S07240 Summary:

BILL NOS07240
 
SAME ASNo same as
 
SPONSORFARLEY
 
COSPNSR
 
MLTSPNSR
 
Add Art 14 SS1401 - 1421, RPAP L
 
Relates to permitting foreclosure of real property improved by a non-residential building or certain multi-family buildings by the power of sale; establishes an effective non-judicial proceeding for uncontested commercial mortgage foreclosure.
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S07240 Actions:

BILL NOS07240
 
05/02/2012REFERRED TO JUDICIARY
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S07240 Floor Votes:

There are no votes for this bill in this legislative session.
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S07240 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7240
 
                    IN SENATE
 
                                       May 2, 2012
                                       ___________
 
        Introduced  by  Sen.  FARLEY -- read twice and ordered printed, and when
          printed to be committed to the Committee on Judiciary
 
        AN ACT to amend the  real  property  actions  and  proceedings  law,  in
          relation to foreclosure of mortgages by power of sale
 
          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 article 14 to read as follows:
     3                                  ARTICLE 14
     4                  FORECLOSURE OF MORTGAGE BY POWER OF SALE
     5  Section 1401. When mortgage may be foreclosed.
     6          1402. Notice of intention to foreclose.
     7          1403. Notice of pendency of non-judicial proceeding for foreclo-
     8                  sure by power of sale.
     9          1404. Contents of notice of sale.
    10          1405. Notice of sale; how given.
    11          1406. Notice of sale; how served.
    12          1407. Sale; how postponed.
    13          1408. Sale; how conducted.
    14          1409. Mortgagee or successor in interest may purchase.

    15          1410. Right to redeem of mortgagor, subordinate lienor, or hold-
    16                  er of subordinate interests.
    17          1411. Effect of sale.
    18          1412. Conveyance.
    19          1413. Distribution of proceeds of sale.
    20          1414. Report of sale.
    21          1415. Filing of report of sale.
    22          1416. Multiple collateral;  designation  of  order  of  sale  of
    23                  parcels.
    24          1417. Costs and expenses allowed.
    25          1418. Application for surplus.
    26          1419. Deficiency judgment.
    27          1420. Receiver.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

                                                                   LBD15447-01-2

        S. 7240                             2
 
     1          1421. Right to seek judicial intervention; mortgagee's liability
     2                  for failure to comply with this article.
     3    § 1401. When mortgage may be foreclosed. 1. A mortgage upon real prop-
     4  erty  situated  within  the state, excepting a mortgage on real property
     5  improved solely by (a) a residential building containing less  than  six
     6  dwelling units, including structures and improvements appurtenant there-
     7  to,  or  (b)  a  residential  condominium unit in a residential building
     8  owned in a condominium form of ownership, or (c) a residential building,

     9  including structures and improvements appurtenant thereto,  owned  by  a
    10  qualified  cooperative  apartment corporation, or (d) a building located
    11  in a city with a population of one million or more where the  number  of
    12  units  occupied  by  residential  tenants  is  equal  to or greater than
    13  sixty-five per centum of the total number  of  units  in  the  building,
    14  containing  a  provision  that,  upon  a default of the mortgage, or the
    15  note, bond or other obligation secured thereby, the mortgagee shall have
    16  the right to sell the mortgaged  property,  may  be  foreclosed  in  the
    17  manner  prescribed  in  this  article  for a non-judicial proceeding for
    18  foreclosure by power of sale, where the following requisites occur:

    19    (1) Default has  occurred  under  the  mortgage  and  the  outstanding
    20  indebtedness  has  been  declared immediately due and payable by written
    21  notice to the mortgagor given in the manner required by the mortgage;
    22    (2) An action has not been brought to recover the debt secured by  the
    23  mortgage,  or any part thereof, or to foreclose the mortgage under arti-
    24  cle thirteen of this chapter; or, if an action  on  the  debt  has  been
    25  brought, it has been discontinued or dismissed without prejudice against
    26  the  plaintiff, or an execution, issued upon a judgment rendered therein
    27  in favor of the plaintiff, has been returned wholly or  partly  unsatis-
    28  fied;
    29    (3)  The  mortgage  has  been duly recorded in accordance with article

    30  nine of the real property law in the land records in  the  county  where
    31  the property is situated; and
    32    (4)  The  first  notice  of sale has been published within the time in
    33  which an action could be commenced to foreclose such mortgage.
    34    2. Non-judicial foreclosure by power of sale pursuant to this  article
    35  shall  not  be  available  to a mortgagee holding a mortgage on property
    36  containing residential apartment units where the mortgagee seeks, in and
    37  by the non-judicial foreclosure of the mortgaged property or as a result
    38  thereof, to foreclose, terminate, modify, or impair the tenant's  inter-
    39  ests  in  any  leases for residential units in the mortgaged property or
    40  the tenant's possessory rights pursuant thereto.

    41    § 1402. Notice of intention to foreclose.  1. Not later than ten  days
    42  after  commencing  the  non-judicial  proceeding by filing the notice of
    43  pendency pursuant to section fourteen hundred three of this article, and
    44  not less than ten days prior to the first service of the notice of  sale
    45  pursuant  to section fourteen hundred six of this article, a copy of the
    46  notice of pendency, together with a notice of intention to foreclose, in
    47  a writing complying with subdivision two of this section, shall be  sent
    48  to  the mortgagor, the obligor on the note, bond, or other obligation if
    49  other than the mortgagor, the owner of the mortgaged property, if  other
    50  than  the mortgagor, and to any person or entity having a lien of record

    51  upon the mortgaged property,  or  interest  in  the  mortgaged  property
    52  subordinate  to  the  mortgage that the mortgagee seeks to foreclose, at
    53  the time of the filing of the notice of pendency of which the  mortgagee
    54  has  actual  knowledge  or is on constructive notice, both by (a) regis-
    55  tered mail or certified mail and (b) ordinary first class  mail,  or  by
    56  personal service in the same manner as service of a summons. Such notice

        S. 7240                             3
 
     1  shall  be  sent to the owner of the mortgaged property at the address of
     2  the property or at such other address that is known to the mortgagee, to
     3  a mortgagor at the mortgagor's address specified in the mortgage  or  to

