Foreclosure Defense Material SCBA- Old seminar materials

FORECLOSURE: SOUP TO NUTSMay 12, 2011

DEFENSE ATTORNEY PACKET

DONALD CITAK, ESQ.Citak & Citak – NYC

DEFENSE ATTORNEY PACKET – DONALD CITAK

■ Intake Questionnaire

■ Loan Service and Fee Agreement (Loan Modification)

■ Foreclosure Litigation Addendum

■ Retainer for Attorney Services: Limited Service–Appearance at Conference (FlatFee)

■ Retainer for Attorney Services: Motion to Vacate Judgment (Flat Fee–Hourly)

■ Sample Public Relations Letter

■ Sample Information Sheet: Foreclosures and Alternatives

■ Client’s Authorization to Lender

■ Cease & Desist Notice

■ Sample Qualified Written Request

■ Sample Letter to Bank (Qualified Written Request)

■ Sample Objection Letter

■ Sample Hardship Letter

■ Financial Worksheet

■ Lender Financial Benefit (Foreclosure v. Modification)

■ New York Legislature: Chapter 472 (Creating New Crimes Related to MortgageFraud)

■ Foreclosure Bill: November 2009

■ CPLR Rule 3408: Mandatory Settlement Conference (Residential Foreclosure)

■ Verified Amended Answer with Affirmative Defenses

■ Country Wide Home Loan v. Gress (Assignment after Commencement – NoStanding)

■ Administrative Order: Chief Judge

■ Fair Debt Collection Practices Act

■ FHA’s Loss Mitigation Option Letter

■ FHA’s Loss Mitigation Option Guidelines

INTAKE QUESTIONAIRRE

CLIENTS NAME: ______________________________________________________ Mortgage Questionnaire

1. When did you apply for your current mortgage? (month and year) _____________________________________________________________________

2. Were you (and/or the co-borrower) working at the time of the application? _____________________________________________________________________

3. What was your annual Income at the time of application? _______________________

4. What was the co-borrowers annual Income at the time of application? _____________ 5. Were you self employed? ______________________________________________________ 6. Was the mortgage for a purchase or a refinance of your home?

______________________________________________________________________________ 7. Did you provide any proof of income to the broker/bank when you applied for the loan?

______________________________________________________________________________ 8. Did you use your own attorney or was one recommended to represent you at the closing?

______________________________________________________________________________ 9. If yes, please provide name and contact information and who recommended them:

_____________________________________________________________________________

10. Did you understand all of the documents that you signed at closing?

11. Did someone review and explain every document with you at the closing? If so Whom?_______________________________________________________________________

12. Were the terms & the rate at the closing what you were expecting or promised? _____________________________________________________________________________

13. If there was a change at the closing – what was the reason given by the broker?

____________________________________________________________________________________________________________________________________________________________

14. Was the loan a fixed rate, adjustable or negative amortization?

________________________________________ 15. Did you feel you could afford the loan at the time of the closing? _____________________

16. Has the interest rate or payment changed since closing? ____________ When?

_______________________________

17. What is the rate now? ______ What is the payment now?__________________ ____

Income Questionnaire

18. Are you (and/or co-borrower) still working? ________________________________________

19. What is your annual income now? ________________________________________________

20. What is the co-borrowers annual income now? ______________________________________

21. If you or the co-borrower are no longer working, please provide date of unemployment and what led up to you losing your job: __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

22. Has your income decreased for other reasons?

Why?______________________________________________________________________________

Hardship Questionnaire 23. Explain your hardship in as much detail as possible (Month and year of occurrence’s) which

led to current situation: __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

HARDSHIP INFORMATION (Indicate ALL that are applicable)

Interest Rate Adjustment – Mortgage rate adjusted from _____ to ____ causing our monthly mortgage payment to increase $_______ per month. Reduced Income – Husband received overtime which amounted to approximately $________ per month. He is no longer receiving overtime which has caused our annual income to decline by $______ per annum. Excessive Medical Bills – Injured in car accident on such and such a date and needed to be hospitalized for ___ days. EXPLAIN INJURIES IN DETAIL. Required to go to physical therapy for ____ months and was unable to work. Illness requiring extensive/extraordinary care. EXPLAIN IN DETAIL HARDSHIP INFORMATION I am having problems making my monthly payment because of financial difficulties created by: (Check all that apply and provide brief description below) ◦ Unemployment ◦ Reduced Income ◦ Medical Bills ◦ Illness ◦ Payment Increase ◦ Job Relocation ◦ Separation ◦ Divorce ◦ Death of Spouse ◦ Military Service ◦ Property Damage ◦ Incarceration ◦ Too Much Debt ◦ Business Failure ◦ Other (Please Specify): ______________________________________________________________________________________

Unemployment date: ____________________________________________________________________ Reduced Income date: ___________________________________________________________________ Medical Bills____________________________________________________________________________ Illness_________________________________________________________________________________ Mortgage Payment Increase_______________________________________________________________ Job Relocation__________________________________________________________________________ Separation – Divorce_____________________________________________________________________ Death of Spouse _________________________________________________________________________ Military Service_________________________________________________________________________ Property Damage_______________________________________________________________________ Incarceration____________________________________________________________________________ Too Much Debt (IE: credit Cards, loans)_____________________________________________________ Business Failure_________________________________________________________________________ Other (Please Specify): ___________________________________________________________________

BORROWER MODIFICATION HISTORY Please provide the answers to the questions below as accurately and comprehensively as possible, to assist us in evaluating various aspects of, and expectations within, the modification process for which you may engage us.

DATE: ___________________ BORROWERS: __________________________ ____________________________ PROPERTY ADDRESS: _____________________________________________________ LENDERS: _____________________________ ______________________________ 1. Have you had any prior contact with your lender regarding any prior attempts to modify your mortgage loan? ______ YES ______ NO If so, When? First Contact Date: ___________ Last Contact Date: ___________ 2. How long did it take you to make contact with someone at the Lender's offices who was responsive to your inquiries? 3. (a) Were you told that you needed to be delinquent in payments before the lender would consider a modification request? ______ YES ______ NO (b) If so, how many months delinquent? ________ 4. What was the result? State any comments you deem important or relevant: _____________________________________________________________________________ _____________________________________________________________________________ 5. Identify (and, if available, provide copies of) any written applications, forms, financial statement or other document or information you may have submitted to the lender with regard to any prior loan modification attempts. 6. What do you believe is the current market value of your home? $ ___________ 7. (a) If the market value is less that the current principal mortgage amount, are you willing to continue to pay interest on the current principal amount? ___ YES ___ NO (b) If the lender is not willing to reduce the principal balance of the loan down to the current value, are you willing to walk away from the home? ___ YES ___ NO

Please Sign Here

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CITAK & CITAK Attorneys at Law

270 Madison Avenue, New York, NY 10016

Phone: (212) 759-9585 Fax: (212) 759-2979 [email protected]

LOAN MODIFICATION SERVICE AND FEE AGREEMENT

Primary Borrower: Property Address: 1. The persons identified on Schedule A (herein referred to as “Borrowers”) seek to modify the existing mortgage(s) on the Property identified in Schedule A hereto (“the Subject Property”): (a) Borrowers hereby engage the services of the CITAK & CTIAK (“Servicers”) on the terms and conditions set forth below, and (b) Servicers hereby agree to perform the services defined and detailed below (“Loan Modification services”) and the Borrowers agree to pay the fees detailed below for these services. 2. Borrower understands that “Loan Modification”, as used herein, refers to an attempt to change one or more terms or provisions of one or more existing mortgage loans and/or home equity loans, secured by the Subject Property, to adjust the monthly payment on an incremental and/or permanent basis, reduce, defer or modify certain arrearages or fees which may now be owed, or which may hereafter be incurred by Borrowers, modify prior or future interest rate adjustments and, in some instances, lower the principal amounts due under such mortgage loans and/or home equity loans. 3. Borrowers understand and acknowledge that: (a) in the Loan Modification process, lenders may be willing to reduce or defer amounts owed, lower or defer future payments, lower rates, extend loan term durations and, in some limited instances, reduce the loan principal amount; (b) lenders are not obligated to agree to a Loan Modification, but may be willing to do so based upon numerous reasons, factors and circumstance, some of which relate to the particular borrower applying for Loan Modification, and some of which relate to overall prevailing market and financial conditions in general; (c) there is no guarantee of success in modifying a loan, and no person or entity can assure such a modification at all, let alone any specific terms and provisions of such a proposed modification; (d) a borrower is NOT required to engage the services of any person, entity, attorney accountant, etc., to apply for, process and negotiate a Loan Modification from a lender, but may negotiate such a Loan Modification himself/herself – or may avail themselves of any one of a number of free services that may be available to a homeowner through a local Bar Association or other Community-based organizations; however, a borrower may elect to engage the services of persons or entities to apply for, process and negotiate a Loan Modification on borrower’s behalf – as Borrowers have done herein – based upon the experience, resources and expertise of persons or entities such as Citak & Citak, Esqs., Citak Law Group, PLLC and their personnel and affiliates;

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(e) they believe that engaging Servicers herein to represent them in the Loan Modification process provides them with a better chance to procure modification of one or more loans, and to procure a better result than if they were to conduct and negotiate with the Loan Modification process themselves, and they are therefore willing to pay the fees agreed to herein, and that all legal services hereunder will be provided by the Citak & Citak, Esqs., Citak Law Group, PLLC and other (non-legal) services may be provided by outside servicing agents, all of whom shall be engaged, compensated and supervised by Citak& Citak, without further separate obligation by Borrowers, except as may otherwise be expressly set forth herein. (f) they acknowledge that Servicers cannot determine the amount of time that will be required to complete the Loan Modification process, they have been advised that it is common for some lenders that are understaffed and/or overburdened with loan modification requests to not provide documents required within the time limits imposed by RESPA or other governing rules and regulations, Some lenders after receiving Loan Modification proposals have not provided approvals or counterproposals more than 90 days after their receipt. The overall time to finalize a loan modification with a lender may encompass more than one year due to the above referenced factors and other factors that affect the lenders and their abilities to expeditiously respond to communications. 4. (a) Borrowers agree to provide truthful and accurate information and documentation requested by Servicers regarding the property and Borrowers’ personal finances, including assets, liabilities, income, expenses, and all other information which Servicers require or request to enable them to complete all aspects of the process for which Borrowers are engaging their services. . Loan Modification is an interactive process that requires up to date information and documentation at many stages of the loan modification process. Lenders WILL OFTEN CLOSE FILES that are in the process of modification that fail to provide updated information expeditiously. In the event that Servicers request information and Borrower fails to provide same within 10 business days, Servicers may discontinue processing and declare Borrower’s file “INACTIVE.” In the event that your file is declared “INACTIVE,” an analyst will have to requalify the file, which includes, but is not limited to, reaffirming bank statements, earnings and other required data. Borrower may be accessed an additional fee of $250 for each time Servicers are required to requalify the file. AMOUNG YOUR MOST IMPORTANT OBLIGATIONS UNDER THIS AGREEMENT IS TO PROVIDE INFORMATION TIMELY WHEN REQUESTED. (b) Borrowers warrant and represent that all of the information provided by them in connection with the Loan Modification is, and shall hereafter be, true and accurate in all respects, and that Borrowers have not omitted, and will not hereafter fail to deliver, information or documentation requested, or which may be relevant to the Loan Modification process for which Borrowers are engaging the Servicers. (c) Borrowers understand that inaccuracies or omissions can seriously hamper the efforts of Servicers to procure a modification of Borrowers’ mortgage(s). Borrowers are further aware that furnishing inaccurate information in connection with the Loan Modification process may constitute violations of state and/or federal laws. Any non-compliance by Borrowers with the provisions of this paragraph 4 shall be deemed a material and substantial breach of this agreement by the Borrowers and shall give the Servicers the right, at their sole discretion, to terminate this agreement and perform no further services for the Borrowers. The right of the Borrowers to the return of any fees paid hereunder, if any, is set forth below. 5. Borrowers agree that Servicers may verify any information provided by Borrowers, and authorize Servicers to take all steps which may be necessary to do so. Borrowers authorize Servicers, and their employees, agents, servants and affiliates, to communicate with Borrowers’ Lender(s) and to request and receive all information and documentation which would be available to Borrowers from said Lender(s), and have, or will hereafter, execute any documents necessary to implement such authorization.

6. The term “Lender”, as used herein, shall include any and all of the actual Lender’s assignees, successors and/or assigns, servicers, employees, agents, or any person or entity employed or engaged by, or affiliated with, any of the foregoing.

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7. Borrowers further hereby authorize Servicers to obtain credit reports from any one or all three of the credit reporting agencies, including updated credit reports as deemed necessary by Servicers in the course of the modification process. 8. Borrowers agree that signatures on this and any other documents executed for Servicers as part of, or in connection with, the Loan Modification process, by facsimile or electronic (e-mail) transmission will be of the same binding force and effect as original signatures. 9. Borrowers agree that, during the term of this Agreement, they will not engage in any direct or indirect communication (and will cease any ongoing communication) with any Lenders or their representatives regarding Loan Modification, and that they will not engage the services of any other persons, firms or entities to represent them in any manner with respect to modification of loans on the Subject Property. It is in the best interest of the Borrower that all communication and negotiations be conducted exclusively by Servicers.

SERVICES and FEES: ALL FEES other than the initial payment upon execution shall be payable, by EFT (electronic check), credit card, or debit card to: Citak & Citak

I. BASIC FEE The Basic Fee shall be equal to one percent (1%) of the amount claimed as owed by the lender (inclusive of principal, interest, late fees, penalties, lender advances, etc., hereinafter the “total debt”) of a single mortgage loan or one and a half percent (1.5%) of the “total debt” if the property is encumbered by more than one mortgage, however, in no event shall the Basic Fee be less than $3,000. Borrowers acknowledge that the precise “total debt” may not be readily determinable at the time of execution of this Agreement, but only at a later date after Servicers’ receipt and review of all loan documents from the Borrower and the lenders(s). Thus, it is agreed that the parties will utilize the mortgage principal and any past due interest or other charges claimed due by the Lender on the most recent statement as the total debt at the time of the execution of this Agreement, and any necessary adjustment of the Basic Fee, resulting from subsequent determination of the precise total debt, shall be made as an adjustment at the time of the acceptance of Loan Modification. In addition, Borrowers are responsible for any fees charged by their Lenders for copies of documents, and fees charged by their Lenders for preparation of loan modification documents.

II. OPTIONAL SERVICE: Forensic Analysis of Loan Documents In addition to the Basic Fee, the Borrower may elect to engage Servicers to perform a Forensic Analysis of Loan Documents for any or all of Borrower’s mortgage loans. A Forensic Analysis includes a comprehensive review, comparison, analysis and interpretation of the loan documentation received by Borrowers pre-closing and post-closing, thus enabling Servicers to determine whether all lending laws and regulations were followed, and whether there were any violations thereof, which may entitle the Borrowers to relief from the existing mortgage(s), and/ or may enhance the Servicers’ negotiating position with the Borrower’s lenders in the Loan Modification process. Fees: First Mortgage Forensic Analysis: $695

Additional Mortgages Forensic Analyses: $250 each

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III. PRINCIPAL REDUCTION and/or DEFERRAL FEE

These are in addition to the Basic Fee or any Litigation Fees (payable under the separate Foreclosure Addendum).

IF the Servicers achieve a reduction or deferral of the principal or past due payments owed to the Borrowers’ Lender in the Loan Modification process, then Borrowers agree to pay Servicers a fee equal to:

In the case of a reduction of principal or past due amounts on any of Borrower’s mortgage loans: four (4%) percent of the total reduced amount

In the event of a principal deferral: two (2%) percent of the total deferred amount.

