During the past several years, the New York legislature enacted dramatic new changes that are intended to provide additional protections to homeowners facing the threat of mortgage foreclosure.

2008 and 2009 Amendments to RPAPL § 1304 - Ninety-Day Notice Required for Foreclosure

In 2008, the New York Legislature amended the Real Property Action and Proceedings Law (RPAPL) to require that a 90-day notice be sent to residential borrowers for high-cost, subprime or non-traditional loans. Under the 2008 amendment, 90-days notice is a perquisite to the filing of a mortgage foreclosure proceeding, and it applies to subprime loans that were consummated between January 1, 2003 and September 1, 2008. The foregoing time-period is clearly intended to cover the period during which it is believed that the most abusive lending practices occurred. The statute defines non-traditional loans as those which are interest-only and/or have variable rates. The statute defines "subprime loans" as those with interest rates above a certain threshold, which is determined based on a formula set forth in the statute.

Most recently, this month, the New York legislature has voted to extend the 90-day notice requirement to all types of home loans - not just subprime mortgages. The bill also gives protections to renters living in foreclosed properties, allowing them to stay in their homes for the full 90-day notice period or the length of their leases, whichever is longer.

Special Summons Requirement Under RPAPL § 1320

RPAPL § 1320 is labeled "Special summons requirement and private residential cases." This section requires that a particular notice be included in the summons in residential foreclosure cases of three units or less. The notice consists of a warning to the borrower that a default in answering could lead to the loss of the borrower's home. The precise text that must be included in the summons is set forth in the statute.

While it may seem obvious that a foreclosure action can result in the loss of the subject property, the reality is that historically, most homeowners do not file answers to foreclosure complaints. It is hoped that the additional notice will emphasize the need for homeowners to take quick action by filing and serving an answer to the foreclosure complaint.

The RPAPL amendments described above are just a few of the various statutory provisions that have been enacted to protect residential property owners in New York from the loss of their homes in foreclosure.

Marc A. Rapaport, Esq.
November 17, 2009
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