suzanne Berger is a commercial litigator with Bryan Cave LLP. Currently, she represents

Bank of America, N.A., as loan servicer, in connection with a portion of its New York

portfolio of litigated residential foreclosures, currently managing more than 400 cases

throughout the State. She also has also represented various special servicers including LNR

Partners in connection with multi-million dollar distressed commercial real estate loans in

New York City and its suburbs. Ms. Berger has handled numerous foreclosure cases not

only in the supreme courts but before the Second Circuit and the Appellate Divisions

including Ruiz v. Mortgage Electronic Registration Systems, Inc., 130 A.D.3d 1000 (2d Dep’t

2015)(affirming the dismissal of borrower’s RPAPL Art. 15 quiet title action which claimed

that their MERS mortgage was void ab initio having been “split” at inception from the debt);

Acocella v. Bank of New York Mellon, 127 A.D.3d 891 (2d Dep’t 2015)(affirming the

dismissal of borrower’s quiet title action which claimed that the assignment of the

mortgage from MERS to Respondent was a nullity because it had been made allegedly

without the corresponding assignment of the Note); Janette Williams-Guillaume v. Bank of

America, N.A., 130 A.D.3d 1016 (2d Dep’t 2015) (affirming the dismissal of borrower’s

unjust enrichment and fraud claims against originating lender for allegedly lending her

more than she court afford to repay); BAC Home Loans Servicing, LP v. McCombie 133

A.D.3d 1252 (4th Dep’t Nov. 13 2015) affirming that there is no private right of action

against plaintiff under TARP (the federal Troubled Asset Relief Program, 12 USC 5211 et

seq), dismissing the punitive damages counterclaim and dismissing borrower’s negligence

counterclaim because the relationship between the parties as mortgagor and mortgagee is

a contractual one, and plaintiff owed no legal duty independent of the mortgage and

confirming that plaintiff was under no obligation to grant defendant’s request for a short

sale or deed in lieu of foreclosure); Ziska v. Bank of America, N.A., 99 A.D.3d 602 (1st Dep’t

2012) (regarding the proper forum for a borrower to challenge a securitized mortgage

loan) and Dollar Dry Dock Savings Bank v. Piping Rock Builders, 181 A.D.2d 709, 581

N.Y.S.2d 361 (2d Dep’t 1992)(clarifying certain aspects of New York’s “election of

remedies” rule).

Ms. Berger has been with Bryan Cave LLP since 2002. Previously she was special counsel at

Robinson Silverman Pearce Aronsohn & Berman LLP.

467

Education

Barnard College, Columbia University B.A. 1978

Fordham Law School, J.D., 1984, Associate Editor, Fordham Law Review (1983-84).

Publications

Contributing Author – West New York Practice Series General Practice in New York (1998),

Chapter on Mortgage Foreclosure

N.Y.S. Bar Association 2008, 2010 and 2012 CLE Westchester Panel Chair-2006 Panel

Member – “Mortgage Foreclosures and Workouts,” 2002 and 2004; “Foreclosures and

other Receiverships,” April and October 2003

N.Y.S. Bar Association, CLE, Representing a Political candidate, New York Law Primer, April

2008

Rockland County Bar Ass’n, CLE, Basics of Mortgage Foreclosures, Fall 2010 and Spring

2013

Personal

Ms. Berger resides in Dobbs Ferry, New York.

468

Marjorie A. Bialy Senior Counsel M&T Bank

Marjorie Bialy serves as in-house counsel to M&T Bank, where she supports consumer and

commercial collections, workouts and bankruptcy. Marjorie has practiced bankruptcy law

in the Buffalo area for 25 years. She has lectured on behalf of state and local bar

associations on a myriad of bankruptcy topics. She received her law degree from the

University Of Buffalo School Of Law and is admitted to both the NYS bar and the Federal

bar for the WDNY and the NDNY.

