PLAINTIFF FAILS TO ESTABLISH STANDING, DENIED SUMMARY JUDGMENT AND ORDER OF REFERENCE

Wells Fargo Bank moved for summary judgment and appointment of a referee to compute. Defendants cross-moved for dismissal of the complaint in this foreclosure mortgage action alleging lack of standing. The court stated an electronic note signed electronically by the mortgagor was a "transferable record," noting a person having control of a transferable record was the holder. An affidavit from Wilson, Vice President Loan Documentation for plaintiff, stated plaintiff was in possession of the promissory note, an electronic note, and was the current controller. Yet, the court found Wilson did not expressly state she examined the note holder registry or identify the source from which she determined plaintiff was controller of the electronic note. It ruled in the absence of factual details as to the transfer of the electronic note to plaintiff, including the transfer date, it could not be established that plaintiff controlled the electronic note on the date this action was commenced. Hence, plaintiff failed to establish standing as part of its prima facie case, and its motion was denied. Also, as defendant failed to submit sufficient proof plaintiff was not the holder of the electronic note at the time the action was commenced, the cross-motion to dismiss was denied.

The full decision can be found here

BANK FAILS TO ESTABLISH STANDING TO SUE WITHOUT DETAILS OF NOTE'S PHYSICAL DELIVERY

U.S. Bank moved to strike defendants' answer, defenses and counterclaim, and granting it summary judgment in this foreclosure proceeding. It produced a copy of the mortgage, and written assignment of same, among other things, proffering an affidavit of Wilde, who asserted defendants defaulted on the loan and bank was in physical possession of the note. Defendants asserted they never received correspondence regarding foreclosure settlement conferences, seeking to have the matter remanded to the settlement part. They also challenged bank's standing to sue herein. Wilde's affidavit averred only that before the action was commenced it was verified that bank was in physical possession of the note, but he did not provide factual details regarding the physical delivery of the note, or that he personally inspected the original note. The court stated absent such further details, bank failed to establish prima facie it was holder of the note before commencement of this action, and thus, was insufficient to establish bank's standing without details concerning the physical delivery. Given that defendants resided at the property, only missed an initial recent conference date and public policy considerations, the court referred the matter to the foreclosure settlement conference part.

The full article and decision can be found here

Law Makes NY Lenders Maintain 'Zombie' Homes

New York is imposing new requirements on mortgage lenders to maintain abandoned houses before foreclosure.

The law, signed Thursday by Gov. Andrew Cuomo, threatens banks with civil penalties up to $500 a day for failing to maintain residential properties once they're aware of vacancies.

The old law required they take responsibility following a foreclosure judgment, which Cuomo said left hundreds of "zombie properties" across the state.

The signed legislation, A10741/S8159, also establishes an electronic statewide registry of abandoned homes, establishes a state hotline where neighbors can report them and requires notices to mortgage borrowers emphasizing their right to stay in houses until foreclosure.

"It brings together multiple strands that, combined, will help homeowners, neighborhoods and municipalities and New York State at large, move from crisis into recovery," said Kirsten Keefe, a senior attorney at the nonprofit law firm Empire Justice Center. "The settlement conference and notice improvements alone will have an immense impact. I look forward to seeing this new law put into action."

A related measure, A10730/S8141, establishes a State of New York Mortgage Agency fund to buy and sell abandoned properties at below-market rates and demolish those beyond repair.

THE FULL STORY CAN BE FOUND HERE

Emigrant Savings Bank Discriminated Against Minorities, Brooklyn Jury Says

A federal jury in Brooklyn found on Monday that the Emigrant Savings Bank had discriminated against eight minority homeowners by purposefully marketing to them subprime mortgages with what were described as predatory interest rates of as much as 18 percent a year.

In 2011, the homeowners — among them a home health aide, a library worker and a clinician at Rikers Island — filed a lawsuit against the bank in Federal District Court in Brooklyn, claiming that Emigrant Savings had targeted minority customers who had low credit scores with so-called no-income refinancing loans from 2005 to 2009, both before and after the subprime crash. Ending a monthlong trial, the jury’s verdict upheld the plaintiffs’ claim that the bank had “aggressively” sold the “highly abusive” loans specifically to minority families in violation of the Fair Housing Act, among other state and federal laws.

Six of the plaintiffs were awarded a total of $950,000 in damages in the case. Two others waived their claims after entering into a loan modification agreement with the bank. “Today’s verdict was a victory for borrowers seeking redress for Emigrant’s discriminatory and predatory lending practices,” said Rachel Geballe, a lawyer for Brooklyn Legal Services, which represented the plaintiffs.

One, Edith Saint-Jean, testified that she and her husband had refinanced their home in Brooklyn to pay off more than $30,000 in delinquent bills. Ms. Saint-Jean said that an independent broker had assured her that her monthly payments on the Emigrant Savings loan would go down within six months, but it did not happen. “They destroyed my life,” she said.

Officials for the bank had argued that the mortgages represented less than 5 percent of Emigrant Savings’ total assets and often allowed low-income clients, many of them black and Latino, access to the credit market when they had no other options.

