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Articles by Peter T. Roach

Located in Syosset, NY, Peter T. Roach & Associates, P.C. has the most experienced professionals in real estate, litigation, foreclosure, and bankruptcy law. Our vast knowledge and experience allow us to effectively take on any case. We do everything we can to better serve our clients and exceed their expectations! To learn more about our practice, please read some interesting articles about New York debt collection and real estate law.

Friday
Sep122014

New York’s Statute of Limitations - Another Pitfall to Avoid!

New York’s Statute of Limitations ("SOL") is designed to protect homeowners from the unfairness that might otherwise result from foreclosures concerning defaults that occurred so long ago that the homeowner may no longer possess documents, evidence or proof of payments made.

CPLR 213 provides that actions to enforce contracts (such as Notes and Mortgages) must be commenced within six (6) years, or the defendant may raise the affirmative defense that the SOL has expired and the case will be forever dismissed.

There are, however, exceptions to this rule, such as the following:

  • Each payment required is considered a separate cause of action, so unless the entire balance has been accelerated, only those payments that were due more than six years ago are barred.
  • Each time the borrower submits a payment, the six (6) years begin to run anew.
  • If the borrower files a bankruptcy petition, the SOL is tolled during the time bankruptcy is pending. 

  • If the borrower signs a written document (including Forbearance Agreements, Loan Mods, or even correspondence) acknowledging the debt, the six (6) years will begin to run anew from the date of this acknowledgment.

Furthermore, pursuant to CPLR 205(A), if an action is dismissed for any reason, other than the four (4) exceptions listed below, a party may commence a new action within six (6) months of the dismissal even though the SOL may have expired. The exceptions are dismissals based upon:

  1. Lack of jurisdiction

  2. The merits of the case

  3. Voluntary dismissal

  4. Failure to prosecute

Therefore, it is crucial to avoid voluntary discontinuing a foreclosure if a SOL issue exists! If you discover a procedural defect in a foreclosure action, but the SOL has expired while it was pending, DO NOT discontinue the defective foreclosure voluntarily, but wait for the Court to do so to ensure that a new foreclosure can be commenced in the next six (6) months. (And don’t forget that you may need to send a new 90 Day Notice, per RPAPL 1304)

As a result of the “extended timeline” in New York, SOL issues are becoming more and more “routine.” Be careful not to handle them routinely, however, or you may discover a whole new meaning for SOL!


Peter Roach
Peter T. Roach & Associates, P.C.

 

 

Tuesday
Aug192014

Judgment Enforcement: What’s in your debtor’s wallet?

Many litigation attorneys are very good at what they do - winning cases and obtaining judgments. But once they obtain a judgment, their clients are not always voluntarily paid what they have been awarded, and the judgment must be enforced. In order to do so, the debtor’s assets must first be located so enforcement proceedings can commence.

As collection attorneys, we are often retained after judgments have already been obtained, since the attorney for the judgment creditor usually does not possess the expertise or the necessary resources to locate debtor’s assets. Since we typically charge contingency fees, ranging from 13.5% - 25% of the amounts actually recovered, there are no fees to be paid unless we collect funds due!

Our skip tracers utilize our “waterfall resources” and custom proprietary software to locate bank accounts and identify employment of debtors, while our collectors try to negotiate settlements during the enforcement process.

Our “waterfall resources” include numerous databases that our skip tracers use to locate bank accounts and places of employment for individual debtors or guarantors. Debtor’s employment can be identified by searching through websites of local, state and federal government and utilizing numerous asset search vendors for privately employed debtors. Once a debtor’s place of employment is identified, we issue a Wage Garnishment to a Marshal or Sheriff.

Our custom proprietary software enables us to compare our debtor’s information with the information contained in the databases of the major banks. Once a “match” is identified, we issue a Restraining Notice to “freeze” it so that the debtor may no longer make withdrawals from that account. This often results in a telephone call from the debtor asking us to release the account and offering to pay most or all of the judgment in exchange for this release. Additionally, we also send “paper restraining notices” to smaller banks.

