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Recent Legislative Actions In Relation to Foreclosures Part II

Posted by Arnold A. Arpino | Jul 21, 2016 | 0 Comments

The Affirmative Defense – Lack of Standing:

Earlier this year, the New York State Assembly passed law providing that a borrower in a mortgage foreclosure action does not waive standing, even if that defense is not asserted in an answer or pre-answer motion.   While it is not law yet, it still needs to be voted on by the Senate and signed by the Governor, this new law has immense implications for both the plaintiff and defense bar in mortgage foreclosure actions.

Standing usually is not an issue for a foreclosing plaintiff, however, every once and a while you see instances where a foreclosing party has not been in possession of the note prior to filing a foreclosure.  You would think after years of litigation that this practice would be cleaned up, but still in 2016, you often see foreclosure complaints dismissed or summary judgment denied based on questions of fact around the issue of standing. 

If passed, this new law would give borrowers a weapon in fighting off foreclosure or forcing a favorable settlement.  This defense would be available to the defendant even after a sale if the foreclosure action proceeded on a default in appearing by the borrower.  A borrower could withhold in their back pocket the defense of standing in the middle of a foreclosure or near the very end of an action.  In New York, the foreclosing party has the burden of proving standing once the defense has been raised.  There could be literal chaos if for instance a foreclosing party carelessly was not in possession of the note or the assignment of the note prior to initiating a foreclosure action and the subject property was sold.

This is a law the both the Plaintiff and Defense Bar will be following very closing over the coming months as the impact on the mortgage lending and servicing industry could be very serious.

About the Author

Arnold A. Arpino

Managing Shareholder focusing on Creditor's Rights, Real Estate, & Non-Taxable Estate Planning.


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Arnold A. Arpino & Associates, P.C., is a full service law firm that represents individuals and businesses in a variety of different practice areas. Our firm regularly appears in the Courts throughout Long Island, New York City, and the Hudson Valley.