Appraisal: Depending upon the comparison of the Borrowers’ loan balances with the current value of the Subject Property, Servicers may need to provide Lenders with evidence of the current market value of the property, and compare that directly with the Lenders’ position and costs to be incurred in the foreclosure process. Because the value of the property in such a scenario is based not on the prices of recent normal arms-length sales of homes (traditional “comps”), but must include recent distress/foreclosure sales, which are more indicative of what the lenders can expect at the end of the foreclosure process if they do not agree to the loan modification, Servicers sometimes must obtain a specialized appraisal to show the lenders why the values of the property in or after foreclosure are not the same as the value of the similar properties sold leisurely in an arms-length transaction. The cost of an Appraisal is an additional fee, paid by the Borrower at the time of the Servicer’s engages the Appraiser, as follows: Estimated Average Appraisal Cost: $ 350-$500 (Properties above $ 750,000 or with special circumstances may be higher.)

Services included in the Basic Fee: Qualified Written Request: Preparation and submission to each Lender of a formal written request pursuant to Section 6 of the Real Estate Settlement Procedures Act (RESPA). This QWR must be acknowledged by the Lender within twenty (20) business days. The QWR will encompass all documents generated prior to, and during, the loan application process, and all documents signed prior to, at, or since, the mortgage loan closing, facilitating Servicers’ review thereof. During the 60-day period from a lender’s receipt of the QWR, that lender may not provide information to any consumer reporting agency regarding any overdue payment, owed by a borrower, relating to such period or the matters raised in the QWR. Hardship Interview: Interview with Borrowers to determine reasons and circumstances causing Borrowers’ past, present and/or future inability to meet monthly mortgage payment obligations required under the original mortgage documents. Financial Analysis of Borrowers’ Positions and Payment Capabilities: Detailed review of Borrowers’ current financial positions, including, particularly, income and expenses, present and anticipated, to enable Servicers to determine and present to lenders, proposed modified payment amounts which Borrowers will be able to comfortably afford on a monthly basis going forward. This will facilitate Servicers’ proposals to lenders for modifications of the loans, while enabling Servicers to present credible and realistic plans to both induce the lenders to agree and convince them of the reasonableness of the modifications requested.

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Property Inspection and Report: Visit to the property for physical inspection of interior, exterior and surrounding area, as appropriate, including photographing of specific conditions and areas of and around the property, and preparation of a report of such inspection. The information will be assembled, either electronically or in print, and submitted to lender to support the proffered change in valuation, if any, of the subject property. In certain instances, in the event that the inclusion of this report will not benefit the modification process, it will be omitted based upon Servicers discretion. Property Valuation Report: Internal preparation of a report of conditional market value, utilizing data available from local and national valuation companies or municipalities, or Public Records. The information will be assembled, either electronically or in print, and submitted to lender to support the proffered change in valuation, if any, of the subject property. (In certain cases, an Appraisal may be required as detailed above (at an additional cost to Borrowers). Submission of Modification Package to Lender: After completing the analysis of all relevant factors: hardship, financial projections, property value, possible RESPA or TILA violations (if a forensic analysis is performed), market conditions, etc., Servicers will prepare and submit a proposal, with detailed documentation, to the lender which will seek to both (i) accomplish Borrowers’ needs, and (ii) give practical value and sufficient appeal to the lender to have a realistic chance of being accepted by the lender. Negotiation with Lender and Resubmission of Loan Modification Package: Assuming that the lenders do not accept the initial proposed terms of modiifcation, or have questions or objections, Servicers will negotiate to try to finalize either the initial proposal or a revised proposal that is acceptable to Borrowers. After negotiation, Servicers will revise the proposal to include negotiated changes, and may be asked to formally resubmit the proposal with any and all revisions. Review of Final Offers From Lenders: The Lender will typically forward a set of documents to our office and the documents will be reviewed by Servicers to determine that they conform to the agreed upon modification.

Services NOT Included in the Basic Fee or Other Fees: The Basic Fee and other fees to be paid under this Agreement as outlined above do NOT include, and do NOT entitle the Borrowers to, legal services by Citak & Citak, Esqs. or Citak Law Group, PLLC, unless they are expressly specified herein. NOTE: The Basic Fee and other fees to be paid under this Service and Fee Agreement do NOT include foreclosure litigation, other litigation, bankruptcy filings or proceedings, tax advice, or other unspecified legal services. ______ Initials

Non-Payment of Mortgage Payments Prior to or During the Modification Process

Because you are not current with your monthly mortgage payments or because you may choose to stop making those payments, there is a strong possibility that your Lender will start a lawsuit to foreclose on your mortgage and gain title of your house. BE ADVISED THAT DISCUSSIONS WITH YOUR LENDER IN THE LOAN MODIFICATION PROCESS DOES NOT PREVENT YOUR LENDER FROM COMMENCING A LAWSUIT TO FORECLOSURE ON YOUR MORTGAGE. If you ignore any legal papers that are served upon you and fail to respond with appropriate action, you could lose your home and a money judgment could be entered against you. We strongly urge you to defend vigorously any foreclosure action commenced against you. The completion and implementation of a successful Loan Modification usually results in discontinuance of any then pending foreclosure lawsuit and the cancellation of any Lis Pendens that may have filed against your property.

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YOU ARE FREE TO RETAIN ANY ATTORNEY OF YOUR CHOOSING TO REPRESENT YOU IN A FORECLOSURE LAWSUIT. If you chose to retain CITAK & CITAK, ESQS or CITAK LAW GROUP, PLLC to defend you in that mortgage foreclosure lawsuit, additional fees will be incurred and must be paid by you. The additional fees that Borrowers will incur, should they choose to engage CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC and/or in connection with a mortgage foreclosure lawsuit, are set forth in the annexed Foreclosure Addendum

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Termination of Loan Modification and Service and Fee Agreement

In the event that the Client terminates the services of the Servicers prior to the conclusion of the Loan Modification process on the Client’s behalf, the Servicers shall be entitled to be paid on a quantum merit basis for all services rendered, legal and non-legal, up until the date of the termination of the Attorneys services. The hourly rates charged by the principal attorneys (Donald L. Citak and Burton Citak) are $450.00, by Associates $225.00, by Administrators $175.00, by paralegals $125.00, together with any disbursements incurred for outside services. The Client’s failure to make payments in a timely manner as prescribed herein shall authorize Servicers not to do any further work on the Client’s behalf, and shall, at the option of the Servicers, be deemed to be their discharge by the Client. This discharge will then be confirmed in writing by either party. Should the Servicers be discharged or withdraw from representing the Client herein, prior to depleting any of the Basic Fee or other fees paid by the Client, then a final bill identifying all services rendered and the expenses incurred to be charged to the Client will be sent to the Client. If, in the sole opinion of the Servicers, any portion of the Basic Fee or other fees paid by the Client have not been earned by Servicers, same will be refunded to the Client within thirty (30) days.

______ Initials

Borrowers acknowledge that Servicers have not provided Borrowers with any guarantees regarding the reduction of principal or interest rates on mortgage loans sought to be modified. Borrowers have informed Servicers that Borrowers are no longer financially able to satisfy their payment obligations under the mortgage due to certain hardships, which may be financial, medical or of another type. As a result of these circumstances, Borrowers have engaged Servicers for the purposes stated herein. Borrowers expressly acknowledge that Borrowers may be sued by their lenders and that Borrowers’ credit scores and credit histories may be negatively affected if Borrowers do not pay regular monthly payments to their lenders.

Additionally, Borrowers expressly acknowledge that they have been advised that, from time to time, lenders do not comply with their obligations under RESPA or the FDCPA, which could cause delays in the Loan modification process.

Borrowers agree that signatures on this and any other documents executed for Servicers as part of, or in connection with, the Loan Modification process, by facsimile or electronic (e-mail) transmission will be of the same binding force and effect as original signatures. All parties acknowledge that they have read, and understand and agree to, the terms and provisions of, and their obligations under, this Loan Modification Service and Fee Agreement. BORROWER: CITAK & CITAK _____________________________ by: _______________________________ BORROWER: _____________________________

SCHEDULE A Subject Property Address:

BORROWERS

Borrower #1: ____________________________________________

_____________________________________________

_____________________________________________

Soc. Sec. No.: ___________________

Phone Nos.: Home: ___________________

Work: ___________________

Cell: ___________________

Borrower #2: _____________________________________________

_____________________________________________

_____________________________________________

Soc. Sec. No.: ___________________

Phone Nos.: Home: ___________________

Work: ___________________

Cell: ___________________

Borrower #3: _____________________________________________

_____________________________________________

_____________________________________________

Soc. Sec. No.: ___________________

Phone Nos.: Home: ___________________

Work: ___________________

Cell: ___________________

LENDERS

First Mortgage Lender

Name: _________________________________________________________________

Address: _______________________________________________________________

Loan Number: __________________________________________________________

Amount Currently Owed: ___________________________

Second Mortgage Lender

Name: _________________________________________________________________

Address: _______________________________________________________________

Loan Number: __________________________________________________________


Third Mortgage Lender

Name: _________________________________________________________________

Address: _______________________________________________________________

Loan Number: __________________________________________________________


Loan Modification Fee Schedule Borrower: Property Address: Total Debt: Number of Mortgages: One Two Three Four ------------------------------------------------------------------------------------------------------------------------------- The Basic Fee shall be equal to one percent (1%) of the amount claimed as owed by the lender (inclusive of principal, interest, late fees, penalties, lender advances, etc., hereinafter the “total debt”) of a single mortgage loan or one and a half percent (1.5%) of the “total debt” if the property is encumbered by more than one mortgage, however, in no event shall the Basic Fee be less than $3,000. In the event such modification is accepted and there is any fee unpaid after the execution of this Agreement, the entire Basic Fee and any other fees must have been paid, or must be paid, at the time of the acceptance of the modification offered by the lender(s). Borrower’s failure to pay any installment when due entitles Citak & Citak, at its sole option, to discontinue the performance of any further services and terminate this agreement in accordance with the Termination provisions set forth herein.

ALL FEES (other than the initial payment, which is being paid upon execution) shall be payable by EFT (electronic check), credit card, or debit card to: Citak & Citak

The Basic Fee (minimum $3,000) is calculated to be: Total Debt: $______ x 1% or 1.5% = $ First Forensic Analysis……………@ $695.00…………………………………….………. $ 695.00

Second Forensic Analysis………...@ $250.00 each………………………………………. $

Documentation / Processing / Mailing / Fedex ……………………………….. $ 295.00

Total $

AGREED TO AND ACCEPTED: Date: _________________

________________________ _______________________ ______________________

Loan Modification Fee Payment Option Schedule Total Fee: ------------------------------------------------------------------------------------------------------------------------------- The Borrower may elect any of these following 3 Option Payment Schedules to the pay Total Fee computed on the Loan Modification Fee Schedule on the preceding page: Option A: 50% ($ ) on Execution; 50% ($ ) 30 days thereafter (on / /10), by EFT, Credit Card or Debit Card. If this Option is selected, and both payments made timely, the Total Fee will be discounted by 5%, which sum shall be deducted from the second installment, making that second installment $___________. If this installment is not received by its due date, i.e., if any electronic funds transfer, or credit card or debt card payment is declined, returned, unpaid, reversed, etc., the 5% discount shall be forfeited and the entire fee amount of $ _______ shall be due, plus service fees, as set forth below. Option B: 25% ($ ) on Execution; 25% ($ ) 30 days thereafter (on / /10), by EFT, Credit Card or Debit Card. 25% ($ ) 60 days thereafter (on / /10), by EFT, Credit Card or Debit Card. 25% ($ ) 90 days thereafter (on / /10), by EFT, Credit Card or Debit Card. If any installment is not received by its due date, i.e., if any electronic funds transfer, or credit card or debt card payment is declined, returned, unpaid, reversed, etc., borrower will pay a service fee, as set forth below. Option C: 25% ($ ) on Execution; The balance in 8 equal installments ($ each) on the 1st and 15th days or the following business day of each subsequent month for the next four calendar months, commencing _____________. If any installment is not received by its due date, i.e., if any electronic funds transfer, or credit card or debt card payment is declined, returned, unpaid, reversed, etc., borrower will pay a service fee, as set forth below. In the event that Borrower believes that necessary funds will not be available on the due date of any installment payment, and notifies Servicer at least 3 business days prior to the due date, Servicer will grant courtesy extensions, up to 2 times, for either a change of EFT account/Credit or Debit Card, and/or a 5-day extension of the due date. The service fee for any declined, returned, unpaid or reversed electronic funds transfer, or credit card or debt card payment shall be $50.00. BORROWER HAS SELECTED (Circle) OPTION: A B C

AGREED TO AND ACCEPTED: Date: _________________

________________________ _______________________ ______________________

"Notice of Right to Cancel"

You may cancel this Agreement, without any penalty or obligation, at any time before midnight of the third business day that begins the day after you agree to it by executing the document below and returning same via facsimile to (2121) 759‐9585.

To cancel this Agreement by mail you may send this Notice of Right to Cancel by certified mail to Citak & Citak , 270 Madison Avenue, New York, NY 10016 postmarked no later than the third business day after the date you received this Notice.

If you cancel this Agreement within the 3 day period, Citak & Citak will refund all money you have already paid.

I hereby, cancel this Agreement as of_______________________, 2011.

Print Name Sign Date

X

Print Co‐Signer Name (if applicable) Sign Date

X

Notice of Right to Cancel Received on: _____________.

___________________________

___________________________

Electronic Funds Transfer Authorization

As a duly authorized signatory on the account referenced herein, I/we authorize Citak & Citak, Esqs or Citak Law Group, PLLC to initiate electronic funds transfer debits from the referenced account identified below for the purposes detailed in the service fee payments due, or when applicable, apply electronic fund transfer credits to the same account. This applies to check by phone payments as well as any other electronic payment.

Furthermore, if any electronic debit(s) should be returned by my financial institution as Non‐Sufficient Funds (NSF), I/We authorized Citak & Citak, Esqs or Citak Law Group, PLLC to collect a return item fee of $50 per item by electronic debit from the referenced account.

I/We understand and authorize all of the above as evident by my/our signature below.

Financial Institution Branch

City State Zip

Routing/ABA # Account # Choose One:

Checking Savings

Print Name Sign Date

X

Print Co‐Signer Name (if applicable) Sign Date

X

FORECLOSURE LITIGATION ADDENDUM

NAME: PROPERTY ADDRESS:

Our Loan Modification Service and Fee Agreement with you does NOT include any legal services for any litigation, including any lawsuit initiated by your Lender to foreclose on your mortgage and try to obtain title to your house. Appearance in such litigation or any litigation is NOT part of the services to be rendered to you under our Loan Modification Service and Fee Agreement. Because you are not current with your monthly mortgage payments or because you may stop making those payments, there is a strong probability that your Lender will start a lawsuit to foreclosure on your mortgage. Legal services in defending such a lawsuit are not part of our loan modification services. If you ignore that lawsuit and fail to respond with appropriate timely action, you could lose your home and a money judgment could be entered against you. We strongly urge you to defend vigorously any foreclosure action commenced against you. Please understand that engaging in conversation with the Lender or Servicers customer service department regarding a loan modification or a forbearance agreement does not relieve you of the requirement to file an answer in the courts. We have often seen people that were lulled into believing that the foreclosure action would not continue while they were having discussions to supposedly modify their mortgage loan. The reality is that the Lender will continue the foreclosure lawsuit. For your protection, any agreement reached with the Lender must be obtained in writing. Verbal agreements over the telephone with a customer service representative of the Lender have absolutely no legal standing.

YOU ARE FREE TO RETAIN ANY ATTORNEY OF YOUR CHOOSING TO REPRESENT YOU IN THAT LEGAL PROCEEDING. If you chose to retain CITAK LAW GROUP, PLLC or CITAK & CITAK, ESQS to defend you in that foreclosure lawsuit, additional fees will be incurred and must be paid by you at the time we undertake the services listed below. You are required to pay only for the legal services needed and undertaken in your particular case. Our fees for the legal services to defend a foreclosure action are as follows:

Initial review/evaluation of Complaint and preparation/service and filing of an Answer with applicable affirmative defenses and possibly counterclaims, if applicable $1250.00 * You should never ignore legal papers of any kind, particularly in a foreclosure lawsuit; otherwise the Lender will proceed quickly – in a matter of a few months – to sell your home; any defenses or counterclaims you may had had available could be forfeited and waived.