“Emigrant loans were a ‘lifeline’ for these consumers — which is why more than 70 percent of the borrowers in this program succeeded and kept their homes,” the bank said in a statement on Monday. After promising to appeal the jury’s verdict, the statement added: “Each of the plaintiffs greatly benefited from their Emigrant loans when compared to any gain they would have realized from selling their homes earlier.”

Correction: June 27, 2016 

An earlier version of this article misidentified who Edith Saint-Jean had testified assured her that her monthly payments on a loan from Emigrant Savings Bank would go down after six months. It was an independent broker, not Emigrant Savings.

THE STORY CAN BE FOUND HERE

Legislation to clean up zombie properties signed into law

STATEN ISLAND, N.Y. -- Legislation to address the state's zombie properties -- 303 have been identified on Staten Island -- and to establish the Community Restoration Fund, was recently signed into law by Gov. Andrew Cuomo.

Sen. Diane Savino. (D-North Shore/Brooklyn), along with Bronx Sen. Jeffrey Klein, championed legislation to protect neighboring home values while ensuring the speedy rehabilitation of properties.

"This is a great day for the people of New York City, especially my constituents living in Staten Island and Brooklyn who've been dealing with this issue for far too long," said Savino.

The legislation comes on the heels of a new study that revealed that Staten Island is home to 303 zombie homes, which has resulted in plummeting property values of privately-owned homes in surrounding neighborhoods by $50.7 million.

The study, "The Next Great American Bank Robbery" -- launched by the Independent Democratic Conference (IDC) -- highlights financial and societal problems caused by zombie properties, which are those homes left to decay in the middle of the foreclosure process.

The zombie homes negatively affect property values of an estimated 9,311 neighboring properties.

"Just like every homeowner has a duty to maintain his or her property, banks need to do the same so that nearby residents aren't forced to deal with the blight of unmaintained properties and falling property values," said Assemblywoman Nicole Malliotakis (R-East Shore/Brooklyn).

"We've experienced a surge in this problem since the devastation of Sandy, adding to the frustration of so many people who worked so hard to get their homes back into shape," she added.

IS THERE A ZOMBIE IN YOUR NEIGHBORHOOD?

According to the study, the Staten Island zip code with the most zombie homes is 10306, where there are 47 abandoned properties, and the median house value is $449,400. The overall home depreciation in this zip code is $7.1 million.

The zip code with the least amount of zombie properties was 10307, where there were six of these homes. The median house value in that zip code is $571,200, and the total depreciation due to abandoned homes is $1.2 million.

ADDRESSING ZOMBIE PROPERTIES

The new legislation calls for the following:

To address the zombie property blight, banks will now have to maintain vacant and abandoned properties.

A new toll-free hotline will allow people to report potentially vacant or abandoned sites, and an electronic database will provide streamlined access to information for affected communities.

An expedited foreclosure process will protect neighboring homes while improvements to mandatory settlement conferences will protect homeowners facing foreclosure.

The establishment of a Consumer Bill of Rights will inform property owners of their rights in foreclosure proceedings.

THE COMMUNITY RESTORATION FUND

Savino and Klein introduced the legislation to establish the New York State Community Restoration Fund. This will help those homeowners who are delinquent, at risk of entering default, or may have already fallen into foreclosure due to economic hardship, said Savino.

The fund authorizes the State of New York Mortgage Agency to utilize fund resources to rehabilitate distressed properties, demolish homes that are dilapidated beyond repair, and fund not-for-profit and affordable housing developers, in order to address the foreclosure crisis, repurpose or rehabilitate foreclosed or vacant properties into affordable housing, and keep families in their homes.

CLICK HERE FOR THE FULL STORY

Goldman, Barclays, 6 Others Ink $190M FDIC Deal Over Sour RMBS

Goldman Sachs & Co., Barclays Capital Inc. and six other financial institutions have agreed to pay the Federal Deposit Insurance Corp. $190 million to end mortgage-backed securities claims the agency brought on behalf of five failed banks, the FDIC said on Thursday.

The deal settles federal securities suits the FDIC filed as receiver for the failed banks to recover on their purchases of 21 Countrywide mortgage-backed securities. 

For the full-story click HERE

Today, we received a HAMP loan modification for one of our clients which  lowered the monthly payment from $2,205.81 to $ 1,010.90 – a savings of almost $1,200 a month!!!  See the worksheet below which contains the details. 

Bank Fails to Prove Standing, Not Entitled To Summary Judgment in Foreclosure Action

Plaintiff HSBC Bank moved for summary judgment against Murphy, among other things, in this foreclosure on a mortgage action against the subject real property. It alleged it was in possession of the original note with proper endorsement and/or allonge, thus, was the holder of the note and mortgage, stating Murphy defaulted by failing to make scheduled monthly payments. The court granted bank's motion to consolidate two actions, and for a default judgment against defaulting, non-answering defendants. Murphy alleged bank lacked standing arguing the copy of the original note and blank endorsement annexed to its motion and affidavits was invalid as it was on a separate, undated, otherwise blank page. The court agreed, finding the affidavit of Doublin, a document execution specialist for bank's servicer, attesting its physical possession of the original note endorsed in blank, was insufficient on its face. It stated the endorsement itself failed to contain any evidence it was "firmly affixed thereto as to become a part thereof." Doublin also offered no information as to the original note's condition, simply noting Nationstar, as bank's agent, received the original note Sept. 3, 2013, and remained in possession. Thus, bank was not entitled to summary judgment.

