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For example: Failure to respond to a Qualified Written Request, 12 USC 2605(e): Actual damages, costs

and attorneys’ fees; plus $1000 per violation if pattern and practice of noncompliance

Prohibits “deceptive acts or practices in the conduct of any business, trade or commerce or in the
furnishing of any service in this state…” Can apply to loan servicing and loan origination issues

Must show

(1) deceptive acts were directed at consumers,

(2) acts are misleading in a material way, and

(3) plaintiff has been injured as a result. Unlike fraud, does not require showing of intent.

Broadly construed. 4343 GBL 349 Remedies include:

1. Injunctive relief against deceptive acts and practices

2. Actual damages

3. Treble damages up to $1000 if violation was willful or knowing, and

4. Attorneys’ fees.

The Case Law At Issue The issue in dispute is whether a lien can be stripped off or stripped down in a
Chapter 20 case. The reason this arises is that the Chapter 20 Debtor already received a Chapter 7
discharge and cannot receive a discharge in the newly filed Chapter 13. The Chapter 20 Debtor, having
been relieved of his in personam obligations in the Chapter 7 case, is now trying eliminate to the
creditor’s recourse to the property. This is a great country – isn’t it? The leading reported cases in New
York are In re Wapshare, 492 B.R. 211 (Bankr. S.D.N.Y. 2013) (Judge Morris); In re Wong, 488 B.R. 537
(Bankr. E.D.N.Y. 2013) (Judge Stong); In re Miller, 462 BR 434 (Bankr E.D.N.Y. 2011) (Judge Trust) and In
re Orkwis, 457 BR 243 (Bankr E.D.N.Y. 2011) (Judge Grossman). In Wapshare, the Court permitted a
Chapter 20 debtor to strip off a junior Home Mortgage, which was wholly unsupported by any equity in
the mortgaged property once a chapter 13 plan was confirmed and all plan payments had been made. In
Wapshare, Judge Morris required that the case and plan were filed in good faith. The Wapshare court
followed the numerous cases that heave also permitted lien stripping in a Chapter 20 where the Chapter
13 plan was confirmed and all plan payments have been made. In re Miller, 462 B.R at 433 (“Only upon
the completion of the plan payments may a debtor strip off an inferior wholly unsecured mortgage
lien”); In re Okosisi, 451 B.R. 90, 103 (Bankr. D. Nev. 2011) (“The permanence of lien avoidance is
conditioned upon the successful completion of all plan payments”); In re Tran, 431 B.R. 230, 236-37
(Bankr. N.D. Cal. 2010) (“[T]he court can condition any permanent modification or stripping on the
debtor’s performance and completion of the debtor’s chapter 13 plan”). The Wapshare court also failure
to confirm a plan will lead to dismissal or conversion of the case. Upon dismissal, the liens will be
restored. Wapshare, 491 B.R. at 217. The Eastern District has been divided on the issue. In In re Wong,
488 B.R. 537 (Bankr. E.D.N.Y. 2013), Judge Stong held that a chapter 13 debtor that was discharged in a
Chapter 7 could confirm a plan where the junior mortgage liens were “stripped off,” holding that the
junior mortgagors’ claims were unsecured under 506(a) and therefore unsecured with respect to 317
Sections 1322(b)(2) and 1325(a)(5). In re Miller, Judge Trust permitted a Chapter 20 debtor to strip off of
a junior Home Mortgage where the value of the property was less than the amount of the first Home
Mortgage. Strip off was permitted despite the unavailability of a discharge, provided that Debtor
completed the plan payments (over 5 years) and based upon a finding that the new Chapter 13 was filed
in good faith (i.e. the case was not filed solely to strip the lien after the Chapter 7 discharge). Judge Trust
did preserve the unsecured claim for treatment in the Chpater 13 plan despite the prior discharge. On
the other side of the same Courthouse, Judge Grossman, with identical facts as Miller, prohibited the
Chapter 20 Debtor from stripping off a junior Home Mortgage based upon the inability of the Debtor to
modify such liens and to obtain a discharge pursuant to 11 U.S.C. §§ 1322, 1325 and 1328. Also, based
upon her decision in In re Smoot, we believe that Judge Eisenberg would follow Judge Trust in allowing a
strip off in a Chapter 20. Thus, while bankruptcy courts are split across the country, the majority of the
courts in the Second Circuit permit lien stripping in a Chapter 20 case. If these cases had been regular
Chapter 13 cases (as opposed to Chapter 20 cases), under In re Pond, strip off would have been allowed
