Relates to prohibiting robosigned documents in foreclosure actions.
TITLE OF BILL: An act to amend the real property actions and proceedings law, in relation to foreclosure actions and robosigned documents
Would provide that any entity which records a robosigned document or files a robosigned document in any court, relative to a foreclosure proceeding, is liable for a civil penalty of $10,000 per robosigned document.
SUMMARY OF PROVISIONS:
Section 1392 of the real property law added to the Real Property law as follows:
1. Sets forth the definition of a "robosigned document."
2. States that any entity that files a robosigned document in any court relative to a foreclosure proceeding shall be subject to a civil penalty of $10,000 per robosigned document.
3. Allows a borrower to seek an order in any court of competent jurisdiction if the borrower reasonably believes that the foreclosing party used robosigned documents.
4. Following a trustee's sale, a borrower may recover the greater of actual damages or $10,000 plus attorney's fees if the foreclosing party used robosigned documents.
5. A court may award the borrower the greater of $50,000 plus attorney's fees or treble damages if the use of robosigned documents was intentional.
6. A violation of this section shall not affect the validity of any sale of the property without notice.
7. The borrower may not obtain relief under this section if the violation was technical or de minimis.
8. It shall be an affirmative defense for a violation of this section if the entity violating this section is a signatory to the settlement between the attorney generals of several states including New York.
9. A third party encumbrancer shall not be relieved of liability under this section that occurred prior to the sale of the property.
Section 2. This act shall take effect immediately.
JUSTIFICATION: As our nation makes its way through the foreclosure crisis that has beset it for many years, the abuse of many banks and mortgage servicers have come to light. One of the most egregious abuses by the banks and mortgage servicers has been "robo-signing."
In a foreclosure preceding a bank or mortgage servicer must provide documentation and affidavits to, among other things, prove that the party actually owns the mortgage and that the owner is in default. As the mortgage crisis expanded, banks and mortgage servicers routinely used affidavits signed by employees who did not personally review the documents. These employees also had no basis for believing that the homeowner was in default or that the bank owned the loan.
While several banks have entered into agreements with several states' attorneys general, many banks and mortgage servicers who have not entered into a settlement have committed the same offense. This bill will create a civil penalty for those banks and mortgage servicers.
LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS: No cost but state may receive civil penalties.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 7035 IN SENATE April 21, 2014 ___________Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development AN ACT to amend the real property actions and proceedings law, in relation to foreclosure actions and robosigned documents THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The real property actions and proceedings law is amended by adding a new section 1392 to read as follows: S 1392. ROBOSIGNED DOCUMENTS. 1. FOR THE PURPOSE OF THIS SECTION "ROBOSIGNED DOCUMENT" SHALL MEAN ANY DOCUMENT THAT CONTAINS FACTUAL ASSERTIONS THAT ARE NOT ACCURATE, ARE INCOMPLETE, OR ARE UNSUPPORTED BY COMPETENT, RELIABLE EVIDENCE. A "ROBOSIGNED DOCUMENT" ALSO MEANS ANY DOCUMENT THAT HAS NOT BEEN REVIEWED BY ITS SIGNER TO SUBSTANTIATE THE FACTUAL ASSERTIONS CONTAINED IN THE DOCUMENT. FOR PURPOSES OF THIS DEFI- NITION, MULTIPLE PEOPLE MAY VERIFY THE DOCUMENT OR STATEMENT SO LONG AS THE DOCUMENT OR STATEMENT SPECIFIES THE PORTIONS VERIFIED BY EACH SIGN- ER. 2. ANY ENTITY THAT RECORDS A ROBOSIGNED DOCUMENT OR FILES A ROBOSIGNED DOCUMENT IN ANY COURT RELATIVE TO A FORECLOSURE PROCEEDING SHALL BE LIABLE FOR A CIVIL PENALTY OF TEN THOUSAND DOLLARS PER ROBOSIGNED DOCU- MENT. THE CIVIL PENALTIES UNDER THIS SECTION ARE SEPARATE FROM AND EXCLUSIVE OF ANY OTHER REMEDIES OR LIABILITIES THAT MAY APPLY. THIS SECTION IS NOT INTENDED TO LIMIT THE TYPE OF ACTIONS REGARDING ROBO- SIGNED DOCUMENTS THAT MAY BE FILED BY ANY GOVERNMENTAL ENTITY. 3. A BORROWER MAY SEEK AN ORDER IN ANY COURT HAVING JURISDICTION TO ENJOIN ANY PENDING TRUSTEE'S SALE, IF A NOTICE OF SALE HAS BEEN RECORDED, AND THE BORROWER REASONABLY BELIEVES THAT THE MORTGAGEE, TRUS- TEE, BENEFICIARY, OR AUTHORIZED AGENT FAILED TO COMPLY WITH THE REQUIRE- MENTS OF THIS SECTION. A BORROWER WHO OBTAINS AN INJUNCTION SHALL BE AWARDED REASONABLE ATTORNEY'S FEES AND COSTS. 4. FOLLOWING A TRUSTEE'S SALE, A BORROWER MAY RECOVER THE GREATER OF ACTUAL DAMAGES OR TEN THOUSAND DOLLARS PLUS REASONABLE ATTORNEY'S FEES AND COSTS IN ANY COURT OF COMPETENT JURISDICTION, IF THE BORROWEREXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13334-01-3 S. 7035 2
REASONABLY BELIEVES THAT THE MORTGAGEE, TRUSTEE, BENEFICIARY, OR AUTHOR- IZED AGENT FAILED TO COMPLY WITH THE REQUIREMENTS OF THIS SECTION. 5. A COURT MAY AWARD A BORROWER THE GREATER OF TREBLE ACTUAL DAMAGES OR STATUTORY DAMAGES OF FIFTY THOUSAND DOLLARS, PLUS ATTORNEY'S FEES AND COSTS, IF IT FINDS THAT THE VIOLATION OF THIS SECTION WAS INTENTIONAL, RECKLESS, OR RESULTED FROM WILLFUL MISCONDUCT BY A MORTGAGEE, TRUSTEE, BENEFICIARY, OR AUTHORIZED AGENT. 6. A VIOLATION OF THIS ARTICLE SHALL NOT AFFECT THE VALIDITY OF A SALE IN FAVOR OF A BONA FIDE PURCHASER AND ANY OF ITS ENCUMBRANCERS FOR VALUE WITHOUT NOTICE. 7. NOTWITHSTANDING SUBDIVISIONS THREE AND FOUR OF THIS SECTION, A BORROWER MAY NOT OBTAIN RELIEF UNDER THIS SECTION FOR ANY VIOLATION THAT WAS TECHNICAL OR DE MINIMIS IN NATURE THAT DID NOT IMPACT THE BORROWER'S ABILITY TO PURSUE AN ALTERNATIVE TO FORECLOSURE AS PROVIDED BY THIS ARTICLE. 8. IT SHALL BE AN AFFIRMATIVE DEFENSE TO ANY LIABILITY FOR VIOLATION OF THIS SECTION THAT A SIGNATORY TO A CONSENT JUDGMENT ENTERED IN THE CASE ENTITLED UNITED STATES OF AMERICA V. BANK OF AMERICA CORPORATION, FILED IN THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF WASHINGTON, D.C., CASE NUMBER 1:12-CV-00361 RMC, IS IN COMPLIANCE WITH THAT CONSENT JUDGMENT WHILE THE CONSENT JUDGMENT IS IN EFFECT. 9. A THIRD-PARTY ENCUMBRANCER SHALL NOT BE RELIEVED FROM LIABILITY RESULTING FROM A VIOLATION OF THIS SECTION COMMITTED BY THAT THIRD-PARTY ENCUMBRANCER, THAT OCCURRED PRIOR TO THE SALE OF THE SUBJECT PROPERTY TO THE BONA FIDE PURCHASER. S 2. This act shall take effect immediately.