Senate Bill S5928

                                 BILL NUMBER:  S5928

 TITLE OF BILL :  An act to amend the real property actions and
proceedings law, in relation to foreclosure of mortgages

 SUMMARY OF PROVISIONS OF BILL :

Section 1: Amends section 1302 of RPAPL to require that foreclosing
plaintiffs plead ownership of the note and mortgage applicable to all
homeowners instead of limited to only homeowners with subprime and
high-cost home loans.

It also ensures that RPAPL 1302 defenses are applicable to all
homeowners instead of limited to just homeowners with subprime and
high-cost home loans.

Section 2: Sets the effective date on the first of January after it
shall have become law.

 JUSTIFICATION :

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 would require plaintiffs in a foreclosure action to
plead ownership of the note and mortgage for all home loans and would
enable all homeowners to avail the statutory defenses to protect their
homes, as opposed to just those homeowners with subprime or high-cost
home loans.

 LEGISLATIVE HISTORY :

2016: A.10373 -A.Rules

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :

None.

 EFFECTIVE DATE :
First of January after it shall have become law.