Finally, although we are only allowed to send “information subpoenas” to those banks which we have reason to believe has information regarding our debtor, when a bank acknowledges that they do, in fact, have an active account, we serve them with an information subpoena to obtain further information about the debtor's place of employment and other assets he or she possess.

While the enforcement of a judgement can easily be done by any lawyer if he or she knows exactly where the debtor's assets are located, the difficult task is to find this information. The investment to be able to do so, both in time and money, however, is quite substantial, which is why collection lawyers are able to to locate assets that other lawyers cannot.


Peter Roach
Peter T. Roach & Associates, P.C.

 

 

Monday
Aug042014

Strict Foreclosure: The Second Bite of The Apple

When a mortgage is foreclosed, not only are the rights of the owners of the property extinguished, but all rights of third parties who have subordinate liens or other interests are extinguished, as well as the property, which will be sold at the foreclosure sale “free and clear” of any such interests.

In order for the Plaintiff's attorney to comply with the constitutional requirements of Due Process, these parties must be given “notice and an opportunity to be heard,” which is accomplished by naming them as defendants and serving them with a summons and complaint.

Sometimes the title company fails to discover a subordinate lien or interest and the foreclosure search does not include it. As a result, the party holding the subordinate lien or interest is not named as a defendant, and their lien or interest is not extinguished. Consequently, upon completion of the foreclosure the bidder’s title company (or third party purchaser’s title company if the Lender was the successful bidder and then sold the REO) will raise the lien or other interest as an exception.

In order to omit this exception, a “Strict Foreclosure” will be required, not against “the world”, but strictly against the one or more defendants who weren’t named in the original proceeding. To afford these parties “Due Process”, they must be:

  1. Named as Defendants in the Strict Foreclosure;
  2. Served with a summons and complaint;
  3. Given the opportunity to defend against and raise any defenses they would have been able to raise in the initial foreclosure; and
  4. Given the opportunity to exercise their right of redemption, which is the right to pay the mortgage debt in full, thus satisfying the mortgage and avoiding the loss of their lien or interest.

Rarely, if ever, is there any response from any of the parties served with a summons and complaint for a Strict Foreclosure, as these parties are not usually willing to to pay the entire mortgage balance in order to preserve their rights. Accordingly, upon the expiration of their time to answer or redeem, an Order may be submitted to the Court that extinguishes their rights, just as if they had been named and served the initial foreclosure.

The delay (six months to a year) caused by the need for this procedure, however, will be quite upsetting to the client, who is already frustrated at the length of time required to liquidate their non-performing mortgage. If the foreclosure attorney has a good relationship with the title company that is insuring the purchaser, and if the amount of the judgment of foreclosure is greater than the amount of the purchase price for the new property, the title company will often accept an “Undertaking” from Plaintiff’s lawyer to complete the strict foreclosure and extinguish the lien. Based upon the Undertaking, they will omit the lien as an exception to title, allow the closing to proceed and enable the client to receive their sales proceeds without further delay.

Sometimes it’s BOTH what you know and who you know!

 

Peter Roach
Peter T. Roach & Associates, P.C.

 

 

Tuesday
Jul222014

Dual Tracking Prohibited When “Complete” Loss Mitigation Application  Received

While Borrowers have always had the ability to request Loss Mitigation as a way of resolving a foreclosure, both the public awareness and the legal requirements for Loss Mitigation have dramatically increased since the foreclosure crisis began in 2008.

Historically, Lenders would continue prosecuting a foreclosure,  notwithstanding that the Borrower had submitted an application and “package” of documents for them to review in order to resolve the foreclosure. This process, known as “Dual Tracking” was intended to avoid delays in the foreclosure process should the Loss Mitigation efforts fail.

Judgments of Foreclosure were routinely submitted and foreclosure sales were scheduled and sometimes held, even though though the Borrower may have been under the impression that they had resolved the foreclosure. To avoid such scenarios, Congress included in the Dodd-Frank Act specific provisions prohibiting this practice.

