MEMORANbUM TO: Hon. Michael V. Foreclosure Action Surplus Monies form

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1 state OF NEW YORK UNIFIED COURT SYSTEM j;mpire STATE PlJ\ZA 4 ESP, SUITE 2001 ALBANY, NEW YORK 12ll3 14$0 (513) A. GAIL PRUD 1m l'tlicuael V. COCCOMA OUEf IWMJNISTIIAlWI!JVOOE Dfl'lfTY ClflEI'.WMlNISTRA TIVF. JIJOOE CO\Jli.TS OVTSIOE HEW YORK CITY MEMORANbUM August 8, 2013 TO: FROM: Hon. Thomas Mercure Hon. Vito C. Caruso Hon. James C. Tormey Hon. Robert C. Mulvey Hon. Craig J. Doran Hon. Paula L. Feroleto Hon. Alan D. Scheinkman Hon. Thomas A. Adams Hon. C. Randall Hinrichs Hon. Rfchard E. Slse Hon. Michael V. Coccom@ Carol Schongar Joanne Haelen, Esq. Michael Klefn, Esq. Karen Ambrozik Ronald Pawelczak Andrew Isenberg, Esq. Nancy Mangold Paul Lamanna, Esq. Warren Clark, Esq. Robert DeCataldo, Esq. SUBJECT: Foreclosure Action Surplus Monies form Attached kindly find the. Foreclosure Action Surplus Monies Form, with instructions, which has been approved by Jud9e Marks for distribution. Pfease distribute this information to your Chief Clerks of.supreme and County Courts and direct that thi9 form. together with the instructions, be utilized by Justices of the Supreme Court, Acting Justices of the Supreme Court, J'udfclal Hearing Officers and Court Attorney-Referees who handle real property foreclosure proceedings. If it is not practical for the Court to calendar all such cases, then the Judge's Low Clerk/Secretary will regularly check with the County Treasurer or finance Officer to confirm whether Referees have deposited monies with the County Treasurer or Finance Officer in cases in which the sale price exceeded the upset price.. If monies hove not been

2 deposited within si~ months after the auction, the matter will be referred to the Judge who gppolnted the Referee for further proceedings. MVC:jdr Attachment c: Hon. A. Gail Prudenti Hon. t.awrenc:e Marks Ronald Younkins Eugene Myers John McConnell, Esq. Maria Barrln9ton Scott Murphy

3 TO BE COMPLETED FOR EJI'ERY SALE BY COURT APPOINTED REFEREE AND FILED WITH COUNTY CLERK AND CHAMBERS WITHIN 30 DAYS OF SALE FORECLOSURE ACTION SURPI.US MONIES FORM SUPREME COURT OF THE STATE OF NEW YORK COUNTY Part Plaintiff(s) Hon. _ -against- Index No Defendant(s) Property Address: Sale Date A. Were there surplus funds? DYes DNa B. To be completed by the Referee Amount of final judgment of foreclosure Sale price of property Upset price Surplus amount $ $ $ $ C. To be comnlclcd by Referee conducting the sale (please pri nt) Name: Telephone: Address: Address: Signature and Date: D. To be completed by Plaintiffs Representative E. To be completed by Purchaser Name (please print) Name (please print) Address: Address: Te.lep.honc: Signature and Date: Address: E~mail Address :, Telephone: Signature and Date:

4 'The Referee will complete the attached fonn nnd secure the signature of the Plaintiffs representative and purchaser or purchaser's representative. INSTRUC'fiONS TO CHAMBERS The form will include the following information: case caption; name, address nnd telephone number oflhe Referee, the Plaintifrs representative and the purchaser; sale price; and ll!jsci price. The fonn must be signed by the Referee, the Plaintitrs representative and the purchaser of the foreclosed property. The Referee will deliver, within 30 days after the auction, the completed, signed form to the County Clerk. The Referee will also send a completed copy to the Chambers of the Justice who signed the Judgment of Foreclosure. Chambers staff for the Judge, Court Attomey~Referee or JHO who signed the Judgment of Foreclosure and Sale shall verify compliance. All foreclosure cases will be calendared, no later than six months after the Judgment has been signed, before the Judge who appointed the Referee (or before a Court Attorney Referee or a JHO). This is to determine whether the sale as ordered has occurred, the outcome, and to make such further orders as necessary.