Read more: http://www.newyorklawjournal.com

Lender's Failure to Comply With RPAPL §1303 Requires Dismissal of Foreclosure Action

Plaintiff bank moved for summary judgment and an order of reference in this action to foreclose a mortgage on an owner-occupied, two-family dwelling. Mitchell cross-moved to dismiss the action alleging bank's failure to serve him with RPAPL §1303 notice. Bank's process server alleged he personally served Mitchell with the §1303 notice when he served the summons and complaint, stating same was effectuated at Mitchell's residence. Mitchell's affidavit averred he was never personally served with §1303 notice or the summons and complaint, stating at the time the process server allegedly served papers, Mitchell was more than one mile away from the home at a local store. The court stated as Mitchell submitted admissible proof controverting the process server's affidavit, the matter was referred for a traverse hearing, and the special referee concluded service of process was not properly effectuated on Mitchell. It found no merit to bank's claim Mitchell waived bank's noncompliance with §1303, noting a lender's failure to comply with §1303 was not an affirmative defense that a defendant to a foreclosure action was required to assert in an answer. Therefore, Mitchell's cross-motion to dismiss was granted and the motion denied.

Read more: http://www.newyorklawjournal.com

THE 90-DAY NOTICE REQUIREMENT EXTENDS THE STATUTE OF LIMITATIONS

New York’s RPAPL 1304 requires that prior to the commencement of a foreclosure action, a notice must be given to the borrower allowing 90 days to cure the default before the plaintiff is allowed to file the summons and complaint.

However, it is often the case that the Statute of Limitations is about to expire during this 90-day period, and servicers are often concerned that if they wait the 90 days to comply with the 90-day notice requirement imposed by RPAPL 1304, the Statute of Limitations will expire. Those who are unaware of CPLR 204A may, therefore, be tempted to initiate the action without first complying with RPAPL 1304.

This is a big mistake, as the failure to comply with RPAPL 1304 will cause the foreclosure to be fatally defective, and the action to be dismissed. (See my prior article - Recent Decisions Regarding New York’s Pre-Foreclosure Requirements).

New York’s CPLR 204A, however, expressly provides “Where the commencement of an action has stayed by a court or by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced.”  Furthermore, when New York State’s Court of Appeals, New York's highest court, decided the case Archer v. New York City Transit Authority, they expressly ruled that CPLR 204A extends the Statute of Limitations by the amount of time during which Plaintiff has stayed from commencing the action.

Accordingly, banks and servicers should meticulously comply with the requirements of RPAPL 1304, wait to file the summons and complaint until after the 90 days has expired, and take comfort in the extension granted by CPLR 204A. 

This Story is from Peter T. Roach & Associates, P.C. click here to view their blog.

Brooklyn Supreme Court Justice Arthur Schack Dies

Andrew Denney, New York Law Journal

May 4, 2016

Brooklyn Supreme Court Justice Arthur Schack, who attracted attention during his tenure for taking a hard line against banks seeking to evict New Yorkers from their homes through foreclosure, died on Monday after a lengthy battle with anemia. He was 71.

Schack was born and raised in the Bensonhurst section of Brooklyn. He obtained a bachelor's degree from Brooklyn College in 1966 and a master's degree from Indiana University in 1968.

For more than a decade after obtaining his master's, Schack worked as a high school social studies teacher in the Bay Ridge section of Brooklyn and was active with the United Federation of Teachers during that time.

In 1980, Schack obtained his J.D. from New York Law School and left teaching. From 1983 to 1998, he served as a member of Community Board 10. He was also active in Democratic politics.

"Artie was kind of a Renaissance man," said Joseph Bova, Democratic district leader for the 49th Assembly District and a member of the Stars and Stripes Democratic Club, of which Schack was a member before he became a judge.

An avid baseball fan, Schack worked as counsel to the Major League Baseball Players Association from 1982 to 1998. He was elected to the Brooklyn Civil Court in 1998 and to the Supreme Court in 2003.

Justice Lawrence Knipel, the administrative judge for civil matters in Brooklyn Supreme Court, said in an interview that, as a jurist, Schack could be relied upon to handle difficult cases.

"He never said no to an assignment and he was known for taking on some of the toughest cases," Knipel said.

Additionally, Knipel said, Schack was known for penning colorful opinions that "grabbed readers' attention" with alliteration or allusions to Shakespeare.

Schack made national news for his tough stance against banks and lenders in foreclosure proceedings, rejecting petitions with shoddy or incomplete paperwork. In 2011, he issued a ruling ordering HSBC Bank executive to appear for a sanctions hearing.

