Assembly Speaker Sheldon Silver and Judiciary Committee Chair Helene Weinstein today announced the approval of legislation that would help homeowners facing foreclosure by ensuring that lenders bringing foreclosure cases have a legal right to do so. It will also resolve the growing "shadow docket" of cases which lenders refuse to advance while the cases accrue costs and fees.
Under current law, lenders can start a residential foreclosure lawsuit yet still avoid having to attend a mandatory settlement conference. This has created a backlog of residential foreclosure cases and has delayed these mandatory settlement conferences which require both parties to work towards a modification.
"As a result of this loophole, families are deprived of the settlement conferences to which they are entitled," said Silver. "This bill would bring relief to families by requiring banks or lenders to have sufficient proof before they can bring a residential foreclosure lawsuit forward. This would give homeowners access to the foreclosure settlement conferences early in the process and enable them to avoid the unnecessary accumulation of interest and penalties."
Assemblywoman Helene Weinstein, sponsor of the legislation, said, "The filing of foreclosure cases by lenders and their refusal to bring cases before a judge has left thousands of homeowners in legal limbo without knowing whether the lender even has a right to bring the action. This creates a 'shadow docket' which harms homeowners faced with foreclosure. Each month, a case languishes on this docket, the interest and other fees continue to accrue, and lenders can and do say that they can no longer negotiate because the case is in litigation. This bill would ensure that these cases face the scrutiny of our judiciary to facilitate settlement and avoid home loss. In doing so, the bill will prevent further growth of the 'shadow docket' which was estimated by the Office of Court Administration at over 25,000 at the end of March."
The bill (A.10395/Weinstein) would require foreclosure plaintiffs to file a certificate of merit in residential foreclosure actions. The certificate of merit would be accompanied by copies of the legal documents which a lender must have in order to foreclose. Provisions in the bill would require counsel for lenders to certify that "there is a reasonable basis for the commencement of such action."