469

John M. Brickman Partner Ackerman, Levine, Cullen, Brickman & Limmer, LLP John M. Brickman, head of the litigation group at Ackerman, Levine, Cullen, Brickman & Limmer, LLP, of Great Neck, New York, practices primarily in the areas of commercial litigation and trusts and estates disputes. He has tried more than 100 cases before federal and state courts and arbitration tribunals, and has argued more than 100 appeals. He devotes particular attention to contract, corporate, partnership, trusts and estates, employment, intellectual property, unfair competition, civil racketeering, real estate, and construction cases, and frequently represents parties in disputes between principals of professional practices and substantial closely-held businesses. Mr. Brickman was appointed a Commissioner of the New York State Commission on Legislative Ethics in July 2016. He served from 2007 to 2011 as a Commissioner of the New York State Commission on Public Integrity, the agency that enforced state lobbying and public employee ethics laws and regulations. He is a member of the Town of North Hempstead Working Group to revise the Town’s Ethics Code. From 2005 to 2009, he was a Director of the Nassau Health Care Corporation, and from 2005 to 2008, he served as Chairman of the Correctional Association of New York, where he remains a Director. Until 2014, he was President and a Director of The Levitt Foundation, and he is Vice Chairman and a Director of the Long Island Medical Foundation. From 1992 to 1994, he served as a Trustee of The Johns Hopkins University and President of The Johns Hopkins Alumni Association. Mr. Brickman is active in bar association, educational, and community activities. He is a member of the National Panel of Arbitrators of the American Arbitration Association. Annually, he chairs a Continuing Legal Education program on lawyers’ ethics and civility, presented by the New York State Bar Association. From 1991 to 2006, he was Adjunct Professor of Law at Touro College, Jacob D. Fuchsberg Law Center, where he taught the course in Pre-Trial Litigation to senior law students. He writes and speaks regularly on legal ethics and public issues, including the administration of correctional and criminal justice agencies. Mr. Brickman received his undergraduate degree from Johns Hopkins and his J.D. degree cum laude in 1969 from Columbia University School of Law, where he was a Harlan Fiske Stone Scholar and Dean's List Scholar and served as Revision Editor of the Columbia Journal of Law and Social Problems. From 1971 to 1975, he served as Executive Director of the New York City Board of Correction, the agency of New York City government that oversees the operation of the New York City prison system and issues reports and recommendations for change.

471

Adam L. Browser Of Counsel Ruskin Moscou Faltischek, P.C.

Adam L. Browser has extensive experience in civil and sophisticated commercial litigation,

including trials and appeals, covering a wide variety of industries. His broad litigation

experience includes disputes involving construction, real estate, contracts, partnerships,

financial services, landlord-tenant, collections, insurance and title claims. He also regularly

represents owners, contractors and subcontractors in negotiating and drafting

construction agreements. Mr. Browser frequently lectures and writes on the topics of

litigation, construction and creditor’s rights.

Adam serves as of counsel to Ruskin Moscou Faltischek P.C., where he is a member of the

firm’s Litigation and Financial Services, Banking & Bankruptcy Departments and its

Construction Practice Group.

Prior to joining Ruskin Moscou Faltischek P.C., he represented national financial

institutions, including many Fortune 500 companies, in foreclosures, workouts,

bankruptcies, evictions and title claims.

After graduating with honors from the State University of New York at Binghamton, Adam

attended Hofstra Law School where he was the managing editor of the Hofstra Property

Law Journal.

Published

“Judicial Estoppel: A Useful Tool for a Litigator,” The Suffolk Lawyer, June 2010

“Fending off Predators: Regulating Delinquent Mortgage Modification Companies,”

The Suffolk Lawyer, September 2009

“Caveat Emptor: A Risk of Buying at a Foreclosure Sale,” Nassau Lawyer, May 2009

“The Home Equity Theft Prevention Act,” Nassau Lawyer, March 2007

“The Growth of Green Building,” Suffolk Lawyer, February 2007

“For Whom the Statute Tolls: CPLR §214-C and Construction Defect Claims,” Nassau

Lawyer, July–August 2004

“The Rule Against Perpetuities Lives on,” New York Law Journal, June 2003. Co-

authored with Douglas Good

473

Lectures

"Debt Collection and Judgment Enforcement" June 2016

“Contracts for Contractors,” April and September 2015

“Mortgage Foreclosures, A Defendant’s Perspective,” November 2014

“How to Get Paid and What to Do When You Don’t,” October 2014

“Debt Collection and the Enforcement of Money Judgments,” June 2014

“A Primer on Foreclosure and Bankruptcy,” May 2013

“Basics of Mechanic’s Liens,” March 2013

“Mortgage Foreclosures and Workouts,” December 2012

“Litigation from A to Z: What Every Solo Practitioner Needs to Know From Client

Intake to Enforcement of Judgment,” February 2012

“Collections and Enforcement of Money Judgments,” November 2010

“Demonstrative Evidence in Construction: Practical and Evidentiary Issues,”

February 2010

“Home Foreclosure: Where to Turn for Help When Things Start Coming Apart,”

February 2009

“Green Building: What It Is, What You Need to Know and Why,” February 2007

“It’s Not Your Money: Understanding New York’s Lien Law Trust Fund Provisions,”

December 2005

474

Steven D. Farer President Farer & Schwartz, P.C.

Steven D. Farer, a 1974 graduate of Albany Law School, has been practicing law in the

Albany-Saratoga region since 1975. He is a principal in the firm of Farer & Schwartz, P.C.,

and is well known in the legal, banking and title insurance communities for his knowledge

in the areas of real property litigation and real property transactional law. The majority of

his practice is devoted to real property and commercial litigation, including title insurance

defense cases, Article 15 Proceedings, mortgage foreclosure actions, and breach of contract

actions. He frequently serves as consultant to, or in an “of counsel” capacity to other law

firms in real property litigation matters. He is a frequent lecturer on real property issues

and real estate related litigation for the New York State Bar Association, Lorman

Educational Services and the National Business Institute. He has been a contributing

author on real property issues for the New York State Bar Association, Lorman Educational

Services and National Business Institute.