"He wasn't afraid to take a principled stand on anything," Knipel said, noting that some Schack's decisions in foreclosure cases were later reversed by the Appellate Division, Second Department.

Arthur Aidala, president of the Brooklyn Bar Association and a partner at Aidala Bertuna & Kamins who was a longtime friend of Schack's, said that Schack's decisions could be controversial, but that the judge was more concerned with doing what he felt was right rather than what he thought would be popular when weighing in on an issue.

"A practitioner like myself had the utmost respect for a judge who does what he or she thinks is right," Aidala said.

Schack is survived by his wife Dilia; his daughter Elaine, who is a court attorney in Brooklyn; and his son, Douglas.

A visitation will be held Wednesday from 11 a.m. to 11:45 a.m. at Shermans Flatbush Memorial Chapel, 1283 Coney Island Ave., and a funeral will be held at noon.

Thereafter, interment will take place at the Green-Wood Cemetery in Brooklyn.

The family will be sitting Shiva at 8903 Ridge Blvd., from 6 to 9 p.m. on Wednesday; from 1 to 8 p.m. on Thursday; and from 11:30 a.m. to 2 p.m. on Friday.

Goldman Sachs to pay $5 billion in U.S. Justice Dept mortgage bond pact

Goldman Sachs Group Inc (GS.N) has agreed to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis, the U.S. Department of Justice said on Monday.

The settlement, which Goldman disclosed in January, stems from the firm's conduct in packaging, securitization, marketing and sale of residential mortgage-backed securities between 2005 and 2007, the Justice Department said.

Investors suffered billions of dollars in losses from the securities bought during the period, the department said.

The settlement comprises a $2.385 billion civil penalty and $1.8 billion in other relief, including funds for homeowners whose mortgages exceed the value of their property, as well as distressed borrowers. It also preserves the government's ability to bring criminal charges against Goldman and does not release any individuals from potential criminal or civil liability, the Justice Department said.

In addition, Goldman will pay $875 million to resolve claims by the New York and Illinois attorneys general, the National Credit Union Administration and the Federal Home Loan Banks of Chicago and Seattle.

A state and federal working group formed to investigate wrongdoing in the pre-financial crisis mortgage-backed securities market negotiated the settlement, said New York Attorney General Eric Schneiderman.

The group has reached settlements with five other major financial institutions since 2012: J.P. Morgan Chase (JPM.N) ($13 billion), Bank of America (BAC.N) ($16.6 billion), Citibank (C.N) ($7 billion) and Morgan Stanley (MS.N) ($3.2 billion).

"We are pleased to put these legacy matters behind us," a Goldman spokesman said in a statement. "Since the financial crisis, we have taken significant steps to strengthen our culture, reinforce our commitment to our clients, and ensure our governance processes are robust," he said.

For example, Goldman's due diligence for one issue of 2006 mortgage-backed securities showed that some of the loan pools reflected an “unusually high” percentage of loans with credit and compliance defects, the Department said.

"How do we know that we caught everything?" asked a Goldman committee tasked with reviewing and approving mortgage-backed securities, according to the Justice Department. "We don't," a Goldman manager said.

"Depends on what you mean by everything? Because of the limited sampling... we don’t catch everything,” another Goldman manager said.

Still, the committee approved the securities without requiring additional due diligence, said the Justice Department, which did not identify those involved.

FOR THE FULL ARTICLE CLICK  HERE

FTC Brings Action Against Debt Relief Operation that Targeted Financially Distressed Homeowners and Student Loan Borrowers

The Federal Trade Commission has charged a debt relief operation with falsely representing to financially distressed homeowners and student loan borrowers that it would help get their mortgages and student loans modified. At the FTC’s request, a federal court has temporarily halted the operation. The agency seeks to permanently stop the alleged illegal practices and obtain refunds for affected consumers.

According to the FTC’s complaint, Good EBusiness LLC, using the name The AAP Firm, and Tobias West deceptively marketed home loan modification services and illegally charged an advance fee of between $1,000 to $5,000. The agency alleges that the defendants falsely claim that they can lower consumers’ monthly mortgage payments, often quoting a specific amount, and reduce their mortgage interest rates, usually within a few months, and falsely promise full refunds if they fail. They told consumers, many of whom were current on their mortgage payments, to stop making payments to, and communicating with, their lenders during the purported loan restructure process, without providing disclosures required by the Mortgage Assistance Relief Services Rule (MARS Rule) and Regulation O, according to the complaint.

The FTC’s complaint also alleges that Good EBusiness, using the names Student Loan Help Direct and Select Student Loan; Select Student Loan Help LLC; Select Document Preparation Inc.; and Tobias West and his wife, Komal West, illegally charged an advance fee of $500 to $800 for purported student loan relief services. According to the complaint, the defendants falsely told financially distressed borrowers – including some who were at risk of delinquency or default and already subject to seizure of their tax refunds or wage garnishment –  that they would renegotiate, settle or alter payment terms on their student loan debt, and remove tax liens and wage garnishments, or they would fully refund the fees if they failed.

