In response to the foreclosure crisis that continues to buffet our economy, New York has revised its laws and established programs that make the foreclosure process fairer to homeowners and tenants. The Legislature has appropriated funds to assist beleaguered homeowners in obtaining counseling and legal representation, created mandatory foreclosure conferences to foster equitable settlements, and sought to prevent foreclosed properties from becoming burdens on our fiscally strapped localities.
Recent events, including the decisions of several trial courts, have revealed serious shortcomings in the legal papers submitted to the courts by plaintiffs and, thus, cast doubts on the integrity of the judicial foreclosure process. Among other issues, national headlines have highlighted how the failure of the public recording system to accurately reflect the ownership of mortgages and mortgage notes has impaired the ability of homeowners to respond to foreclosures and courts to determine the rights of both lenders and homeowners. This hearing will examine what, if any, further changes to New York law should be implemented to restore the integrity of these public records. Legislation that addresses some of these concerns includes A.8684B (2010) upon which the committees would welcome comment.
The hearing also will examine ways in which to better enable lenders, homeowners and courts to disentangle the web of mortgage promissory note assignments, the complexity and opaqueness of which has contributed, in part, to the state and national foreclosure crisis. Testimony should address ways of ensuring accurate court submissions by those parties who have legal standing to foreclose a mortgage including A.11465 (2010), which would limit standing to commence a foreclosure action to the actual holder of the mortgage and note or such holder's agent.
This hearing will also focus on the effectiveness of the monies appropriated in the SFY 2010-11 budget to aid victims of subprime lending facing foreclosure. Testimony should address the quality and effectiveness of the counseling and legal services funded by this and prior appropriations.
In addition, possible errors in the securitization process may have resulted in significant loss of tax revenues to the state and material liability to the creators of certain real estate trusts. Testimony should address the extent to which securitization trusts have exposed themselves to state tax liability by failing to comply with the federal and state law regarding Real Estate Mortgage Investment Conduits (REMICs).