475

Oda Friedheim Supervising Attorney

The Legal Aid Society

Oda Friedheim is the supervising attorney of the foreclosure prevention unit of The Legal

Aid Society. Since 2000, she has been representing homeowners in foreclosure

proceedings as well as in affirmative cases brought in state and federal court challenging

predatory lending and real estate practices. She also served as lead counsel in a class

action law suit brought in federal court aimed at making loan servicers accountable under

HAMP. Ms. Friedheim has served on numerous panels, testified at hearings, conducted

trainings for the judiciary, attorneys, legislative aides and community activists and was a

presenter at numerous workshops for homeowners. She has been serving on boards of

community based organizations including the Boards of Chhaya and the New Economy

Project (formerly known as the Neighborhood Economic Development Advocacy Project

(NEDAP), and is currently a member of the New City Bar Association/s Taskforce on

Foreclosure.

477

Michele Gartner Special Counsel for Surrogate & Fiduciary Matters

Office of Court Administration

Michele Gartner is OCA Special Counsel for Surrogate and Fiduciary Matters. She is

responsible for the review and certification of training programs for Part 36 fiduciaries, for

developing and presenting training programs regarding the part 36 rules for judicial and

nonjudicial court personnel, and for answering questions from the public and the courts

regarding Part 36 interpretation and implementation. She serves as Counsel to the OCA

Guardianship Advisory Committee, the OCA Surrogate’s Court Advisory Committee, and the

Administrative Board for the Offices of Public Administrators. She previously served as the

Public Administrator of Nassau County. She received her JD from the University of Buffalo

School of Law.

479

Garry M. Graber Partner Hodgson Russ LLP

Garry M. Graber is a partner in the law firm of Hodgson Russ LLP, which has offices across

New York State and in Palm Beach and Toronto. He concentrates his practice in U.S. and

cross-border insolvency matters and commercial litigation and leads the Firm’s

Bankruptcy, Restructuring and Commercial Litigation Practice Group.

Mr. Graber has also been an adjunct faculty member at the SUNY Buffalo Law School for 25

years, teaching upper level courses in Business Bankruptcy and Secured Transactions and

is the 2015 recipient of the Law School’s Excellence in Teaching Award. He has written and

lectured extensively on bankruptcy, foreclosures and commercial law topics, co-chairs the

Insolvency Committee New York State Bar’s Real Property Section and sits on the Executive

Committee of the Insolvency Section of the Ontario Bar Association.

Mr. Graber is a past-president of the Upstate New York Turnaround Management

Association, the Bar Association of Erie County, the U.B. Law School Alumni Association and

the Erie County Bar Foundation and is a recipient of U.B. Law’s Distinguished Alumni

Award. He is also a past chair of the Bankruptcy Committee of the New York State Bar

Association and a member of the American Bankruptcy Institute and the Canadian and

Ontario Bar Associations.

481

Adam Gross Partner Gross Polowy LLC

Adam Gross is a founding partner of Gross Polowy, LLC, a boutique firm that specializes in

residential mortgage servicing, mortgagee efforts for home retention of borrowers in

default, foreclosure and all related issues. Mr. Gross has over 20 years of experience

representing lenders in default related matters. At Gross Polowy he oversees the firm’s

compliance with the requirements for New York and federal court foreclosures. His

practice focuses on consulting major bank and non-bank mortgage servicers and financial

services companies in a variety of litigation compliance and enforcement matters, including

mortgage servicing regulations, foreclosure compliance, CFPB and FDCPA issues.

Before founding Gross Polowy, LLC in December 2011, Mr. Gross was a managing attorney,

chief litigation counsel and associate at several law firms dedicated to mortgage servicing

and foreclosure issues, where he served as counsel for issues in foreclosure, bankruptcy,

title claim resolution and complex litigation, in Ohio from 1991 until 2002 and then in New

York. In those positions, he advised executive management on legal, risk, and strategic

issues; developed and implemented strategies to manage timelines, litigation and

compliance with statutory and client based regulatory orders on foreclosures. Mr. Gross

played a lead role in crafting best practices and standardized documents in New York for

the mortgage servicing industry’s response to the 2010–2011 foreclosure crisis and the

state’s continually changing laws and regulations.

Mr. Gross has a bachelor of arts from Clark University (1998) and a juris doctorate from

Case Western Reserve University (1991).

483

Thomas J. Hall Partner Hall & Hall, LLP

Thomas J. Hall is a partner in the Law Firm of Hall & Hall, LLP, with offices in Staten Island,

New York and Lincroft, New Jersey. Mr. Hall’s primary areas of practice include Real Estate,

Mortgage Foreclosures, Banking and Commercial Litigation.

