N.Y. Courts Act to ‘Protect Integrity’ of Foreclosure Process

Foreclosure noticeThe New York court system today became the first in the nation to issue a new rule in response to the uproar over shoddy foreclosure paperwork by lender representatives.
The rule requires attorneys for plaintiffs to fill out a new form “certifying that counsel has taken reasonable steps” to review and verify the accuracy of legal documents filed in foreclosure cases.
“We cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs – such as a family home – during this period of economic crisis,” said New York Chief Judge Jonathan Lippman in a statement.
The new filing requirement was introduced by the Lippman in response to disclosures in recent weeks by major mortgage lenders of shoddy processing, including the widespread notarization and “robo-signing” of supporting documents in residential foreclosure filings in courts nationwide.
It is uncertain how many other state courts will follow suit with new requirements. New York is one of 23 states that have judges issue final disposition of foreclosure case.
“This new filing requirement will play a vital role in ensuring that the documents judges rely on will be thoroughly examined, accurate, and error-free before any judge is asked to take the drastic step of foreclosure,” the judge said.
Attorneys general from all 50 states and federal regulators have launched investigations into “robo-signing” allegations.
The nation’s largest lender, Bank of America, said it will begin resubmitting affidavits Oct. 25 in 102,000 foreclosure actions in the 23 states were judgments are pending. It was the only major lender to issue a foreclosure freeze – on Oct. 8 – on all cases. The lender is holding on a freeze in the other 27 states, which may delay about 30,000 foreclosure sales.
Other major lenders are reviewing cases, including JPMorgan Chase, Ally Financial (formerly GMAC) and Wells Fargo. But none have issued moratoriums, and none of said they found irregularities.
Under the new requirement in New York, plaintiff’s lawyers in foreclosure matters must submit the “affirmation” form at one of several stages:

  • In new cases, the affirmation must accompany the Request for Judicial Intervention;
  • In pending cases, the affirmation must be submitted with either the proposed order of reference or the proposed judgment of foreclosure;
  • In cases where a foreclosure judgment has been entered but the property has not yet been sold at auction, the affirmation must be submitted to the court referee, and a copy filed with the court, five business days before the scheduled auction;
  • If new facts emerge after the initial filing, counsel is also obligated to file an amended version of the affidavit.

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