Good Ebusiness and Tobias West are charged with violating the FTC Act and the MARS Rule/Regulation O. All of the defendants are charged with violating the FTC Act and the Telemarketing Sales Rule.

To learn more, click here.

Brooklyn Supreme Court faces backlog of nearly 12,000 foreclosure cases in the hands of just three judges

Newly elected Supreme Court Judge Noach Dear is one of three judges dealing with thousands of foreclosure cases clogging the courts. Nearly a decade after the start of America’s historic housing crash, the nightmare continues for forgotten homeowners behind in their mortgage.

The list of pending home foreclosures before Brooklyn Supreme Court Justice Noach Dear on Tuesday morning was enough to take your breath away. Around 11:30 a.m., a clerk in Dear’s packed courtroom at 360 Adams St. announced the cases still to be heard. There was Bank of America vs. Vazquez, Bank of New York vs. Antigone, Citi Mortgage vs. Green, Deutsche Bank vs. Paz, Federal National vs. Castro, HSBC Bank vs. Ambrose, JPMorganChase vs. Roberts, PennyMac vs. Acevedo, Wells Fargo vs. Hamilton —more than 65 in all.

But lawyers and advocates for distressed homeowners say Dear’s courtroom has become a prime example of a new “assembly line” approach to justice by the Brooklyn court system. At separate tables in the front, two law clerks convened a steady string of meetings with contending parties while the judge looked on.“You should see how busy this place gets on Thursdays and Fridays,” said Dear, who is overseeing nearly 6,500 foreclosure cases all by himself.

Dear rarely holds a hearing with a court stenographer present to make a formal record of the proceedings. He simply oversees the meetings his clerks hold.

In January, Lawrence Knipel, the administrative judge for Kings County’s civil division, suddenly consolidated the borough’s enormous backlog of nearly 12,000 foreclosure cases in the hands of just three judges, with Dear getting more than half of them. Previously, those cases had been spread among more than 25 judges who also heard other kinds of cases.“The old way wasn’t working,” Knipel told the Daily News. That’s because foreclosures have mushroomed into more than a third of all civil cases in New York state courts. More than 41,000 new ones were filed statewide last year. That’s not a whole lot less than the 47,000 filed at the height of the housing collapse in 2009.

And more the 60% of the state’s foreclosure cases are concentrated in four downstate counties, including Brooklyn and Queens. 

Along one wall of Dear’s courtroom, a row of 10 big metal cabinets are filled with case documents. Mountains of newly arriving files are piled on top. “We get a truckload of these every day, and we’re handling it,” said Dear, who has scheduled an average of 100 cases a day.“My goal is to issue decisions on all motions within two weeks of their being filed,” Dear said. But such rapid justice is dangerous, says Jacob Inwald of Legal Services NYC.

In a letter signed by a dozen legal advocacy groups, Inwald warned that he saw no way “three judges can possibly handle this volume of cases without either causing unimaginable delays” or “reverting to a rubber-stamp process … in which robosigned pleadings and motion papers once again become the norm.” 

Knipel and Dear reject such criticism.“If I have to make a decision on the spot, I make it on the spot,” Dear said. “But I’m going to be fair to everyone. I’m very big on customer service. Everyone will be respected in my courtroom.” 

Under the old system, Knipel noted, some judges were allowing cases to drag on for years. “Nobody likes to foreclose on people’s homes, so things don’t get done,” Knipel said. “The most efficient way to handle this matter is to do it by dedicated parts.”

The advocates agree that assigning a group of judges to solely handle foreclosures is a good thing. But three is hardly enough, they say. “There are nearly 50 judges in Brooklyn’s civil division,” one lawyer said. “Why assign a third of the court’s entire caseload to just a few judges?”

Knipel appeared to be listening. “I’ll soon be adding a fourth judge,” he said, and acknowledged he might make other changes to the new approach. “That’s why they make erasers on the back of pencils,” he said. “We have to constantly reexamine what we’re doing, and be open to change.”

For the full NY Daily News Article   Click Here

Consolidation of Brooklyn Foreclosure Cases Leads to Concern

Advocates for homeowners are concerned that consolidating about 12,000 Brooklyn foreclosure cases under three judges could bring more delays or compromise the quality of adjudication.

Though motions for summary judgment, default judgment and orders of reference had previously been spread out among 27 judges, Justice Lawrence Knipel, the administrative judge for civil matters in Brooklyn Supreme Court, decided last month to funnel the cases to Justices Noach Dear, Mark Partnow and Acting Justice Peter Sweeney.

Dear will handle foreclosure matters exclusively, while the other two justices will have their motion practice focused on foreclosures but will continue their trial work.

"If the existing amount of work for 25 judges is now concentrated among three, how is the work going to get done without either impairing quality of work or grinding things to a halt?" asked Jacob Inwald, director of foreclosure prevention for Legal Services NYC.

In support of the reassignments, Knipel noted how more than a year ago, he consolidated all guardianship matters with one judge. Supreme Court Justice Leon Ruchelsman brought about 450 cases to an annual or final accounting last year, compared with the approximately 250 cases that six judges resolved in years past.

