| During the past several years, the New York | | | | affirmative defense, that the lender failed to comply |
| legislature passed new laws that are intended to | | | | with the special summons requirement applicable to |
| provide additional protections to homeowners who | | | | foreclosure cases. The filing of an answer form in |
| are facing the threat of mortgage foreclosure. These | | | | response to a foreclosure complaint will ensure that |
| legislative changes are intended to protect owners of | | | | the dismissal of a lender's summons and complaint |
| residential properties by requiring that additional | | | | which fails to include the new, mandatory warnings. |
| notices be sent to homeowners both before and | | | | In the alternative, a homeowner may assert his or |
| during the foreclosure process. The underlying goal is | | | | her rights under the new law by filing a motion to |
| to decrease the number of properties lost through | | | | dismiss the foreclosure action. |
| foreclosure by ensuring the homeowners are aware | | | | While it may seem obvious that a foreclosure action |
| of their rights to file answers in response to | | | | can result in the loss of the subject property, the |
| foreclosure complaints. The notice requirements have | | | | reality is that historically, many homeowners do not |
| been strictly interpreted by the courts, and have | | | | file answers to foreclosure complaints. With the new |
| resulted in the dismissal of foreclosure actions that | | | | laws, the legislature and courts seek to emphasize |
| were filed by lenders who did not comply with the | | | | the need for homeowners to take quick action by |
| specific dictates of the new laws. | | | | filing and serving an answer to the foreclosure |
| In 2008, the New York Legislature amended the Real | | | | complaint. The hope is to give homeowners, |
| Property Action and Proceedings Law (known as the | | | | particularly those who are burdened with subprime |
| "RPAPL") to require that a 90-day notice be sent to | | | | loans, a chance to stop foreclosure and reach an |
| residential borrowers for high-cost, subprime or | | | | alternative solution not involving the loss of their |
| non-traditional loans. Under the 2008 amendment, | | | | properties. |
| 90-days notice is a perquisite to the filing of a | | | | The foregoing RPAPL amendments are just a few of |
| mortgage foreclosure proceeding, and it applies to | | | | the various statutory provisions that have been |
| subprime loans that were consummated between | | | | enacted to protect residential property owners in |
| January 1, 2003 and September 1, 2008. The | | | | New York from the loss of their homes in |
| foregoing time-period is clearly intended to cover the | | | | foreclosure. In addition to the new foreclosure |
| period during which it is believed that the most | | | | defense legislation, the courts in New York have |
| abusive lending practices occurred. The statute | | | | become increasingly vigorous in ensuring that |
| defines non-traditional loans as those which are | | | | homeowners actually receive the required |
| interest-only and/or have variable rates. Under the | | | | notifications. Judges have not hesitated to dismiss |
| statute, "subprime loans" are those with interest | | | | foreclosure cases that were filed in violation of the |
| rates above a certain threshold, which is determined | | | | new laws. The key is for a homeowner to actually |
| based on a formula that is set forth in the statute. | | | | answer a foreclosure summons and complaint, |
| Most recently, in November, 2009, the New York | | | | thereby ensuring that the lender's complaint is subject |
| legislature voted to extend the 90-day notice | | | | to the judicial scrutiny. In this manner, homeowners |
| requirement to all types of home loans - not just | | | | have the chance to stop foreclosure. |
| subprime mortgages. The bill also gives protections to | | | | As a result of the changed laws and procedures, |
| renters living in foreclosed properties, allowing them | | | | homeowners are more likely to succeed in their |
| to stay in their homes for the full 90-day notice | | | | efforts to defend against the loss of their homes |
| period or the length of their leases, whichever is | | | | through foreclosure. Although the foreclosure crisis in |
| longer. The legislature also enacted new requirements | | | | New York is not as severe as in some states (e.g. |
| relating to summonses that are served in foreclosure | | | | Nevada and Florida), the statistics give ample cause |
| cases. RPAPL § 1320 is labeled "Special | | | | for concern. As of November, 2009, it is estimated |
| summons requirement and private residential cases." | | | | that 12% of New York homeowners are delinquent in |
| This section requires that a particular notice be | | | | their mortgage payments. Meanwhile, New York |
| included in the summons in residential foreclosure | | | | suffers from a 9% unemployment rate, giving reason |
| cases of three units or less. The notice consists of a | | | | to believe that the rate of foreclosures will continue |
| warning to the borrower that a default in answering | | | | to be high. Thus, the defensive measures enacted in |
| could lead to the loss of the borrower's home. The | | | | New York represent an effort to deal with an |
| precise text that must be included in the summons is | | | | ongoing crisis that shows no sign of abating in the |
| set forth in the statute. | | | | near future, and which will continue to affect |
| When filing an answer to a mortgage foreclosure | | | | individuals and neighborhoods throughout the state. |
| complaint, a homeowner should assert, as an | | | | |