Mr. Hall received his Bachelor of Arts degree from Georgetown University in 1983. He

graduated from Vermont Law School in 1986, cum laude, where he was Articles Editor and

a Member of the Vermont Law Review. He is a member of the New York and New Jersey

Bar.

Mr. Hall is currently a Member and Officer (Second Vice Chair) of the Executive Committee

of the Real Property Law Section of the New York State Bar Association. Mr. Hall served as

Co-Chair of the Title and Transfer Committee of the Real Property Law Section from 2007

through 2015. Mr. Hall previously was a Member of the Executive Committee of the

Business Law Section of the New York State Bar Association. Mr. Hall has also served as a

Member of the House of Delegates of the New York State Bar Association. Mr. Hall is also a

Fellow of the New York Bar Foundation. Mr. Hall is past President of the Richmond County

Bar Association and is presently the Chairman of the Real Estate Committee of the

Richmond County Bar Association.

Mr Hall has served and continues to serve as the Co-Chair of the Real Property Law

Section’s Title Agent Licensing Task Force and in that capacity engaged in numerous

discussions with legislators and regulators regarding New York’s Title Agent Licensing Bill

and its implementing regulations promulgated by the New York State Department of

Financial Services.

Mr. Hall has lectured at numerous New York State Bar Association Continuing Legal

Education Programs, including Title Insurance and Agent Licensing at the 2007 Annual

Meeting of the Real Property Law Section; Foreclosure and Other Receiverships (2003);

Practical Skills - Mortgage Foreclosures and Workouts (2002, 2008, 2010, 2012 & 2014);

Hot Topics in Real Property and Practice - Foreclosing a Subprime Mortgage Loan Issues

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and Defenses (2008); Dealing with Residential Foreclosures (2009); Foreclosure Litigation

and Mortgage Modifications Part I - Overview of the Foreclosure Litigation Process (2009)

and Foreclosure Litigation and Mortgage Modifications Part II - Foreclosing a Subprime

Mortgage Loan, Issues and Defenses - Including New Legislation (2009). Mr. Hall has also

lectured on various real estate topics at numerous Seminars held by County Bar

Associations including Richmond County, Kings County and Schenectady County.

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Vincent O. Hanley Member Bond Schoeneck & King

Vincent represents owners, developers, lenders, and borrowers in sophisticated real estate

transactions involving commercial and industrial properties. In addition to handling

acquisitions and sales of real property, he assists clients with all other aspects of

commercial real estate development, including the negotiation and drafting of architect

agreements and construction contracts, leasing, zoning, subdivision, economic

development incentives, and negotiation of easements and restrictive covenants. Vincent

also represents both lenders and borrowers in various types of commercial financing

transactions, loan workouts, and commercial foreclosures. He also handles a wide array of

real estate litigation, including real property tax assessment review proceedings, land use

and zoning litigation, eminent domain proceedings, partition actions, quiet title

proceedings, and commercial lease litigation.

Vincent has served as a guest lecturer for the University at Buffalo School of Management,

the New York State Bar Association, Lorman Educational Services, and various business

groups on a broad range of real estate-related topics, including economic development

incentives, easements and licenses, and commercial mortgage foreclosures. He is also a

member of the National Association of College and University Attorneys, and represents a

number of area colleges in real estate financing and development projects.

Honors and Affiliations

Listed in

The Best Lawyers in America® 2017, Eminent Domain and Condemnation Law;

Land Use and Zoning Law; Litigation - Land Use and Zoning; Litigation - Real Estate;

Real Estate Law (listed for 10 years)

Best Lawyers’ 2017 Buffalo Litigation - Real State Lawyer of the Year

Best Lawyers’ 2014 Buffalo Land Use and Zoning Law Lawyer of the Year

New York Super Lawyers 2016®, Real Estate

Who's Who in Law 2008, Buffalo Business First

New York State Bar Association

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State Bar of Arizona

Erie County Bar Association

National Association of College and University Attorneys

Representative Publications

"Five Questions with... Vincent Hanley," Buffalo Law Journal, 5/13/13

Other Activities

Board of Directors, Food Bank of WNY, 2014-present

Board of Directors, Society of St. Vincent de Paul Society for Buffalo and Western New York

Board of Trustees, Mercy Hospital Foundation, 2014-present

Board of Trustees, Hilbert College, 2003-2012; past Chair, 2007-2009

Recipient, Hilbert College Medal, 2013

Member, Saints Peter and Paul Church, Williamsville, New York

Member, St. Thomas More Guild

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William P. Hessney Partner Martin, Shudt, Wallace, DiLorenzo & Johnson

William P. Hessney is a partner with the law firm of Martin, Shudt, Wallace, DiLorenzo &

Johnson located in Troy, New York and he has been practicing law in the Capital District

since 1985. He received his B.A. degree magna cum laude from the State University of New

York at Albany and his J.D. degree from the Albany Law School of Union University. Born

and raised in Canandaigua, New York, he has made the Capital District his home for more

than 40 years. He concentrates his practice in the areas of areas of banking and finance,

creditors’ rights, mortgage foreclosure, real estate workouts, commercial and residential

real estate, title insurance, civil litigation, corporate and limited liability company

representation and commercial leasing matters. He is admitted to the New York State bar

and admitted to U.S. District Court in the Northern, Southern, Eastern and Western Districts

of New York. He has handled matters in all of those Courts.