and, assuming a claim is filed, the secured creditor would have an unsecured claim for the amount due.
This may result in only a few pennies on the dollar to the creditor, even assuming the creditor was
permitted to retain an unsecured claim. The Second Circuit has not yet decided the issue, but the courts
in the Fourth and Eleventh Circuits and Bankruptcy Appellate Panels of the Sixth Circuit and Eighth
Circuit have all permitted lien stripping in a Chapter 20 case. SeeWells Fargo Bank, N.A. v. Scantling (In re
Scantling), 754 F.3d 1323 (11th Cir. 2014) (strip off of unsecured mortgage on debtor’s principal
residence “is accomplished through the 506(a) valuation procedure that determines that the creditor
does not hold a secured claim”); Branigan v. Davis (In re Davis), 716 F.3d. 331 (4th Cir. 2013) (affirming
district court’s affirmation of bankruptcy court’s confirmation orders stripping off the in rem component
of valueless junior liens against debtors’ residences in a Chapter 20 case but not reaching the good faith
issue); In addition, the Bankruptcy Appellate Panel in the Sixth Circuit in In re Cain, 513 B.R. 316 (BAP 6th
Cir. 2014) held that a valueless lien can be stripped, regardless of discharge eligibility; In re Fisette, 455
B.R. 177 (8th Cir. BAP 2011), appeal dismissed by In re Fisette, 695 F.3d 803 (8th Cir. 2012). As a result,
the courts are likely to permit a lien strip off of a Home Mortgage and a lien strip down with respect to
other secured claims in Chapter 20 cases. The issues for the lender will be: 318 1. Valuation Junior Home
Mortgages: If the appraisal reflects any value above the senior liens there should be a basis to prevent
the lien strip. The caveat is that minimal value may not suffice. As with all appraisals, the odds are that
the Debtor will have a lower valuation. It will then come down to credibility of the appraisers and the
appraisal. The Judge is likely to split the baby unless one appraisal is simply incredible as a matter of law.
Thus, unless the appraisal reflects an adequate cushion taking into account up to 10% cost of sale, there
is a risk that the Court will find no value and permit a strip off 2. Valuation Junior Liens Other Collateral:
The issue is the same with respect to the integrity of the appraisal, but it is not an all or nothing result.
The secured claim will be stripped down to the determined value of the collateral. 3. Good faith: Was
the chapter 20 case and plan filed in good faith. This will be fact specific and likely turn on the amount of
time between the two filings and whether the debtor had a reason to file the second case independent
of the strip off or strip down. 4. Unsecured Claim: The treatment of the remaining unsecured claim is an
open issue. The question will be whether there is enough of a payout to make the fight worthwhile. This
issue increases the importance of filing a proof of claim to try to preserve the issue. 5. Settlement
Posture: if the lien is clearly under water or close, try to negotiate the treatment of an unsecured claim.
Example 1 : Value of debtor’s principal residence is $500; first Home Mortgage lien $400; second Home
Mortgage lien $200. There can be no lien strip off or strip down of the second lien in either a Chapter 7
or 13 or 11. Example 2 : Value of debtor’s principal residence is $500; first Home Mortgage lien $500;
second Home Mortgage lien $200. There can be no lien strip off of the second Home Mortgage lien in a
Chapter 7; but there can be a lien strip off in a Chapter 20, 13 or 11 if the Chapter 20 was filed in good
faith and the debtor completes the plan payments. In a Chapter 11 or 13 it is clear that the resulting
unsecured claim should be provided for under the plan. In a Chapter 20, it remains an open issue as to
whether the claim will be treated as unsecured or discharged. Example 3 : Value of other collateral is
$500; first lien $400; second lien $200. In a Chapter 11 or 13, there can be a strip down to treat the
junior lien as secured to the extent of $100 and unsecured for $100. Example 4 : Value of other
collateral is $500; first lien $500; second lien $200. The second lien will be stripped off in a Chapter 20,
13 or 11 if the Chapter 20 was filed in good faith and the debtor completes the plan payments. In a
Chapter 11 or 13 the resulting unsecured claim should. be provided for under the Plan. In a Chapter 20,
it remains an open issue as to whether the claim will be treated as unsecured or discharged