In Lieu of Filing an Answer, Circumstances May Allow You To File a Pre-Answer Motion for Dismissal $1,250.00 *

(plus court filing fees) Depending upon several circumstances and factors unique to you, there are instances where service may not have been made properly, and it may be to your benefit to move to serve and file a motion to dismiss instead of answering. While there is no guarantee as to whether such a motion will be granted or denied, it will result in either: (i) the dismissal of the action, or (ii) the extension of your time to serve and file an Answer until after the motion to dismiss has been submitted to the Court, and decided (this time is usually between 30 and 90 Days). NOTE: Unless we believe, in good faith, that service was not proper as required by law, serving such a motion instead of answering is not an option available to you.

ALSO NOTE: If a Pre-Answer Motion is made and the Court denies the motion, you will be required to file an Answer to avoid default. In that case, you will be required to pay the above fees for the filing of an Answer.

Preparation/service of discovery demands

(i.e., Demand for Discovery and Inspection, Demand for Examination before Trial, etc.) $350.00 * The foreclosure lawsuit can be used to obtain documents in the lender’s possession, relating to the lawsuit or your counterclaims. While our QWR’s require the Lender to produce important documents, the Lenders often delay or fail to comply entirely. However, they must comply with document demands in the foreclosure lawsuit, or risk having a Court impose sanctions. The foreclosure lawsuit gives us another shot at obtaining these documents with more severe and imminent penalties to the Lenders if they are lax in complying or fail to comply.

THE ABOVE FEES MUST BE PAID UP FRONT, OR THE ANSWER (OR PRE-ANSWER MOTION TO DISMISS) WILL NOT BE PREPARED AND SERVED. IF YOU FAIL TO REPSOND TIMELY TO THE SUMMONS AND COMPLAINT, YOU MAY BE HELD IN DEFAULT.

Additional Possibly Required Services

Review and analysis of Lender’s discovery response $400.00 These documents will allow us to explore suspected predatory lending practices, reveal others which were not otherwise apparent and explore other possible defenses that we may not have previously been able to determine. Usually, these tasks will involve several hours of time.

Examination Before Trial (includes preparation) (1/2/full day) $750.00/$1,000.00

(plus cost of Court Reporter) This may become needed if we are aware of, or suspect, predatory lending practices, fraud or other actions by the lender, or if there are specific reasons in your particular case where we feel it is important to put the Lender on the spot by asking questions to a lender representative, which he/she must answer under oath.

Response to Motion by Lender $900.00 - $1,500.00

(Other than Motion Seeking Summary Judgment) Lenders and their attorneys are always looking to shortcut the process, and by-pass any defenses or obstacles to scheduling the sale of your home. If they are bringing a motion before the Court, it is likely for the purpose of frustrating your ability to obtain documents or information which would help us prove your defenses and/or counterclaims, or otherwise frustrate your ability to litigate your claim on the merits, and try to win by default. These motions must be opposed, to protect your positions and, again, derail the foreclosure process.

Initiation of Motion for Affirmative Relief $1,250.00 -$2,000.00 (Other than Motion Seeking Summary Judgment) (plus court filing fees)

There are times when you may need relief from the Court, whether to compel the lender to deliver documents you do not have , or have the case dismissed where the lender has failed to do so, or where you seek dismissal of all or part of a claim or defense for any of a number of substantive reasons. In those instances, you must initiate the request to the Court for such relief, by serving a Notice of Motion and supporting papers. This may bring the foreclosure action to an end, directly or indirectly, in a manner favorable to you, or may otherwise allow you to obtain certain specific needed relief.

Motions Seeking Summary Judgment $3000.00-$5,000.00 Summary Judgment motions seek to have the Court grant a final judgment against you, solely on undisputed facts. If your Lender makes such a motion, the granting of that motion denies you the opportunity to have a trial on the merit and effectively ends the case. In granting such a motion, a Court must conclude that there are no issues of disputed facts and that based on undisputed facts, your Lender is entitled to a judgment on the merits. The will lead to the appointment of a Referee and means that your Lender is one step closer to foreclosing and then evicting you from your home. Defending against Summary Judgment motions is very time consuming and requires considerable effort. If the Lender’s attorneys make a Summary Judgment motion, best efforts must be exerted to defeat the motion, which is not guaranteed, so that you will have your day in Court. Please note that your help in providing to us all of the facts necessary to defeat a Summary Judgment motion cooperation is essential.

Court Appearances (conferences, motions)(1/2 / full day) $400 - $750.00

Many courts in foreclosure cases have now routinely been

calling the parties to Court for a conference to see if the foreclosures can be avoided, whether by forbearance, short sale or loan modification. In the current “foreclosure” climate, many judges are strongly urging the lenders to try to work with us to modify the loan, and thus avoid and terminate the foreclosure completely. In fact, where the Lender has not yet responded to the QWR, the judges often insist that the Lender’s attorney hold the proceeding in abeyance until the lender has complied with the QWR. This greatly assists us in getting the opportunity to review those responses and submit a complete loan modification proposal. As a result, court conferences can often not only lead to a successful loan modification, but also curtail unnecessary expense of litigation in the interim. Also, court appearances are often required in connection with motions that seek to obtain specific relief in the litigation process as referenced above.

Court Appearances for Trial (or other formal evidentiary hearing) – TBD Fees will be based on time to be incurred, which cannot be determined or even estimated at this time, since each case is different; fees will also vary whether case is to be tried by partner or associate with hourly rates varying from $225.00 to $450.00 per hour)

PLEASE ALSO NOTE: 1) In addition to the above legal fees, you understand and acknowledge that you are

responsible to pay any out-of-pocket disbursements incurred or to be incurred by CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC in representing you in this action. These disbursements include but are not necessarily limited to filing fees, process servers, transcription services for depositions, overnight delivery services, messenger fees, postage, photocopying, subpoena fees and travel costs to/from courthouse.

2) No services shall be provided under the terms of this Addendum in any action or

proceeding other than the defense of the foreclosure action commenced by your lender for which the services of CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC have been expressly retained.

3) This Addendum does not cover any services relating to any appeal or any services

that might be required following the entry of a final judgment or order. The representation of CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC shall terminate with the entry of final judgment in your matter, unless extended by mutual agreement in writing.

4) CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC as a law firm is

being engaged to represent you (not any one particular attorney). The law firm reserves the right to assign and delegate all aspects of such representation among their attorneys as they deem appropriate.

5) If you terminate the services of CITAK & CITAK, ESQS and/or CITAK LAW

GROUP, PLLC prior to the conclusion of this matter, CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC shall be entitled to be paid for all services rendered up until the date of the termination. Any monies paid to CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC for services not rendered or for disbursements not incurred shall be returned to you within thirty (30) days. The Client’s failure to make payments in a timely manner as prescribed herein shall authorized Attorneys not to do any further work on the Client’s behalf, and shall, at the option of the Attorneys, be deemed to be their discharge by the Client. This discharge will then be confirmed in writing by either party. In the event that the Attorneys have appeared in any action or proceeding, they may apply to the Court or agency to be released from their appearance and for the substitution of the Client, pro se, or other counsel as their attorney. In the event of a discharge or withdrawal by the Attorneys, a charging lien in the amount owed to the Attorneys may be imposed by the Court, which would entitle the Attorneys to payment for services rendered at the end of the case out of the proceeds of any judgment or by other arrangements to be imposed by the Court, including but not limited to imposing a security interest or lien against property or assets to the extent permitted by law.

6) You acknowledge that no representations have been made to you concerning the

outcome of this mortgage foreclosure action. You acknowledge that you are fully aware of the hazards of litigation and that CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC has not guaranteed and cannot guarantee the success of any litigation.

7) You have the right to settle the claims in dispute at any time and only you can authorize the settlement. CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC shall communicate to you any offers to settle received from the opposing attorneys.

8) Should you fail to make payments in a timely manner as prescribed herein,

CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC is authorized not to do any further work on your behalf. In the event that CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC has appeared in this action, they may apply to the Court to be released from their appearance and to substitute you, Pro Se, or such other counsel as you may designate your attorney.

9) You have the right to be provided with copies of correspondence and legal

documents relating to the case and to be kept appraised of the status of the case. 10) You have the right to cancel our services as your attorneys at any time. If you do,

CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC is entitled to be paid for all services rendered and disbursements incurred in accordance with the terms set forth above. In the event that a dispute arises relating to the Attorneys’ fees in an amount between $1,000 and $50,000, you may have the right to arbitrate that dispute pursuant to Part 137of the Rules of the Chief Administrator of the Courts.

The undersigned fully acknowledges

reading this Addendum in its entirety, having the opportunity to consider its terms fully, and receiving a satisfactory explanation of same;

that there are no additional or different terms or agreements other than those expressly set forth in this Addendum;

receiving a copy of this Addendum; and that CITAK & CITAK, ESQS and/or CITAK LAW GROUP, PLLC AND/OR is

authorized to act as your Attorneys to take any steps which, in the discretion of those Attorneys, are deemed necessary or appropriate to protect your interests in defending the foreclosure action that has been commenced against you.

___________________________________ CITAK & CITAK, ESQS ___________________________________ By : ___________________________ Dated: ____________, 2011

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RETAINER FOR ATTORNEY SERVICES

AGREEMENT, between CITAK & CITAK, ESQS., attorneys at law with

offices at 270 Madison Avenue, Suite 1203, New York, NY 10016 (212-759-9585 - tel)

(212-759-2979 - fax) hereinafter referred to as the "Attorneys" and

Client (also referred to “You”):

Address:

Telephone:

Cell phone:

Email:

1. Client is retaining the Attorneys to evaluate their file and to appear at a

foreclosure conference to be held in a foreclosure proceeding commenced by

Lender:

Court:

Index No. 32676/08

Conference Date:

Client’s goal in retaining the Attorneys’ services at this time is to delay the matter

for as long as possible in anticipation of ultimately securing finances in order to pay the

monies due and owing to plaintiff. The Client understands that the Attorneys are NOT

being retained to appear in the lawsuit at this time and further understands that no legal

papers will be filed at this time. At a future date the client may elect to retain the

Attorneys for that purpose but these services will be subject to a fee agreement.

2. Client will pay to the Attorneys as and for a retainer in the sum of Seven

Hundred and fifty ($750.00) Dollars. This retainer is a flat fee and covers only the

services specified herein and no other services are to be performed under this agreement.

Client understands that the Attorneys will perform no services until this fee is paid in full.

3. In addition, you are responsible to reimburse to the Attorneys for all out-of-

pocket disbursements incurred on your behalf (which, by way of example only, may

include Court filing fees, messenger/delivery services, transcripts of depositions and/or

proceedings, telephone calls, facsimile transmissions, process service fees, mileage travel

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charges to/from Court, meetings and/or depositions, photocopying costs, postage,

witness/document subpoena fees, expert witness fees).

4. Client further understands and expressly acknowledges that she is aware of

the hazards of litigation and is also aware that, despite all efforts of the Attorneys, there

are no guarantees of the outcome of any litigation. You further acknowledge that no

representations have been made to you concerning the outcome of the motion or the

litigation.

5. Your failure to make timely payments of Attorneys’ invoices shall

authorize Attorneys not to do any further work on your behalf, and shall, at the option of

the Attorneys, be deemed to be their discharge by you as your Attorney. This discharge

will then be confirmed in writing by either party. In the event that the Attorneys have

appeared in any action or proceeding, they may apply to the Court or agency to be

released from their appearance and for the substitution of the Client, pro se, or other

counsel as their attorney. In the event of a discharge or withdrawal by the Attorneys, a

charging lien in the amount owed to the Attorneys may be imposed by the Court, which

would entitle the Attorneys to payment for services rendered at the end of the case out of

the proceeds of any judgment or by other arrangements to be imposed by the Court,

including but not limited to imposing a security interest or lien against property or assets

to the extent permitted by law.

6. Should the Attorneys be discharged or withdraw from representing the

Client herein, prior to depleting the advanced retainer identified above, then a final bill

identifying all services rendered and the expenses to be charged to the Client will be sent

to the Client. To the extent that any portion of the advanced retainer is not used, same

will be refunded to you within thirty (30) days.

7. You have the right to be provided with copies of correspondence and legal

documents relating to the case and to be kept apprised of the status of the case.

8. No services shall be provided in any action or proceeding other than as

expressly provided above. This Agreement does not cover any services relating to any

appeal or any services that might be required following the entry of a final judgment or

order. The Attorneys’ representation shall terminate with the entry of final judgment in

your matter, unless extended by mutual agreement in writing.

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9. The Attorneys are being engaged to represent you as a law firm, not any

one particular attorney. The Attorneys reserves the right to assign and delegate all aspects

of such representation among their attorneys as they deem appropriate.

10. You have the right to settle the claims in dispute at any time and only you

can authorize the settlement. The Attorneys shall communicate to you any offers to settle

received from the opposing attorneys.

11. You have the right to cancel the Attorneys’ services at any time. If you do

act and terminate this agreement, the Attorneys are entitled to be paid for all time and

expenses incurred in accordance with the terms set forth above. In the event that a dispute

arises relating to the Attorneys’ fees in an amount between $1,000 and $50,000, you may

have the right to arbitrate that dispute pursuant to Part 137of the Rules of the Chief

Administrator of the Courts.

THE UNDERSIGNED FULLY ACKNOWLEDGES

A) reading this Agreement in its entirety, having the opportunity to consider its terms fully, and receiving a satisfactory explanation of same;

B) that there are no additional or different terms or agreements other than those expressly set forth in this Addendum;

C) receiving a copy of this Agreement; and D) that CITAK & CITAK is expressly authorized to act as your Attorneys to take

any steps which, in the discretion of those Attorneys, are deemed necessary or appropriate to protect your interests in the context of the proceeding for which you have engaged their services.

IN WITNESS WHEREOF, the parties hereto have signed this Agreement.

_______________________ Dated: CITAK & CITAK, ESQS. By: ______________________

Dated:

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RETAINER FOR ATTORNEY SERVICES

AGREEMENT, between CITAK & CITAK, ESQS., attorneys at law with

offices at 270 Madison Avenue, Suite 1203, New York, NY 10016 (212-759-9595 - tel)

(212-759-2979 - fax) hereinafter referred to as the "Attorneys" and

Client (also referred to “You”):

Address:

Telephone:

Cell phone:

Email:

1. Client is engaging the Attorneys for legal services in connection with a

purported judgment that has been obtained against Client by Good Samaritan Hospital in

the Supreme Court, Suffolk County, under Index No. 44921-08. Client advises that he

first received notice of this purported judgment by an income execution from the

Sheriff’s office in Suffolk County. Specifically, Client requests that a motion be brought

before the Court seeking to dismiss this judgment, based upon a lack of personal

jurisdiction due to improper service. Alternatively, you wish to have the default vacated

so you can have an opportunity to defend the action brought against you on the merits.

Re: Service: You have advised the Attorneys that you were not personally served

with the Summons & Complaint in that proceeding, a copy of the Summons & Complaint

was not personally delivered to anyone of suitable age and discretion at the Client’s home

address or place of business, nor did you receive a copy thereof in the mail.

Re: Meritorious Defense: You have advised the Attorneys that you do not believe

that you owe the debt to the Plaintiff because

________________________________________________________________________

______________________________________________________________________

2. Client will pay to the Attorneys as and for a retainer in the sum of Two

Thousand ($2,000.00) Dollars. Receipt of that sum is acknowledged by the Attorneys

by their signature on this retainer. This retainer will cover all services required in

connection with the preparation, service, filing and argument of this motion only and no

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other services. You agree that, no services will be rendered by CITAK & CITAK until

this fee is paid to them in full.