     4  such  other  place as may have been directed by the mortgagor in writing
     5  in accordance with the mortgage, and to any person or  entity  having  a
     6  lien  of  record subordinate to the mortgage that the mortgagee seeks to
     7  foreclose at the address shown on such lien. The notice shall be sent to
     8  a person or entity having any  subordinate  interest  in  the  mortgaged
     9  property  that the mortgagee seeks to foreclose and of which the mortga-
    10  gee has such actual knowledge or constructive notice at such person's or
    11  entity's last known personal or business address.
    12    2. The notice shall:
    13    (a) identify the mortgage by the parties thereto, the date and record-
    14  ing date thereof, and any recorded amendments and modifications thereof;

    15    (b) (1) if there is a monetary default, set forth the amounts due, the
    16  date due and any late charges and default interest; (2) if  there  is  a
    17  non-monetary default, set forth the basis thereof;
    18    (c)  state that the mortgagee has (1) made demand to cure a default if
    19  such demand is required under the mortgage or the note,  bond  or  other
    20  obligation  secured thereby, which default has not been cured within the
    21  applicable cure period, and (2) declared the entire  obligation  secured
    22  by  the  mortgage to be immediately due and payable by written notice to
    23  the mortgagor;
    24    (d) set forth the outstanding principal balance declared due and paya-
    25  ble, together with the  amount  of  interest  accrued  thereon  and  the

    26  approximate amount of other sums secured by the mortgage;
    27    (e) state that the interest in the mortgaged property of the mortgagor
    28  and all persons or entities having an interest in the mortgaged property
    29  subordinate to the mortgage, who are served with a copy of the notice of
    30  intention  to  foreclose and any other notices required under this arti-
    31  cle, will be terminated by foreclosure of the mortgage by power of  sale
    32  pursuant  to  this  article and that the mortgagor, owner, or such other
    33  person or entity having an interest in the mortgaged  property  subordi-
    34  nate to the mortgage, may thereupon be evicted by judicial process;
    35    (f)  set  forth  the  right  of the mortgagor, or any person or entity

    36  having an interest in the mortgaged property subordinate  to  the  mort-
    37  gage,  to  any  surplus moneys out of the proceeds of sale in accordance
    38  with the provisions of section fourteen hundred eighteen of  this  arti-
    39  cle;  and,  if  a  deficiency  judgment is permitted, that the mortgagee
    40  shall have the right to seek a deficiency judgment pursuant  to  section
    41  fourteen hundred nineteen of this article;
    42    (g)  set  forth the rights and remedies, as specified in section four-
    43  teen hundred twenty-one of this article,  which  are  available  to  the
    44  mortgagor,  or  any  person  or  entity  claiming under the mortgagor or
    45  having an interest in or lien  upon  the  mortgaged  property  which  is
    46  subordinate to the mortgage being foreclosed; and

    47    (h)  where the United States of America, the state of New York, or any
    48  municipality, agency or instrumentality of any of them, is  entitled  to
    49  notice,  the  notice  shall specify with particularity the nature of the
    50  interest or lien of the governmental entity. The non-judicial proceeding
    51  under this article shall be deemed to be  an  action,  for  purposes  of
    52  statutes conferring jurisdiction over governmental entities.
    53    3.  Affidavits of service or mailing upon each of the persons or enti-
    54  ties entitled to and served with the notice of  intention  to  foreclose
    55  shall  be  filed prior to the date of sale under the index number of the

        S. 7240                             4
 

     1  non-judicial proceeding with the clerk of the county in which  the  sale
     2  is to take place.
     3    §  1403. Notice of pendency of non-judicial proceeding for foreclosure
     4  by power of sale.  1. The mortgagee shall, prior to the first service of
     5  the notice of intention to foreclose, purchase an index  number  in  the
     6  office  of  the  county clerk of the county in which the sale is to take
     7  place and file in the clerk's office of each county where the  mortgaged
     8  property  is  situated  a  notice  of  the  pendency of the non-judicial
     9  proceeding for foreclosure by power of sale which shall, in addition  to
    10  the  applicable requirements of article sixty-five of the civil practice
    11  law and rules, specify the date of the mortgage,  the  parties  thereto,

    12  the  time  and  place  of recording, the name of the record owner of the
    13  mortgaged property, the names of any subordinate lienors or  holders  of
    14  subordinate  interests entitled to notice of the sale, the object of the
    15  proceeding for foreclosure of the mortgage  by  power  of  sale,  and  a
    16  description  of  the  mortgaged  property,  including the number of each
    17  block and lot on the land map of the county which  is  affected  by  the
    18  notice. If the notice is filed in more than one county, the notice shall
    19  designate  the county in which the sale is to take place. The provisions
    20  of article sixty-five of the civil practice law and rules requiring  the
    21  service  and  filing of a summons shall not be applicable to a non-judi-

    22  cial proceeding for foreclosure by power of sale pursuant to this  arti-
    23  cle.
    24    2.  The  filing  of  the  notice of pendency shall be deemed to be the
    25  commencement of the non-judicial proceeding for foreclosure by power  of
    26  sale pursuant to this article.
    27    3.  The  notice  of  pendency shall be effective for a period of three
    28  years from the date of filing. Before expiration of a period or extended
    29  period, the court, upon motion of the mortgagee and upon such notice  as
    30  the court may require, may, for good cause shown, grant an extension for
    31  an  additional  three year period. An extension order shall be filed and
    32  indexed before expiration of the notice of pendency.  In the  event  the

    33  sale  has  not taken place prior to the expiration of a pendency period,
    34  and a lapse in extending the notice of  pendency  has  occurred,  a  new
    35  notice  of  pendency  may  be  filed upon a court order from the supreme
    36  court in the county in which the sale is to take  place,  on  a  showing
    37  that  no  person  or entity has been prejudiced by the failure to extend
    38  the notice of pendency. In the event that a person or entity shall  have
    39  acquired, after the expiration of a notice of pendency and before anoth-
    40  er  shall  be  filed, an interest in or lien upon the mortgaged property
    41  which is subordinate to the mortgage, such person  or  entity  shall  be
    42  entitled to notice of the sale.