(discussing various approaches and decisions toward lien stripping in Chapter 20 cases). Lien Stripping in
Chapter 7 Cases While most courts had previously determined that wholly unsecured junior mortgages
could not be stripped off in a Chapter 7 Case, because of the holding and rationale in Dewsnup v. Timm,
502 U.S. 410 (1992), some courts, and (locally) Judge Dorothy Eisenberg in the Bankruptcy Court for the
Eastern District of New York, had determined that Dewsnup’s holding was limited to partially unsecured
and not wholly unsecured junior mortgages. See In re Lavelle, Case No.: 09-72389-478, 2009 Bankr.
LEXIS 3811 (Bankr. E.D.N.Y. 2009). That dispute was laid to rest with the United States Supreme Court’s
decision in Bank of America v. Caulkett, 135 S. Ct. 1995 (2015) [which is included in these materials],
which held that, under Dewsnup, wholly unsecured junior liens cannot be stripped off and are treated
the same way as partially unsecured junior liens. While critical of the holding in Dewsnup, the majority
noted that no party had requested that Dewsnup be overruled. Vesting Title to Real Property to a
Secured Creditor in a Chapter 13 Plan There is an ongoing controversy in the bankruptcy and district
courts as to whether a Chapter 13 debtor may both surrender property to a secured creditor and
simultaneously vest title 321 to the property in a secured creditor. The latest word on the subject from
District Judge, Arthur D. Spatt of the Eastern District of New York is that vesting and surrender are
incompatible. HSBC Bank USA, NA v. Zair, 550 B.R. 188 (E.D.N.Y. 2016). In Zair, the debtors possessed
real property that had been severely damaged by Superstorm Sandy, and the debtors requested in their
plan not only to surrender the property to the secured creditor—giving the creditor a limited time to file
a deficiency claim, but also to vest title to the property in HSBC. Examining the statutory language, and
disagreeing with a number of courts that had held that surrender and vesting were compatible—citing
the purpose of the Bankruptcy Code to give the debtor a fresh start, Judge Spatt held that the statutory
framework of the Bankruptcy Code did not allow such an option. This is scarcely the final word on the
subject. 322 (Slip Opinion) OCTOBER TERM, 2014 1 Syllabus NOTE: Where it is feasible, a syllabus
(headnote) will be released, as is being done in connection with this case, at the time the opinion is
issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the
Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber
Co., 200 U. S. 321, 337. SUPREME COURT OF THE UNITED STATES Syllabus BANK OF AMERICA, N. A. v.
CAULKETT CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT No. 13–
1421. Argued March 24, 2015—Decided June 1, 2015*
• Foreclosing plaintiff must own the note and the mortgage at the inception of the action. Deutsche
Bank National Trust Co. v. Barnett, 88, A.D. 3d 636, 931 N.Y.S. 2d 630, (2d Dep’t 2011); Kluge v. Fugazy,
145 A.D. 2d 537, 536 N.Y. S. 2d 92 (2d Dep’t 1988) • Note and Mortgage: assignment of the mortgage
without assignment of the debt, i.e. the note, is a nullity. • Note: represents contractual debt obligation
Mortgage: represents collateral security for debt