Dodd–Frank Wall Street Reform and Consumer Protection Act

Commonly referred to simply as Dodd-Frank, the act contains many Consumer Protection provisions, such as the prohibition against Lenders initiating the foreclosure until the borrower is at least 120 days in arrears. Notwithstanding the terms of the mortgage contract agreed to by both parties, Lenders must wait at least 120 days before starting a foreclosure. Fortunately for New York Lenders, Dodd-Frank does not prohibit sending the “90-day letter” required by RPAPL 1304 during this time.

Additionally, Dodd-Frank prohibits Lenders from submitting a Judgment of Foreclosure, or from scheduling a Foreclosure sale, if a “complete” loss mitigation package was submitted at least 37 days before the sale date.  

Loss Mitigation applications, however, are rarely, if ever, submitted with a 100% complete package. Inevitably, there is missing information or documents that Servicers require in order to complete their review. Accordingly, the question that has yet to be answered when a Lender is ready to submit a Judgment of Foreclosure, or from scheduling a Foreclosure sale and had previously received a  Loss Mitigation application, is whether a  “complete” Loss Mitigation package is one which is 100% complete or if it includes those that are “substantially” complete, and are missing only minor information or documents.

While it is too soon for case law to answer this question, it is this author’s recommendation, to “err on the side of caution” and assume that the courts, the CFPB and other Regulatory Agencies will apply a liberal construction as to whether or not a Loss Mitigation package was complete.  

Should there be any doubt that a “complete” loss mitigation package may be deemed to have been submitted, a letter should be sent to the Borrower providing a reasonable time within which to provide the missing information or documentation required.  Should the Borrower fail to provide the missing information or documentation required, another letter formally advising the Borrower that his/her Loss Mitigation application was denied due to incompleteness of the loss mitigation package.

In this way, the Lender avoids the Borrower being under the impression that they had resolved the foreclosure and can demonstrate compliance with both the “spirit” as well as the “letter” of the law while incurring only a minor expense to do so.

Peter Roach
Peter T. Roach & Associates, P.C.

 

 

Friday
Jun272014

Zombie Foreclosures: Are they coming for you?

Due to the housing crisis of the past 5 years, efforts have been made to give homeowners every conceivable chance to avoid the foreclosures of their properties, so that they are not forced out of their homes. While well-intentioned, some of these provisions have resulted in unintended consequences. One such impact has been the rise of “zombie foreclosures.”

The zombie foreclosure occurs when a homeowner is foreclosed upon and then moves out of the property during the foreclosure process. Because foreclosures in New York now take so long to complete, the abandoned property may remain vacant for months or even years. During this time, it becomes a blight on the neighborhood it is located in, prompting outrage from neighbors concerned about its detrimental effect on a town’s property values.

This happens more than ever before due to the many new procedural requirements that have been added to the foreclosure process and the congested court calendars that have resulted from the exponential increase of residential foreclosures during the past several years.

To combat these zombie foreclosures, some municipalities such as Nassau and Suffolk counties have created new processes to expedite foreclosures in cases where the home has already been abandoned by its owners.      

In order to avail themselves of these new procedures, lenders should consider regularly inspecting properties securing delinquent loans to identify any that are, in fact, vacant and utilizing the new procedures to expedite foreclosures.

Additionally, Lenders should solicit Deeds in Lieu of Foreclosure from delinquent homeowners, in exchange for a release from their liabilities, REGARDLESS OF THE EXISTENCE OF SUBORDINATE LIENS! By accepting a Deed in Lieu of Foreclosure, Lenders can avoid the "zombie foreclosure," begin to make any needed repairs, and market the property while the foreclosure is completed.

Finally, Lenders should continuously communicate with defaulting homeowners to evaluate if their circumstances have changed for the better or worse and to determine if a loss mitigation opportunity has been created before they decide to simply move out.

Although the New York foreclosure process will inevitably take too long,  sometimes, as shown above, there are ways to shorten it.

Are you doing everything you can?

Peter Roach
Peter T. Roach & Associates, P.C.