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NY passes Bill for a borrower, can recover attorneys’ fees if a lender’s foreclosure action fails

NY passes Bill for a borrower, can recover attorneys’ fees if a lender’s foreclosure action fails

WooHoo! I tell you what…EVERY State needs to follow by this example!

Banks Oppose ‘Access To Justice In Lending Act’? Well, Let’s See What It Provides

Submitted by Steven Meyerowitz on Fri, 07/09/2010 – 9:06am

A rose by any other name may smell as sweet, Juliet says. A nice thought for the theatre, but perhaps not for the law. A New York bill that has passed both houses of the state legislature is called the “Access To Justice In Lending Act.” And the New York Bankers Association opposes it. What?

The bill governs a mortgagor’s right to recover attorneys’ fees in foreclosure actions. It provides that whenever a residential mortgage provides that in any action to foreclose, the mortgagee may recover attorneys’ fees and/or expenses, “there shall be implied in such mortgage a covenant by the mortgagee to pay to the mortgagor the reasonable attorneys’ fees and/or expenses incurred by the mortgagor . . . in the successful defense of any action or proceeding commenced by the mortgagee against the mortgagor arising out of the contract.” Translation: a borrower can recover attorneys’ fees if a lender’s foreclosure action fails.

The bank group, represented by the Wilson Elser law firm, opposes the bill, declaring that it “would create a new implication in any contract that provided attorneys’ fees and costs to foreclosing parties a right for the party being foreclosed on to also collect attorneys’ fees and costs if he or she is successful.” In its view, the legislation “is unconstitutional on its face as applied to existing mortgages, is unnecessary and would create uncertainty in the foreclosure process.”

The Wilson Elser letter adds that the bill “is so broadly drafted that it could give defendants in foreclosure actions the right to attorneys’ fees even where a mortgagee would have no such rights…. In typical foreclosure actions in New York, foreclosure notices may be filed three, four, five or even more times without a foreclosure being actually completed. If a mortgagor elected to hire an attorney and then brought his or her mortgage up to date by paying off arrears, this legislation would provide the mortgagor with the right unfairly to collect attorneys’ fees for those uncompleted actions.”

We’ll keep you up-to-date on the status of this legislation as developments warrant.

Source: Financial Fraud Law

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