Statewide Debt Collection Rules
In August 2014, MFY submitted comments to the New York State Department of Financial Services (DFS) about the agency’s revised proposed debt collection rules. Overall we support the implementation of debt collection rules, which will help alleviate many of the problems our clients face, but we believe the rules could be strengthened with some changes, including that the rules explicitly apply to in-house collection arms of original creditors.
MFY Urges Legislature to Pass Bill Extending Mandatory Foreclosure Settlement Conferences
Since 2008 MFY attorneys have prevented hundreds of homes in Brooklyn, Queens, and Staten Island from being lost to foreclosure, thanks, in part, to a NYS law that requires mandatory settlement conferences in residential foreclosure cases. That law is set to expire in early 2015, prompting MFY to advocate for the passage of a simple “extender” bill currently before the NYS Senate. The NYS Assembly passed the bill 131-0 on June 2, 2014, with bipartisan support.
The NYS Office of Court Administration recently documented that more than 46,000 new foreclosure cases were filed in 2013, an 84% increase over 2012 filings. Thus far in 2014, filings are up another 39% over 2013′s crisis-level filings. A recent report by New Economy Project likewise documents the significant upward trend in troubled mortgages in NYC. The NYS Bankers Association acknowledges the continued serious foreclosure problem and thus does not oppose the settlement conference extender bill.
Although some banking interests have disingenuously complained that the NYS foreclosure process takes too long to complete, those complaints utterly ignore that it is the banks and their agents that, as plaintiffs in foreclosure, control the timing of the process. Foreclosure prevention advocates have documented – and published judicial decisions reflect – the myriad ways in which banks delay the process. Cynical complaints about delay should not serve as a distraction from the vitally important role foreclosure settlement conferences serve in ensuring that NY homeowners who can save their homes from foreclosure are given the appropriate opportunity and forum to do so. That forum is the court-supervised foreclosure settlement conference provided by CPLR 3408, a provision that must be extended for five years to ensure fairness in the foreclosure process and to provide struggling NY homeowners with a level playing field.
MFY Applauds OCA’s Proposed Rules for Debt Collection Cases and Pro Se Forms
MFY submitted comments in May in support of revised rules proposed by the New York State Office of Court Administration that would implement state-wide forms for debt collectors to use when seeking default judgments in consumer debt cases. The proposal also would expand existing resources for pro se defendants and impose an additional notice requirement statewide. The proposed reforms are welcome and critically needed for our clients because of the acute problems consumers face as a result of the routine entry of default judgments based on faulty information and robo-signed affidavits. The proposed amendments to the court rules serve to clarify what is already required under the CPLR and common law when seeking default judgments by both debt buyers and original creditors and will bring much-needed reform to the default judgment process.
Supporting Kinship Caregivers Seeking Custody & Guardianship
MFY Legal Services supports changes to Domestic Relations Law 72 (S. 2094-A; A.7189-A) to make it easier for relatives to secure orders of custody or guardianship for children that have been in their care for two years or more.
MFY Urges Governor to Appoint a Wage Board to Increase Pay for Tipped Workers
MFY, as part of the Coalition for a Real Minimum Wage Increase, called on Governor Cuomo to appoint a Wage Board so that tipped workers – 75 percent of whom are women – will not be left out of New York’s recent minimum wage increase.
MFY Urges CFPB to Issue Strong Rules on Debt Collection
The Consumer Rights Project submitted comments to the Consumer Financial Protection Bureau (CFPB) in anticipation of federal rules governing debt collection practices. To be effective, the rules should adopt the protections already existing in New York City, and expand upon them by, among other things, (1) more closely regulating the debt buying industry; (2) improving protections for consumers with limited English proficiency; (3) requiring debt collectors to possess key information at all stages of the collection process; (4) facilitating consumers’ ability to exercise their rights to verification and to cease contact; (5) banning unfair practices, such as the collection of time-barred debts; (6) promoting transparency for ongoing settlement and payment plans; (7) ensuring fair litigation conduct; and (8) encouraging private enforcement of the Fair Debt Collections Practices Act. Finally, the rules should expressly cover all debt collectors, including original creditors and collection attorneys. MFY applauds the CFPB’s interest in protecting consumers across the country from unfair, abusive and deceptive collection efforts, and appreciate the opportunity to serve as a sounding board for our clients’ experiences.
