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June 22, 2011

Foreclosure Notices and Title Issues Outline


Foreclosure Notices and Title Issues The following laws are important to know in order to get a marketable title from a foreclosure proceeding. The proceeding itself is governed by Article 13 of the Real Property Actions and Proceedings Law (RPAPL 1301, et. seq.)
1. RPAPL 1303 - Help for homeowners notice. This is a notice which is to be sent with the summons and complaint. It has to be on a separate page. The page must be a different color than the other pages of the summons and complaint.
2. RPAPL 1320- This "You are in danger of losing your home" notice is a bold print notice which must be part of the summons. I put it at the top of the summons.
3. CPLR 3215(g)(3)- This is the affidavit of mailing of additional notice in an action on a consumer debt. The plaintiff must mail an additional copy of the summons to the defendant in a plain envelope at least 20 days prior to taking a default judgment.
4. CPLR 6512 - Notice of Pendency (aka Lis Pendens, LP) - File the LP prior to service of summons. Must personally serve one of the defendants within 30 days after filing the Lis Pendens in order for the LP to act as a claims bar. The claims bar date will be retroactive to the date that the LP filed. Thereafter, anyone who files a judgment, etc. need not be made a defendant.
5. CPLR 306-b. Service on remaining defendants must be done within 120 days after filing of the summons.
6. Title companies like to see an affidavit of service for each defendant. If husband and wife are being served, make sure the process server gives you two affidavits, rather than a single form with combined service information.
7. RPAPL 1302 - If you are foreclosing a "high cost home loan", a "sub-prime" loan, or a "non-traditional" home loan, usually made between 2003-2008, then there must be an affirmative allegation in the complaint that the Plaintiff is the owner and holder of both the note and mortgage. These types of loans are defined in NYS Banking Law sections 6-l and 6-m. Also, note that there is a definition of a "lender" in the Banking law, and your client has to be a lender for the affirmative pleading rule to apply. See Section 590(f)(1) and 590(e)(1) for the definitions.
8. CPLR 3408 - Preferences. Mandatory settlement conferences within 60 days after proof of service of summons on foreclosures of loans described in #7 above.
9. RPAPL 1304- Pre-foreclosure notice- Ninety days prior to commencing an action (filing the LP and S &C), in a foreclosure of a loan described in #7 above, there must be a notice sent to the defaulting mortgagors. See this statute for particulars of the notice and mailing. We do not have this form in our database, as we have no loans of the type described in #7 above. Therefore, we will never have to send this notice.
10. RPAPL 1307- Mortgagees now have a duty to maintain foreclosed property beginning on the date that judgment is entered. Since a sale is not held until 28 to 35 days thereafter, then the Mortgagees should be advised to provide for maintenance between the judgment date and the sale date. Housing Court can sue the lender for violations of building codes under this law. Mortgagee will be responsible for maintenance until the referee's deed is delivered to the buyer, usually 30 days or more after the auction sale date.
Definitions:
High Cost Home Loan - Interest rate = Treasury securities plus 8%.
- Points Plus Fees > 5% of total loan amount. ($50,000 or higher loan.
- Points plus Fees > 6% or $1,500.00 (loans under $50,000). See Banking Law 6-L.
Sub-prime home loan - Loans which, when compared to all loans of comparable duration in the local Freddie Mac survey, exceed the average by 1.75%. See Banking Law 6-m. Also, Treasury securities rate plus 3% over a comparable term made by a "lender". See RPAPL 1304(c).
Non-Traditional Home loan - Ã"payment option" ARM or an interest only loan made between 2003 and 2008.
Lender - A licensed mortgage banker. Banking Law Sec. 590(f)(1).
An exempt organization. Banking Law Sec. 590(e)(1). Primarily institutional lenders