BILL NO A09911
SAME AS No same as
SPONSOR Rules (Weinstein)
Add S1302-a, RPAP L
Provides that the defense, in a mortgage foreclosure action, of the plaintiff's
lack of standing is not waived because of the defendant's failure to raise such
defense in his or her responsive pleading.
TITLE OF BILL: An act to amend the real property actions and
proceedings law, in relation to the failure to raise the defense of
lack of standing in a mortgage foreclosure action
SUMMARY OF PROVISIONS OF BILL:
Section 1: Adds a new section 1302-A to the RPAPL providing that any
defense based on a plaintiffs lack of standing in a foreclosure
proceeding related to a home loan cannot be waived if a defendant
fails to raise such a defense in a responsive pleading or pre-answer
motion. It also provides that a defendant may not raise the defense
after a foreclosure sale, unless the judgment of foreclosure and sale
was issued upon the defendant's default.
Section 2: Provides for the effective date.
JUSTIFICATION: During the past 4 years, both before and after the
stock market crash of 2008, and the previous and associated meltdown
of the housing market, there has been a nationwide increase in
foreclosures throughout the country. However, many of the foreclosure
actions initiated by lenders and trusts to obtain the securitized debt
obligation (the property)," have called into question the inherent
legality of the proceedings, due to the plaintiffs lack of "standing"
and in many cases it is simply not clear who actually owns the
mortgage or debt. Despite the fact that in order to have an
appropriate foreclosure proceeding the filing party must legally have
"standing to commence a foreclosure action" against a mortgagor or
borrower, many lenders and trusts alike continue to move forward with
bringing a legal action against borrowers when many of these lenders
don't even own the debts in the first place.
In New York, numerous court decisions have held that if the borrower
doesn't raise standing upon answering the foreclosure action, the
defense of standing is waived for the borrower. See, HSBC Bank USA v
Dammond, 59 AD3d 679 (2nd Dept 2009). Unfortunately, many times the
borrower often has no way of knowing who owns the loan, and despite
the clear requirement that the plaintiff own the note, if the
defendant borrower does not raise the issue initially in an answer or
pre-answer motion to dismiss up front, they may never be able to raise
it again. In this situation, an entity foreclosing can foreclose on a
home they don't have any legal right to foreclose on.
The proposed bill language provides that he defense of standing is not
waivable and can be raised throughout the foreclosure process. Absent
the clarification provided under this proposal, mortgagees will
continue to be able to foreclose solely because an otherwise viable
standing, defense was not timely raised.
LEGISLATIVE HISTORY: New bill, 2014.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None.
EFFECTIVE DATE: Immediately with provisions.
S T A T E O F N E W Y O R K
I N A S S E M B L Y
May 28, 2014
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Weinstein)
-- read once and referred to the Committee on Judiciary
AN ACT to amend the real property actions and proceedings law, in
relation to the failure to raise the defense of lack of standing in a
mortgage foreclosure action
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. The real property actions and proceedings law is amended by
2 adding a new section 1302-a to read as follows:
3 S 1302-A. DEFENSE OF LACK OF STANDING; NOT WAIVED. NOTWITHSTANDING THE
4 PROVISIONS OF SUBDIVISION (E) OF RULE THIRTY-TWO HUNDRED ELEVEN OF THE
5 CIVIL PRACTICE LAW AND RULES, ANY OBJECTION OR DEFENSE BASED ON THE
6 PLAINTIFF'S LACK OF STANDING IN A FORECLOSURE PROCEEDING RELATED TO A
7 HOME LOAN, AS DEFINED IN PARAGRAPH (A) OF SUBDIVISION FIVE OF SECTION
8 THIRTEEN HUNDRED FOUR OF THIS ARTICLE, SHALL NOT BE WAIVED IF A DEFEND-
9 ANT FAILS TO RAISE THE OBJECTION OR DEFENSE IN A RESPONSIVE PLEADING OR
10 PRE-ANSWER MOTION TO DISMISS. A DEFENDANT MAY NOT RAISE AN OBJECTION OR
11 DEFENSE OF LACK OF STANDING FOLLOWING A FORECLOSURE SALE, HOWEVER,
12 UNLESS THE JUDGMENT OF FORECLOSURE AND SALE WAS ISSUED UPON DEFENDANT'S
14 S 2. This act shall take effect immediately.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.