New York Homeowners Fight Back: Challenging Invalid Foreclosure Complaints Through Standing to Sue Defenses
When facing foreclosure in New York, homeowners often feel powerless against what appears to be an inevitable legal process. However, one of the most heavily contested issues in New York mortgage foreclosure litigation following the 2008 financial crisis was standing to foreclose, i.e., whether the plaintiff had an interest in the claim at issue in the lawsuit that would allow it to sue the mortgagor. Today, generally, all that is needed for a plaintiff in a foreclosure action in New York to have standing to foreclose is that it be the holder or assignee of the underlying promissory note at the time the foreclosure action is commenced. Understanding these challenges can be the key to protecting your home and financial future.
Understanding Standing to Sue in Foreclosure Cases
One of the first considerations in a foreclosure case – or any case, actually – is whether or not the party asserting the claim has legal standing (also known as locus standi) to do so. Standing is a party’s capacity and right to bring forth a claim against another. In foreclosure actions, this means the lender must prove they have the legal authority to foreclose on your property.
You would be surprised at the number of lenders and servicers who attempt to file for foreclosure without the legal authority to do so. A homeowner must identify when a plaintiff does not have the authority and to defend against the foreclosure action by challenging the plaintiff’s standing. This defense has become particularly important as mortgages are frequently sold and transferred between different entities.
Recent Legal Changes Strengthen Homeowner Protections
New York homeowners received significant protection with the passage of RPAPL § 1302-a, which became effective December 23, 2019. This groundbreaking legislation fundamentally changed how standing challenges work in foreclosure cases involving home loans.
Now, for “home loans,” defendants can assert the defense of lack of standing at any stage of the foreclosure action even if they did not assert it at the outset in their answer or in a pre-answer motion to dismiss. Critically, now, the failure to answer or to appear at any stage of the foreclosure action may never result in a waiver of this defense. This represents a dramatic shift from previous law, where homeowners could lose this defense simply by failing to raise it early in the case.
The law applies specifically to home loans, which are defined as loans secured by a mortgage or deed of trust on real estate improved by a one to four family dwelling, or a condominium unit, in either case, used or occupied, or intended to be used as a residence.
How to Successfully Challenge Standing
Challenging a lender’s standing requires careful analysis of the documentation submitted with the Foreclosure Complaint. It is important to have an attorney who can review the documents and/or affidavits submitted by a bank with a foreclosure petition and determine whether the documents provided may lead to a successful standing challenge. These cases show that New York courts will not accept anything to prove standing, and homeowners can win a motion to dismiss and gain more time to rectify their mortgage default or obtain a loan modification.
Common issues that can support a standing challenge include:
- Inadequate proof of note ownership at the time of filing
- Defective assignments or endorsements
- Lack of personal knowledge in supporting affidavits
- Missing or improperly attached allonges
- Gaps in the chain of ownership
In Aurora Loan Services, LLC v. Ang, the bank provided an affidavit from an assistant secretary of Nationstar Mortgage claiming a review of business records showed the bank had possession of the note. However, since the assistant secretary did not claim to be personally knowledgeable of the bank’s practices, the Court found in favor of the homeowner’s challenge to standing.
New Requirements for Foreclosure Complaints
Recent changes to New York law have also strengthened requirements for what lenders must include in their initial foreclosure filings. Instead of waiting for a defendant to challenge standing, the law now requires plaintiffs to include specific documents with an initial complaint. The law requires the attorney for the plaintiff to sign and submit a certificate of merit assuring the court they have reviewed all documents and reasonably believe the plaintiff has the right to bring the foreclosure action.
These enhanced requirements mean that prior to this law, plaintiffs would drag their feet producing the required documents (often because they could not do so), and the foreclosure timelines became longer and longer, but now lenders must be prepared from the start to prove their right to foreclose.
Timing and Strategic Considerations
While the new law provides greater flexibility, timing remains crucial in foreclosure defense. A defendant may not raise an objection or defense of lack of standing following a foreclosure sale, however, unless the judgment of foreclosure and sale was issued upon defendant’s default. For “home loans,” this defense can no longer be waived and under certain circumstances, it can even be asserted after a foreclosure sale.
This means that even homeowners who received default judgments may still have options to challenge the foreclosure based on standing issues, providing a potential lifeline even in seemingly hopeless situations.
The Importance of Professional Legal Representation
Successfully challenging standing in a foreclosure case requires extensive knowledge of both New York real property law and federal banking regulations. These motions can be complicated, so you want an experienced foreclosure defense attorney filing the motion for you. For this reason (among others), it is critical to have the right lawyer representing you from the very beginning of your case to ensure you do not miss the chance to assert defenses such as lack of standing.
The Law Office of Ronald D. Weiss, P.C., located in Melville, Long Island, has been helping homeowners navigate these complex legal challenges since 1993. The Law Offices of Ronald D. Weiss, PC have been supplying expert bankruptcy, foreclosure defense, and debt negotiation services since 1993. We offer practical, compassionate solutions customized to each client’s financial situation. With over 30 legal professionals on our team, we have the resources to handle your important legal matter.
Their approach focuses on highly effective legal help that is both compassionate and affordable. We often use multiple debt solution tools – bankruptcy, litigation, and negotiation – together as part of a larger strategy where they support and strengthen each other. This comprehensive strategy recognizes that standing challenges are often most effective when combined with other foreclosure defense tactics and alternative solutions.
Taking Action to Protect Your Home
Never assume that losing your home is inevitable, as the foreclosure system in New York often favors homeowners and allows for many opportunities to help them and prevent the loss of their homes. The enhanced protections for standing challenges represent just one tool in a comprehensive foreclosure defense strategy.
If you’re facing foreclosure in New York, understanding your rights regarding standing challenges could be the difference between losing your home and finding a path forward. The recent legal changes have created new opportunities for homeowners to fight back against invalid foreclosure complaints, but these defenses require skilled legal representation to implement effectively.
Don’t wait until it’s too late. Contact an experienced foreclosure defense attorney to review your case and determine whether standing challenges or other defenses might help protect your home and financial future. With the right legal strategy, you may have more options than you realize.