February 4, 2014
by Andrew Morganstern
Rosicki, Rosicki & Associates, P.C.
USFN Member (New York)
Judges have issued rulings and legislators have passed laws affecting mortgage foreclosures. It seems as though there is a competition between the judiciary and the legislature to enact rules that protect homeowners in the event of a foreclosure.
In response to the widespread reports of “robo-signing,” the Chief Administrative Judge issued an Administrative Order three years ago, requiring that plaintiff counsel file an affirmation with the court. In the affirmation, plaintiff’s attorney must state that a representative of the plaintiff confirmed the factual accuracy of the allegations in the complaint and in any supporting affidavits filed with the court as well as the accuracy of the notarizations. In order to prepare this affirmation, it is first necessary to obtain a written statement or affidavit from the servicer verifying the accuracy of these documents. The terms of this order are not a model of clarity, resulting in litigation as to its interpretation and even as to its validity.
Not to be outdone, the legislature enacted C.P.L.R. 3012-b, requiring that plaintiff’s counsel file a “certificate of merit” in most foreclosure actions commenced on or after August 30, 2013. For actions commenced prior to August 30, 2013, either an affirmation pursuant to the Administrative Order or a certificate of merit may be filed.
This new law applies to foreclosure actions where the defendant is a resident of the property and involves a “home loan.” A home loan is a loan made to a natural person, where the debt is incurred primarily for personal, family, or household purposes and is secured by a mortgage on a one- to four-family dwelling. A home loan does not include reverse mortgages. (Effective January 14, 2015, a home loan will no longer include a mortgage where the principal amount exceeds the conforming loan size for a comparable dwelling as set by the Federal National Mortgage Association).
The certificate of merit is filed with the complaint. The certificate is signed by the plaintiff’s attorney and certifies that the attorney has reviewed the facts of the case as well as the pertinent documents. The plaintiff’s attorney further certifies that based on consultations with representatives of the plaintiff “… there is a reasonable basis for the commencement of such action and that the plaintiff is currently the creditor entitled to enforce rights under such documents.”
Additionally, a copy of the mortgage or security agreement, the note or bond, and all assignments as well as any modification, extension, or consolidation agreement must either be attached to the summons and complaint or to the certificate. In the event that any of the required documents cannot be located, the attorney or a representative of the plaintiff must file an affidavit “… attesting that such documents are lost whether by destruction, theft or otherwise.”
Finally, this new law provides that if the plaintiff willfully fails to provide copies of the required documents, the court may dismiss the complaint or issue an order that grants relief “as is just.” Examples of appropriate relief include denial of interest, costs, or attorney’s fees.
Where it has been found that a servicer failed to negotiate in good faith, judges have imposed various types of penalties. However, appellate courts have found that it is inappropriate to grant sanctions unless they have been authorized by statute. The legislature has evidently been reading these cases since the law requiring a certificate of merit expressly provides judges with the authorization to impose almost any type of relief as may seem proper. Accordingly, in the event that there is willful failure by a plaintiff to file the necessary documents, it is clear that the court has the authority to mete out any sanction that it finds to be appropriate.
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