Statewide Forms for Debt Collectors Seeking Default Judgments
In December 2013, MFY submitted comments regarding rules proposed by the Office of Court Administration (OCA) that would implement statewide forms for debt collectors to use when seeking default judgments in consumer credit actions. Although MFY supports OCA’s initiative in addressing the meager amount of proof required to obtain default judgments in these cases, we oppose the proposed amendments because as currently drafted they actually serve to exacerbate the existing problems affecting tens of thousands of consumers, and we offer suggestions for improving such applications.
2013-2014 Legislative Agenda
Enact the Consumer Credit Fairness Act
Enact the Consumer Credit Fairness Act to strengthen the pleading requirements in debt collection cases, enhance notice requirements, and require greater information when applying for a default judgment, thereby leveling the playing field for pro se litigants and reducing the number of judgments based on inaccurate information.
Ensure that Adult Homes and Nursing Homes are Prepared for Emergencies
Hurricane Sandy had a devastating effect on residents of New York’s nursing homes and adult care facilities. Many facilities were evacuated after the storm under chaotic circumstances. Residents were displaced for weeks and months in difficult conditions. This legislation would address the shortfalls in this system by incorporating lessons learned from Hurricane Sandy and establishing new state-wide protocols for planning and evacuation of facilities housing people who are elderly or have disabilities.
Require Banks to Negotiate in Good Faith with Homeowners Facing Foreclosure
Make CPLR Rule 3408, currently set to sunset in February 2015, permanent. Homeowners in foreclosure will continue to be afforded access to Settlement Conferences in which the parties are required to negotiate in good faith. Advocates seek to enhance the process by, among other things, authorizing the tolling and/or barring collection of interest, costs and fees when plaintiff causes undue delay, and awarding defendants’ costs, attorney’s fees and damages in those circumstances. This amendment to the current statute also seeks to reduce protracted motion practice in IAS Parts and minimize the need for evidentiary hearings related to the parties’ obligation to negotiate in good faith.
Establish a Homeowner Bill of Rights
Establish a Homeowner Bill of Rights in New York State drawing from the core provisions in the National Mortgage Settlement, Office of the Comptroller of the Currency settlements, Consumer Finance Protection Board regulations, and New York State Department of Financial Services regulations, among others (all of which are set to expire in the next two years); extend the protections of these settlements and regulations to home loans not currently covered; and provide homeowners a private right of action for violation of the Homeowner Bill of Rights.
Protect Tenants from Frivolous Lawsuits
Amend New York State General Business Law section 349 to clarify that landlords are committing deceptive business practices when they bring frivolous lawsuits, charge illegal rents and fees, and engage in other bad practices in order to harass, exploit, and mislead tenants. This will allow tenants to go to court to enjoin a landlord from future deceptive conduct and provide for both damages and attorney’s fees.
Protect the Rights of Rent-Stabilized Tenants
Amend New York State law to provide that rent-stabilized leases can be exempted by a debtor in bankruptcy, ensuring that rent-regulated tenants seeking a fresh financial start do not lose their homes in the bankruptcy process.
Require the NYC Police Department to Create Crisis Intervention Teams
Pass a New York State law creating a pilot program to assess the need and create an action plan for the New York City Police Department to develop specially-trained Crisis Intervention Teams (CIT) to respond to incidents related to so-called “emotionally disturbed persons” to minimize unnecessary arrest, hospitalization, injury and death of people with mental illness and reduce risk of injury to police officers and community members.