Mr. Hessney has participated in a number of continuing legal education programs. They

include being the chair and speaker for the Albany Session of the NY State Bar Association

Seminar: Practical Skills-Mortgage Foreclosures and Workouts, in 2004, 2006, 2008, 2010,

2012, 2014 and 2016, coauthor and speaker for the seminar entitled New York Real Estate

Title Law: Solutions to the Most Common Problems in 2004, coauthor and speaker for the

seminar entitled Effective Mortgage Foreclosure Techniques in New York in 1994 and the

coauthor and speaker for the seminar entitled New York Foreclosure and Repossession in

1993.

Mr. Hessney has lived in Rensselaer County with his family for more than two decades. He

also served as a Member of the Board of Trustees and volunteer for the Rensselaer County

Historical Society for the past ten years.

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Jacob Inwald Director of Foreclosure Prevention Legal Services NYC

Jacob Inwald is Director of Foreclosure Prevention at Legal Services NYC, where he

provides supervision and support to more than 40 foreclosure prevention advocates

engaging in a range of foreclosure prevention and affirmative litigation for low-income

New Yorkers at Legal Services NYC’s offices across New York City. Jay came to LSNYC in

2009, after nearly 25 years in private practice as a commercial litigator, most recently at

Sonnenschein Nath & Rosenthal (now known as Dentons), bringing considerable litigation

expertise to LSNYC’s foreclosure practices, one of the oldest and largest in the country, with

foreclosure prevention projects in Brooklyn, Queens, the Bronx and Staten Island. He is a

statewide expert on foreclosure law and policy, regularly conducts trainings for the

judiciary and practitioners throughout New York City and across New York State, and he

has played a leading role in developing and maintaining an on-line foreclosure practice

resource used by non-profit foreclosure defense practitioners across New York State.

He presently serves on the New York City Bar Association’s Foreclosure Task Force and has

also served on its Litigation Committee and its Committee on Law Student Perspectives.

Since 1993, Jay has served as a pro bono arbitrator in the Civil Court of the State of New

York, Small Claims Division. After graduating from George Washington University Law

School magna cum laude in 1984, where he was Notes Editor of the Law Review, Jay served

as a law clerk at the United States Court of Appeals for the Ninth Circuit in San Francisco,

California before returning to New York to begin practicing law on Wall Street. Jay

graduated summa cum laude, with High Honors in History, from Brandeis University in

1981, where he was also elected to Phi Beta Kappa.

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Roxanne L. Jones Partner Frenkel, Lambert, Weiss, Weisman & Gordon, LLP

Roxanne L. Jones, is a Partner and the Managing Attorney of the NY Mortgage Default -

Settlement Conference Group at Frenkel, Lambert, Weiss, Weisman & Gordon, LLP. At the

firm, Mrs. Jones supervises the handling of the court mandated residential settlement

conferences pursuant to CPLR Sec. 3408. Mrs. Jones personally appears at settlement

conferences throughout New York State on behalf of prominent lenders for the purposes of

facilitating the loss mitigation (workout) process, between the lenders and borrowers

facing foreclosure. She serves as an authority on foreclosure resolution and is highly

sought after to advise on State and Federal loss mitigation guidelines and court processes.

Mrs. Jones’ experience at the firm also includes representation of creditors in Bankruptcy

and Evictions litigation.

Mrs. Jones earned her Juris Doctor from the State University of New York at Buffalo School

of Law in 1997. She was admitted to the New York State Bar in August 1998 and is also

admitted to practice in the United States District Court, Eastern District of New York. She

also holds a Bachelor of Science Degree in Legal Studies from John Jay College of Criminal

Justice, and is a veteran of Operation Desert Shield/Storm and retired as a Sergeant from

the United States Army Reserves.

Prior to joining Frenkel Lambert, Mrs. Jones began her legal career as an Assistant District

Attorney with the Bronx District Attorney's Office. Her array of experience includes the

areas of foreclosure litigation, real estate, collections, and insurance defense litigation.