3. If this motion is successful and the Court sustains the Client’s claim that no

service was properly made upon him, the present action will be dismissed. But the

dismissal of this action does not in any way affect the underlying debt that you may owe

to the Plaintiff in this action, even if the Attorneys are successful in getting the present

action dismissed.

4. You further acknowledge and understand that, if this motion is not

successful, the judgment will continue in effect and you will be subject to all legal

enforcement proceeding by the Plaintiff to collect the sums due there under.

5. It is also possible that the Court may, or the parties may agree, to vacate the

judgment, and allow you to continue this litigation to resolve the underlying issue of the

indebtedness claimed by the Plaintiff to be owed by you. In that case, this litigation will

continue. In that event, you agree that an additional sum of Two Thousand ($2,000.00)

Dollars must be paid to the Attorneys as a retainer to have them continue to represent

you in this action. This sum does not represent the total amount of the overall fees that

you may incur by virtue of retaining the Attorneys= services for this matter, particularly if

the anticipated proceeding results in a trial. The Attorneys’ fees will be paid based upon

the amount of time incurred and expended by the Attorneys on the Client’s behalf. The

schedule of established hourly time charges as follows:

Partner (BURTON or DONALD CITAK) $400 per hour

Associate $225 per hour

Paralegal/Summer Associate $125 per hour

Analyst (non-legal personal) $100 per hour

Time shall be computed to the tenth of an hour and billed monthly together with

disbursements. Any changes in these rates must be sent in writing to the Client and the

Attorneys represent that these rates will not change for at least one (1) year after the date

of this agreement.

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6. You further understand and acknowledge that the hourly rates apply to all

time expended related to your matter, including but not limited to, office meetings,

telephone calls, (by or to you, or otherwise made or had on your behalf or related to your

matter), preparation, review and revision of correspondence, pleadings, motions,

disclosure demands responses, affidavits, affirmations, and/or any other documents,

memoranda, or papers related to your matter, research of legal precedent applicable to the

disputed issues, Court appearances (conferences and/or hearings), file review, preparation

time, travel time, and any other time expended on behalf of or in connection with your

matter.

7. In addition, you are responsible to reimburse the Attorneys for all out-of-

pocket disbursements incurred on your behalf (which, by way of example only, may

include Court filing fees, messenger/delivery services, transcripts of depositions and/or

proceedings, telephone calls, facsimile transmissions, process service fees, mileage travel

charges to/from Court, meetings and/or depositions, photocopying costs, postage,

witness/document subpoena fees, expert witness fees).

8. The Attorneys bill for the time incurred and disbursements expended shall

be forwarded on a regular basis but not more than once per month to Client, who shall

pay all fees and disbursements immediately upon receipt of Attorneys’ invoice. Client

shall not be charged for time spent in the discussion of the Attorneys’ bills.

9. Client further understands and expressly acknowledges that he is aware of

the hazards of litigation and is also aware that, despite all efforts of the Attorneys, there

are no guarantees of the outcome of any litigation. You further acknowledge that no

representations have been made to you concerning the outcome of the motion or the

litigation.

10. Your failure to make timely payments of Attorneys’ invoices shall

authorize Attorneys not to do any further work on your behalf, and shall, at the option of

the Attorneys, be deemed to be their discharge by you as your Attorney. This discharge

will then be confirmed in writing by either party. In the event that the Attorneys have

appeared in any action or proceeding, they may apply to the Court or agency to be

released from their appearance and for the substitution of the Client, pro se, or other

counsel as their attorney. In the event of a discharge or withdrawal by the Attorneys, a

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charging lien in the amount owed to the Attorneys may be imposed by the Court, which

would entitle the Attorneys to payment for services rendered at the end of the case out of

the proceeds of any judgment or by other arrangements to be imposed by the Court,

including but not limited to imposing a security interest or lien against property or assets

to the extent permitted by law.

11. Should the Attorneys be discharged or withdraw from representing the

Client herein, prior to depleting the advanced retainer identified above, then a final bill

identifying all services rendered and the expenses to be charged to the Client will be sent

to the Client. To the extent that any portion of the advanced retainer is not used, same

will be refunded to you within thirty (30) days.

12. You have the right to be provided with copies of correspondence and legal

documents relating to the case and to be kept apprised of the status of the case.

13. No services shall be provided in any action or proceeding other than as

expressly provided above. This Agreement does not cover any services relating to any

appeal or any services that might be required following the entry of a final judgment or

order. The Attorneys’ representation shall terminate with the entry of final judgment in

your matter, unless extended by mutual agreement in writing.

14. The Attorneys are being engaged to represent you as a law firm, not any

one particular attorney. The Attorneys reserves the right to assign and delegate all aspects

of such representation among their attorneys as they deem appropriate.

15. You have the right to settle the claims in dispute at any time and only you

can authorize the settlement. The Attorneys shall communicate to you any offers to settle

received from the opposing attorneys.

16. You have the right to cancel the Attorneys’ services at any time. If you do

act and terminate this agreement, the Attorneys are entitled to be paid for all time and

expenses incurred in accordance with the terms set forth above. In the event that a dispute

arises relating to the Attorneys’ fees in an amount between $1,000 and $50,000, you may

have the right to arbitrate that dispute pursuant to Part 137of the Rules of the Chief

Administrator of the Courts.

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THE UNDERSIGNED FULLY ACKNOWLEDGES

A) reading this Agreement in its entirety, having the opportunity to consider its terms fully, and receiving a satisfactory explanation of same;

B) that there are no additional or different terms or agreements other than those expressly set forth in this Addendum;

C) receiving a copy of this Agreement; and D) that CITAK & CITAK is expressly authorized to act as your Attorneys to take

any steps which, in the discretion of those Attorneys, are deemed necessary or appropriate to protect your interests in the context of the proceeding for which you have engaged their services.

IN WITNESS WHEREOF, the parties hereto have signed this Agreement.

CITAK & CITAK, ESQS.

By: DONALD L. CITAK

___________________________________ Dated:

SAMPLE PUBLIC RELATIONS LETTER Dear Homeowner: As you progress toward getting your mortgage loan modified, it may sometimes be a little like road construction; bumpy and nerve-wracking. However, as a skilled driver, our firm will assist you in getting through this process safe and sound. To help you get through this journey, over the coming months, we have outlined some of the types of turbulence may be encountered. Many lenders today are "sneaky". They do things to confuse and disrupt the negotiation of a loan modification for you. Often, when some lenders find out that you have retained a law firm to negotiate your loan modification professionally, they will often send to you a modification proposal that does not better your situation for the long term. Your lender may be trying to get you to sign a loan modification that may cause you to end up with a higher payment. Statistically, the overwhelming majority of homeowners (more than 85%) will be back in default within 3-6 months on these types of modifications. YOU NEED A PERMANENT SOLUTION NOT A TEMPORARY BAND-AID.

While such a modification may look "good" on the surface, upon closer examination, it turns out to be full of land mines for you the homeowner. IF YOU RECEIVE ANYTHING FROM YOUR LENDER, PLEASE MAKE SURE TO EMAIL OR FAX A COPY TO US FOR REVIEW. We have experienced lenders, who have received a Qualified Written Request from our firm, immediately contacting the homeowner by telephone to try and intimidate them for hiring a third party professional to represent them. This action is completely improper (and possibly illegal). Lenders and loan servicers do not like to have to deal with someone who is as experienced, or perhaps much more experienced at loan modifications than the lenders or servicers staff. THE LENDERS PREFER TO INTIMIDATE A HOME OWNER AND RELY ON THE HOMEOWNERS’ INEXPERIENCE, FEAR AND ANXIETY IN THIS SITUATION. THEY DO NOT WANT TO DEAL WITH OUR EXPERIENCED STAFF. You may receive calls from your lender telling you that our firm is not in the system or that they have not received any documentation from us. This is simply untrue; we keep copies for all documents received and a log of our communications with lenders. The fact is that many lenders and servicers do not share access of information between all internal departments and sometimes need many weeks to notify all of their own departments.

There are going to be times during this process when it seems like "nothing is happening" for weeks or months at a time. The fact is that lenders and servicers are severely understaffed and they drag their feet. We cannot say whether they are doing this intentionally, but we do believe that lenders hope that you as homeowners will grow impatient and just find a way to make the next month's payment. Some unscrupulous servicers and lenders hope the homeowner grows so impatient and contacts the lender directly and give up what we believe is the advantage of having a professional negotiator and legal counsel to obtain the best loan modification possible. Due to delays and stalling tactics by the lender, it might be necessary for you to provide updated documentation, such as current bank statements, most recent paystubs etc. on multiple occasions. We know this is a nuisance, but please know that we are only asking for this information as it is being requested by the lender or servicer. Once you have engaged our services, make it your business to always send us updated bank statements and pay stubs each month. You may have neighbors, friends, or even family members who may lose their home during your own loan modification process. This can be very discouraging, and can result in you becoming nervous and impatient. Do not let these types of things get you down. Statistically, more than 90% of people served with foreclosure actions do not respond to the lawsuit and are held in Default. You've taken the right steps to deal with your situation and have engaged experienced legal counsel. So, now you know what some of the bumps ahead may look like. You may experience all, some, none, or different bumps than the ones outlined. Remember, we will negotiate with your lender professionally and protect your rights. We will work diligently to obtain the best outcome for you – but remember, there are no guarantees. While we know this is a very trying time for you and your family, remember to keep breathing and to keep getting up each day and putting one foot in front of the other to get through each day, as best you can. Our staff will be working with you, and together we are hopeful that your crisis can be resolved. If you have any questions or concerns at anytime please feel free to call. Sincerely,

Ways to Stop Foreclosure

1. Loan Modification- Your current lender modifies your current mortgage in order to make your mortgage more affordable for you and avoid a foreclosure for the lender. A modification can include an interest rate reduction, change of loan term, and sometimes reduction of principal. Historically, modifications were only used when a borrower was delinquent but now it is being utilized to avoid an impending default due to various circumstances.

2. Forbearance- Normally, when a Notice of Default has been filed, a forbearance can be negotiated; however, this is a short term solution or “band aid” and may be a step towards the preferred long-term solution of a loan modification. Forbearance means that the lender has agreed that you may defer or reduce payments for a short period of time, with the understanding that another option will be used at the close of that period to bring your account to a current status. The options can include sale of the property, a refinance or a loan modification. This will temporarily hold off legal action.

3. Short Sale - This is utilized when you are “upside down” on your mortgage – which means that you owe more than the property is worth and you do not want to remain in the property. The lender in this instance will agree to the property being sold for less than the mortgage balance, even though it means that the lender takes a loss. You offer the home for sale and all offers are presented to the lender. Unlike a traditional sale, where the homeowner makes decisions, in this scenario the lender makes the final decision on price and terms. Of utmost importance is the negotiation with the lender regarding a 1099 issued to the borrower and filed with the IRS for the amount of the loss that the bank absorbs. If a 1099 is issued and filed then you may owe state and federal income taxes because forgiven debt may be characterized as taxable income. We can help to negotiate the best terms for you in the situation of a short sale to limit the impact to you financially and on your credit report.

4. Foreclosure Bail Out Loan – This is a new loan where the defaulted mortgage is paid off. This is usually a hard money mortgage and it is common for interest rates to approach 10-15%. Points can be as high as 5 and terms are usually short, meaning a “balloon payment” – the entire principal debt amount -- will be due, usually with an range of 3-5 years. In order to qualify, you must have sufficient equity in the property. Hard money lenders are looking for 65-75% max loan to value so that they have a relatively comfortable equity cushion. This loan is designed to get you through a relatively short period without losing your home, during which you can either: (i) generate funds (e.g., sale of your business or another asset, receipt of inheritance, distribution of retirement, pension, or IRA funds), and/or (ii) enhance your household income, resurrect your credit, etc., to enable you to subsequently obtain a new long term conventional mortgage loan at low competitive market rates, or (iii) “buy” time to allow the market to become stronger, to sell the house for more that you owe against it. CAUTION: It is very important that you have at least one viable “exit strategy”, if not alternate exit strategies, because the typically higher rate on this type of loan does not make it conducive to terms of longer than 1-2 years, at most.

5. Deed-in-lieu – This is unique remedy that can be mutually beneficial to lender and borrower: a classic “you wash my back, I’ll wash yours” situation between you and your lender. A “deed-in-lieu of foreclosure” is, literally that – a lender takes your house as the collateral for the unpaid mortgage loan, but instead (“in lieu of”) its having to expend substantial time and money to reach that result, the lender acquires the property because you, the borrower, convey it voluntarily – by signing over to the lender a “deed” – the instrument by which you transfer to the lender all your interest in the property. The theory here is that, where the property may already be worth less than the amount you owe against it, it will be to the advantage of both you and the lender to eliminate the time that a foreclosure takes (during which the value of the property may decrease even further) and the expense (which will be your obligation, but which the lender may never be able to recover from you). The deed in lieu of foreclosure helps both the lender and borrower: (i) for the lender, it

accelerates its acquisition of the property with less expense of time and money that the lender may never recoup, enabling it to resell the property sooner than later, and mitigate its losses; (ii) for the borrower, you avoid further liability for additional costs, and devaluation of the property (the borrower is initially still responsible to repay the entire loan, even if the house is worth less than the loan amount), and escape that subsequent personal debt obligation, usually a substantial one. Simply, in exchange for the advantage the lender realizes from the borrower’s consensual delivery of the deed, the lender will release the borrower from the remaining shortfall liability. The lender shows its appreciation for the borrower not forcing the lender through the arduous foreclosure process by allowing the borrower to “close the book” on the debt, and negate the residual liability. You will also avoid the time, expense, aggravation and embarrassment of foreclosure proceedings, which are matters of public record. CAUTION: In recent years, laws have been added t protect borrowers from unfair or oppressive “deed-in-lieu” transactions, as for example where a borrower is “convinced” (perhaps defrauded) into signing over the property to the lender when its value may still be significantly higher than the loan amount. In this situation, borrowers lose the equity they had in the property, and the lender realizes a windfall, the reselling the house for more than the loan amount, with no obligation to return any of that windfall to the borrowers! You must be sure that you have done a full investigation of property value, and protected yourself with counsel before signing a deed-in-lieu of foreclosure to your lender.

6. Chapter 13 Bankruptcy – The primary purpose of this specialized bankruptcy procedure is to stay, and then prevent, impending foreclosure of your house. Where arrears have built up, which you cannot pay in one lump, but you have the steady household income necessary to both remain current in monthly payments going forward, and pay those accrued arrears in installments, over a period of time (usually in the 3-5 year range), you can propose a plan to repay the arrears, and stop the lender from foreclosing, as long as: (i) the Bankruptcy Court approves your proposed plan, and (ii) you meet the obligations (timely payments) required by that plan. In some instances, the Bankruptcy Court will compel a lender to accept a loan

modification as a part of the Chapter 13 process. Another advantage of this process is that a borrower can sell or refinance the house during the “plan” period, and end the plan, as the lender will be fully repaid (or you can negotiate a short sale or other settlement, now from a “position of strength”, rather than the position of inherent weakness facing most borrowers in foreclosure). Of course, there are disadvantages (for example, damage to your credit - but sometimes that damage is not much worse than the damage that a foreclosure would cause to your credit). CAUTION: Chapter 13 is a highly specialized area of Bankruptcy Law, which is, itself, a high specialized area of law. Chapter 13 is more suitable for some borrowers that others, and many different factors relating to the individuals specific overall financial picture should be analyzed. You should consult counsel with not only Bankruptcy Law expertise, but specifically Chapter 13 expertise in determining whether to pursue this option.