    43    4.  The filing of the notice of pendency shall be deemed to be conclu-
    44  sive record notice to any tenant or occupant who takes possession of all
    45  or a part of the mortgaged property, or any person who or  entity  which
    46  acquires an interest in or lien upon the mortgaged property, or any part
    47  thereof, after the filing of the notice of pendency and all such persons
    48  or  entities  shall  be bound thereby and by the non-judicial proceeding
    49  pursuant to this article.
    50    § 1404. Contents of notice of sale. The notice of sale shall specify:
    51    1. the names of the mortgagor and record  owner,  if  other  than  the
    52  mortgagor, the mortgagee, and of each assignee of the mortgagee;
    53    2.  the date of the mortgage, the date when and the place where it was

    54  recorded, and the book and page or index in which it is recorded and the
    55  dates and recording information pertaining to  each  assignment  of  the
    56  mortgage;

        S. 7240                             5
 
     1    3.  the  identity  of holders, if any, of subordinate interests in the
     2  mortgaged property which the mortgagee  seeks  to  foreclose  which  are
     3  recorded  or of which the mortgagee has actual or constructive notice at
     4  the time of the filing of the notice of pendency, and the nature of such
     5  subordinate interests;
     6    4.  the  outstanding  principal sum claimed by the mortgagee to be due
     7  upon the mortgage, together with accrued interest thereon, late charges,

     8  other sums due under the mortgage, and sums advanced  by  the  mortgagee
     9  recoverable  under  the mortgage including the costs of sale and reason-
    10  able attorneys' fees and disbursements, at the time of the first  publi-
    11  cation of the notice;
    12    5.  a legal description of the mortgaged property, the street address,
    13  and the block and lot or other tax or tax map identification;
    14    6. if the mortgaged property consists of two or more distinct parcels,
    15  unless the mortgage provides that the  parcels  shall  be  sold  as  one
    16  parcel,  the notice of sale shall specify the order in which the parcels
    17  shall be sold;
    18    7. that the owner has the right, up to and including the time  of  the

    19  sale,  to redeem the mortgaged property upon payment to the mortgagee of
    20  the outstanding principal balance secured by the mortgage, together with
    21  interest accrued thereon, and all other sums due  thereunder,  including
    22  the costs of sale and reasonable attorneys' fees and disbursements; and
    23    8. the date, place and time of sale.
    24    §  1405.  Notice  of sale; how given. Notice that the mortgage will be
    25  foreclosed by a sale of the mortgaged property, or a part thereof, at  a
    26  time  and place specified in the notice, shall be given in the following
    27  manner:
    28    1. A copy of the notice shall be  served,  as  prescribed  in  section
    29  fourteen hundred six of this article, upon:
    30    (a) the mortgagor;

    31    (b)  the  obligor on the note, bond or other obligation, if other than
    32  the mortgagor;
    33    (c) the owner of the mortgaged property, if other than the mortgagor;
    34    (d) any other person or entity in the mortgage designated  to  receive
    35  notice;
    36    (e)  a  subsequent lienor of the mortgaged property that the mortgagee
    37  seeks to foreclose whose interest was recorded or docketed in the proper
    38  office for recording or filing in the  county  in  which  the  mortgaged
    39  property is located at the time of the filing of the notice of pendency;
    40  and
    41    (f) any person having a lien upon or interest in the mortgaged proper-
    42  ty,  or  any  part  thereof,  at the time of the filing of the notice of

    43  pendency that is subordinate to the  mortgage  and  that  the  mortgagee
    44  seeks  to  foreclose.  Affidavits of service or mailing upon each of the
    45  persons or entities entitled to notice of the sale shall be filed  prior
    46  to  the date of sale under the index number of the non-judicial proceed-
    47  ing with the clerk of the county in which the sale is to take place.
    48    2. A copy of the notice of sale must be published  at  least  once  in
    49  each  week  during  the  five successive weeks immediately preceding the
    50  date of sale, or at least twice in each week during the four  successive
    51  weeks  immediately preceding the date of sale, in a newspaper of general
    52  circulation distributed in the county in which the property to be  sold,

    53  or  any  part thereof, is situated, or if no newspaper is distributed in
    54  such county, then in a newspaper distributed  in  an  adjoining  county,
    55  except  that where such property is located in a county wholly contained
    56  within a city with a population of one million or more, such  notice  of

        S. 7240                             6
 
     1  sale  shall  be  published  in  the  same manner as a notice of judicial
     2  proceeding in a newspaper distributed within such county  to  be  desig-
     3  nated  by  the clerk of such county. Any period of seven successive days
     4  shall constitute a week under this section.
     5    3.  A copy of the notice of sale must be filed on or before the day of

     6  first publication of the notice of sale with the clerk  of  each  county
     7  wherein the mortgaged property, or any part thereof, is situated.
     8    4.  The  publication  provisions  of this section shall be followed in
     9  lieu of the provisions of section two hundred thirty-one of this chapter
    10  respecting the publication of a notice of sale.
    11    § 1406. Notice of sale; how served. Service of notice of the  sale  as
    12  prescribed  in  subdivision one of section fourteen hundred five of this
    13  article shall be made upon a person or entity described  in  subdivision
    14  one  of section fourteen hundred five of this article that the mortgagee
    15  seeks to foreclose as follows:
    16    1. At least thirty days before the date of sale, by delivering a  copy

    17  of  the  notice,  in the manner prescribed by article three of the civil
    18  practice law and rules for personal service of a copy of a summons in  a
    19  civil action in a court of record, to the person or entity to be served,
    20  and  by  mailing  an additional copy thereof to such person or entity by
    21  first class mail in an envelope bearing the legend "personal and  confi-
    22  dential" and not indicating on the outside thereof, by return address or
    23  otherwise,  that  the  communication  is from an attorney or concerns an
    24  action or proceeding against the person or entity to be served. If  such
    25  person  or  entity  is a foreign corporation, or is not a resident of or
    26  within the state, then service thereof may  be  made  upon  it  in  like

    27  manner without the state, at least forty days before the date of sale.
    28    2.  Service  of  a  copy of the notice of sale upon the mortgagor, the
    29  mortgagor's successors or assigns, or a subsequent grantee of the  prop-
    30  erty  from the mortgagor, in the manner prescribed in the mortgage shall
    31  be good, valid and effective service hereunder.
    32    3. Service of a copy of the notice of sale upon the United  States  of
    33  America,  its agencies or instrumentalities, shall be in accordance with
    34  applicable federal statute.
    35    § 1407. Sale; how postponed.   1. The sale may  be  postponed  by  the
    36  mortgagee for a period of time not to exceed five weeks. Notice of post-
    37  ponement of the sale shall be published at least once not less than five