"It works when you have dedicated people," Knipel said, later adding that he was "more than reasonably confident we're going to see significant improvement."

Spurred by Chief Judge Janet DiFiore's call for "objective, self-critical analysis" of court operations, Knipel said foreclosure motions have been "substantially slowed" because of the competing caseloads of the 27 judges in the Individual Assignment System.

Each IAS justice in Brooklyn at any moment has about 2,000 cases where they oversee motion practice, plus their trial work.

Out of Brooklyn Supreme Court's roughly 54,000 pending civil cases, Knipel said about 11,800 are foreclosures.

As result, Dear, who had overseen consumer debt cases in Civil Court before his election to Supreme Court, now has more than 6,000 residential foreclosure cases but no other assignments.

Knipel acknowledged consumer debt cases are a "different animal" than foreclosure cases. But he said Dear has "demonstrated an ability to manage a large calendar."

Sweeney is taking on about 2,000 of the oldest residential foreclosure cases, which are seven to nine years old. Partnow is being assigned the remaining non-residential, non-commercial cases.

Six other judges will resolve motions, which can require hearings, such as homeowner claims that lenders negotiated without good faith.

If a lack of good faith is found, the judge will keep the case through disposition. If not, the case will go back to Dear.

Knipel said he was open to revisiting the plan as it unfolds.

But attorneys for homeowners are wary.

"It is work to decide motions. It is work to conference cases. Human time is finite," Inwald said, noting that delays ultimately mean a larger debt incurred by the homeowner. "Time is definitely money in this context. The harm is very, very real."

TO READ THE FULL STORY BY: Andrew Keshner of the New York Law Journal- CLICK HERE.

Morgan Stanley To Pay $3.2B To Settle US Mortgage Claims

Morgan Stanley has agreed to pay $3.2 billion to settle civil allegations the New York-based bank misled customers about the quality of mortgage-backed securities that soured during the nation's financial crisis, federal and state officials said Thursday.

The settlements mark the latest in a string of penalties against major banks as the U.S. Department of Justice and state attorneys general complete investigations into evidence the financial institutions' marketing and sales practices helped fuel the crisis.

“Morgan Stanley touted the quality of the lenders with which it did business and the due diligence process it used to screen out bad loans.  All the while, Morgan Stanley knew that in reality, many of the loans backing its securities were toxic," said acting U.S. Attorney Brian Stretch of California's northern federal district.

Morgan Stanley said its previous financial set-asides for the settlements would prevent the payments from affecting the bank's 2016 earnings. "We are pleased to have finalized these settlements involving legacy residential mortgage-backed securities matters," the bank said.

The bank in February 2015 said it had reached agreement in principle on a $2.6 billion settlement resolving mortgage-related claims by DOJ's Civil Division and federal prosecutors in California. But the settlement, which affected the bank's fourth-quarter 2014 earnings, wasn't immediately finalized amid negotiations on documentation outlining the bank's conduct.

The new agreements cover the bank's handling of residential mortgage-backed securities between 2005 and 2007, just before the financial crisis erupted. A statement of facts issued with the settlements said Morgan Stanley failed to tell investors that some of the mortgages "did not comply with underwriting guidelines" or "had understated loan-to-value ratios." Additionally:

• A Morgan Stanley valuation due diligence official sent a June 2006 email that warned a colleague not to mention that some mortgage-backed securities the bank marketed to investors had "slightly higher risk tolerance." The official added: "We are running under the radar and do not want to document these types of things."
  
• A July 2006 email from the bank's due diligence team to a bank official included a list of problem loans and said: "I assume you will want to do your 'magic' on this one?"
  
• An email from a loan originator about an October 2006 loan pool urged a Morgan Stanley employee to "[p]lease, Mitigate, mitigate, mitigate!!!" a reference to the process the bank used to decide whether higher-risk loans should be packaged in  mortgage securities.

The settlement includes $550 million for New York, $400 million worth of consumer relief and $150 million in cash, said New York Attorney General Eric Schneiderman. He said the penalties would "deliver resources to the families and communities that need them the most, while helping New Yorkers avoid foreclosure, and spurring the construction of more affordable housing."

Other major U.S. banks that negotiated settlements over similar mortgage-related misconduct paid even higher penalties in recent years.

FOR THE FULL STORY CLICK HERE

HSBC Reaches $470M Deal With US, States Over Banking Abuses

Banking giant HSBC has reached a $470 million settlement with the federal government and nearly all states over mortgage lending and foreclosure abuses that officials say contributed to the country's economic meltdown, the Justice Department announced Friday. 

 The agreement requires the bank to pay $100 million and to provide an additional $370 million in consumer relief to borrowers and homeowners, including reducing mortgage interests rates as well as the principal on mortgages for homeowners who are at risk of default. The deal also requires the bank to improve standards for how it services loans and handles foreclosures. 

