BILL NUMBER: S526

SPONSOR: THOMAS
 
TITLE OF BILL:

An act to amend the real property law, in relation to the recording of a
transfer or assignment of a mortgage interest

 
PURPOSE OF BILL:

To require parties to record a mortgage ownership assignment document
with the recording officer which identifies the owner of the mortgage
interest. Such ownership interest would be recorded with the initial
mortgage and whenever the mortgage interest - which conveys the right to
receive mortgage payments from the real property owner - is recorded or
assigned.

 
SUMMARY OF PROVISIONS OF BILL:

Section 1 amends the real property law by adding a new section 291-k.
Section 291-k would require all parties with recorded property interests
to record a mortgage ownership assignment document with the recording
              

officer that identifies the owner of the mortgage interest - which
conveys the right to receive mortgage payments from the real property
owner - in the recorded record.

The form would be recorded within 90 days from the date that the instru-
ment is acknowledged or proved. The term "instrument" applies to the
initial transaction and later trading in the mortgage interest. The
requirement that instruments be acknowledged or proved is current law
(see section 291 of the real property law) and provides a date certain
for commencement of the 90 day time period.  This remains true for later
trading of these "instruments".

The mortgage owner would not be required to re-record the mortgage, pay
a mortgage recording tax, or the mortgage transfer tax. The owner of the
mortgage would be required to pay the applicable per-page recording fee.
The recording would be accomplished through use of a "Mortgage Ownership
Assignment Document". That form is set forth in the bill.

Failure to record such form within the statutory 90 day period will
subject mortgagees and assignees to a $250 fine payable to the recording
officer, which will be used to support recording officer operations.

Section 2 is the effective date.

 
JUSTIFICATION:

The recording statutes and the nature of real estate transactions have
been eclipsed by the passage of time and fail to provide necessary
information for owners of real property. The changing business practices
of the mortgage industry have led to the free trading of the legal
instruments, which represent the right to collect the stream of mortgage
payments from real property borrowers.

Private record keeping entities maintain a database which keeps a real-
time record of such transactions. This database facilitates real-time
trading in these instruments. However, the New York Court of Appeals has
held that recording statutes do not require parties to record ownership
interests. Thus, borrowers cannot ascertain the identity of the owner(s)
of their promissory notes through simple access to the public record
preventing ready communication between the homeowner and the owner of
their legal instruments. In this time of turmoil in housing and mortgage
lending, this inability to contact the actual owner of their mortgage
note leaves a distressed borrower unable to reach their note owner. This
situation requires an update to the recording statutes so that it
contains straightforward information on the current owner of the inter-
est.

Further, case law from the foreclosure crisis makes it clear that the
foreclosure plaintiffs are having problems convincing judges that they
are the owner of the mortgage at issue. Naturally, this is critical
information for the judge since a foreclosure cannot proceed if the
court lacks evidence that the plaintiff is either the actual owner of
the mortgage or is acting on their behalf. Providing this information in
a neutral public record will aid in this essential inquiry. Such statu-
tory amendment would aid buyers of these notes given that some foreclo-
sure cases in 2010 have been dismissed with prejudice because the plain-
tiff was unable to prove ownership to the satisfaction of the court.
Moreover, maintaining mortgage ownership information in the public
record will aid in the enforcement of the recent changes to the law
regarding mortgage fraud.

For these amendments to the recording statutes to be meaningful, each
new owner of the legal instruments is required to record their name -
whether business or personal, the address and phone number on the mort-
gage ownership assignment document. Any representative of such a new
owner who physically records such interest must record the assignment or
transfer in the name of the actual owner.

When a mortgage has been securitized, the owner of the mortgage is the
entity that administers and/or manages the securitized portfolio of
property. It does not refer to each individual shareholder who has an
investment in the securitization.

 
LEGISLATIVE HISTORY:

2021-22: S.212 (Thomas) - Referred to Judiciary.

2019-20: S.4806 (Thomas) / A.5613 (Weinstein) - Referred to Judiciary.

2017-18: S.475 (Peralta) /A.1387 (Weinstein) - Referred to Judiciary.

2015-16: S.1278 (Peralta) / A.163 (Weinstein (MS)) - Referred to Judici-
ary.

2013-14: S.44 (Peralta) / A.1082 (Weinstein (MS)) - Referred to Judici-
ary.

2012: S.667-B (Peralta) / A.626 (Weinstein (MS)) - Judiciary Committee
Discharged and Committed to Rules.

2011: S.667-B (Peralta) / A.626 (Weinstein (MS)) - Referred to Judici-
ary.

2010: S.7515 (Schneiderman) / A.8684 (Weinstein (MS)) - Committed to
Rules.
2009: A.8684 (Weinstein (MS)) - Committed to A.  Rules.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

This bill would generate undetermined additional funds for the state's
recording officers County Clerks and City Register and counties.

 
EFFECTIVE DATE:
The act will take effect ninety days after becoming law and shall apply
to all mortgages and assignments of mortgages executed on or after such
date.