    38  days  prior  to  the  new date of the sale in the newspaper in which the
    39  original notice was published, and shall be served  in  the  manner  set
    40  forth  in  section fourteen hundred six of this article upon each person
    41  upon whom or entity upon which the original notice of sale was served.
    42    2. The sale may also be postponed if the person designated to  conduct
    43  the  sale  does  not appear on the date scheduled for the sale, in which
    44  case notice of the adjourned date  shall  be  published  and  served  as
    45  provided in subdivision one of this section.
    46    3. If the sale is stayed by application of any other law, then at such
    47  time  as  the  stay shall be vacated or lifted, an adjourned sale may be

    48  scheduled by the mortgagee and publication of the notice of  sale  shall
    49  be  made  as  prescribed  in subdivision two of section fourteen hundred
    50  five of this article.
    51    4. The sale may be postponed by the mortgagee more  than  once.    The
    52  manner  of  the  postponement  and the publication and service of notice
    53  thereof shall be effected in accordance with the provisions of  subdivi-
    54  sion one of this section.
    55    §  1408.  Sale; how conducted.  1. The sale shall be at public auction
    56  by a licensed auctioneer, sheriff, marshal, or court appointed  official

        S. 7240                             7
 
     1  for  such purpose, during reasonable business hours, on a day other than

     2  Saturday, Sunday or a public holiday, in the county in which  the  mort-
     3  gaged  property,  or  a  part  thereof,  is  situated, at any courthouse
     4  located in the county, or if in a county within the city of New York, at
     5  the courthouse of the supreme court in such county.
     6    2.  If  publication of the notice of sale is for four weeks, such sale
     7  shall take place on any day on or after the twenty-eighth day and on  or
     8  before  the thirty-fifth day after the day of the first publication; and
     9  if publication of the notice of sale is for five weeks, such sale  shall
    10  take  place on any day on or after the thirty-fifth day and on or before
    11  the forty-second day after the day of the first publication. Any  period

    12  of seven successive days shall constitute a week under this section.
    13    3.  The person conducting the sale shall announce the terms thereof at
    14  the outset of the auction. A copy of the terms of  sale  shall  be  made
    15  available  by  the  mortgagee  or person conducting the sale at or prior
    16  thereto.
    17    4. On acceptance of a bid at the sale,  the  bidder,  other  than  the
    18  mortgagee,  shall  deposit  with the person conducting the sale at least
    19  ten percent of the bid price in cash, certified check or  a  bank  check
    20  drawn on a bank, trust company, savings bank or savings and loan associ-
    21  ation  having  offices  in  this  state. A memorandum of the sale, which
    22  shall incorporate the terms of the sale, shall be executed by the person

    23  conducting the sale and the successful  bidder  thereat,  including  the
    24  foreclosing  mortgagee.  The  memorandum shall state the identity of the
    25  purchaser, the amount of the successful bid, the amount of  the  deposit
    26  which,  pending the conveyance of title, shall be retained by the person
    27  conducting the sale in a  separate  account  in  a  commercial  bank  or
    28  savings  bank located in the state of New York, the date, time and place
    29  of closing of title and that the terms  of  the  sale  are  incorporated
    30  therein. The memorandum of sale shall not be amended or modified.
    31    5.  If  the successful bidder fails to make the deposit on acceptance,
    32  or to complete the transaction within thirty days after acceptance,  the

    33  mortgagee may resell the mortgaged property. The bidder's deposit may be
    34  retained  or recovered by the mortgagee as liquidated damages regardless
    35  of the amount bid and paid on the resale of the mortgaged property.
    36    6. If the mortgaged property consists of two or more distinct parcels,
    37  they shall be sold separately in the order specified in  the  notice  of
    38  sale unless otherwise provided in the mortgage or any instrument extend-
    39  ing, amending or modifying the mortgage. As many of the parcels shall be
    40  sold  as  it  is necessary to sell in order to satisfy the amount due at
    41  the time of the sale, and the costs  and  expenses  allowed  by  section
    42  fourteen hundred seventeen of this article.  Where two or more buildings

    43  are  situated  in the same city lot or local tax lot, they shall be sold
    44  together.
    45    § 1409. Mortgagee or successor in interest may purchase.  The  mortga-
    46  gee,  or  its  assignee,  or  the  legal  representative  of either, may
    47  purchase the mortgaged property, or any part thereof, at  the  sale  and
    48  shall be entitled to bid. Upon any such bid up to the full amount of the
    49  indebtedness  secured  by  the mortgage, including unpaid interest, late
    50  charges, costs of sale, reasonable attorneys'  fees  and  disbursements,
    51  and advances made to protect the lien of the mortgage, the mortgagee, or
    52  its  assignee,  or  the  legal  representative  of  either, shall not be
    53  required to make any deposit at the sale or any payment of the amount of

    54  the successful bid up to the full amount of the indebtedness secured  by
    55  the mortgage, upon the delivery of the power of sale deed.

        S. 7240                             8
 
     1    § 1410. Right to redeem of mortgagor, subordinate lienor, or holder of
     2  subordinate  interests.    1. At any time before the commencement of the
     3  bidding at the sale, the mortgagor, or the record owner of the mortgaged
     4  property, or the holder of any subordinate security interest in or other
     5  lien upon the mortgaged property, may prevent the sale by payment to the
     6  mortgagee,  in  good  funds,  of all sums due under the mortgage, or the
     7  note, bond or other obligation secured thereby,  together  with  accrued

     8  interest thereon, and all other sums due thereunder, including the costs
     9  of  sale  and reasonable attorneys' fees. As between or among holders of
    10  security interests, the tender of redemption by the holder  entitled  to
    11  priority  prevails  over  the  tender  of  redemption by the holder of a
    12  subordinate interest.
    13    2. If a mortgagor, record owner, or holder of any subordinate security
    14  interest in or other lien upon the mortgaged  property  is  entitled  to
    15  redeem under this section, the mortgagor, record owner, or the holder of
    16  any  subordinate  security  interest or lien, may, upon such redemption,
    17  require the mortgagee, upon full payment of the obligation, in  lieu  of
    18  the  certificate  of discharge under section two hundred seventy-five of

    19  the real property law, to assign  the  debt  and  the  mortgage  without
    20  recourse  or  warranty  to  any person or entity designated by the payor
    21  provided that such person or entity is not the mortgagor or a person  or
    22  entity  acting as a nominee of the mortgagor, and the mortgagee is obli-
    23  gated to do so, provided the payor executes the affidavit required under
    24  section two hundred seventy-five of the real property  law.  The  rights
    25  under  this subdivision may be enforced by the holder of any subordinate
    26  security interest in or lien upon the mortgaged property even though  it
    27  is  a subordinate security interest or lien. The assignment of the mort-
    28  gage, and the indebtedness secured thereby, shall be  deemed  to  be  an