 Officials say those changes are intended to discourage past banking practices, such as robosigning and poor-quality loans, that played a part in the financial crisis starting in 2007 in which millions of Americans lost their homes to foreclosure. "This settlement illustrates the department's continuing commitment to ensure responsible mortgage servicing," Benjamin Mizer, head of the Justice Department's Civil Division, said in a statement. "The agreement is part of our ongoing effort to address root causes of the financial crisis." 

 The settlement involves the departments of Justice and Housing and Urban Development and the Consumer Financial Protection Bureau. Attorneys general from 49 states plus the District of Columbia signed on. The $100 million payment will go to the federal government and to an escrow fund administered by the states to make payments to borrowers who lost their homes to foreclosure between 2008 and 2012. 

The $370 million in relief to homeowners already is flowing, the Justice Department said. An independent monitor will also be appointed to oversee the bank's compliance with the settlement terms. The civil settlement includes no criminal penalties, though the Justice Department says the state and federal government still have the option of pursuing criminal enforcement.

The full story can be found here: http://abcnews.go.com

Wells Fargo officially reaches $1.2B settlement over its FHA lending

The Settlement Resolves claims for the time period between 2001-2010

NEW YORK -- San Francisco bank Wells Fargo Wednesday said it has agreed to fork over $1.2 billion to settle allegations that it fraudulently certified loans in connection with a government insurance program.

In a 2012 lawsuit, the U.S. government accused Wells Fargo of sticking it with "hundreds of millions of dollars" in Federal Housing Authority insurance claims as a result of years of "reckless" underwriting and fraudulent loan certification.

As a result, FHA had to pay out insurance claims on thousands of FHA-insured mortgages that defaulted, the government said.

On Wednesday, Wells Fargo said it had "reached an agreement in principle" with the parties that brought the complaint, including the U.S. Department of Justice, the U.S. Manhattan Attorney’s Office the U.S. Attorney’s Office for the Northern District of California, and the U.S. Department of Housing and Urban Development.

The settlement is expected to retroactively ding the bank's 2015 net income by $134 million, or 3 cents a share, to $22.9 billion, or $4.12 a share, the bank said.

The lawsuit alleged that Wells Fargo recklessly underwrote loans backed by FHA insurance from at least 2001 to 2010.

In that time, the bank certified over 100,000 FHA loans as meeting HUD’s requirements and therefore eligible for FHA insurance, even though the loans had not been properly underwritten and did not meet HUD’s requirements, the lawsuit said.

Wells Fargo also internally identified 6,558 seriously deficient loans that it was required to self-report. But rather than reporting the loans as required, the bank concealed 6,320 of these improperly certified loans, the government alleged.

Eight years after the mortgage meltdown of 2008, big banks continue to pay hefty fines for their alleged contributions to the crisis, including faulty underwriting and their handling of risky mortgage-backed securities, or loans bundled and then sold in slices to investors.

Last month, Goldman Sachs announced a $5.1 billion tentative settlement of a federal and state investigation of the investment for its handling of mortgage-backed securities leading up to the financial crisis.

THE FULL ARTICLE CAN BE FOUND HERE: http://www.usatoday.com

Should You File for Bankruptcy Before or After Foreclosure?

Should You File for Bankruptcy Before or After Foreclosure?

by: Kathleen Michon, J.D.

Deficiency After Foreclosure: When You Owe Money After the Foreclosure Sale

When a house is sold in foreclosure, the price at which the home is sold is often much less than the outstanding amount of the mortgage. This is especially true these days, when home prices are depressed throughout the U.S. The difference between the amount owed on the mortgage and the foreclosure sale price is called the “deficiency.” (Some states cap the amount of the deficiency to the difference between the property’s fair market value and the foreclosure sale price.)

Can the Lender Collect the Deficiency?

Whether your lender can come after you for the deficiency depends on the state you live in. Some states, including California, bar lenders from going after borrowers for a deficiency if the underlying mortgage was secured by the borrower’s principal residence. In most nonjudicial foreclosure states (states that allow lenders to pursue foreclosure without suing the borrower in court) and a few judicial foreclosure states (states that require lenders to sue borrowers in court before foreclosing), lenders have the right to recover a deficiency only if they file a separate lawsuit against the borrower. Because of the expense (and because borrowers who lose their homes in foreclosure often don’t have much in the way of income or assets), lenders frequently forego this right. (To find out what the law is in your state, see the Mortgage Deficiency Laws topic page and the article on Anti-Deficiency Laws.)

You May Owe Taxes if Your Lender Forgives the Deficiency

If your lender doesn’t pursue you for the deficiency and instead cancels the debt, in the eyes of the IRS you have just received taxable income. As far as the IRS is concerned, you once owed a certain amount of money (say, $20,000); you now no longer owe the $20,000; therefore, you’ve received a windfall of $20,000. You will have to pay income tax on that forgiven debt unless you qualify for one of two exceptions: the Mortgage Debt Relief Act of 2007 exception or the insolvency exception.