Foreclosure Action Commenced • Assignment can be by written assignment or by physical delivery of


note and mortgage. Aurora v. Taylor, 25 NY 3d 355 (2015) (“physical delivery of the note to the plaintiff
from its owner prior to commencement of a foreclosure action may, in certain circumstances, be
sufficient to transfer the mortgage obligation and create standing to foreclose”) • Difficult to prove
physical delivery prior to commencement. • If written assignment, execution date generally controls and
conclusory affidavits of prior physical delivery devoid of detail are suspect. • Back dated assignment
ineffective absent proof of prior physical delivery. Wells Fargo v. Marchione, 69 A.D. 3d 204, 887 N.Y. S.
2d 615 (2d Dep’t 2009); see also New Century Mtge. Corp. v. Kogan, 2013 NY Slip Op 50047(U) (Kings
Cty. Jan. 14, 2013 (no standing where plaintiff commenced foreclosure action twelve days after it
assigned mortgage and note to another party and therefore did not own note and mortgage when it
commenced the action.)

LaSalle Bank N.A. at Trustee v. Ahearn, 59 A.D.3d 911 (3d Dep’t 2009) (retroactive assignment
ineffective where foreclosure action commenced prior to execution of assignment). Accord,
Countrywide Home Loans, Inc. v. Gress, 68 A.D.3d 709, 888 N.Y.S.2d 914 (2d Dep’t 2009) (retroactive
assignment executed after commencement of action ineffective to confer standing on assignee in
foreclosure action commenced before execution of assignment). Commencement: measured by filing,
not service; Wells Fargo Bank N.A. v. Marchione, 69 A.D.3d 204, 887 N.Y.S.2d 615 (2d Dep’t 2009)
(affirming dismissal where assignment was executed after filing of action but before service of summons
and complaint;;

Assignments and Chain of Title, including timing, suspicious endorsements and allonges, assignments
from MERS as nominee, lack of documented authority of parties signing assignments, assignees signing
on behalf of assignors Robo-signing of assignment documents Mortgage-Backed Securities
Investment Vehicles: Pooling and Servicing Agreements and noncompliance with trust closing dates and
other terms. Assignment can be by written assignment or by physical delivery of note and mortgage. •
Difficult for plaintiff to prove physical delivery prior to commencement: what is plaintiff’s evidence of
physical delivery? Affiants often lack personal knowledge, may not even be employed by the correct
party, and cannot provide any specifics—affidavits typically do not meet standards for grant of summary
judgment. • If written assignment involved, execution date generally controls.

Assignment from MERS when MERS is designated merely as nominee of lender, and never owned note,
is ineffective to confer standing on its assignee. Bank of New York v. Silverberg, 86 A.D. 3d 274, 926
N.Y.S. 2d 532 (2d Dep’t 2011) Homecomings Financial, LLC v. Guldi, 108 A.D.3d 506, 969 N.Y.S.2d 470 (2d
Dep’t 2013) Plaintiff failed to prove MERS was holder of mortgage and note when action commenced.
Mortgage language identifying MERS as nominee insufficient to overcome requirement that foreclosing
party be both holder or assignee of subject mortgage and holder of the underlying note when the action
is commenced. Note specifically identified lender as a different party and plaintiff failed to submit any
evidence demonstrating that note was physically delivered to MERS prior to action's commencement.
Evidence that MERS assigned mortgage instrument to plaintiff while action was pending was ineffectual
because "MERS could not transfer that which id did not hold." Plaintiff's servicing agent's affidavit
stating that the note was delivered to custodian of records of plaintiff during the course of the action
was also insufficient, and, in any event, provided no factual details of the physical delivery of the note. .