    29  assignment  of  a bona fide obligation within the meaning of section two
    30  hundred seventy-five of the real property law.
    31    § 1411. Effect of sale.  1. A sale, made and conducted  as  prescribed
    32  in  this  article, to a purchaser, including the mortgagee or the person
    33  to whom or entity to which the purchaser or the  mortgagee  assigns  the
    34  terms  of  sale  and  memorandum of sale by assignment duly executed and
    35  recorded, is equivalent to a sale pursuant to judgment in an  action  to
    36  foreclose  the  mortgage  under  article  thirteen  of this chapter, and
    37  except as respects the interest of the United States of  America,  which
    38  shall  be foreclosed as provided in subdivision four of this section, or

    39  those residential tenants whose interest may not be  foreclosed,  termi-
    40  nated,  modified, or impaired pursuant to this article, immediately upon
    41  the execution of the memorandum of sale of  the  person  conducting  the
    42  auction,  shall  bar  any  claim  or equity of redemption, upon, or with
    43  respect to, the property sold, of each of the following persons or enti-
    44  ties:
    45    (a) the mortgagor, or  the  mortgagor's  heirs,  devisees,  executors,
    46  administrators, successors or assigns;
    47    (b)  each  person  claiming  under  any of them, by virtue of a title,
    48  lien, tenancy, interest, encumbrance, judgment or decree, subsequent  to
    49  the  mortgage, upon whom the notice of sale was served, as prescribed in
    50  this article;

    51    (c) each person so claiming, whose assignment,  mortgage,  conveyance,
    52  tenancy,  or  other interest was not duly recorded in the proper book or
    53  index for recording the same in the county  in  which  the  property  is
    54  situated, or whose judgment or decree was not duly docketed in the coun-
    55  ty  clerk's  office, at the time of the filing of the notice of pendency

        S. 7240                             9
 
     1  of the sale pursuant to this article, and the  executor,  administrator,
     2  successor or assignee of such a person;
     3    (d)  every  other  person,  claiming  under a statutory lien or encum-
     4  brance, created, recorded or filed  subsequent  to  the  filing  of  the

     5  notice  of  pendency,  attaching to the title or interest of any person,
     6  designated in any of the foregoing subdivisions of this section.
     7    2. Nothing in this article shall bar or foreclose any  claim  upon  or
     8  interest  in  the  mortgaged property sold of any person or entity whose
     9  interest in or lien upon the  mortgaged  property  arose  prior  to  the
    10  filing of the notice of pendency and who has not been served with a copy
    11  of the notice of sale in the manner prescribed in this article.
    12    3.  A  conveyance  made  in  accordance  with section fourteen hundred
    13  twelve of this article to a purchaser at the foreclosure sale, including
    14  the mortgagee, is not a fraudulent transfer by reason of the value given

    15  being less than the value of the mortgagor's interest in  the  mortgaged
    16  property.
    17    4.  Where  the  United  States  of  America, or any of its agencies or
    18  instrumentalities, has a subordinate lien or interest of record  in  the
    19  mortgaged property and is entitled to notice, the mortgagee shall obtain
    20  an  order  from  the supreme court in the county in which the sale is to
    21  take place, after the time for the United States of  America  to  appear
    22  has expired, foreclosing the lien or interest of the United States. Upon
    23  such  order,  the sale shall be deemed to be a judicial sale foreclosing
    24  the lien or interest of the United States  of  America  subject  to  the
    25  rights of the United States of America pursuant to applicable statutes.

    26    §  1412.  Conveyance.    1.  The person authorized to conduct the sale
    27  pursuant to subdivision one of section fourteen hundred  eight  of  this
    28  article shall, at the closing of title held in accordance with the terms
    29  of  sale,  execute  and deliver a deed to the purchaser in the following
    30  form:
    31                             POWER OF SALE DEED
    32    THIS DEED, made as of the _______ day of ___________,  _____,  between
    33  ______________,  in  the capacity of auctioneer/sheriff/marshal/referee,
    34  having an office at _________, ______________, New York ("Grantor")  and
    35  ______________,     a     ____________     having    an    address    at
    36  ____________________, ______________, _____________ ("Grantee"),

    37                                 WITNESSETH:
    38    That __________________("Mortgagee"), the  owner  and  holder  of  the
    39  mortgage described in Exhibit A attached hereto encumbering the property
    40  described  hereinbelow  (the  "Property"),  and  the note, bond or other
    41  obligation secured thereby, has foreclosed the  lien  of  said  mortgage
    42  pursuant   to   article  fourteen  of  the  real  property  actions  and
    43  proceedings law of the state of New York;
    44    That Grantor has been designated by Mortgagee or by the court  in  the
    45  county  in  which  the  sale  has taken place to conduct the sale of the
    46  Property;
    47    That the sale was duly held on  _______________  ___,  ____,  and  the

    48  memorandum  of  sale  attached  hereto  as Exhibit B was executed at the
    49  conclusion of the sale;
    50    And that pursuant thereto and in consideration  of  ___________Dollars
    51  ($_____________) paid by Grantee, being the highest sum bid at the sale,
    52    Grantor does hereby grant and convey to Grantee:
    53  (Land Description of the Property)
    54    TOGETHER with all right, title and interest, if any, of the Grantor in
    55  and  to  any  streets and roads abutting the above-described premises to
    56  the center lines thereof; TOGETHER with the appurtenances  and  all  the

        S. 7240                            10
 
     1  estate and rights of the grantor in and to said premises; to have and to

     2  hold the premises herein granted to the grantee, the heirs or successors
     3  and assigns of the Grantee forever.
     4    IN  WITNESS  WHEREOF,  Grantor has hereunto set the Grantor's hand and
     5  seal the date first above written.
     6    ________________ (ACKNOWLEDGEMENT)
     7    2. Before the deed is executed and delivered  to  the  purchaser,  the
     8  mortgagee  shall  file the mortgage and any assignment not shown to have
     9  been lost or destroyed in the office of the clerk, unless  it  is  in  a
    10  form  which  can  be recorded; in which case it shall be recorded in the
    11  county or counties where the mortgaged property or properties are  situ-
    12  ated;  the  expense of filing or recording and entry shall be allowed in

