New York Legislature Proactively Trying to Level the Playing Field in Residential Foreclosures.

Attorneys in New York are keenly aware of the new representations, but do consumers know how seriously the New York State Legislature is taking the mortgage foreclosure crisis?

The Office of Court Administration sets forth the Proposed Language and Provides consumers with the following warning:

N.B.: During and after August 2010, numerous and widespread insufficiencies in foreclosure filings in various courts around the nation were reported by major mortgage lenders and other authorities. These insufficiencies include: failure of plaintiffs and their counsel to review documents and files to establish standing and other foreclosure requisites; filing of notarized affidavits which falsely attest to such review and to other critical facts in the foreclosure process; and “robosignature” of documents by parties and counsel. The wrongful filing and prosecution of foreclosure proceedings which are discovered to suffer from these defects may be cause for disciplinary and other sanctions upon participating counsel.

Simultaneously, the Govenor has agreed to permit homeowners the opportunity to seek attorneys fees. Generally, unless a contract provides or a statute states that counsel fees are available, such fees are not recoverable in New York. To encourage homeowners to vigorously protect their rights, New York has now enacted, Real Property Law §282, which retroactively inserts a statutory provision permitting attorneys fees in where homeowners successfully prevail in defeating their mortgage agreements. Although it goes into effect 60 days after its signing, it applies to all mortgages in effect on or after Oct. 20 and all proceedings begun on or after that date.

Although it is early, such a law may encourage attorneys to volunteer their services to homeowners facing foreclosure, many of them who cannot afford to hire their own lawyers. Homeowners may also benefit by gaining leverage to negotiate concessions from lenders seeking to avoid the potential costs of litigation.

One thing is for sure– New York’s not-for-profits and mortgage counselors (flooded with these cases) may start gaining traction for their defenses.

We will see.