5 Subject: New statute regarding Certificate of Merit in residential foreclosures Ch. 306/L Add b, amd R3408, CPLR. Provides for the filing of a certificate of merit in any residential foreclosure action involving a home loan in which the defendant is a resident of the property subject to the foreclosure. Effective 8/30/13 SPONSORS MEMO: NEW YORK STATE SENATE INTRODUCER'S MEMORANDUM IN SUPPORT submitted in accordance with Senate Rule VI. Sec 1 BILL NUMBER: S4530A SPONSOR: KLEIN TITLE OF BILL: An act to amend the civil practice law and rules, in relation to residential foreclosure actions This measure is being introduced at the request of the Chief Judge of the State and the Attorney General upon the recommendation of the Chief Administrative Judge's Advisory Committee on Civil Practice. This measure would add a new section 3012-b to the CPLR in relation to residential foreclosure actions. This new section would create a procedure whereby the plaintiff lender's attorney must take certain steps to ascertain that his or her client has standing to maintain the action, Specifically, before commencing such an action, he or she must be assured that the plaintiff he or she represents.holds the instrument of indebtedness in the action. To evidence that the plaintiff's attorney has received such assurance, the complaint he or she files in the action must be accompanied by a certificate, signed by the plaintiff s attorney, declaring that the attorney has reviewed the merits of the action and that, based upon consultation with representatives of the plaintiff or the attorney's review of pertinent documents, the attorney has concluded to the best of the attorney's knowledge, information and belief there is a reasonable basis for commencement of the action. Also, if not attached to the complaint, the plaintiff's attorney must attach to the certificate copies of the relevant instruments of indebtedness and any instruments of modification, extension, consolidation and assignment. Where the required documents are lost whether by destruction, theft or otherwise, the attorney shall attach to the certificate supplemental affidavits by the attorney or by a representative of plaintiff. In such a case, the plaintiffs obligations under the New York uniform commercial code are not replaced or abrogated. This measure would also amend rule 3408 of the CPLR to require a plaintiff to file proof of service within 20 days of service. This amendment will supply the necessary ingredient to ensure participation by the parties in the mandatory foreclose conference with the court. We believe that, in addition to helping the bar by clarifying in statute the plaintiff attorney's obligation to the court in a residential foreclosure action, this measure is an appropriate public policy response to 8/22/2013