    13  the costs to be recovered by the mortgagee  pursuant  to  this  article;
    14  and,  if filed with the clerk, he shall enter in the minutes the time of
    15  filing.
    16    3. The purchaser of the mortgaged property, upon a sale  conducted  as
    17  prescribed  in this article, thereupon obtains marketable title thereto,
    18  in the same manner as a purchaser in a judicial foreclosure sale  pursu-
    19  ant to article thirteen of this chapter against all persons bound by the
    20  sale.
    21    § 1413. Distribution of proceeds of sale.  1. The proceeds of the sale
    22  shall  be  distributed and paid by the person conducting the sale in the
    23  following order:
    24    (a) All taxes, water rates, sewer rents and assessments that are liens

    25  upon the real property sold, and any liens or encumbrances placed  by  a
    26  city  agency or a municipality upon the real property that have priority
    27  over the foreclosed mortgage.
    28    (b) The costs and expenses of the sale, pursuant to  section  fourteen
    29  hundred seventeen of this article.
    30    (c)  To the mortgagee, the amount of the debt, accrued interest there-
    31  on, late charges, and all other sums advanced by the mortgagee which are
    32  recoverable under the mortgage, including the costs of sale and  reason-
    33  able  attorneys'  fees  and  disbursements,  or  so  much thereof as the
    34  proceeds will pay. The person conducting the sale shall take the affida-
    35  vit of the mortgagee as to all of the foregoing amounts being  due,  and

    36  the  receipt  of the mortgagee for the amount so paid, and file the same
    37  with the report of sale.
    38    (d) Upon entry of an order pursuant to section fourteen hundred  eigh-
    39  teen  of  this article providing for same, to the holder of any subordi-
    40  nate mortgage or lien, or to the owner of the equity  of  redemption  or
    41  any  person or entity having filed a notice of claim against the proper-
    42  ty, from the then remaining proceeds the amount then due to such  person
    43  or  entity,  in  the  priority thereof, or so much as the then remaining
    44  proceeds will pay.
    45    2. All surplus moneys arising from  the  sale  after  payment  of  the
    46  amounts due under paragraphs (a), (b) and (c) of subdivision one of this

    47  section  shall  be  paid to the county treasurer for the county in which
    48  the sale took place by the person conducting the sale within  five  days
    49  after the same shall be received, in like manner and with like effect as
    50  if the proceeding to foreclose the mortgage occurred pursuant to article
    51  thirteen of this chapter.
    52    §  1414.  Report of sale.  1. Within fifteen days after completing the
    53  sale and executing the proper conveyance to the  purchaser,  the  person
    54  conducting the sale shall make a report of the sale, which shall state:
    55    (a) the time when and the place where the sale was made;
    56    (b) the sum bid for each distinct parcel separately sold;

        S. 7240                            11
 

     1    (c) the name of the purchaser of each distinct parcel; and
     2    (d) the name of each person or entity, court officer or other officer,
     3  to whom proceeds of the sale was paid, and the sum thereof.
     4    2. The report of sale shall contain:
     5    (a)  affidavit  of  the  publication of the notice of sale, and of the
     6  notice or notices of postponement, if any, by the publisher  or  printer
     7  of  the  newspaper  in  which they were published, or by the publisher's
     8  foreman or principal clerk;
     9    (b) copies of the affidavit or affidavits, of the service of copies of
    10  the notice of intention to foreclose and the notice of pendency thereto-
    11  fore filed with the clerk of the court; and
    12    (c) the terms of sale and executed memorandum of sale.

    13    3. The report shall specify the amount claimed to be due by the  mort-
    14  gagee  on  the  indebtedness  secured by the mortgage, together with all
    15  other sums recoverable under section fourteen hundred seventeen of  this
    16  article, the amount distributed by the person conducting the sale pursu-
    17  ant  to  section fourteen hundred thirteen of this article, and to whom,
    18  and the amount of the deficiency or surplus  after  application  of  the
    19  proceeds of sale thereto. The report shall contain the mortgagee's affi-
    20  davit  specifying the amount claimed due by the mortgagee on the indebt-
    21  edness secured by the mortgage, together with all other sums recoverable
    22  under section fourteen hundred seventeen of this article.

    23    4. The matters required to be contained in any or all of  the  affida-
    24  vits  specified herein may be contained in one affidavit, where the same
    25  person deposes with respect to them. A copy of the notice of sale  shall
    26  be annexed to each affidavit.
    27    § 1415. Filing of report of sale.  1. The report and affidavits speci-
    28  fied  in  section  fourteen  hundred  fourteen  of this article shall be
    29  filed, in the same manner as the filing of the notice of pendency pursu-
    30  ant to subdivision two of section fourteen hundred three of  this  arti-
    31  cle,  in  the  county  clerk's  office in the county where the sale took
    32  place within thirty days after the completion of the sale and  execution

    33  of  the  proper  conveyance  to  the purchaser, and, as such, constitute
    34  presumptive evidence of the matters of fact therein stated, with respect
    35  to any mortgaged property sold which is situated in that county.
    36    2. Each county clerk in this state in  whose  office  reports  of  the
    37  foreclosure  of  mortgages  by power of sale have been or shall be filed
    38  pursuant to the provisions of the foregoing subdivision of this section,
    39  is hereby authorized to deliver certified copies  of  the  same  to  the
    40  purchaser  of  the  mortgaged property on the foreclosure sale or to any
    41  mortgagor, obligor on the note or bond, owner of, or any other person or
    42  entity having a subordinate interest in  or  lien  upon,  the  mortgaged

    43  property which was foreclosed by the sale, upon request therefore.
    44    §  1416. Multiple collateral; designation of order of sale of parcels.
    45  Where the indebtedness is secured by more than one mortgage on mortgaged
    46  property consisting of more than one functionally separate and  distinct
    47  property, unless otherwise provided in the mortgage or in any extension,
    48  amendment or modification thereof or instrument amendatory thereto, each
    49  property  shall be sold either (a) separately in the order designated by
    50  the mortgagee (which may be on a single sale date, or on separate  dates
    51  as  provided  in  the  notice  of sale), or (b) as otherwise directed by
    52  order of the supreme court for the county in which the sale is  to  take

    53  place, pursuant to a motion made under the index number of the non-judi-
    54  cial  proceeding  for  foreclosure of power of sale. The mortgagee shall
    55  not schedule or conduct the sale of the subsequent  property  so  desig-
    56  nated  until after the deficiency has been determined in accordance with

        S. 7240                            12
 
     1  section fourteen hundred nineteen of  this  article,  whereupon  in  the
     2  event  a  deficiency  exists, the mortgagee may schedule and conduct the
     3  sale of the subsequent property in the order designated by the mortgagee
     4  unless  the court orders otherwise, such sale to be conducted in accord-
     5  ance with the provisions of this article.