AUTHORIZATION 1. The undersigned, ______________________ who is presently a borrower under the following mortgage(s), secured by the following real property: Bank/Lender Loan Number Property Address City State Zip (hereinafter referred to as “Borrower”) has, simultaneously herewith, engaged the services of CITAK & CITAK 270 Madison Avenue, Suite 1203, New York, NY 10016 (212-759-9585 (tel), 212-759-2979 (fax)(hereinafter referred to as “Citak”) to analyze loan documents and related documents, and to investigate, negotiate, and attempt to procure a modification or rescission of, Borrower’s mortgage loan listed above. 2. Borrower agrees that Citak may verify any information provided by Borrowers, and authorizes Citak to take all steps which may be necessary to do so. In furtherance thereof, Borrower hereby authorizes Citak and its employees, agents, servants and affiliates, including First American Loan Modification, LLC, to communicate with Borrower’s Lender(s) and to request and receive all information and documentation which would be available to Borrower from said Lender(s). 3. Borrower specifically confirms that all communications, whether written, oral, electronic or otherwise, regarding the subject mortgage (except for normal monthly statements, and other notices required by law to be delivered to the Borrower), should be directed to the Law Offices of Citak & Citak, on Borrower’s behalf, and not directly to the Borrower.

4. The term Lender(s), as used herein, shall include any and all of the actual Lender’s assignees, successors and/or assigns, Servicers, employees, agents, or any person or entity employed or engaged by, or affiliated with, any of the foregoing. 5. Borrower further authorizes Citak to obtain, at Borrower’s expense, credit reports from any one or all three of the credit reporting agencies, including updated credit reports as deemed necessary by Citak in the course of the modification process. 6. Borrower agrees that signatures on this and any other documents executed for Citak as part of, or in connection with, the loan modification process, by facsimile or electronic (e-mail) transmission will be of the same binding force and effect as original signatures. __________________________________ _____________________ ________________ Borrower Soc. Sec # Date __________________________________ _____________________ ________________ Borrower Soc. Sec # Date

CEASE & DESIST

To: Countrywide Home Loans, Inc. Borrower(s): Mr. & Mrs. Smith Account #: 123445 YOU HAVE BEEN NOTIFIED, IN WRITING, THAT OUR FIRM REPRESENTS THE ABOVE NAMED BORROWER(S). NEVERTHELESS, YOU PERSIST IN CONTINUING TO CONTACT THE BORROWER(S) DIRECTLY.

SUCH ACTIONS VIOLATES FEDERAL LAW! (See FAIR DEBT COLLECTION PRACTICES ACT Annexed)

STOP YOUR ILLEGAL ACTIONS IMMEDIATELY!

BE FURTHER ADVISED THAT:

Every negative report you send to a Credit Reporting Agency after receiving our Qualified Written Request constitutes a separate violation of Federal Law and severely damages our client(s).

FOR EACH VIOLATION OF LAW, YOU MAY BE LIABLE FOR STATUTORY PENALTIES, ACTUAL DAMAGES AND POTENTIALLY PUNITIVE DAMAGES FOR YOUR INTENTIONAL AND WILLFUL CONDUCT

YOU MUST CEASE AND DESIST ALL ACTIONS THAT VIOLATE THE LAW! SHOULD YOU FAIL TO DO SO, YOU ARE ACTING AT YOUR OWN PERIL.

PLEASE BE GUIDED ACCORDINGLY. ______________________________ Citak & Citak, Esqs.

FAIR DEBT COLLECTION PRACTICES ACT

§ 805. Communication in connection with debt collection (a) COMMUNICATION WITH THE CONSUMER GENERALLY. Without the prior consent of the consumer

given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt—

(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowl-edge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer;

REAL ESTATE SETTLEMENT PRACTICES ACT U.S.C. §§ 2605(e)(3) – Protection of credit rating U.S.C. §§ 2605 (f) - Damages and costs

(3) Protection of credit rating

During the 60-day period beginning on the date of the servicer's receipt from any borrower of a qualified written request relating to a dispute regarding the borrower's payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 1681a of title 15).

(f) Damages and costs

Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:

(1) Individuals

In the case of any action by an individual, an amount equal to the sum of—

(A) any actual damages to the borrower as a result of the failure; and

(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.

(2) Class actions

In the case of a class action, an amount equal to the sum of-- (A) any actual damages to each of the borrowers in the class as a result of the failure; and

(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of—

(i) $500,000; or (ii) 1 percent of the net worth of the servicer.

(3) Costs

In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.

CITAK & CITAK Attorneys at Law

270 Madison Avenue, New York, NY 10016

Phone: (212) 759-9585 Fax: (212) 759-2979 [email protected]

DATE BY FACSIMILE TRANSMISSION AND US MAIL Bank Att: Homeowner Assistance Center (Loan Modification Division) Re: Borrower: Property Address: Loan Number: Ladies and Gentlemen: As your files should reflect, we were engaged by _____________ (also referred to as the “Borrower”) to review and analyze mortgage documents and the servicing thereof, to determine possible improprieties and violations of law therein with respect to the loan currently outstanding (the “Mortgage”) against the above referenced property (the “Property”). On or about __________ a "Qualified Written Request" was sent to you under Section 2605(e)(1)(B) of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605(e)(1)(B), together with the Borrower’s written Authorization of this firm to communicate with you. You received those items on ___________. Enclosed herein is another copy of both documents for your reference. These documents require that __________ and its representatives communicate and correspond directly and exclusively with Citak & Citak on behalf of the above-referenced Borrower. As stated in the second paragraph of the "Qualified Written Request" there are certain implications and restrictions which impose both affirmative and negative obligations upon you, as the lender and/or servicer. While we understand that there are many departments within ___________ nationwide, it is imperative that all offices be made aware of the restrictions imposed under the terms of the QWR as it relates to Section 2605 of the Real Estate Settlement Procedures Act and The Fair Debt Collection Practices Act. We have been informed by our client that either (i) NAME OF BANK has negatively reported to the consumer reporting agencies and/or (ii) our clients continue to receive phone calls from NAME OF BANK’S collection department.

2

As stated in the fourth paragraph of each Qualified Written Request sent on behalf of our client, Section 2605(e)(3) of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2605(e)(3) provides explicit restrictions to lenders and/or servicers which specifically state:

DURING THE 60 BUSINES DAY PERIOD FROM YOUR RECEIPT OF THIS QUALIFIED WRITTEN REQUEST YOU MAY NOT PROVIDE INFORMATION REGARDING ANY OVERDUE PAYMENT, OWED BY OUR CLIENT RELATING TO SUCH PERIOD OR THE MATTERS RAISED HEREIN, TO ANY CONSUMER REPORTING AGENCY.

We trust that you understand the significance of the damage suffered by a Borrower whose credit standing is impaired when (BANK NAME) does not comply as prescribed by the RESPA Statute. Such reporting is a direct violation of federal RESPA statute. The damages caused to our clients may be irreparable and severely jeopardize their credit standing unnecessarily. It is our anticipation that, upon receipt of the requested documentation set forth in the QWR, we can review all documentation provided so we can finalize and submit to __________ a formal loan modification proposal that will make the loan current. Once again, if we can work together with ___________ in this process it will be more beneficial to both the borrower and ________ in the end. On behalf of our client I must insist that you refrain from reporting any negative information to any credit reporting agency or credit bureau and insist that you immediately retract any such negative information previously reported and inform the credit bureaus that this was reported in error, and ensure that it is forthwith permanently removed from my client’s account records. With respect to the collection calls made to our clients, please notify your collection department that, under the terms of the QWR, all communications, oral or written, for the borrower, must now be directed to the Law Firm of Citak & Citak, in accordance with The Fair Debt Collection Practices Act 15 USC 1692c, specifically:

§805(a) COMMUNICATION WITH THE CONSUMER GENERALLY. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in collection of any debt –

(1) * * * (2) if the debt collector knows the consumer is represented by an ATTORNEY with respect to such debt and has knowledge of, or can readily ascertain such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or (3) * * *

Under RESPA, substantial penalties and fines may be imposed for non-compliance with obligations under the QWR. Specifically, “whoever fails to comply with any provision of the RESPA statute shall be liable to the borrower for each such failure in the following amounts: (1) Individuals – In the case of any action by an individual, an amount equal to the sum of

3

(A) any actual damages to the borrower as a result of the failure; and (B) any additional damages, as the court may allow, in the case of a pattern or practice of

noncompliance with the requirements of this section, in an amount not to exceed $1,000.

(2) Class Actions – In the case of a class action, an amount equal to the sum of

(A) any actual damages to each of the borrowers in the class as a result of the failure; and (B) any additional damages, as the court may allow, in the case of a pattern or practice of

noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of

(i) $500,000; or (ii) 1 percent of the net worth of the servicer.

(3) Costs - In addition to the amounts under paragraph (1) and (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances. OUR CLIENT RESERVES ALL RIGHTS TO HOLD YOU REPSONSIBLE FOR ALL APPROPRIATE DAMAGES SUFFERED AS A RESULT OF YOUR VIOLATIONS OF FEDERAL LAW. AVOIDING OR REMEDYING ANY SUCH VIOLATIONS WILL REDUCE YOUR EXPOSURE IN THIS REGARD. All responses regarding this matter should be directed to________________, who has been assigned this case, as follows: By Mail or Overnight Delivery: By Telephone: By Fax: By E-mail: Very truly yours, CITAK & CITAK, ESQS., by: ________________________________ Donald L. Citak, Esq. cc: CLIENT NAME Bank Atty OR Legal Department

Sample Objection Letter DATE CERTIFIED MAIL RETURN RECEIPT REQUESTED Chase Home Finance, LLC Re: Borrower: Property Address: Account #: Dear Sir or Madam: Our firm represents the Borrower. In response to your May 6, 2009 letter to the Borrower, regarding the mortgage you claim to hold on the identified property, be advised as follows: By this letter, the Borrower timely disputes this debt. The Borrower believes that errors and/or improprieties have occurred in the servicing of this loan, including possible misapplication of escrowed funds, as well as inaccurate reporting to the Borrower. Also, serious issues exist regarding this debt, not necessarily limited to the amount of the debt, but also to its validity as a legal obligation at all, specifically, whether your client is even the holder of the note at this time. Moreover, there are also indications of possible serious predatory lending acts in the application, closing and servicing of this loan, including possible violations of RESPA, TILA and/or the Fair Debt Collection Practices Act. We request that your office's addressing these issues with us before seeking to enforce this debt through any litigation (including foreclosure). We would like to work with you to prevent unnecessary costs and expenses from being incurred by both parties, particularly if you will seek to compel the Borrower to absorb them. Hopefully, we can resolve some, if not all, of these issues before you leap into the foreclosure process, which, as you are undoubtedly aware, in New York can take considerable time and requires a formal Settlement Conference at which these issues would be addressed. Should you commence a foreclosure action without responding to the matters raised in this letter, be assured that, at the mandatory Settlement Conference, your ___________ letter and this response will be the first documents shown to the Judge presiding over that Settlement Conference, as evidence of bad faith. We look forward to your response in connection with this matter.

Very truly yours, Esq.

cc:

Prototype Introductory “Hardship” Presentation: ___________, 20 ABCDE Bank 12345 Main Street Anywhere, USA 99999 Att: Mortgage Workout Department Dear _______________: Regrettably, we/I find ourselves/myself in a position of having to approach you with a request to modify our/my mortgage. Unanticipated circumstances, including a series of events occurring since we/I closed on this mortgage – as well as certain representations made to us/me before we/I closed on this mortgage, which now, it seems, may have been less than forthright – have combined to place us/me in a position of jeopardy unless our/my mortgage obligations are modified as soon as possible. In particular, we/I (are/am - are/am about to become) delinquent in paying our/my monthly mortgage obligations. (Describe circumstances, including loss of employment, reduction in income, from employment or other source, such as maintenance or child support, diminished investment returns or losses.) These events were unanticipated, and beyond our/my control. They have unquestionably adversely changed our/my financial capabilities, significantly diminishing our/my ability to pay the same monthly living expenses which we/I were/was capable of paying, and had anticipated remaining capable of paying, when we/I agreed to the terms of the mortgage loan that we/I now have with you. We have tried all options to avoid this calamity, and have calculated, recalculated, cut expenses where possible, and “crunched numbers” with our accountant/ financial advisor, but unfortunately we/I are/am still short in our/my ability to continue to pay the monthly obligations of the mortgage loan as presently structured. We/I therefore hope that you will agree to work with us/me to modify the payments, by reducing the interest rate, reducing the principal, or a combination of both.

Our/My primary aim is to keep our/my house, as we/I do not want to uproot our/my lives/life or, more importantly that of our/my children who, of course, attend school locally, and whose lives are deeply rooted and entrenched in the community. We/I hope that you will approach this situation with a fair and open mind. Our/My representative will contact you shortly to discuss specific proposals that hopefully will be beneficial to all concerned. Sincerely yours, __________________________

Borrower Name: Loan Number:

FINANCIAL WORKSHEET

BORROWER INFORMATION

Property Address: Hm #: __________________________ Wk #: ________________________ Cell # : __________________________ Best time to call: ____________ E mail: ___________________________

Please check all that apply:

I live in this house Occupants in home: ______

This is a second house

This house is vacant

This is a rental property (monthly rent: $_________)

Active Bankruptcy

Borrower Name Social Security # Co-Borrower Name Social Security # Mailing Address:

EMPLOYMENT INFORMATION

BORROWER CO-BORROWER

Employer Employer Position Position

INCOME DATA

PRIMARY HOMEOWNER ADDITIONAL OCCUPANT(S) HOUSEHOLD INCOME CURRENT CURRENT

Gross Net Gross Net Employment Income

$ $

Disability

$ $

Rental Income

$ $

Unemployment

$ $

Child Support / Alimony

$ $

Other

$ $

TOTAL MONTHLY INCOME

$ $

Income Frequency: (please check one)

Primary Homeowner: Weekly Bi-Weekly Semi Monthly Monthly Quarterly Yearly

Additional Occupant(s): Weekly Bi-Weekly Semi Monthly Monthly Quarterly Yearly

Current Employment Status Primary Homeowner: (please check one)

Employed Full-Time Employed Part-Time Unemployed/Not Working Self-Employed Retired Current Employment Status Additional Occupant(s): (please check one)

Employed Full-Time Employed Part-Time Unemployed/Not Working Self-Employed Retired

ASSETS / LIABILITIES

DESCRIPTION ESTIMATED VALUE

AMOUNT OWED

NET VALUE

Automobile Make / Model

Deposit Accounts – Checking / Savings IRA / KEOUGH Accounts 401K Savings Plan Stocks / Bonds / CDs

Borrower Name: Loan Number:

HOUSEHOLD LIABILITIES AND EXPENSES

EXPENSES MONTHLY

PAYMENT BALANCE

DUE ALIMONY / CHILD SUPPORT $ $ AUTOMOBILE EXPENSES (Gas, Maintenance) $ $ CHILD CARE/ELDER CARE $ $ OTHER MORTGAGE(S) $ $ EDUCATION $ $ FOOD - FAMILY $ $ MEDICAL / DENTAL $ $ PETS $ $ SPENDING MONEY $ $ OTHER EXPENSE $ $ AUTO INSURANCE $ $ HEALTH INSURANCE $ $ LIFE INSURANCE $ $ HOSPITAL $ $ PRESCRIPTIONS $ $ CABLE $ $ ELECTRICITY $ $ GAS $ $ TELEPHONE/ CELL PHONE / INTERNET $ $ WATER / SEWAGE $ $ CLOTHING $ $ DRY CLEANING $ $ MONTHLY PARKING $ $ CLUB OR UNION DUES $ $ SCHOOL OR WORK LUNCHES PURCHASED $ $ HOA DUES $ $ OTHER $ $

DEBT $ $ AUTOMOBILE LOANS $ $ AUTOMOBILE LOANS $ $ CREDIT CARDS $ $ INSTALLMENT LOANS $ $ MORTGAGE PAYMENT $ $ 2ND LIEN MORTGAGE PAYMENT $ $ PROPERTY TAXES AND INSURANCE (if not included in mortgage payment)

$ $

PERSONAL LOANS $ $ OTHER SECURED DEBT $ $ OTHER UNSECURED DEBT $ $ OTHER $ $ TOTAL EXPENSES/DEBT $ $

Net Income: $_____________ - Expenses: $______________ = Surplus: $_____________ UPFRONT FUNDS AVAILABLE Amount: $________________

BORROWER: , 20___ Signature Date Name (please print) CO-BORROWER: , 20___ Signature Date Name (please print)

NY LEGIS 472 (2008) Page 12008 Sess. Law News of N.Y. Ch. 472 (S. 8143-A) (McKINNEY'S) (Publication page references are not available for this document.)

