NEW YORK MORTGAGE FORECLOSURE - THE SHADOW DOCKET

From the AG's website, a press release from yesterday:

"MINEOLA — Attorney General Eric T. Schneiderman and New York State Senate Majority Coalition Leader Jeff Klein today highlighted the "Certificate of Merit" bill (A. 5582) and the Foreclosure Fraud Prevention Act (A.7395), two important pieces of legislation to protect New York homeowners facing foreclosure. Both bills passed the New York State Assembly last week, and will be soon be decided on by the New York State Senate. Many homeowners in New York are still fighting to stay in their homes, and these bills would ensure that families are protected from careless, or irresponsible, or even criminal behavior."

The full press release can be found here:

http://www.ag.ny.gov/press-release/ag-schneiderman-senate-majority-coalition-leader-klein-highlight-foreclosure-relief

The Certificate of Merit bill is interesting. As stated in the press release:

"Kristen Brown Lilley, Director of Policy Advocacy at the Empire Justice Center, said, “This bill addresses a real problem for homeowners who are stuck in legal limbo because lenders aren’t filing the required paperwork. If enacted, foreclosure cases will move more swiftly through the foreclosure process, giving homeowners a better chance of saving their homes, and returning vacant properties to the housing market more quickly.”

Homeowners' foreclosure cases regularly languish for months, or even years, when financial institutions delay in filing critical paperwork that affirms the basis for the foreclosing bank's right to foreclose on the property and ultimately triggers a settlement conference – the mandatory process under New York law that provides borrowers an opportunity to negotiate alternatives to foreclosure, such as loan modifications or short sales.

The delays and subsequent backlogs, often referred to as the “shadow docket,” have become a major burden on both homeowners and the judicial system. This legislative fix will require banks to file the necessary paperwork, which ultimately triggers the settlement conference, simultaneously with the filing of any foreclosure action, thus avoiding future delays. The Office of Court Administration issued a report in July of 2012 which found that 25,000 families are trapped in this legal foreclosure limbo."

However, for some homeowners in foreclosure this can also be bad news: the elimination of the shadow docket will greatly minimize foreclosure defense tactics by attorneys as there are some homeowners that wish to remain in their "unaffordable" home for as long as possible.