     6    § 1417. Costs and expenses allowed.  The mortgagee shall  be  entitled
     7  to  recover out of the proceeds of sale, or upon application for a defi-
     8  ciency judgment, the costs and expenses of:  (a)  advertisement  of  the
     9  notice  of sale, as determined by paid receipts therefor; (b) service of
    10  the notice of intention to foreclose and the notice of sale; (c)  prepa-
    11  ration  and  filing  of  the affidavits required under this article, the
    12  power of sale deed, and report of sale; (d) the  conduct  of  the  sale,
    13  including  the  fee of the officer conducting the sale, which, except as
    14  shall be directed by the court, shall not exceed one  thousand  dollars;
    15  (e) recording of the deed if the mortgagee is the purchaser at the sale;

    16  (f)  filing or recording the mortgage if not theretofore paid for by the
    17  mortgagor; and (g) the reasonable attorneys' fees incurred in connection
    18  with the non-judicial proceeding under this  article  which,  except  as
    19  shall  be directed by the court, shall not exceed the sum of twenty-five
    20  hundred dollars. Fees designated in this section in dollar amounts shall
    21  be indexed in accordance with changes  in  the  federal  consumer  price
    22  index - all consumers, over base year two thousand twelve.
    23    § 1418. Application for surplus.  1. Any person or entity claiming the
    24  surplus  moneys  arising  from  the sale of the mortgaged property, or a
    25  part thereof, may, within twenty days after the filing of the report  of

    26  the  sale,  file  under  the  index  number assigned to the non-judicial
    27  proceeding in the office of the clerk of the county where the sale  took
    28  place,  a  written notice of the claim, stating the nature and extent of
    29  the claim. Thereafter, an application, with proof of  service  upon  the
    30  mortgagor,  the  record  owner  of the mortgaged property, and any other
    31  person who or entity which has filed a claim to the surplus  moneys  may
    32  be  made  by  any  person  who  or entity which has filed a claim to the
    33  surplus moneys, seeking an order directing payment thereof  out  of  the
    34  surplus moneys.
    35    2. Upon such application, or at any time within three months thereaft-
    36  er, on notice to all persons who or entities which have been served with

    37  the  notice  of  sale  or filed claims to the surplus money, or any part
    38  thereof, on motion of any person who or entity which has filed a  notice
    39  of claim to the surplus money, or any part thereof, the court, by refer-
    40  ence  or  otherwise,  shall  ascertain  and report the amount due to the
    41  applicant, or to any person who or entity which has a lien on  or  claim
    42  to  such  surplus  money,  or  any part thereof, and the priority of the
    43  several liens or claims thereon, and shall  order  distribution  of  the
    44  surplus moneys by the county treasurer.
    45    3.  The owner of the equity of redemption, or any person who or entity
    46  which has responded to the application, or  any  person  who  or  entity

    47  which  files  a notice of claim or has a recorded lien against the mort-
    48  gaged property shall be given notice by mail or in such other manner  as
    49  the  court  shall  direct,  to  attend any hearing on disposition of the
    50  surplus moneys and shall have the right to receive distribution  of  the
    51  surplus  moneys,  or  any portion thereof, in any manner directed by the
    52  court.
    53    § 1419. Deficiency judgment.  1. Unless otherwise agreed by the  mort-
    54  gagor  and  the  mortgagee in the mortgage, a person who or entity which
    55  owes payment of an obligation secured by the mortgage  foreclosed  under
    56  this  article is liable for the whole residue, or so much thereof as the

        S. 7240                            13
 

     1  court may determine, of the debt remaining unsatisfied, after  the  sale
     2  of  the  mortgaged  property  and  the  application of the proceeds, the
     3  amount of the debt remaining unsatisfied to be determined by  the  court
     4  as herein provided.
     5    2.  Not  later than ninety days after the delivery to the purchaser of
     6  the power of sale deed to the mortgaged property, the person to whom  or
     7  entity  to  which  such  residue  shall be owing may make an application
     8  under the index number assigned  the  non-judicial  proceeding,  in  the
     9  supreme court for the county in which the mortgaged property is located,
    10  or  in a county in which the sale has taken place for a deficiency judg-
    11  ment against the persons or entities liable therefor upon notice to such

    12  persons or entities. Such notice shall be served personally or  in  such
    13  other  manner as the court may direct. Upon such application, the court,
    14  whether or not the person or entity claimed to be liable for the residue
    15  appears, shall determine, upon reasonable appraisal  by  a  real  estate
    16  appraiser  licensed  in  the state of New York, or otherwise as it shall
    17  direct, the fair and reasonable market value of the  mortgaged  property
    18  as  of  the  date  the  mortgaged property was bid on at auction or such
    19  nearest earlier date as there shall have been any market  value  thereof
    20  and  shall  make  an  order directing the entry of a deficiency judgment
    21  against the person or entity liable therefor. Such  deficiency  judgment

    22  shall be for an amount equal to the aggregate amount of the indebtedness
    23  due  to  the  mortgagee,  together with all other sums recoverable under
    24  section fourteen hundred seventeen of this article as such shall be  set
    25  forth  in  the  report  of sale pursuant to subdivision three of section
    26  fourteen hundred fourteen of this article  less  the  higher  of:    (a)
    27  market value of the mortgaged property as determined by the court or (b)
    28  the sales price of the mortgaged property at the public sale.
    29    3. If no application for a deficiency judgment shall be made as herein
    30  prescribed,  the  proceeds  of the sale regardless of the amount thereof
    31  shall be deemed to be in full satisfaction of the mortgage debt, and  no

    32  right to recover any deficiency in any action or proceeding shall exist.
    33    § 1420. Receiver. 1. Where the mortgage provides that the mortgagee is
    34  entitled  to  the  appointment of a receiver for the mortgaged property,
    35  the mortgagee shall have the right at any time after the filing  of  the
    36  notice  of  pendency  pursuant to section fourteen hundred three of this
    37  article to make an application under the index number  assigned  to  the
    38  non-judicial proceeding, in the supreme court in the county in which the
    39  sale takes place, for the appointment of a receiver.
    40    2.  Where the mortgage provides that a receiver may be appointed with-
    41  out notice or contains the covenant set  forth  in  subdivision  ten  of