Copr. © West 2008 No Claim to Orig. Govt. Works

McKINNEY'S 2008 SESSION LAW NEWS OF NEW YORK

231st LEGISLATURE

Additions are indicated by Text; deletions by Text. Changes in tables are made but not highlighted.

CHAPTER 472

S. 8143-A CREATING NEW CRIMES RELATED TO MORTGAGE FRAUD--DISTRESSED PROPERTY CONSULTING

CONTRACTS

Approved August 5, 2008, effective as provided in section 28 AN ACT to amend the real property actions and proceedings law, the civil practice law and rules, the banking law and the general obligations law, in relation to home mortgage loans; to amend the penal law and the criminal procedure law, in rela-tion to creating new crimes relating to mortgage fraud; and to amend the real property law, in relation to distressed property consulting contracts

The People of the State of New York, represented in Senate and Assembly, do enact as follows:

§ 1. Section 1303 of the real property actions and proceedings law, as added by chapter 308 of the laws of 2006 and subdivi-sion 1 as amended by chapter 154 of the laws of 2007, is amended to read as follows:

<< NY RP ACT & PRO § 1303 >> § 1303. Foreclosures; required notices 1. The foreclosing party in a mortgage foreclosure action, which involves residential real property consisting of owner-occupied one-to-four-family dwellings shall provide notice to the mortgagor in accordance with the provisions of this section with regard to information and assistance about the foreclosure process. 2. The notice required by this section shall be delivered with the summons and complaint to commence a foreclosure action. The notice required by this section shall be in bold, fourteen-point type and shall be printed on colored paper that is other than the color of the summons and complaint, and the title of the notice shall be in bold, twenty-point type. The notice shall be on its own page. 3. The notice required by this section shall appear as follows:

Help for Homeowners in Foreclosure New York State Law requires that we send you this notice about the foreclosure process. Please read it carefully.



Mortgage foreclosure is a complex process. Some people may approach you about "saving" your home. You should be ex-tremely careful about any such promises. Summons and Complaint You are in danger of losing your home. If you fail to respond to the summons and complaint in this foreclosure ac-tion, you may lose your home. Please read the summons and complaint carefully. You should immediately contact an attorney or your local legal aid office to obtain advice on how to protect yourself. Sources of Information and Assistance The State encourages you to become informed about your options in foreclosure. There In addition to seeking assistance from an attorney or legal aid office, there are government agencies, legal aid entities and other non-profit organizations that you may contact for information about foreclosure while you are working possible options, including trying to work with your lender during this process. To locate an entity near you, you may call the toll-free helpline maintained by the New York State Banking Department at ............. (enter number) or visit the Department's website at ............... (enter web address). The State does not guarantee the advice of these agencies. Foreclosure rescue scams Be careful of people who approach you with offers to "save" your home. There are individuals who watch for notices of foreclosure actions in order to unfairly profit from a homeowner's distress. You should be extremely careful about any such promises and any suggestions that you pay them a fee or sign over your deed. State law requires anyone of-fering such services for profit to enter into a contract which fully describes the services they will perform and fees they will charge, and which prohibits them from taking any money from you until they have completed all such prom-ised services. 4. The banking department shall prescribe the telephone number and web address to be included in the notice. 5. The banking department shall post on its website or otherwise make readily available the name and contact information of government agencies or non-profit organizations that may be contacted for information about the foreclosure process, includ-ing maintaining a toll-free help-line to disseminate the information required by this section. § 2. The real property actions and proceedings law is amended by adding a new section 1304 to read as follows:

<< NY RP ACT & PRO § 1304 >> § 1304. Required prior notices 1. Notwithstanding any other provision of law, with regard to a high-cost home loan, as such term is defined in sec-tion six-l of the banking law, a subprime home loan or a non-traditional home loan, at least ninety days before a lend-er or a mortgage loan servicer commences legal action against the borrower, including mortgage foreclosure, the lender or mortgage loan servicer shall give notice to the borrower in at least fourteen-point type which shall include the following:

"YOU COULD LOSE YOUR HOME. PLEASE READ THE FOLLOWING



NOTICE CAREFULLY"

"As of ..., your home loan is ... days in default. Under New York State Law, we are required to send you this notice to inform you that you are at risk of losing your home. You can cure this default by making the payment of ..... dollars by ..... If you are experiencing financial difficulty, you should know that there are several options available to you that may help you keep your home. Attached to this notice is a list of government approved housing counseling agencies in your area which provide free or very low-cost counseling. You should consider contacting one of these agencies immediate-ly. These agencies specialize in helping homeowners who are facing financial difficulty. Housing counselors can help you assess your financial condition and work with us to explore the possibility of modifying your loan, establishing an easier payment plan for you, or even working out a period of loan forbearance. If you wish, you may also contact us directly at .......... and ask to discuss possible options. While we cannot assure that a mutually agreeable resolution is possible, we encourage you to take immediate steps to try to achieve a resolution. The longer you wait, the fewer options you may have. If this matter is not resolved within 90 days from the date this notice was mailed, we may commence legal action against you (or sooner if you cease to live in the dwelling as your primary residence.) If you need further information, please call the New York State Banking Department's toll-free helpline at 1-877-BANK-NYS (1-877-226-5697) or visit the Department's website at http://www.banking.state.ny.us" 2. Such notice shall be sent by the lender or mortgage loan servicer to the borrower, by registered or certified mail and also by first-class mail to the last known address of the borrower, and if different, to the residence which is the subject of the mortgage. Notice is considered given as of the date it is mailed. The notice shall contain a list of at least five United States department of housing and urban development approved housing counseling agencies, or other housing counseling agencies as designated by the division of housing and community renewal, that serve the region where the borrower resides. The list shall include the counseling agencies' last known addresses and telephone num-bers. The banking department and/or the division of housing and community renewal shall make available a listing, by region, of such agencies which the lender or mortgage loan servicer may use to meet the requirements of this sec-tion. 3. The ninety day period specified in the notice contained in subdivision one of this section shall not apply, or shall cease to apply, if the borrower has filed an application for the adjustment of debts of the borrower or an order for relief from the payment of debts, or if the borrower no longer occupies the residence as the borrower's principal dwelling. 4. The notice and the ninety day period required by subdivision one of this section need only be provided once in a twelve month period to the same borrower in connection with the same loan. 5. (a) "Annual percentage rate" means the annual percentage rate for the loan calculated according to the provisions of the Federal Truth-in-Lending Act (15 U.S.C. § 1601, et seq.), and the regulations promulgated thereunder by the federal reserve board (as said act and regulations are amended from time to time). (b) "Home loan" means a home loan, including an open-end credit plan, other than a reverse mortgage transaction, in which:



(i) The principal amount of the loan at origination did not exceed the conforming loan size that was in existence at the time of origination for a comparable dwelling as established by the federal national mortgage association; (ii) The borrower is a natural person; (iii) The debt is incurred by the borrower primarily for personal, family, or household purposes; (iv) The loan is secured by a mortgage or deed of trust on real estate upon which there is located or there is to be lo-cated a structure or structures intended principally for occupancy of from one to four families which is or will be oc-cupied by the borrower as the borrower's principal dwelling; and (v) The property is located in this state. (c) "Subprime home loan" for the purposes of this section, means a home loan consummated between January first, two thousand three and September first, two thousand eight in which the terms of the loan exceed the threshold as defined in paragraph (d) of this subdivision. A subprime home loan excludes a transaction to finance the initial con-struction of a dwelling, a temporary or "bridge" loan with a term of twelve months or less, such as a loan to purchase a new dwelling where the borrower plans to sell a current dwelling within twelve months, or a home equity line of credit. (d) "Threshold" means, for a first lien mortgage loan, the annual percentage rate of the home loan at consummation of the transaction exceeds three percentage points over the yield on treasury securities having comparable periods of maturity to the loan maturity measured as of the fifteenth day of the month in which the loan was consummated; or for a subordinate mortgage lien, the annual percentage rate of the home loan at consummation of the transaction equals or exceeds five percentage points over the yield on treasury securities having comparable periods of maturity on the fifteenth day of the month in which the loan was consummated; as determined by the following rules: if the terms of the home loan offer any initial or introductory period, and the annual percentage rate is less than that which will apply after the end of such initial or introductory period, then the annual percentage rate that shall be taken into account for purposes of this section shall be the rate which applies after the initial or introductory period. (e) "Non-traditional home loan" shall mean a payment option adjustable rate mortgage or an interest only loan con-summated between January first, two thousand three and September first, two thousand eight. (f) For purposes of determining the threshold, the banking department shall publish on its website a listing of con-stant maturity yields for U.S. Treasury securities for each month between January first, two thousand three and Sep-tember first, two thousand eight, as published in the Federal Reserve Statistical Release on selected interest rates, commonly referred to as the H.15 release, in the following maturities, to the extent available in such release: six month, one year, two year, three year, five year, seven year, ten year, thirty year. (g) "Lender" means a mortgage banker as defined in paragraph (f) of subdivision one of section five hundred ninety of the banking law or an exempt organization as defined in paragraph (e) of subdivision one of section five hundred ninety of the banking law. § 3. The civil practice law and rules is amended by adding a new rule 3408 to read as follows:

<< NY CPLR § 3408 >> Rule 3408. Mandatory settlement conference in residential foreclosure actions



(a) In any residential foreclosure action involving a high-cost home loan consummated between January first, two thousand three and September first, two thousand eight, or a subprime or nontraditional home loan, as those terms are defined under section thirteen hundred four of the real property actions and proceedings law, in which the de-fendant is a resident of the property subject to foreclosure, the court shall hold a mandatory conference within sixty days after the date when proof of service 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. (b) At the initial conference held pursuant to this section, any defendant currently appearing pro se, shall be deemed to have made a motion to proceed as a poor person under section eleven hundred one of this chapter. The court shall determine whether such permission shall be granted pursuant to standards set forth in section eleven hundred one of this chapter. If the court appoints defendant counsel pursuant to subdivision (a) of section eleven hundred two of this chapter, it shall adjourn the conference to a date certain for appearance of counsel and settlement discussions pursu-ant to subdivision (a) of this section, and otherwise shall proceed with the conference. (c) At any conference held pursuant to this section, the plaintiff shall appear in person or by counsel, and if appearing by counsel, such counsel shall be fully authorized to dispose of the case. The defendant shall appear in person or by counsel. If the defendant is appearing pro se, the court shall advise the defendant of the nature of the action and his or her rights and responsibilities as a defendant. Where appropriate, the court may permit a representative of the plain-tiff to attend the settlement conference telephonically or by video-conference.

<< Note: NY BANK § 6-l >>

<< Note: NY RP ACT & PRO § 1304 >> § 3-a. For any foreclosure action on a residential mortgage loan, in which the action was initiated prior to September 1, 2008 but where the final order of judgment has not yet been issued, the court shall request each plaintiff to identify whether the loan in foreclosure is a subprime home loan as defined in section 1304 of the real property actions and proceedings law or is a high-cost home loan as defined in section 6-1 of the banking law. If the loan is a subprime home loan or high-cost home loan, the court shall notify the defendant that if he or she is a resident of such property, he or she may request a settlement conference. If the defendant requests a conference, the court shall hold such conference as soon as practicable for the purpose of holding settlement discussions pertaining to the 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 los-ing 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. At any conference held pursuant to this section, the plaintiff shall appear in person or by counsel, and if appearing by coun-sel, such counsel shall be fully authorized to dispose of the case. The defendant shall appear in person or by counsel. If the defendant is appearing pro se, the court shall advise the defendant of the nature of the action and his or her rights and respon-sibilities as a defendant. Where appropriate, the court may permit a representative of the plaintiff to attend the settlement con-ference telephonically or by video-conference. § 4. Paragraphs (c), (h) and (j) of subdivision 2 of section 6-1 of the banking law, as added by chapter 626 of the laws of 2002, are amended and five new paragraphs (r), (s), (t), (u) and (v) are added to read as follows:



<< NY BANK § 6-l >>

(c) No negative amortization. No high-cost home loan may contain a payment schedule with regular periodic payments that cause the principal balance to increase. A loan is considered to have such a schedule if the borrower is given the option to make regular periodic payments that cause the principal balance to increase, even if the borrower is also given the option to make regular periodic payments that do not cause the principal balance to increase. This paragraph shall not prohibit negative amortization as a result of a temporary forbearance sought by a borrower. (h) No financing of insurance or other products sold in connection with the loan. No high-cost home loan shall finance, directly or indirectly, any credit life, credit disability, credit unemployment, or credit property insurance, or any other life or health insurance premiums, or any payments directly or indirectly for any debt cancellation or suspension agreement or con-tract, except that insurance or any product or service that is not necessary or related to the high-cost home loan such as auto club memberships or credit report monitoring, but not including fees paid to the lender, broker, or closing agent, fees related to the recording of the mortgage, title insurance or other settlement fees. Insurance premiums or debt can-cellation or suspension fees calculated and paid on a monthly basis shall not be considered financed. (j) No refinancing of special mortgages. No lender or mortgage broker making or arranging a high-cost home loan may refinance an existing home loan that is a special mortgage originated, subsidized or guaranteed by or through a state, tribal or local government, or nonprofit organization, which either bears a below-market interest rate at the time of origination, or has nonstandard payment terms beneficial to the borrower, such as payments that vary with income, are limited to a percentage of income, or where no payments are required under specified conditions, and where, as a result of the refinancing, the borrower will lose one or more of the benefits of the special mortgage, unless the lender is provided prior to loan closing documenta-tion by a HUD certified approved housing counselor or the lender who originally made the special mortgage that a borrower has received home loan counseling in which the advantages and disadvantages of the refinancing has been received. (r) No prepayment penalties. No prepayment penalties or fees shall be charged or collected on a high-cost home loan. A prepayment penalty in a high-cost home loan shall be unenforceable. (s) No abusive yield spread premiums. In arranging a high-cost home loan, the mortgage broker shall, at the time of application, disclose the exact amount and methodology of total compensation that the broker will receive. Such amount may be paid as direct compensation from the lender, direct compensation from the borrower, or a combina-tion of the two. The provisions of this paragraph shall not restrict the ability of a borrower to utilize a yield spread premium in order to offset any up front costs by accepting a higher interest rate. If the borrower chooses this option, any compensation from the lender which exceeds the exact amount of total compensation owed to the broker must be credited to the borrower. The superintendent shall prescribe the form that such disclosure shall take. This provision shall not restrict a broker from accepting a lesser amount. (t) Mandatory escrow of taxes and insurance. No high-cost home loan shall be made after July first, two thousand ten unless the lender requires and collects the monthly escrow of property taxes and hazard insurance. With respect to a high-cost home loan, a borrower may waive escrow requirements by notifying the lender in writing after one year from consummation of the loan. The provisions of this paragraph shall not apply to a high-cost home loan that is a subordinate lien when the taxes and insurance are escrowed through another home loan or where the borrower can demonstrate a record of twelve months of timely payments of taxes and insurance on a previous home loan. (u) Mandatory disclosure of taxes and insurance payments. With respect to a high-cost home loan, the first time a borrower is informed of the anticipated or actual periodic payment amount in connection with a first-lien residential mortgage loan for a specific property, the lender or mortgage broker shall inform the borrower that an additional amount will be due for taxes and insurance and shall disclose to the borrower as soon as reasonably possible the ap-proximate amount of the initial periodic payment for property taxes and hazard insurance.