6 Page 2 of4 the crisis in foreclosure cases. Statutory reform is needed to ensure the integrity of the mortgage foreclosure process and eliminate the cases brought without standing or merit. This measure seeks to prevent completely the problem of "shadow dockets" in residential foreclosure actions, a problem unforeseen at the time the recent affirmations rule was promulgated by administrative order. Under this measure, the trial court would have reasonable assurance that all of the instruments of indebtedness underpinning these actions, and all instruments of assignment, if any, are in place at the commencement of the action. This measure shall take effect in 30 days and shall apply to actions commenced on or after such effective date; provided, however that the amendments to subdivision (a) of rule 3408 of the civil practice law and rules made by section two of this act shall not affect the expiration of such subdivision and shall be deemed to expire therewith Legislative History: Senate 4530 (Senator Klein) (ref to Judiciary) Assembly 5582 (M. of A. Weinstein) (PASSED) 2012 Legislative History: S (Rules) (ref to Rules) A (M. of A. Weinstein) (Passed) CHAPTER TEXT: LAWS OF NEW YORK, 2013 CHAPTER 306 AN ACT to amend the civil practice law and rules, in relation to residential foreclosure actions Became a law July 31, 2013, with the approval of the Governor. Passed by a majority vote, three-fifths being present. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. The civil practice law and rules is amended by adding a new section 3012-b to read as follows: 3012-b. Certificate of merit in certain residential foreclosur e actions. (a) In anv residential foreclosure action involving a home loan, as such term is defined in section thirteen hundred four of the real property actions and proceedings law, in which the defendant is a resident of the property which is subject to foreclosure, the complaint shall be accompanied by a certificate, signed by the attorney for the plaintiff, certifying that the a ttorney has reviewed the facts of the case and that, based on consultation with representatives of the plaintiff identified in the certificate and the attorney's review of pertinent documents, including the mortgage, security agreement and note or bond underlyinq the mortgage executed by defendant and all instruments of assignment, if any, and any other instrument of indebtedness including any modification, extension, and consolidation, to the best of such attorney's knowledge, information and belief there is a reasonable basis for the commencement of such action and that the plaintiff is currently the creditor entitled to enforce rights under such documents. If not attached to the summons and complaint in the action, a copy of the mortgage, security a-greement and note or bond underlying the mortgage executed by defendant and all instruments of assignment, if any, and any other instrument of indebtedness including any modification, extension, and consolidation shall be attached to the certificate. (b) Where a certificate is required pursuant to this section, a single certificate shall be filed for each action even if more than one defendant has been named in the complaint or is subsequently named. (c) Where the documents require d under subdivision (a) are not attached to the summons and complaint or to the certificate, the attorney for the plaintiff shall attach to the certificate supplemental affidavits by such attorney or representative of plaintiff attesting that 8/22/2013

7 Page 3 of4 such documents are lost whether by destruction, theft or otherwise. Nothing herein shall replace or abrogate plaintiff's obligations as set forth in the New York uniform commercial code. (d) The provisions of subdivision (d) of rule 3015 of this article shall not be applicable to a defendant who is not represented by an attorney. (e) If a plaintiff willfully fails to provide copies of the papers and documents as required by subdivision (a) of this section and the court finds, upon the motion of any party or on its own motion on notice to the parties, that such papers and documents ought to have been provided, EXPLANATION--Matter in italics is new; matter in brackets [-] is old law to be omitted. CHAP the court may dismiss the complaint or make such f inal or conditional order with regard to such failure as is just including but not limited to denial of the accrual of any interest, costs, attorneys' fees and other fees, relating to the underlying mortgage debt. Any such dismissal shall be without prejudice and shall not be on the merits. 2. Subdivision (a) of rule 3408 of the civil practice law and rules, as amended by chapter 507 of the laws of 2009, is amended to read as follows: (a) In any residential foreclosure action involving a home loan as such term is defined in section thirteen hundred four of the real property actions and proceedings law, in which the defendant is a resident of the property subject to foreclosure, plaintiff shall file proof of service within twenty days of such service, however service is made, and the court shall hold a mandatory conference within sixty days after the date when proof of s~~vice upon such defendant is filed with the county clerk, or on such adjourned date as has been agreed to by the parties, for the purpose of holding settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan.documents, including, but not limited to determining whether the parties -can reach a mutually agreeable resolution to help the defendant avoid losing his or her home, and evaluating the potential for a resolution in which payment schedules or amounts may be modified or other workout options may be agreed to, and for whatever other purposes the court deems appropriate. 3. This act shall take effect on the thirtieth day after it shall have become a law and shall apply to actions commenced on or after such effective date; provided, however that the amendments to subdivision (a) of rule 3408 of the civil practice law and rules made by section two of this act shall not affect the expiration of such subdivision and shall be deemed to expire therewith. The Legislature of the STATE OF NEW YORK ss: Pursuant to the authority vested in us by section 70-b of the Public Officers Law, we hereby jointly certify that this slip copy of this session law was printed under our direction and, in accordance with such section, is entitled to be read into evidence. Thomas J. Hall, Esq., Partner The Law Firm of Hall & Hall, LLP 57 Beach Street Staten Island, New York Phone: (718) Fax: (718) HaiiT@HallandHalllaw.com 8/22/2013