• HSBC Bank USA, N.A. v. Roumiantseva, 130 A.D. 3d 983 (2d Dep’t 2015). Affirming dismissal for lack of
standing; on defendants' motion to dismiss, defendant had burden to prove plaintiff's lack of standing as
a matter of law. To defeat motion, plaintiff needed to submit evidence raising a question of fact on
standing. Here, defendants submitted documents from plaintiff's document request responses including
MERS assignment and documents showing that MERS was never holder of note and therefore lacked
authority to assign. Plaintiff submitted copy of endorsement in blank, prompting court to direct plaintiff
to produce original note and endorsement. Because endorsement was attached to note only by a paper
clip, it was not "firmly affixed" as required by UCC 3-202, and was therefore not a valid transfer of the
underlying note to plaintiff

Deutsche Bank Natl. Trust v. Haller, 100 A.D. 3d 680, 954 N.Y.S.2d 551 (2d Dep’t 2012) Plaintiff failed to
demonstrate prima facie entitlement to foreclosure: (a) it lacked sufficient evidence of physical
delivery of the note prior to commencement of action where servicer’s affidavit gave no details of
physical delivery; (b) it failed to prove that it was holder of note and mortgage by virtue of
endorsement or written assignment where endorsement was undated and was not annexed to copy of
note attached to complaint and where written assignment presented in support of motion lacked any
evidence that party who purported to execute assignment was authorized to do so by putative assignor

Deutsche Bank Natl. Trust Co. v. Spanos, 102 A.D.3d 909, 961 N.Y.S.2d 200 (2d Dep’t 2013) Plaintiff
failed to establish its prima facie standing to commence the action, as its evidence did not demonstrate
physical delivery of the note prior to commencement of the action or that it was the assignee by virtue
of a written assignment prior to commencement.

Aurora Loan Servs., LLC v Taylor, 25 NY3d 355 (2015) (affirming summary judgment: affidavit established
possession of note prior to commencement. Plaintiff's affidavit sufficient to establish physical
possession of note prior to commencement even if plaintiff failed to produce original note for inspection
(defendant had not requested production of original) and no legal authority suggested best evidence
rule required production of original note. Affidavit by "legal liason" asserting that she examined original
note herself and note and allonges attached to plaintiff's moving papers clearly showed the note's chain
of ownership. Although "the better practice would have been for Aurora to state how it came into
possession of the note in its affidavit to clarify the situation completely, ...under the circumstances of
this case” granting summary judgment was not error. Court did not probe basis of plaintiff’s affiant’s
“personal knowledge” or mention evidentiary standards governing motions for summary judgment

Some cases evaluate evidence to assess whether plaintiff satisfied criteria for summary judgment, while
others recite, without analysis of evidence presented, that plaintiff established requisite standing. Post
Aurora v. Taylor, some courts seem to think rules of evidence and requirements of CPLR 3212 no longer
apply, while others still recognize that a summary judgment motion must be based on admissible
evidence. Deutsche Bank Natl. Trust Co. v Brewton, 142 A.D. 3d 683 (2d Dep’t 2016) (affirming denial of
summary where plaintiff failed to establish that it was a holder or assignee of the note prior to
commencement of the action; plaintiff failed to demonstrate that records relied upon were admissible
under the business records exception to the hearsay rule because affiant did not attest that she was
personally familiar with plaintiff's record-keeping practices. Plaintiff also failed to establish through
submission of excerpts of Pooling and Servicing Agreement standing by virtue of a written assignment of
note prior to commencement.

Rose Land & Fin. Corp. v Vassiliades, 142 A.D. 2d 658 (2016) (affirming summary judgment for plaintiff,
holding that plaintiff established its standing as holder of the note by submitting evidence including the
note, which contained signed endorsements, and the affidavit of its vice president stating that plaintiff
obtained physical possession of the note prior to commencement of the action. No mention of
requirement that summary judgment motions be supported by admissible evidence nor consideration of
admissibility of vice president's affidavit.