(v) No teaser rates. No lender or mortgage broker shall make or arrange a high-cost home loan which has an initial or introductory rate with a duration of less than six months. § 4-a. Subparagraph (ii) of paragraph (1) of subdivision 2 of section 6-1 of the banking law, as added by chapter 626 of the laws of 2002, is amended to read as follows:

<< NY BANK § 6-1 >> (ii) A lender or mortgage broker shall not make or arrange a high-cost home loan unless either the lender or mortgage broker has given the following notice in writing to the borrower within three days after determining that the loan is a high-cost home loan, but no less than ten days before closing:

"CONSUMER CAUTION AND HOME OWNERSHIP COUNSELING NOTICE If you obtain this loan, which pursuant to New York State Law is a High-Cost Home Loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan. You should shop around and compare loan rates and fees. Mortgage loan rates and closing costs and fees vary based on many factors, including your particular credit and financial circumstances, your earnings history, the loan-to-value requested, and the type of property that will secure your loan. The loan rate and fees could vary based on which lender or mortgage bro-ker you select. Higher rates and fees may be related to the individual circumstances of a particular consumer's application. You should consider consulting a qualified independent credit counselor or other experienced financial adviser regarding the rate, fees, and provisions of this mortgage loan before you proceed. The enclosed list of counselors is provided by the New York State Banking Department. You are not required to complete any loan agreement merely because you have received these disclosures or have signed a loan application. If you proceed with this mortgage loan, you should also remember that you may face serious financial risks if you use this loan to pay off credit card debts and other debts in connection with this transaction and then subsequently in-cur significant new credit card charges or other debts. If you continue to accumulate debt after this loan is closed and then experience financial difficulties, you could lose your home and any equity you have in it if you do not meet your mortgage loan obligations. Property taxes and homeowner's insurance are your responsibility. Not all lenders provide escrow services for these pay-ments. You should ask your lender about these services. Your payments on existing debts contribute to your credit ratings. You should not accept any advice to ignore your regular payments to your existing creditors. Accordingly, it is important that you make regular payments to your existing creditors." § 5. The banking law is amended by adding a new section 6-m to read as follows:

<< NY BANK § 6-m >> § 6-m. Subprime home loans 1. Definitions. The following definitions apply for the purposes of this section:



(a) "Annual percentage rate" means the annual percentage rate for the loan calculated according to the provisions of the Federal Truth-in-Lending Act (15 U.S.C. § 1601, et seq.), and the regulations promulgated thereunder by the fed-eral reserve board (as said act and regulations are amended from time to time). (b) "Fully indexed rate" means the index rate that would have applied at the time of the closing had the initial inter-est rate been determined by the application of the same interest rate formula, (for example, an interest rate index plus or minus a margin) that applies under the terms of the loan documents to subsequent interest rate adjustments, disre-garding any limitations on the amount by which the interest rate may change at any one time. (c) A "Subprime home loan" means a home loan in which the fully indexed annual percentage rate exceeds by more than one and three-quarters percentage points for a first-lien loan, or by more than three and three-quarters percent-age points for a subordinate-lien loan, the average commitment rate for loans in the northeast region with a compara-ble duration to the duration of such home loan, as published by the Federal Home Loan Mortgage Corporation (here-in "Freddie Mac") in its weekly Primary Mortgage Market Survey (PMMS) as posted in the week prior to the week when the lender receives a completed application. A subprime home loan excludes a transaction to finance the initial construction of a dwelling, a temporary or "bridge" loan with a term of twelve months or less, such as a loan to pur-chase a new dwelling where the borrower plans to sell a current dwelling within twelve months, or a home equity line of credit. (i) The comparable duration for a home loan shall be determined as follows: for an adjustable or variable home loan with an initial rate that is fixed for less than three years, the Freddie Mac survey result for a one-year adjustable rate mortgage; for an adjustable or variable home loan with an initial rate that is fixed for at least three years, the Freddie Mac survey result for a five-year hybrid adjustable rate mortgage; for a fixed rate home loan with a term of fifteen years or less, the Freddie Mac survey result for a fifteen-year fixed rate mortgage; and for a fixed rate home loan with a term of more than fifteen years, the Freddie Mac survey result for a thirty-year fixed rate mortgage. The superin-tendent may prescribe by regulation a different comparable duration standard as necessary or appropriate to reflect changes in the terms and types of mortgages included in the Freddie Mac survey. (ii) Notwithstanding the comparable rates set forth in this paragraph, and notwithstanding any other law, if the su-perintendent determines that by statute, rule or regulation, different thresholds for determining underwriting stand-ards for subprime loans become applicable to nationally chartered lending institutions, or the provisions of this sec-tion have had an unduly negative effect upon the availability or price of mortgage financing in this state, the superin-tendent may from time to time designate such other threshold rates as may be necessary to achieve parity between such nationally chartered institutions and banking organizations, mortgage banks and mortgage brokers in this state or to alleviate such unduly negative effects. Such determination shall promptly be published on the website of the banking department. (d) "Home loan" means a home loan, including an open-end credit plan, other than a reverse mortgage transaction, in which: (i) The principal amount of the loan does not exceed the conforming loan size limit for a comparable dwelling as es-tablished from time to time by the federal national mortgage association; (ii) The borrower is a natural person; (iii) The debt is incurred by the borrower primarily for personal, family, or household purposes; (iv) The loan is secured by a mortgage or deed of trust on real estate upon which there is located or there is to be lo-cated a structure or structures intended principally for occupancy of from one to four families which is or will be oc-cupied by the borrower as the borrower's principal dwelling; and



(v) The property is located in this state. (e) "Lender" means a mortgage banker as defined in paragraph (f) of subdivision one of section five hundred ninety of this chapter or an exempt organization as defined in paragraph (e) of subdivision one of section five hundred ninety of this chapter. (f) "Mortgage broker" means a mortgage broker as defined in paragraph (g) of subdivision one of section five hun-dred ninety of this chapter and a mortgage banker as defined in paragraph (f) of subdivision one of section five hun-dred ninety of this chapter, when such mortgage banker solicits, processes, places or negotiates a mortgage loan for others. 2. Limitations and prohibited practices for subprime home loans. A subprime home loan shall be subject to the fol-lowing limitations: (a) No call provisions. No subprime home loan may contain a provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This provision shall not prohibit acceleration of the loan in good faith due to the bor-rower's failure to abide by the material terms of the loan. (b) No negative amortization. No subprime home loan may contain a payment schedule with regular periodic pay-ments that cause or may cause the principal balance to increase. A loan is considered to have such a schedule if the borrower is given the option to make regular periodic payments that cause the principal balance to increase, even if the borrower is also given the option to make regular periodic payments that do not cause the principal balance to increase. This paragraph shall not prohibit negative amortization as a result of a temporary forbearance sought by a borrower. (c) No increased interest rate. No subprime home loan may contain a provision which increases the interest rate after default. This provision shall not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents; provided that the change in the interest rate is not triggered by the event of default or the acceleration of the indebtedness. (d) Limitation on advance payments. No subprime home loan may include terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the bor-rower. (e) No modification or deferral fees. A lender may not charge a borrower any fees to modify, renew, extend, or amend a subprime home loan or to defer any payment due under the terms of a suprime home loan if, after the modification, renewal, extension or amendment, the loan is still a subprime home loan or, if no longer a subprime home loan, the annual percentage rate has not been decreased by at least two percentage points. For purposes of this paragraph, fees shall not include interest that is otherwise payable and consistent with the provisions of the loan documents. This par-agraph shall not prohibit a lender from charging points and fees in connection with any additional proceeds received by the borrower in connection with the modification, renewal, extension or amendment (over and above the current principal balance of the existing subprime home loan) provided that the points and fees charged on the additional sum must reflect the lender's typical point and fee structure for subprime home loans. This paragraph shall not apply if the existing subprime home loan is in default or is sixty or more days delinquent and the modification, renewal, exten-sion, amendment or deferral is part of a work-out process. (f) No oppressive mandatory arbitration clauses. No subprime home loan may be subject to a mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers.



(g) No financing of insurance or other products sold in connection with the loan. No subprime home loan shall fi-nance, directly or indirectly, any credit life, credit disability, credit unemployment, or credit property insurance, or any other life or health insurance premiums, or any payments directly or indirectly for any debt cancellation or sus-pension agreement or contract, or any product or service that is not necessary or related to the home loan such as au-to club memberships or credit report monitoring, but not including fees paid to the lender, broker, or closing agent, fees related to the recording of the mortgage, title insurance or other settlement fees. Insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis shall not be considered financed. (h) No "loan flipping". No lender or mortgage broker making or arranging a subprime home loan may engage in the unfair act or practice of "loan flipping". "Loan flipping" is making a home loan to a borrower that refinances an ex-isting home loan when the new loan does not have a tangible net benefit to the borrower considering all of the circum-stances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's situa-tion. (i) No refinancing of special mortgages. No lender making a subprime home loan may refinance an existing home loan that is a special mortgage originated, subsidized or guaranteed by or through a state, tribal or local government, or nonprofit organization, which either bears a below-market interest rate at the time of origination, or has nonstand-ard payment terms beneficial to the borrower, such as payments that vary with income, are limited to a percentage of income, or where no payments are required under specified conditions, and where, as a result of the refinancing, the borrower will lose one or more of the benefits of the special mortgage, unless the lender is provided prior to loan clos-ing documentation by a HUD approved housing counselor or the lender who originally made the special mortgage that the borrower has received home loan counseling about the advantages and disadvantages of the refinancing. (j) No lending without counseling disclosure and list of counselors. A lender or mortgage broker must deliver, place in the mail, fax or electronically transmit the following notice in at least twelve point type to the borrower of a sub-prime home loan at the time of application: "You should consider financial counseling prior to executing loan docu-ments. The enclosed list of counselors is provided by the New York State Banking Department." In the event of a tele-phone application, the disclosures must be made immediately after receipt of the application by telephone. Such dis-closure shall be on a separate form. In order to utilize an electronic transmission, the lender or broker must first ob-tain either written or electronically transmitted permission from the borrower. A list of approved counselors, availa-ble from the New York state banking department, shall be provided to the borrower by the lender or the mortgage broker at the time that this disclosure is given. (k) No encouragement of default. In making or arranging a subprime home loan, a lender or mortgage broker shall not recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of the subprime home loan that refinances all or any portion of such existing loan or debt. (l) Prohibited payments to mortgage brokers. In making or arranging a subprime home loan, no lender or mortgage broker shall accept or give any fee, kickback, thing of value, portion, split or percentage of charges, other than as payment for goods or facilities that were actually furnished or services that were actually performed. Such payment must be reasonably related to the value of the goods or facilities that were actually furnished or services that were actually performed. (m) No prepayment penalties on subprime home loans. No prepayment penalties or fees shall be charged or collected on a subprime home loan. A prepayment penalty in a subprime home loan shall be unenforceable. (n) No abusive yield spread premiums. In arranging a subprime home loan, the mortgage broker shall, at the time of application, disclose the exact amount and methodology for determining the total compensation that the broker will receive. Such amount may be paid as direct compensation from the lender, direct compensation from the borrower, or a combination of the two. The provisions of this paragraph shall not restrict the ability of a borrower to utilize a yield



spread premium in order to offset any upfront costs by accepting a higher interest rate. If the borrower chooses this option, any compensation from the lender which exceeds the exact amount of total compensation owed to the broker must be credited to the borrower. The superintendent shall prescribe the form that such disclosure shall take. This paragraph shall not restrict a broker from accepting a lesser amount. (o) Mandatory escrow of taxes and insurance. No subprime home loan shall be made after July first, two thousand ten unless the lender requires and collects the monthly escrow of property taxes and hazard insurance. With respect to a subprime home loan, a borrower may waive escrow requirements by notifying the lender in writing after one year from consummation of the loan. The provisions of this paragraph shall not apply to a subprime home loan that is a subordinate lien when the taxes and insurance are escrowed through another home loan or where the borrower can demonstrate a record of twelve months of timely payments of taxes and insurance on a previous home loan. (p) Mandatory disclosure of taxes and insurance payments. With respect to a subprime home loan, the first time a borrower is informed of the anticipated or actual periodic payment amount in connection with a first-lien residential mortgage loan for a specific property, the lender or mortgage broker shall inform the borrower that an additional amount will be due for taxes and insurance and shall disclose to the borrower as soon as reasonably possible the ap-proximate amount of the initial periodic payment for property taxes and hazard insurance. (q) No teaser rates. No lender or mortgage broker shall make or arrange a subprime home loan which has an initial or introductory rate with a duration of less than six months. 3. Any provision in a subprime home loan that violates subdivision two of this section shall be rendered void. 4. No arrangement of certain subprime loans. No lender or mortgage broker shall make or arrange a subprime home loan unless the lender or mortgage broker reasonably and in good faith believes at the time the loan is consummated that one or more of the borrowers, when considered individually or collectively, has the ability to repay the loan ac-cording to its terms and to pay applicable real estate taxes and hazard insurance premiums. If a lender or mortgage broker making or arranging a subprime home loan knows that one or more home loans secured by the same real property will be made contemporaneously to the same borrower with the subprime home loan being made or ar-ranged by that lender or mortgage broker, the lender or mortgage broker making or arranging the subprime home loan must document the borrower's ability to repay the combined payments of all loans on the same real property. (a) A lender or mortgage broker's analysis of a borrower's ability to repay a subprime home loan according to the loan terms and to pay related real estate taxes and insurance premiums shall be based on a consideration of the bor-rower's credit history, current and expected income, current obligations, employment status, and other financial re-sources other than the borrower's equity in the real property that secures repayment of the subprime home loan. (b) In determining a borrower's ability to repay a subprime home loan, the lender or mortgage broker shall take rea-sonable steps to verify the accuracy and completeness of information provided by or on behalf of the borrower using tax returns, payroll receipts, bank records, reasonable alternative methods, or reasonable third-party verification. (c) In determining a borrower's ability to repay a subprime home loan according to its terms when the loan has an adjustable rate feature, the lender or mortgage broker shall calculate the monthly payment amount for principal and interest by assuming (i) the loan proceeds are fully disbursed on the date of the loan closing, (ii) the loan is to be re-paid in substantially equal monthly amortizing payments of principal and interest over the entire term of the loan, with no balloon payment, and (iii) the interest rate over the entire term of the loan is a fixed rate equal to the fully indexed rate at the time of the loan closing, without considering any initial discounted rate. (d) A lender or mortgage broker's analysis of a borrower's ability to repay a subprime home loan may utilize reason-able commercially recognized underwriting standards and methodologies, including automated underwriting systems,



provided the standards and methodologies comply with the provisions of this section. 5. Subprime home loan mortgages shall include a legend on top of the mortgage in twelve-point type stating that the mortgage is a subprime home loan subject to this section. 6. The provisions of this section shall apply to any person who in bad faith attempts to avoid the application of this section by any subterfuge, including but not limited to splitting or dividing any loan transaction into separate parts for the purpose of evading the provisions of this section. 7. A lender of a subprime home loan that, when acting in good faith, fails to comply with the provisions of this sec-tion, shall not be deemed to have violated this section if, prior to the institution of any action and before the borrower is prejudiced, the lender notifies the borrower of the compliance failure, appropriate restitution is made, and whatev-er adjustments that are necessary are made to the loan to make the loan satisfy the requirements of this section. 8. The attorney general or the superintendent may enforce the provisions of this section. 9. Any person found by a preponderance of the evidence to have violated this section shall be liable to the borrower of a subprime home loan for actual damages. 10. A court may also award reasonable attorneys' fees to a prevailing borrower in a foreclosure action. 11. A borrower may be granted injunctive, declaratory and such other equitable relief as the court deems appropri-ate in an action to enforce compliance with this section. 12. The remedies provided in this section are not intended to be the exclusive remedies available to a borrower of a subprime home loan. 13. In any action by a lender or assignee to enforce a loan against a borrower in default more than sixty days or in foreclosure, a borrower may assert as a defense, any violation of this section. 14. The provisions of this section shall be severable, and if any phrase, clause, sentence, or provision is declared to be invalid, or is preempted by federal law or regulation, the validity of the remainder of this section shall not be affected thereby. If any provision of this section is declared to be inapplicable to any specific category, type, or kind of points and fees with respect to a home loan, the provisions of this section shall nonetheless continue to apply with respect to all other points and fees. § 6. The banking law is amended by adding a new section 590-b to read as follows:

