A new law signed by Governor Paterson last week grants a new right to homeowners that could infuse greater fairness in foreclosure cases at a time residents need it most.
The Access to Justice in Lending Act adds a new section to the Real Property Law that grants mortgage holders the right to recover attorney’s fees in suits involving the foreclosure of residential property.
In light of the recent rise in foreclosures, and revelations of bank negligence and alleged fraud in some cases, the law will put defendents on a more equal footing with mortgage servicers. It is common practice to include in mortgage documents the lender’s right to recover attorney fees from the homeowner, along with money owed if they successfully bring foreclosure action on a property. Now that right is granted to homewners in New York as well.
“I think it will really make a difference for thousands of homeowners,” said Assemblyman Rory Lancman (D-Hillcrest), who sponsored the bill with Senate Deputy Majority Leader Jeff Klein (D-Bronx).
The foreclosure crisis has hit Queens especially hard among the state’s 62 counties. Over 15,000 pre-foreclosure notices have been filed in Queens between Feb. 13 and Aug. 31 of this year, according to a recent report from the state Banking Department, the second highest number of filings in the state. It is the sixth-worst county in the state as measured by the percentage of mortgages entering the pre-foreclosure stage. Nearly 7 percent of all homeowners in Queens received such notices last spring, according to the same report.
With the new law, many of those homeowners with valid defenses against foreclosure now have access to lawyers they previously could not afford.
“This is the most effective way to weed out the systematic errors that are permeating the foreclosure process,” continued Lancman, who cited falsified notorization and routinely miscalculated debt totals among the fraudulent banking practices brought to light in recent weeks.
“The best part of the Access to Justice in Lending Act is that banks now know that they need to be diligent and careful in how they process foreclosures, because there will be attorneys representing the homeowners.”
“It’s interesting because these are issues we’ve known have been happening for a long time,” said Jessica Yager, director of the foreclosure prevention project at Queens Legal Services, a nonprofit agency that provides free representation and counseling to low-income individuals and families in Queens.
“For nonprofits like us it’s really a drop in the bucket in terms of the number of cases we can handle,” said Yager. But in expanding access to private attorneys, “this law will hopefully bring more foreclosure advocates in court.”
In a similar effort to further protect homeowners, the law was signed the same day New York Chief Justice Jonathan Lippman ruled that attorneys for lenders must file an affirmation that they have verified the accuracy of all documents related to the foreclosure case, making them susceptible to disciplinary sanctions if wrongful filings are discovered.