By: Michael L. Moskowitz and Michele K. Jaspan

A new rule proposed by the Consumer Financial Protection Bureau (“CFPB”), would create a new pre-eviction review period to grant millions of Americans more time to figure out payment options before Covid-19 federal mortgage protections expire at the end of June. A copy of the proposal can be found here.

This proposal would also prevent mortgage servicers from initiating a foreclosure against delinquent borrowers until after Dec. 31, 2021. The rule would apply to all mortgages, both federal and private, on a principal residence.

By: Michael L. Moskowitz and Melissa A. Guseynov

In a recent opinion of note, the Bankruptcy Court for the Eastern District of California sided with the majority of courts in holding section 362(c)(3)(A) of the Bankruptcy Code does not apply to property of a debtor’s estate.  In re Thu Thi Dao, Case No. 20-20742 (Bankr. E.D. Cal. May 11, 2020). Read the full opinion here. 

In this case, Debtor commenced a second chapter 7 bankruptcy case shortly after his prior case had been dismissed for failure to timely file schedules. When the chapter 7 trustee suspected Debtor failed to list all of his assets in the petition, he filed a motion seeking delivery of all unscheduled assets, but was concerned section 362(c)(3)(A) would terminate the automatic stay within thirty days as to such property. The Bankruptcy Court was called upon to clarify whether section 362(c)(3)(A) applied to property of the Debtor’s estate.

By: Michael L. Moskowitz and Melissa A. Guseynov

In a recent opinion of significance, the Bankruptcy Court for the Eastern District of New York held that a court cannot legitimize a void foreclosure sale with a nunc pro tunc order. In re David Telles, Case No. 20-70325 (Bankr. E.D.N.Y. April 30, 2020). Read the full opinion here.  

By: Michael L. Moskowitz and Melissa A. Guseynov

Whether a mortgagee has standing to foreclose on a home loan is a frequently litigated issue in mortgage foreclosure actions in New York. Simply put, a mortgage lender has standing to foreclose on a promissory note if it is the holder of the note at issue at the time the foreclosure action is commenced. As is set forth in more detail below, a recently enacted law in New York provides that the defense of “lack of standing” in a foreclosure action is not waived if the defendant fails to raise the defense at the start of the litigation, thus introducing a new level of uncertainty in foreclosures and possibly prolonging an already lengthy, and costly, procedure for lenders.  

By: Michael L. Moskowitz and Melissa A. Guseynov

In a recent memorandum decision, dated November 12, 2019, a New York Bankruptcy Judge held that filing a chapter 11 petition in order to obtain a 60-day extension of a closing date does not constitute bad faith. In re AAGS Holdings LLC, 19-13029 (Bankr. S.D.N.Y. Nov. 12, 2019). Read the full opinion here.

In AAGS Holdings, a limited liability corporation was under contract to buy certain real property. The contract of sale specifically stated that time was “of the essence.” In addition, if the closing did not take place by the date set forth in the contract, the seller could elect to terminate the contract and retain purchaser’s deposit.

By Michael L. Moskowitz

New York’s Real Property Actions and Proceedings Law (“RPAPL”) § 1304 requires a mortgage lender to notify a residential home borrower of an impending foreclosure action at least 90 days before the foreclosure action is commenced, using specific statutory language, printed in 14 point type, sent by registered or certified mail, as well as by first class mail, to the borrower. The emphasis of this article is the peril which will befall a lender if it fails to timely register the statutorily mandated notice.  

By Michael L. Moskowitz

A New Jersey Appeals Court recently held that homeowners who enter into trial agreements to modify their mortgages under the Federal Home Affordable Modification Program (“HAMP”), and comply with the terms thereof, may commence suit for breach of contract, and possibly consumer fraud, if lenders deny them permanent modifications.

By Richard E. Weltman

{1:54 minutes to read} Wells Fargo Bank, as the owner of a foreclosed home in New Jersey, owed a duty of care to a prospective homebuyer who was injured when she tripped on a piece of glass while touring the home, a federal court judge in Newark ruled on January 28, 2015.

In reaching his decision, U.S. Magistrate Judge Michael A. Hammer explained that commercial lenders taking possession of a residential property through mortgage foreclosure assume the position of the owner, and thus assume the owner’s non-delegable duty to protect visitors from reasonably foreseeable injuries due to potentially dangerous conditions.

New York’s Office of Court Administration recently announced relief for lenders and homeowners frustrated by high case volume delays affecting mandatory foreclosure settlement conferences in certain courts. Litigants will soon enjoy immediate and direct access to judges at these conferences in Kings, Queens, Nassau and Suffolk counties, the four counties with the highest foreclosure case volumes in the state.

We recently reported on whether a bankruptcy debtor’s rent-stabilized lease constitutes an exempt asset in the form of a “local public assistance benefit” under New York Debtor and Creditor Law. The case is presently under consideration before the New York Court of Appeals.

Weltman & Moskowitz began following the case in October, when we reported on the chapter 7 trustee’s efforts to sell the rent-stabilized lease of Mary Veronica Santiago-Monteverde (“Debtor”), a 79-year-old widow. Many readers have been following the debtor’s opposition to the chapter 7 trustee’s efforts to sell the debtor’s interest in her rent-stabilized lease to the landlord as an asset of the bankruptcy estate.

On July 31, 2013, Governor Andrew Cuomo signed the so-called “Shadow Docket” Bill in connection with New York residential foreclosure actions. The bill adds a new section 3012-b to New York Civil Practice Law and Rules (“CPLR”). The new law also amends CPLR § 3408.

The new law is intended to promote the honesty and transparency in the residential foreclosure process by clarifying the obligations of lenders’ attorneys to the court and eliminating the growing number of “shadow docket” cases. Such cases are held in legal limbo while awaiting critical information necessary to trigger the scheduling of mandatory settlement conferences.  The Office of Court Administration estimates that as of July 7, 2013, there are between 5,000 to 7,000 shadow foreclosure cases.

Our client, a major New York-area Credit Union, hired outside counsel to file a residential foreclosure action involving a home loan. The complaint, filed by another law firm, was not verified by an officer or employee of the foreclosing lender.  Rather, it was signed only by the attorney.  Defendant homeowner failed to file an answer to the complaint...

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