Mortgage Foreclosures - Access to Justice in Lending Act

On October 20, Governor Paterson signed into law the "Access to Justice in Lending Act", Chapter 550 of the Laws of 2010, which adds new Section 282 ("Mortgagor's right to recover attorneys' fees in actions or proceedings arising out of foreclosures of residential property)" to the Real Property Law.

The Assembly Bill is posted at the following link.

New Law Allows Homeowners to Recoup Legal Fees in Foreclosure Cases

[Reprinted from the New York Times]

By JOHN ELIGON

Published: October 21, 2010

A new state law signed in Albany this week will allow homeowners who win foreclosure proceedings to have the lender pay their lawyers’ fees.

Supporters say the law balances what they see as the long unfair practice of lenders writing provisions in mortgage contracts that allow them to collect lawyers’ fees from homeowners when the lender successfully forecloses. Some also say that the new law may give homeowners a better chance in court because they will more easily be able to get representation.

The law comes at a time when big banks are coming under increasing scrutiny for lax handling of mortgage documents.

“We have thousands of foreclosures in New York State where homeowners” have valid defenses, said Assemblyman Rory I. Lancman, a Democrat of Queens who co-sponsored the bill. “But they are unable to assert those defenses because they don’t have a lawyer.”

In some other types of litigation, like employment or civil rights, lawyers’ fees have long been awarded to the winning party, Mr. Lancman said. But foreclosure litigation has been an exception.

“There’s been a major problem as this foreclosure crisis has exploded in getting representation for people who need counsel,” said Andrew Scherer, the former president of Legal Services NYC, an agency that provides counsel to people who cannot afford lawyers in civil cases.

“This is going to provide a pretty reasonable incentive for private attorneys to take on these cases,” Mr. Scherer added.

In general, homeowners are considered to have won foreclosure proceedings when they are able to get a judgment from the court allowing them to keep their homes. With recent revelations that banks have cut corners in documenting mortgages during the boom, lawyers say, chances are better than ever to raise legitimate defenses to get a bank’s foreclosure action thrown out.

Even in cases in which a settlement is reached, Mr. Lancman said, lenders may be more willing to negotiate the lawyers’ fees, knowing that they may have to pay those fees if they lose a judgment.

Michael J. Wrubel, a Florida lawyer who represents homeowners, said he did not believe the new law would substantially tip the scale in favor of homeowners.

New York Changes Rules for Filing Foreclosures

New York State instituted new requirements for filing foreclosure
documents effective immediately to stem a wave of foreclosures that were
not documented properly, The Wall Street Journal reported Wednesday in
its online edition. Foreclosure claims must now reportedly have a lawyer
file an affirmation that reasonable steps have been take to verify the
accuracy of the information in the documents.

"We cannot allow the courts in New York State to stand by idly and be
party to what we now know is a deeply flawed process, especially when
that process involves basic human needs-such as a family home-during
this period of economic crisis," said New York State Chief Judge
Jonathan Lippman, according to the Journal.


The marketwatch article links here.
http://www.marketwatch.com/story/ny-changes-rules-for-filing-foreclosures-wsj-2010-10-20

This is the link to the press release from the Unified Court System of New York.
http://www.nycourts.gov/press/pr2010_12.shtml

To Foreclose or Not to Foreclose

Well, as if its NEWS - the big banks have finally confessed that perhaps some technicalities have been overlooked in their foreclosure process.  Putting it mildly.  Yes errors were made and continue to be made.  I am amazed that anything gets accomplished at all at a bank.