    42  section  two  hundred  fifty-four of the real property law, notice of an
    43  application for such appointment shall not be required and the  receiver
    44  shall  be  appointed  by the court pursuant to an order submitted by the
    45  mortgagee simultaneously with, or at any time after, the filing  of  the
    46  application therefor.
    47    3.  Where  a  receiver has been appointed, upon the application of the
    48  mortgagee, the court may direct that the receiver of the rents apply the
    49  rents received by the receiver towards the payment of  accrued  interest
    50  on  the  mortgage,  provided  due provision shall have been made for the
    51  payment of taxes and ordinary and necessary expenses for the  operation,
    52  repair and maintenance of the mortgaged property and such other expenses

    53  as  the  court may direct. Any moneys so paid over by the receiver shall
    54  be deducted from the amount due on the mortgage, or the  note,  bond  or
    55  obligation secured thereby, and the mortgagee's affidavit of the indebt-

        S. 7240                            14
 
     1  edness  filed  with  the  report  of  sale  pursuant to section fourteen
     2  hundred fourteen of this article shall so state the amounts thereof.
     3    4.  In  a  city  with  a population of one million or more persons, an
     4  order appointing a receiver to receive the rents and profits of a multi-
     5  ple dwelling shall provide that the receiver:
     6    (a) register with any municipal department as provided  by  applicable
     7  law; and

     8    (b)  expend  rents  and income and profits as described in subdivision
     9  three of this section, except that a priority  shall  be  given  to  the
    10  correction  of immediately hazardous and hazardous violations of housing
    11  maintenance laws within the time set by orders of any municipal  depart-
    12  ment,  or,  if not feasible, seek a postponement of the time for compli-
    13  ance.
    14    5. The receiver shall be entitled to such commissions,  not  exceeding
    15  five  percent of the greater of (a) the sums received by the receiver or
    16  (b) the sums disbursed by the  receiver,  as  the  court  by  which  the
    17  receiver is appointed allows.
    18    § 1421. Right to seek judicial intervention; mortgagee's liability for

    19  failure  to  comply  with  this  article.  1. If the mortgagee commences
    20  proceedings under this article to foreclose a  mortgage,  or  extension,
    21  amendment,  modification or consolidation thereof, executed prior to the
    22  effective date of this article, the mortgagor may by written  notice  to
    23  the  mortgagee require that further foreclosure proceedings be conducted
    24  judicially as provided in article thirteen of this chapter. Such  notice
    25  must  be  delivered to the mortgagee by registered or certified mail, or
    26  such other method as may be specified in the  mortgage,  postmarked  not
    27  later  than  forty days after the date the mortgagor receives the notice
    28  of intention to foreclose as provided in this article, and  shall  state

    29  (a)  the  date on which the mortgage, or extension, amendment, modifica-
    30  tion or consolidation thereof, that the mortgagee seeks to foreclose was
    31  executed, and (b) that the mortgagor is exercising its right under  this
    32  section  to  require  that  the foreclosure of the mortgage be conducted
    33  through the judicial process.
    34    2. If the mortgagee commences proceedings under this article to  fore-
    35  close a mortgage, or extension, amendment, modification or consolidation
    36  thereof,  executed after the effective date of this article, the mortga-
    37  gor, not later than forty days after the date it receives the notice  of
    38  intention  to foreclose as provided in this article, may apply, by order

    39  to show cause, to the supreme court in the county in which the mortgaged
    40  property is located for an order directing that further  proceedings  be
    41  conducted pursuant to article thirteen of this chapter, and for a tempo-
    42  rary  restraining  order  staying further proceedings under this article
    43  pending a hearing of the application. The application shall include  one
    44  or  more  affidavits  (a) stating whether a previous application for the
    45  same or similar relief has been made, and if so the outcome thereof, and
    46  (b) stating facts to support one or more of the following allegations:
    47    (1) that  the  mortgage,  or  extension,  amendment,  modification  or
    48  consolidation  thereof,  sought  to  be  foreclosed  does  not contain a

    49  provision permitting the foreclosure thereof by power of sale  or  other
    50  non-judicial means;
    51    (2)  that  the  obligation  secured  by the mortgage is invalid or not
    52  otherwise due;
    53    (3) that the mortgagor is not in default under the mortgage or  other-
    54  wise has a meritorious defense to the foreclosure thereof;
    55    (4)  that the mortgagee has not complied with the terms and conditions
    56  of this article; or

        S. 7240                            15
 
     1    (5) that under the facts and circumstances, allowing  the  foreclosure
     2  to proceed under this article would cause an undue hardship to the mort-
     3  gagor.
     4    3.  If  the  application is granted, the foreclosure shall, unless the

     5  court subsequently orders otherwise, proceed pursuant to  article  thir-
     6  teen of this chapter for the judicial foreclosure of the mortgage.
     7    4. If the application is denied, the sale may proceed pursuant to this
     8  article.
     9    5.  At  any  time  the  mortgagee  may, without prejudice, voluntarily
    10  discontinue proceedings under this article and pursue  such  rights  and
    11  remedies  as may be available to it under article thirteen of this chap-
    12  ter.
    13    6. After receiving the notice of intention to foreclose, an interested
    14  party other than the mortgagor may petition the court  for  relief  only
    15  pursuant  to the provisions of article sixty-three of the civil practice

    16  law and rules. The court  shall  apply  the  standards  for  preliminary
    17  injunctive  relief  and  shall  consider  whether  granting  the  relief
    18  requested will prejudice the substantial rights of any party  or  unduly
    19  delay the adjudication of such rights.
    20    7. Any person entitled to receive notice of the intention to foreclose
    21  or  notice of sale under this article may recover from the mortgagee any
    22  damages caused by the failure of the mortgagee to comply with the proce-
    23  dures and conditions set forth in this article.
    24    § 2. This act shall take effect immediately; provided,  however,  that
    25  any  proceeding  commenced following the expiration and repeal of former
    26  article 14 of the real property actions and proceedings law on  July  1,

    27  2009,  which otherwise would have been eligible under such article shall
    28  be eligible under this act, pursuant to an agreement of both parties  to
    29  the proceeding, upon the effective date of this act.
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