U.S. Bank Natl. Assn. v. Guy, 2013 NY Slip Op 51532 (U) (Kings Cty., Schmidt, J. August 22, 2013) (Plaintiff
failed to prove delivery of note prior to commencement where “possession affidavit” offered by
document custodian was not based on personal knowledge and asserted physical delivery on a date that
was inconsistent with complaint's allegations. Plaintiff's reliance on undated allonge was misplaced
where the note had room for further endorsements and allonge was not firmly affixed to the note as
required by the UCC. Court also rejected Plaintiff's assertion that Defendant's acceptance of a HAMP
modification was a ratification of plaintiff's ownership of the note, which was unsupported by any legal
authority

Bank of N.Y. Mellon v. Dean, 2013 NY Slip Op 23224 (Kings Cty., Battaglia, J. July 11, 2013) (plaintiff
failed to establish prima facie entitlement to judgment of foreclosure: Assignment of mortgage from
MERS to plaintiff, which did not purport to assign note, was insufficient to confer standing;
unauthenticated Pooling and Servicing Agreement excerpts did not suffice to establish plaintiff's
standing; affidavit in support of summary judgment motion of physical delivery was neither based on
personal knowledge nor adequately specific and failed to establish that assignor to plaintiff ever had
possession of the note
Redrock Kings, LLC v. Kings Hotel, Inc., 109 A.D.3d 602, (2d Dep’t 2013) (plaintiff established prima facie
entitlement to judgment by providing the subject note and mortgage and proof of default, reciting
without analysis that defendant failed to raise a triable issue of fact concerning plaintiff's standing,
validity of extension agreement or plaintiff's contractual right to foreclose). Citimortgage, Inc. v.
Friedman, 109 A.D.3d 573 (2d Dep’t 2013) (defendant waived standing defense by failing to raise in
answer or a pre-answer motion to dismiss, and in any event defense failed on merits because plaintiff
demonstrated that when it commenced foreclosure action it was holder of the mortgage and two
slightly different versions of the note, both of which were indorsed in blank, and because plaintiff
agreed to proceed on the version of the note that defendant conceded was validly signed and was not
altered

• Is standing defense waived if not raised in the answer or pre-answer motion to dismiss? • Wells Fargo
Bank v. Mastropaolo, 42 A.D. 3d 239, 837 N.Y.S. 2d 247 (2d Dep’t 2007); HSBC v. Dammond, 59 A.D. 3d
679, 875 N.Y.S. 2d 490, 875 N.Y. S. 2d 490, (2d Dep’t 2009); Countrywide v. Delphonse, 64 A.D. 3d 624,
883 N.Y. S. 2d 135 (2d Dep’t 2009). • Cf. Security Pacific Nat’l Bank v. Evans, 31 A.D. 2d 278, 820 N.Y.S.
2d 2 (1st Dep’t 2006) (plaintiff lender commenced action after merging with another bank; lack of legal
capacity waived; not an issue of standing) • CPLR 3211(e) only provides that capacity to sue is waived;
no mention of standing Mastropaolo equated standing to capacity to sue for CPLR 3211 (e) purposes,
but in Mastropaolo,significantly, defendant had appeared by counsel and answered without asserting
standing defense

Does its reasoning make sense for: a) an unrepresented party who answers pro se? b) a party who fails
to answer at all? c) ever? Why do we want to award judgments of foreclosure to plaintiffs who cannot
establish that the debt is owed to them? Would we allow someone who is not a party to a contract to
sue for breach of contract without proving that the rights under the contract on which they sue were
assigned to them d) Policy reasons for waiver of capacity defense embodied in CPLR 3211(e): does that
apply to standing?

