Continuing Strange Burden Of The Attorney Affirmation

This subject was the focus of our July 2, 2012 alert where there was ultimately a pleasing end for the lender: the order of reference had been submitted long before the mandate (Admin Order 548/10 superseded by Admin Order 431/11) requiring an attorney affirmation as to the accuracy of all alleged existed, nonetheless, the trial court denied the order of reference, reversed on appeal.  One of our points was that although the lender won in the end, it suffered considerable delay, compounded by the further detainment and the cost to pursue an appeal.  It is no way to run an airline.

In a new case, the lender was not so “fortunate”; under similar circumstances both the trial and the appellate court ruled that the affirmation was needed for a judgment of foreclosure and sale even though the Administrative Order did not exist when application for the judgment had been made. [Wells Fargo Bank, N.A. v. Hudson, 98 A.D.3d 576, 949 N.Y.S.2d 703 (2d Dept. 2012)].

This result is both more dismaying than it might appear on the surface and is, unfortunately, typical of the myriad landmines foreclosing lenders and servicers encounter in the New York mortgage foreclosure arena.  The surfeit of statutes designed to protect borrowers are often unclear and in any event impose a host of ministerial requirements regarding exceptional punctiliousness in endeavoring to proceed through a foreclosure action.

The decision here is just such an example.  When the judgment was applied for, there was no requirement for this attorney affirmation.  The affirmation was intended to be submitted at an early stage of the foreclosure – not at the end.  Nevertheless, mindful that foreclosures did exist when the Administrative Order was promulgated, it provided that if an action was already pending, the affirmation would be required for issuance of the judgment of foreclosure and sale.  The word “pending” was the villain of the piece in this instance and the court ruled that because the judgment application was “pending” the affirmation would have to be submitted, even though the requirement did not exist when the application was made.

Of course, the trial court could simply have said that it was holding the judgment in abeyance awaiting submission of the affirmation.  But it did not do that because it decided to dismiss the entire action for another reason – which turned out to be baseless and resulted in a reversal on that other point.  But the damage suffered by the foreclosing lender was the need to prosecute an appeal for vindication on the main issue, then to nonetheless incur denial of the judgment until the affirmation was submitted.

It all becomes quite a morass and it underscores the exceptional difficulty lenders and servicers encounter with defaulted mortgages in the Empire State.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.