AARP-backed Measure Would Speed Mediation, Deter “Robo-Signing,” Blight
ALBANY, N. Y. – Thousands of New Yorkers facing foreclosure would have a better chance to avoid the loss of their homes under an AARP-backed bill passed by the State Legislature today.
The bill (S4530A/ A5582A), sponsored by Senate Co-Leader Jeff Klein (D-Bronx) and Assembly Judiciary Chair Helene Weinstein (D-Brooklyn), would speed up New York’s notoriously lengthy foreclosure process, allowing homeowners to avoid snowballing fee and interest charges and giving them a better chance to afford a settlement.
The bill closes an administrative loophole in the state court system that has allowed lenders’ lawyers to avoid submitting paperwork certifying the legitimacy of the foreclosure lawsuits they file.
Lack of certification has prevented thousands of cases from actually moving into the courts, where the two sides are required to enter court-supervised mediation within 60 days of the lender filing proof of service. By requiring lenders’ lawyers to submit certifications at the time they file suit, the bill would also deter “robo-signing” and prevent the filing of wrongful foreclosures by lenders who don’t really own the loan.
“This bill will help thousands of New Yorkers keep the homes they’ve worked hard their whole lives to afford,” said AARP New York state director Beth Finkel. “AARP is gratified that Senator Klein and Assemblywoman Weinstein are leading the way in ensuring that the good work of the legislature in 2009 to require swift scheduling of court-supervised mediation in foreclosure cases is protected. Their bill closes a major loophole to ensure homeowners actually get to this mediation so they can work out manageable mortgage modifications.”
AARP New York applauds Attorney General Eric Schneiderman, Senator Klein and Assembly Member Weinstein for their efforts on behalf of the bill, which was proposed by the attorney general and the Office of Court Administration.
Foreclosure cases linger in New York for a nationally-highest average of nearly three years.
Because of delay by lenders’ lawyers, an estimated 25,000 foreclosure cases are sitting in county clerk’s offices around the state in what has become known as the “shadow docket.” Just a few examples:
- About 4,000 cases are languishing in Westchester County alone, according to Westchester Residential Opportunities Inc.
- Three quarters of cases filed in Brooklyn and Queens in October 2011 remained in the shadow docket half a year later, according to MFY Legal Services Inc.
- In the Capital Region, two thirds of cases filed between November 2011 through May 2012 in Albany and Rensselaer counties, and 59 percent in Schenectady County, were stalled in the shadow docket as of August 2012. Meantime, recent data from the state Department of Financial Services provided to the HomeSave Coalition show that from May 29, 2012 to May 28, 2013, foreclosure notices went to 17,489 additional households in Albany, Columbia, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie and Washington counties.
- More than a quarter of all New York homeowners at risk of foreclosure live on Long Island, and more than 27 percent live in New York City, according to a recent report by the Empire Justice Center citing 90-day pre-foreclosure notices for lack of payment filed during the first half of 2012.
- In Erie County, more than a quarter of foreclosure cases filed in 2011 were still stuck in the shadow docket this spring, according to the Western New York Law Center. That doesn’t even count cases filed earlier.
- In Monroe County, bank lawyers recently submitted certification on two foreclosure suits that were filed in 2009, according to the Empire Justice Center. That means those homeowners had to wait four years for a chance to modify their loans under court supervision – while fees and interest mounted. And those cases are not an anomaly.
The bill would stop these practices.
“The big banks have caused great harm to communities with their abusive mortgage servicing and foreclosure practices,”, said Josh Zinner, Co-Director of New Economy Project (formerly NEDAP). “This legislation will help ensure that banks play by the rules.”
“The simple fix in this legislation will have an immensely positive impact on homeowners facing foreclosure,” said Kirsten E. Keefe, staff attorney for the Empire Justice Center. “Moving the timing for filing a single but critical document, which assures the veracity of the lawsuit, to the beginning of the case should prevent homeowners from being stuck in legal limbo for months or even years, waiting for the lenders to do their due diligence.”
“We want to express our sincere appreciation to the Office of Court Administration – Chief Judge Jonathan Lippman and Chief Administrative Judge Gail Prudenti – as well as Attorney General Eric Schneiderman for initiating the bill and Senate Majority Coalition Co-Leader and Independent Democratic Conference Leader Jeff Klein and Assembly Judiciary Chair Helene Weinstein for sponsoring it in their respective houses,” said Kristin Brown Lilley, the Empire Justice Center’s Director of Policy Advocacy. “We hope the bill will be sent to and signed by the Governor quickly so that we can stop as many people as possible from being stuck in limbo in the shadow docket.”
“We are gratified that the legislature has finally passed this common sense measure designed to ensure that lenders and their counsel do not continue the practice of evading mandatory settlement conferences and delaying the judicial foreclosure process by filing foreclosure actions without taking the required steps to get the cases scheduled for their settlement conferences,” said Jacob Inwald, Director of Foreclosure Prevention Litigation for Legal Services NYC. “It has been supremely ironic that the banking industry has complained about New York’s lengthy judicial foreclosure process, when they have made a conscious decision to file cases but then not pursue them and relegate them to the ‘shadow docket.’ This legislation will prevent them from doing that by requiring the paperwork be done when the action is started, and we urge Governor Cuomo to sign it immediately.”
“The Western New York Law Center applauds the legislature for passing legislation that will allow homeowners to quickly access the mandatory settlement conference process” said Joseph Kelemen, Executive Director of the Western New York Law Center. “Our own experiences show that when homeowners are allowed to participate in the settlement conference process as soon as possible once a foreclosure has commenced they are able to dramatically increase the likelihood of keeping their home. This legislation will help struggling homeowners across the state.”
“S4530-A/A5582-A is a common sense bill that will end the bank-imposed backlog of foreclosure actions,” said Elizabeth Lynch of MFY Legal Services, Inc. “MFY’s clients will now have their day in court instead of wasting away in the shadows, where they have been helplessly trying for years to save their homes – all the while receiving nothing but excuses from the banks. This bill will end that abuse for the thousands of homeowners who are currently suffering. “
AARP New York calls on Governor Andrew Cuomo to sign the bill into law.
AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse. We advocate for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help our members obtain discounts on a wide range of products, travel, and services. A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world’s largest circulation magazine; AARP Bulletin; www.aarp.org; AARP TV & Radio; AARP Books; and AARP en Español, a Spanish-language website addressing the interests and needs of Hispanics. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. AARP Foundation is an affiliated charity of AARP that is working to win back opportunity for struggling Americans 50+ by being a force for change on the most serious issues they face today: housing, hunger, income and isolation. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.