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Michael A. Kornstein Partner Cooper Erving & Savage LLP

Michael A. Kornstein joined Cooper, Erving & Savage in 1978 upon his admission to the bar

and became a partner in 1983. Mr. Kornstein's practice is concentrated in the areas of

commercial real estate, banking, commercial loans, bankruptcy and general business

matters. In his year career, he has been involved in the acquisition, sale and finance of

many large real estate projects in the Capital Region, including office buildings, apartment

complexes, and residential and commercial projects.

Mr. Kornstein represents several commercial financial institutions in transactional matters

and has negotiated complex loan agreements, mortgage agreements, participation

agreements and inter-creditor agreements. He has negotiated commercial leases for large

and small facilities, including commercial ground leases and office leases. Mr. Kornstein

has also participated as bank counsel, underwriter’s counsel and trustee’s counsel in

several industrial revenue bond transactions.

Mr. Kornstein has also represented major financial institutions in the foreclosure of

numerous residential and commercial properties, including office buildings, apartment

complexes, hotels and marinas. Mr. Kornstein has represented the FDIC and Resolution

Trust Corporation in several foreclosure matters including commercial office buildings and

apartment complexes and has also represented the NYS Housing Finance Agency and State

of New York Mortgage Agency in the foreclosure of several assisted living facilities and

their subsequent sales. Mr. Kornstein also has extensive bankruptcy experience in

representing creditors.

He received a bachelor's degree with honors from Union College in 1973 and graduated

from Albany Law School in 1977, where Mr. Kornstein was a member and associate editor

of the Albany Law Review. Mr. Kornstein has lectured at continuing legal education

seminars sponsored by the New York State Bar Association in the area of mortgage

foreclosures. Mr. Kornstein is a member of the New York State Bar Association, the Albany

County Bar Association, and the Capital Region Bankruptcy Bar Association. He was named

a Super Lawyer for Upstate New York in 2012, 2014, 2015, and 2016 for excellence in

Banking Practice.

495

Daniel J. Marren Confidential Law Clerk Supreme Court, Erie County

Daniel J. Marren is the Confidential Law Clerk to New York State Supreme Court Justice,

Hon. Paula L. Feroleto, District Administrative Judge for the Eighth Judicial District. His

responsibilities include legal research and writing, conducting pretrial conferences and

coordination of the Judge’s calendar of cases. His duties also include a number of

administrative functions such as assisting the Judge in scheduling, case assignment,

appearance at public functions and responding to complaints from litigants, attorneys and

individuals involved in the Court system. He has also taken on special projects for the

District such as: the development of mandatory conference parts in mortgage foreclosure

proceedings; implementation of mandatory e-filing; streamlining of procedures for Buffalo

In Rem proceedings; and development of new procedures for court legal staff CLE training.

Prior to working for the Court, he was a partner at Brown & Kelly, LLP in Buffalo, N.Y.

having worked there from 1985 until 2005. His practice was primarily concentrated in the

area of personal injury litigation trials and appeals. He is a graduate of St. Bonaventure

University (B.A., 1982, cum laude) and the State University of New York at Buffalo School of

Law (J.D. 1985). He is admitted to the State Bar of New York and the United States District

and Bankruptcy Courts for the Western District of New York.

Mr. Marren is a member of the Bar Association of Erie County (Board of Directors 2012-

2015), the Western New York Trial Lawyers Association (Board of Directors 2000-2003

and 2009-2012) and the New York State Bar Association. He is Chair of BAEC’s Awards

Committee and has been a member of the Negligence, Speakers and the Admission to the

Bar Committees as well as the TICL Committee of the NYSBA. He was appointed to the New

York State Supreme Court (Civil) Advisory Committee on E-Filing in 2015 and has been a

member of the Statewide Foreclosure Working Group since 2012. He has served as a

hearing officer for the Unified Court System, Buffalo City Court and as an arbitrator for the

Western New York Trial Lawyers Association and the Better Business Bureau. He is an

adjunct faculty member of the State University of New York at Buffalo School of Law

teaching a course on depositions. He has been an attorney advisor for the Bar Association’s

High School Mock Trial program for many years. Mr. Marren has lectured on numerous

occasions for the New York State Bar Association, Bar Association of Erie County, New York

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State Unified Court System and a variety of private CLE providers on topics such as E-Filing,

Mortgage Foreclosures, CPLR, NYS Trial Court Rules; Ethics, Depositions, Labor Law and No

Fault.

He has served on a variety of educational, charitable and non-profit boards such as:

Neighborhood Housing Services of South Buffalo, Inc. (President 1992-1993); New York

State District Advisory Council of Neighborhood Reinvestment Corp; Mount Mercy

Academy; Hon. John J. Hillery Memorial Scholarship Foundation; Cazenovia Park Youth

Hockey Association; and the Bishop Timon High School Alumni Board.