LEAVE TO AMEND

• U. S. Bank, Natl. Assn. v. Sharif, 89A.D. 3d 723,933 N.Y.S. 2d 293, 2011 NY Slip Op 07835 (2d Dep’t Nov.
1, 2011) (reversing denial of leave to amend to assert standing and denial of motion to dismiss for lack
of standing where plaintiff demonstrated no prejudice and failed to establish its standing to foreclose).
See also Deutsche Bank Trust Co. Ams. v. Cox, 2013 NY Slip Op 06543 (2d Dep’t Oct. 9, 2013) (reversing
grant of summary judgment to plaintiff and denial of cross motion for leave to amend answer to assert
standing and other waived defenses in an equitable mortgage action, reiterating that “defenses waived
under CPLR 3211(e) can nevertheless be interposed in an answer amended by leave of court pursuant to
CPLR 3025(b) so long as the amendment does not cause the other party prejudice or surprise resulting
directly from the delay and is not palpably insufficient or patently devoid of merit (see CPLR 3025(b)”)

Deutsche Bank National Trust Co. v. Ibaiyo, 20910- 08 (Queens Ct. 2009) (meritorious defense criteria
for CPLR 3012 motion to extend defendant’s time to answer—standing defense permitted) Maspeth
Federal Av. & Loan Ass’n v. McGown, 77 A.D. 3d 890, 909 N.Y. S. 2d 642 (2d Dep’t 2010) (trial court has
considerable discretion on applications to vacate default and extend time to answer when determining
existence of meritorious defense and reasonable excuse for default)

HSBC Bank USA, N.A. v. Taher, 104 A.D.3d 815, 962 N.Y.S.2d 301 (2d Dep’t 2013) (reversing sua sponte
dismissal with prejudice based on judge’s independent research establishing absence of standing and
prosecution of foreclosure based on robo-signed documents, and reversing subsequent sanctions
ordered against HSBC and plaintiff’s law firm resulting therefrom. Standing had been waived by failure
to answer and was not proper basis for sua sponte dismissal

OCA Court Rule (AO/431/11) Plaintiff's counsel in foreclosure actions required to file an affirmation
certifying that counsel has taken reasonable steps – including inquiry to banks and lenders and careful
review of the papers filed in the case – to verify the accuracy of documents filed in support of residential
foreclosures. Filing Requirement tied to RJI filing instead of summons and complaint let to un-filed RJIs
and Shadow Docket limbo, New CPLR 3012-B: For residential mortgage foreclosures, counsel must sign
certificate with complaint certifying review of facts that plaintiff is currently creditor entitled to enforce
rights of the loan document and file with the complaint, and if not attached to complaint, must attach
copies of mortgage and note to such certificate

Plaintiff Must Plead Ownership of Note and Mortgage for High-Cost/Sub Prime Loans Applicable to
loans subject to Banking Law 6-l and 6-m (high cost and sub prime loans).

1. Service of process

2. Conditions precedent to suit: statutory notices and acceleration notices

3. Statute of Limitations/Quiet Title Counterclaim

4. Banking Law 6-L and 6-M

5. Truth in Lending Act & HOEPA

6. Equitable defenses: HAMP, FHA, unclean hands and CPLR 3408 Non-Compliance

7. Fraud

7. Real Estate Settlement Procedures Act (RESPA)


8. General Business Law 349 (Deceptive Practices Act)

9. Unconscionability Not an exhaustive list

6 Year Statute of Limitations CPLR 213(4)

Increasingly Important Issue with Abandonment of Earlier Cases/Dismissals of Earlier Cases

HAMP: Home Affordable Modification Program promotes affordable loan modifications in order to stem
the foreclosure crisis. Most major mortgage servicers signed up and obligated themselves to a loan
modification process governed by detailed federal loan modification regime. Handbook section entitled
“Protections Against Unnecessary Foreclosure,” prohibits a referral to foreclosure until either: -
Borrower has been evaluated and determined ineligible for HAMP; - Reasonable solicitation efforts have
failed. - MHA Handbook Version 3.2, Section 3. Dual Tracking Issues