The Mortgage Debt Relief Act of 2007 is a federal law that excludes from taxable income forgiven debt that was (a) taken out to buy, build, or substantially improve the borrower’s principal residence (or to refinance a mortgage taken out to buy, build, or substantially improve the borrower’s principal residence), and (b) secured by the borrower’s principal residence. The maximum amount of forgiven debt that can be claimed under this exception is $2 million (or $1 million if you’re married but you file separately). This exclusion only applies to loans taken out during the calendar years of 2007 through 2013. (Congress is currently considering a bill which would extend that through 2015.) For more details and updates on this Act, see Nolo's article Canceled Mortgage Debt: What Happens at Tax Time?

To qualify for the insolvency exception, you must show the IRS that you were insolvent when the debt was cancelled. You were insolvent if the total of all of your liabilities was greater than the total of all of your assets

To learn more about the Mortgage Debt Relief Act of 2007 and insolvency exceptions, visit the IRS website at www.irs.gov and search for “mortgage debt forgiveness” and “publication 4681.”

Will the Deficiency Be Discharged in Bankruptcy?

Filing for bankruptcy will eliminate some but not all of your debts. If your lender comes after you for the deficiency, and you file for bankruptcy afterwards, bankruptcy will wipe out the deficiency debt. On the other hand, if your lender forgives the deficiency before you file for bankruptcy, and you don’t qualify for any of the exceptions that would exclude the cancelled debt from your taxable income, filing for bankruptcy afterwards will most likely be of no help in eliminating your tax debt.

If you file for bankruptcy before foreclosure, your mortgage debt will be discharged. (Although the lien will remain, which means that if you default on payments, the lender can still foreclose.) Because there is no longer any mortgage debt, after the foreclosure sale there will be no deficiency and no tax liability for any cancelled deficiency debt.

Another Benefit of Filing for Bankruptcy Before Foreclosure

As soon as you file for bankruptcy, an order called an “automatic stay” is issued by the court. The automatic stay prohibits your creditors from pursuing any collection activities, including any action related to a pending foreclosure. While your bankruptcy winds its way through the court system, which could take three or four months, you have the opportunity to build up your savings by living in your home without paying any mortgage or rent.

Your lender has the right to ask the bankruptcy court to lift the automatic stay and allow them to go forward with the foreclosure. Nowadays, with the glut of foreclosed homes on the market, many lenders are foregoing this right and waiting for bankruptcy cases to conclude before continuing with foreclosures.

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Vacant 'zombie' houses to get regular inspections and upkeep

STATEN ISLAND, N.Y. -- If you live near a vacant home, a lack of maintenance can lead to a "zombie" nightmare, lowering property values as it creates safety and health hazards.

Beginning this month, relief is on the way for neighbors of some of these properties that are in protracted foreclosure proceedings on Staten Island and across New York State.

Vacant residential homes with first-lien mortgages will get greater attention from 13 banks, mortgage companies and credit unions -- including Wells Fargo, Bank of America and Citi Mortgage -- that have agreed to adopt "best practices" to combat blight from properties whose loans they service.

Combined, the 13 financial institutions represent about 70 percent of the state's loan-servicing market, according to the state Department of Financial Services.

The best practices that these institutions will implement include the following:

• The companies will conduct an exterior inspection of a property within 60 days of delinquency to determine vacancy and abandonment, and then every 30 days thereafter.

• If the property is determined to be vacant and abandoned, the bank or mortgage company will secure each unit at the property by changing the lock, replacing or boarding up windows, posting the property with contact information, and eliminating other safety hazards.

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  Then, on an ongoing basis, the bank or mortgage company will monitor the property's condition to ensure it remains secure and that it complies with applicable provisions of the New York maintenance code (for example, the grass must be cut, and conditions at the property must be safe and sanitary).

• The companies will also report properties determined to be vacant and abandoned to a state registry that will be developed by the Department of Financial Services, which will share that information with local government officials. The department will work with those local officials to address concerns about maintenance with the bank or mortgage company servicing the loan.

• After these best practices are adopted and the registry has been created, participating companies will notify the Department of Financial Services of any new properties they have determined to be vacant and abandoned, and the agency will share this information with local officials across the state.

Under existing law, banks and mortgage companies are not required to maintain vacant and abandoned properties until they receive a judgment of foreclosure, often three years or more after filing for foreclosure, the Department of Financial Services explains. It is during this limbo period that some properties fall into disrepair.

HOW TO COMPLAIN ABOUT A 'ZOMBIE'

The Department of Financial Services will accept complaints from neighbors and local officials about vacant properties, and the agency says that its Mortgage Assistance Unit will work with the applicable bank or mortgage company to resolve issues raised in any complaint.

Complaints can be submitted online at http://www.dfs.ny.gov/consumer/fileacomplaint.htm

Here is the list of financial institutions participating in the best-practices initiative:

• Astoria Bank
• Bank of America
• Bethpage Federal Credit Union
• Carrington Mortgage
• Citi Mortgage
• First Niagara
• Green Tree Servicing
• M&T Bank
• Nationstar
• Ocwen
• PHH
• Ridgewood Savings Bank
• Wells Fargo

The full article can be found here: Silive.com.