498

Peter A. Muth Esq. Law Office of Peter A. Muth

Peter A. Muth is an attorney in private practice concentrating his practice on foreclosure

law, bankruptcy law and summary proceedings. His case work consists mainly of small

commercial and residential foreclosure litigation for smaller Western New York banking

institutions and he finds his way into the courts of almost all counties of the Eighth Judicial

District. His foreclosure cases break down with 60% owner occupied properties, 25%

commercial properties, and 15% estate involved foreclosures. Occasionally Mr. Muth will

represent small individual lenders seek to foreclose seller financed mortgage loans. Mr.

Muth's foreclosure work sometimes leads into cases involving summary proceedings,

bankruptcy proceedings, and partition actions.

Mr. Muth has lectured on a wide variety of topics for the New York State Bar Association,

particularly related to foreclosures following recent - and continued - changes in

residential foreclosure law. He is also a frequent speaker at National Business Institute

Programs on collection law, Fair Debt Collections Practices Act, Landlord Tenant Law and

various aspects of Bankruptcy Law. Mr. Muth is a member of the New York State Bar

Association and admitted in all district and bankruptcy courts of the State of New York. He

earned his B.A. degree from Cornell University and his J.D. degree from the State University

of New York at Buffalo.

499

Mary Lynn Nicolas-Brewster Court Attorney-Referee

Rockland Supreme Court

Mary Lynn Nicolas-Brewster is a member of the New York and New Jersey Bars and serves

as a Court Attorney-Referee for the New York State Supreme Court, Ninth Judicial District.

In her current position, Ms. Nicolas-Brewster serves as a special referee for civil

compliance and foreclosure matters, analyzes complex legal issues and questions raised in

civil cases heard in Supreme Court, and writes legal memoranda and decisions. Prior to her

current position, Ms. Nicolas-Brewster held a senior level management position as

Associate County Attorney in the Law Department for the County of Westchester, Division

of Appeals, Opinions and Legislation, where she was responsible, among other things, for

the representation of Westchester County legislators, agencies and officials in State and

Federal appellate courts. In June 2005, Ms. Nicolas-Brewster was appointed as Village

Justice of the Village of Spring Valley by the Honorable George O. Darden, former Mayor of

the Village of Spring Valley, serving in that capacity until November 2005. Ms. Nicolas-

Brewster has also served as Assistant Solicitor General in the New York State Office of the

Attorney General, Division of Appeals and Opinion; Senior Appellate Court Attorney for the

Appellate Division, Second Department; and Staff Attorney for the United States Court of

Appeals for the Second Circuit. In addition to her legal experience, Ms. Nicolas-Brewster

also serves on the faculty of SUNY-Rockland Community College as an adjunct professor in

the Paralegal Studies Program.

Ms. Nicolas-Brewster earned her bachelor's degree in Literature and Rhetoric from the

State University of New York at Binghamton and her juris doctor degree from New York

University School of Law, where she served as an editor for the Journal of International

Law and Politics.

501

Robert R. Romaker Managing Attorney Legal Aid Society of Northeastern New York

Robert R. Romaker is a Managing Attorney at the Legal Aid Society of Northeastern New

York (LASNNY) in the Albany office. Bob graduated with a B.A. in Political Science and

Spanish from The Ohio State University, and obtained his J.D. from the University of Toledo

College of Law. Bob has been a legal aid attorney his entire career. He was a Staff Attorney

for Southeastern Ohio Legal Services (SEOLS) for 7 years. He then became a Managing

Attorney at SEOLS and continued in that position for 12 years, when he moved to New

York. Bob started with LASNNY as a Staff Attorney in the Amsterdam office. He became a

Supervising Attorney with LASNNY several years later, supervising several foreclosure

attorneys and a housing/consumer attorney in Albany, while continuing as a Staff Attorney

in Amsterdam. He became a Managing Attorney in the Albany office in December 2012. As

Managing Attorney, Bob supervises the housing attorneys, foreclosure attorneys, and

unemployment benefits attorney in the Albany office. He lives in Loudonville with his wife,

Jane Ann, and their 5 children, Sean, Ian, David, Matthew and Emma, along with their

puppy, Zeke.

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Greg Sanda Associate Schiller, Knapp, Lefkowitz & Hertzel, LLP

Greg Sanda is an associate with Schiller, Knapp, Lefkowitz & Hertzel, LLP. He concentrates

his practice on contested mortgage foreclosures throughout New York, including post-

foreclosure evictions, on behalf of banks, credit unions, and mortgage servicing companies.

He also handles a variety of commercial litigation, real property litigation, and real estate

transactional work. Greg came to Schiller Knapp in 2014 from a Glens Falls, NY firm where

he was primarily responsible for the firm’s default servicing practice.

Greg is admitted to practice in the courts of New York State and the U.S. District Court for

the Northern District of New York. He graduated with honors from the University of

Massachusetts (B.B.A. 1999), the George Washington University Law School (J.D. 2003),

and the George Washington University School of Business (M.B.A. 2003). Greg is a member

of the NYS Bar Association, the NDNY Federal Court Bar Association, and the Creditors

Association of Upstate New York.