Aames Funding Corp. v. Houston, 2011 NY Slip Op 05642 (2d Dep’t 2011): Trial court should have
granted borrower’s OSC to stay sale where borrower’s HAMP application was still under review.
Settlement Conferences: typically involve applications for HAMP modifications and courts routinely cite
violations of HAMP requirements as indicia of plaintiffs’ failure to comply with settlement conference
law; But HAMP violations can be evidence of failure to negotiate in good faith at settlement
conferences And violation of HAMP loan modifications can support breach of contract action, possible
FDCPA claim, RESPA violations, and New York Deceptive Practices Act violations

For example: Failure to respond to a Qualified Written Request, 12 USC 2605(e): Actual damages, costs
and attorneys’ fees; plus $1000 per violation if pattern and practice of noncompliance

Prohibits “deceptive acts or practices in the conduct of any business, trade or commerce or in the
furnishing of any service in this state…” Can apply to loan servicing and loan origination issues

Must show

(1) deceptive acts were directed at consumers,

(2) acts are misleading in a material way, and

(3) plaintiff has been injured as a result. Unlike fraud, does not require showing of intent.

Broadly construed. 4343 GBL 349 Remedies include:

1. Injunctive relief against deceptive acts and practices

2. Actual damages

3. Treble damages up to $1000 if violation was willful or knowing, and

4. Attorneys’ fees.
Lien Stripping in Chapter 7 Cases While most courts had previously determined that wholly unsecured
junior mortgages could not be stripped off in a Chapter 7 Case, because of the holding and rationale in
Dewsnup v. Timm, 502 U.S. 410 (1992), some courts, and (locally) Judge Dorothy Eisenberg in the
Bankruptcy Court for the Eastern District of New York, had determined that Dewsnup’s holding was
limited to partially unsecured and not wholly unsecured junior mortgages. See In re Lavelle, Case No.:
09-72389-478, 2009 Bankr. LEXIS 3811 (Bankr. E.D.N.Y. 2009). That dispute was laid to rest with the
United States Supreme Court’s decision in Bank of America v. Caulkett, 135 S. Ct. 1995 (2015) [which is
included in these materials], which held that, under Dewsnup, wholly unsecured junior liens cannot be
stripped off and are treated the same way as partially unsecured junior liens. While critical of the
holding in Dewsnup, the majority noted that no party had requested that Dewsnup be overruled

Natl. Assn. v. Perez, 2012 NY Slip Op. 31812[U] (Sup. Ct. Queens County 2012). Nonetheless, the Second
Department has held that a trial court did not abuse its discretion in allowing an order to be corrected
nunc pro tunc, rather than vacated, where there was no evidence that the order was procured by fraud.
U.S. Bank, N.A. v. Eaddy, 109 A.D.3d 908 (2d Dept. 2013). This area of law is still developing. 3.
Difference between Standing and Capacity to Sue o Standing requires an inquiry into whether the
litigant has an interest in the claim at issue that the law will recognize as a sufficient predicate for
determining the issue at the litigant’s request. Is the relief sought in the case properly sought by this
plaintiff. o Capacity to sue goes to the litigant’s status, i.e., its power to appear and bring its grievance
before the court. For example, a foreign corporation or LLC may not bring an action unless it is
registered with the Secretary of State; minors lack legal capacity, etc. o Why this is important – CPLR §
3211 expressly states that a defense based on the plaintiff’s lack of capacity to sue is waived if not raised
in the answer or a preanswer motion to dismiss. CPLR §§ 3211(a)(3), 3211(e). But the CPLR does not
address a defense of lack of standing. In foreclosure actions, it is rare that a defendant can claim that a
plaintiff lacks capacity to sue (though some such cases will be discussed under Licensing). As discussed
previously, the inquiry is whether the plaintiff possesses standing; BUT, the Second Department in Wells
Fargo Bank Minnesota, N.A. v. Mastropaolo, 42 A.D.3d 239, 241-44 (2d Dept. 2007), while admitting that
the case law was “unsettled” determined “that, for purposes of the waiver rule set forth in CPLR 3211
(e), standing and capacity to sue are sufficiently related that they should be afforded identical treatment