505

William B. Schiller Managing Partner Schiller, Knapp, Lefkowitz & Hertzel, LLP

William B. Schiller is the managing partner of Schiller, Knapp, Lefkowitz & Hertzel, LLP. He

has been practicing law in New York State since 1988, primarily in the area of creditors’

rights. He is admitted to practice in all of the Federal District Courts of New York.

Mr. Schiller is currently a co-chair of the ALFN Bankruptcy Committee. He is also a Member

of the New York State Bar Association, the American Bar Association, ABI and NACTT.

Previously, Mr. Schiller has served as Chair of the Consumer Bankruptcy Committee for the

American Bar Association, President of the Capital District Bankruptcy Bar Association and

President of the Upstate New York Creditors Association. He was also a member of the

Local Rules Committee for the Bankruptcy Courts of the Northern District of New York.

Mr. Schiller is a frequent lecturer on the topics of bankruptcy and foreclosure. His major

areas of practice include litigation, real estate foreclosure, bankruptcy, loss mitigation and

collections.

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Derek Tarson Foreclosure Project Director Legal Aid Society of Rockland County, Inc.

Derek Tarson is the Foreclosure Project Director with the Legal Aid Society of Rockland

County, Inc. in New City, New York. He represents mortgage loan borrowers who are

facing foreclosure, helping them to find ways to save their homes through loan

modifications, legal defenses to foreclosure, and bankruptcy. He also represents consumers

facing wage executions or garnishments to help them avoid the challenges of seemingly

insurmountable debt. He is a regular speaker, along with Suzanne M. Berger of Bryan Cave,

LLP and the Hon. Mark Dillon of the Appellate Division for the Second Department, at the

annual CLE presentations hosted by the Rockland County Bar Association on the topic of

mortgage foreclosures. He also co-presented the webinar “Abandoned Foreclosure Cases

and Dismissals for Want of Prosecution” designed for legal services practitioners across

New York State.

Mr. Tarson graduated with honors from Rutgers Law School – Newark in 2004, where he

was Managing Editor for the Rutgers Law Review; and, prior to joining the Legal Aid

Society of Rockland County, Inc., Mr. Tarson was an associate with Debevoise & Plimpton,

LLP.

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Jay Teitelbaum Managing Member Teitelbaum Law Group, LLC Jay Teitelbaum is the founding partner of Teitelbaum Law Group LLC. Since 2006, with

offices in New York City and White Plains, New York, Teitelbaum Law Group has

specialized in commercial transactions, commercial litigation, creditor’s rights and

bankruptcy and restructuring in New York and throughout the country. Over the past 28

years, Jay has dedicated his career to bankruptcy litigation, creditors’ rights, commercial

litigation and commercial transactions as an associate with Zalkin Rodin & Goodman and a

partner in the bankruptcy and restructuring group of Morgan Lewis & Bockius. More

information is available at www.tblawllp.com. Please feel free to contact Jay at

914.437.7670; [email protected].

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http://www.tblawllp.com/


Daniel Webster Staff Attorney Legal Services for the Elderly, Disabled or Disadvantaged of WNY, Inc. Daniel Webster is a staff attorney for Legal Services for the Elderly, Disabled or Disadvantaged of WNY, Inc. where he has focused primarily on mortgage foreclosure defense for the past seven years. He has represented hundreds of homeowners facing foreclosure across several WNY counties, and the majority of his clients have kept their homes. Daniel is a member of the executive committee of the Real Property Law Section of the NYSBA and co-chairs the Public Interest Committee. Also, Daniel is part of the NYSBA’s Zombie Property Task Force examining new legislation in New York designed to address the problem of vacant and abandoned properties. Daniel lives in Kenmore, NY with his wife and two children.

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Robert A. Wolf Partner Tarter Krinsky & Drogin LLP

Robert A. Wolf is a partner in the Bankruptcy and Litigation Practice Groups of Tarter

Krinsky & Drogin LLP. Bob’s experience includes all aspects of real estate litigation,

bankruptcy litigation and other commercial litigation, with particular concentrations in

loan enforcement proceedings, including prosecution of fraudulent transfer and preference

claims, of breach of fiduciary duty claims, and of lift stay motions. He also has extensive

experience negotiating workout agreements with respect to problem loans.

Bob has been a frequent speaker on issues related to mortgage foreclosures, receiverships,

workouts and bankruptcy. Over the past twenty (20) years, he has served as chair, co-chair

and/or panelist of the New York State Bar Association’s frequently presented program

“Mortgage Foreclosures and Workouts.” He has also co-chaired programs on Receiverships

for the New York State Bar Association. In addition, Bob is a co-author of the chapter,

“Mortgage Foreclosure” in West’s New York Practice Series.

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