<< NY BANK § 590-b >> § 590-b. Responsibilities 1. Each mortgage broker shall, in addition to the duties imposed by otherwise applicable provisions of state and fed-eral law, with respect to any transaction, including any practice, or course of business in connection with the transac-tion, in which the mortgage broker solicits, processes, places or negotiates a home loan: (a) act in the borrower's interest; (b) act with reasonable skill, care and diligence;



(c) act in good faith and with fair dealing; (d) not accept, give, or charge any undisclosed compensation, directly or indirectly, that inures to the benefit of the mortgage broker, whether or not characterized as an expenditure made for the borrower; (e) clearly disclose to the borrower, not later than three days after receipt of the loan application, all material infor-mation as specified by the superintendent that might reasonably affect the rights, interests, or ability of the borrower to receive the borrower's intended benefit from the home loan, including total compensation that the broker would receive from any of the loan options that the lender or mortgage broker presents to the borrower; and (f) diligently work to present the borrower with a range of loan products for which the borrower likely qualifies and which are appropriate to the borrower's existing circumstances, based on information known by, or obtained in good faith by, the broker. 2. No lender or mortgage broker shall improperly influence or attempt to improperly influence the development, re-porting, result or review of a real estate appraisal relating to real property securing a home loan, provided that it shall not be a violation of this prohibition to: (a) ask an appraiser to consider additional information about a borrower's principal dwelling or about comparable properties; (b) request that an appraiser provide additional information about the basis for a valuation; (c) request that an appraiser correct factual errors in a valuation; (d) obtain multiple appraisals of a borrower's principal dwelling, so long as the lender or mortgage broker adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value; (e) withhold compensation from an appraiser for breach of contract or substandard performance of services; (f) terminate a relationship with an appraiser for violations of applicable state or federal law or breaches of ethical or professional standards; and (g) take action permitted or required by applicable state or federal statute, regulation, or agency guidance. 3. Any mortgage broker found by a preponderance of evidence to have violated subdivision one of this section, shall be liable to the borrower for actual damages. 4. Any lender or mortgage broker found by a preponderance of evidence to have violated subdivision two of this sec-tion, shall be liable to the borrower for actual damages. 5. A borrower may be granted injunctive, declaratory, and such other equitable relief as the court deems appropriate in an action to enforce compliance with this section. 6. A court may also award reasonable attorneys' fees to a prevailing borrower in a foreclosure action. 7. The attorney general or the superintendent may enforce the provisions of this section.



8. The remedies provided in this section are not intended to be the exclusive remedies available to a borrower. § 7. Paragraph (g) of subdivision 1 of section 590 of the banking law, as amended by chapter 293 of the laws of 1987, is amended and two new paragraphs (h) and (i) are added to read as follows:

<< NY BANK § 590 >> (g) "Registrant" or "mortgage broker" shall mean a person or entity registered pursuant to section five hundred ninety-one-a of this chapter to engage in the business of soliciting, processing, placing or negotiating mortgage loans for others, or offering to solicit, process, place or negotiate mortgage loans for others.; (h) "Mortgage loan servicer" or "servicer" shall mean a person or entity registered pursuant to subdivision two of this section to engage in the business of servicing mortgage loans for property located in this state; (i) "Servicing mortgage loans" shall mean receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts under section six-k of this chapter, title three-A of article nine of the real property tax law or section ten of 12 U.S.C. 2609, and making the payments to the owner of the loan or other third parties of principal and interest and such other payments with respect to the amounts re-ceived from the borrower as may be required pursuant to the terms of the mortgage service loan documents or servic-ing contract. In the case of a home equity conversion mortgage or reverse mortgage as referenced in section six-h of this chapter, sections two hundred eighty and two hundred eighty-a of the real property law or 24 CFR 3500.2, servic-ing includes making payments to the borrower. § 8. Subdivisions 2, 3, 4 and 5 of section 590 of the banking law, subdivisions 2, 3 and 5 as added by chapter 571 of the laws of 1986, paragraph (b) of subdivision 2 and subdivision 4 as amended by chapter 293 of the laws of 1987, are amended to read as follows:

<< NY BANK § 590 >> 2. Necessity for license. (a) No person, partnership, association, corporation or other entity shall engage in the business of making five or more mortgage loans in any one calendar year without first obtaining a license from the superintendent in ac-cordance with the licensing procedure provided in this article and such regulations as may be promulgated by the banking board or prescribed by the superintendent. The licensing provisions of this subdivision shall not apply to any exempt organi-zation nor to any entity or entities which shall be exempted in accordance with regulations promulgated by the banking board hereunder. (b) No person, partnership, association, corporation or other entity shall engage in the business of soliciting, processing, placing or negotiating a mortgage loan or offering to solicit, process, place or negotiate a mortgage loan in this state without first being registered with the superintendent as a mortgage broker in accordance with the registration procedure provided in this article and by such regulations as may be promulgated by the banking board or prescribed by the superintendent. The registration provisions of this subdivision shall not apply to any exempt organization or mortgage banker. No real estate bro-ker or salesman, as defined in section four hundred forty of the real property law, shall be deemed to be engaged in the busi-ness of a mortgage broker if he does not accept a fee, directly or indirectly, for services rendered in connection with the solic-itation, processing, placement or negotiation of a mortgage loan. No attorney-at-law who solicits, processes, places or negoti-ates a mortgage loan incidental to his legal practice shall be deemed to be engaged in the business of a mortgage broker. The registration provisions of this subdivision shall not apply to any person or entity which shall be exempted in accordance with regulations promulgated by the banking board hereunder. (b-1) No person, partnership, association, corporation or other entity shall engage in the business of servicing mort-



gage loans with respect to any property located in this state without first being registered with the superintendent as a mortgage loan servicer in accordance with the registration procedure provided by such regulations as may be pre-scribed by the superintendent. The superintendent may refuse to register a mortgage loan servicer on the same grounds that he or she may refuse to issue a registration certificate to a mortgage broker pursuant to subdivision two of section five hundred ninety-two-a of this article. The registration provisions of this subdivision shall not apply to any exempt organization, mortgage banker, or mortgage broker or any person or entity which shall be exempted in accordance with regulations prescribed by the superintendent hereunder; provided that such exempt organization, mortgage banker, mortgage broker, or exempted person notifies the superintendent that it is acting as a mortgage loan servicer in this state and complies with any regulation applicable to mortgage loan servicers, promulgated by the banking board or prescribed by the superintendent with respect to mortgage loan servicers. (c) A licensee or registrant or mortgage loan servicer may apply for authority to open and maintain one or more branch offices. (d) No person or entity engaged in the building and sale of residential real property, or a financing subsidiary thereof, shall be deemed to be making a mortgage loan, as defined in paragraph (c) of subdivision one of this section, or soliciting, pro-cessing, placing or negotiating a mortgage loan, as defined in paragraph (d) of subdivision one of this section, if and only if such person, entity or financing subsidiary shall make, solicit, process, place or negotiate a mortgage loan with respect to residential real property it has built through a licensee or exempt organization which is acting as its agent in compliance with this article and regulations promulgated hereunder. 3. Banking board Rules and regulations. In addition to such powers as may otherwise be prescribed by this chapter, the banking board is hereby authorized and empowered to promulgate such rules and regulations as may in the judgement of the banking board be consistent with the purposes of this article, or appropriate for the effective administration of this article, including, but not limited to: (a) Such rules and regulations in connection with the activities of mortgage brokers, mortgage bankers, mortgage loan ser-vicers and exempt organizations as may be necessary and appropriate for the protection of consumers in this state; (b) Such rules and regulations as may be necessary and appropriate to define improper or fraudulent business practices in connection with the activities of mortgage brokers, mortgage bankers, mortgage loan servicers and exempt organizations in making mortgage loans; (c) Such rules and regulations as may define the terms used in this article and as may be necessary and appropriate to inter-pret and implement the provisions of this article; and (d) Such rules and regulations as may be necessary for the enforcement of this article. The banking board is hereby authorized and empowered to make such specific rulings, demands and findings as it may deem necessary for the proper conduct of the mortgage lending industry. 4. Exemptions from provisions of article. No person shall be subject to the licensure or registration provisions of this article if he or she is employed by an exempt organization, a licensee or registrant, or a mortgage loan servicer to assist in the per-formance of the business activities described in this article for the exempt organization, licensee or registrant, or a mortgage loan servicer or is engaged in regulated activities as an associate or affiliate of a registrant, a licensee, a mortgage loan ser-vicer or exempt organization which has filed an undertaking of accountability with the superintendent. No employee of an exempt organization shall be subject to the licensure or registration provisions of this article due to such employee's assisting in the performance of the business activities of a mortgage banker that is controlled by the exempt or-ganization or affiliated with the exempt organization through common ownership or control.



5. Activities of mortgage brokers, mortgage bankers, mortgage loan servicers and exempt organizations. (a) Mortgage bro-kers may not make mortgage loans in this state; (b) Mortgage brokers shall solicit, process, place and negotiate mortgage loans only in conformity with the provisions of this article and chapter, such rules and regulations as may be promulgated by the banking board or prescribed by the superinten-dent pursuant to this article thereunder and all applicable federal laws and the rules and regulations promulgated thereunder; (c) Mortgage bankers and exempt organizations shall make mortgage loans only in conformity with the provisions of this article and chapter, such rules and regulations as may be promulgated by the banking board or prescribed by the superinten-dent pursuant to this article thereunder and all applicable federal laws and the rules and regulations promulgated thereunder; (d) Mortgage loan servicers shall engage in the business of servicing mortgage loans in conformity with the provisions of this chapter, such rules and regulations as may be promulgated by the banking board or prescribed by the superin-tendent thereunder and all applicable federal laws and the rules and regulations promulgated thereunder. (e) Nothing in this section shall be construed to limit any otherwise applicable state or federal law or regulations. § 9. The banking law is amended by adding a new section 595-b to read as follows:

<< NY BANK § 595-b >> § 595-b. Regulation of mortgage loan servicers 1. Establishment of grounds to impose a fine or penalty. In addition to such other rules, regulations and policies as the banking board may promulgate or the superintendent may prescribe to effectuate the purposes of this article, the superintendent shall promulgate regulations and policies governing the establishment of grounds to impose a fine or penalty with respect to the activities of a mortgage loan servicer. 2. Servicing practices. In addition to such other rules, regulations and policies as the banking board may promulgate to effectuate the purposes of this article, the superintendent may prescribe regulations which relate to: (a) providing for disclosures to borrowers of the basis for any interest rate resets; (b) requirements for the provision of pay-off statements; and (c) governing the timing of the crediting of payments made by the borrower. § 10. Section 596 of the banking law, as amended by chapter 571 of the laws of 1986, is amended to read as follows:

<< NY BANK § 596 >> § 596. Superintendent authorized to examine; expenses For the purpose of discovering violations of this article or securing information lawfully required by him hereunder, the su-perintendent may at any time, and as often as he or she may determine, either personally or by a person duly designated by him, investigate the business and examine the books, accounts, records, and files used therein of every licensee, servicer and registrant. For that purpose the superintendent and his or her duly designated representative shall have free access to the of-fices and places of business, books, accounts, papers, records, files, safes and vaults of all such licensees, servicers and regis-trants. The superintendent and any person duly designated by him or her shall have authority to require the attendance of and to examine under oath all persons whose testimony he or she may require relative to such business. The expenses incurred in



making any examination pursuant to this section shall be assessed against and paid by the licensee, servicer or registrant so examined, except that traveling and subsistence expenses so incurred shall be charged against and paid by licensees, ser-vicers or registrants in such proportions as the superintendent shall deem just and reasonable, and such proportionate charges shall be added to the assessment of the other expenses incurred upon each examination. Upon written notice by the superin-tendent of the total amount of such assessment, the licensee, servicer or registrant shall become liable for and shall pay such assessment to the superintendent. In any hearing in which the bank examiner acting under authority of this chapter is available for cross-examination, any offi-cial written report, worksheet, other related papers, or duly certified copy thereof, compiled, prepared, drafted, or otherwise made by said bank examiner, after being duly authenticated by said examiner, may be admitted as competent evidence upon the oath of said examiner that said worksheet, investigative report, or other related documents were prepared as a result of an examination of the books and records of a licensee, servicer or registrant or other person, conducted pursuant to the authority of this chapter. § 11. Section 597 of the banking law, as amended by chapter 571 of the laws of 1986 and the opening paragraph as amended by chapter 499 of the laws of 1995, is amended to read as follows:

<< NY BANK § 597 >> § 597. Books and records; reports Each licensee, servicer, registrant and exempt organization shall keep and use in its business such books, accounts and rec-ords as will enable the superintendent to determine whether such licensee, servicer, registrant or exempt organization is complying with the provisions of this article and with the rules and regulations lawfully made by the superintendent and the banking board. Every licensee, servicer, registrant and exempt organization shall preserve such books, accounts, and records, for at least three years; provided, however, that preservation by photographic reproduction thereof or records in photographic form, including an optical disk storage system and the use of electronic data processing equipment that provides comparable records to those otherwise required and which are available for examination upon request shall constitute compliance with the requirements of this section. Each licensee and registrant shall annually, on or before a date to be determined by the superintendent, file a report with the superintendent giving such information as the superintendent may require concerning the business and operations during the preceding calendar year of such licensee or registrant under authority of this article. Such report shall be subscribed and af-firmed as true by the licensee or registrant under the penalties of perjury and shall be in the form prescribed by the superin-tendent. In addition to annual reports, the superintendent may require such additional regular or special reports as he may deem necessary to the proper supervision of licensees and registrant registrants under this article. Such additional reports shall be in the form prescribed by the superintendent and shall be subscribed and affirmed as true under the penalties of per-jury. The superintendent may require servicers to file annual reports or other regular or special reports, including reports with respect to mortgage delinquencies and foreclosures. Such reports shall be in the form prescribed by the superin-tendent and shall be subscribed and affirmed as true under the penalties of perjury. § 12. Subdivision 1 of section 598 of the banking law, as amended by section 57 of part O of chapter 59 of the laws of 2006, is amended to read as follows;

<< NY BANK § 598 >> 1. In addition to such penalties as may otherwise be applicable by law, the superintendent may, after notice and hearing as provided elsewhere in this article, require any entity, licensee, servicer, registrant or exempt organization found violating the



provisions of this article or the rules or regulations promulgated hereunder to pay to the people of this state an additional pen-alty for each violation of the article or any regulation or policy promulgated hereunder a sum not to exceed an amount as de-termined pursuant to section forty-four of this chapter for each such violation. § 13. Subdivision 3 of section 599-b of the banking law, as amended by chapter 553 of the laws of 2007, is amended to read as follows:

<< NY BANK § 599-b >> 3. "Originating entity" means a person or entity licensed as a mortgage banker or registered as a mortgage broker pursuant to article twelve-D of this chapter. § 14. Subdivision 10 of section 36 of the banking law, as amended by chapter 566 of the laws of 2004, is amended to read as follows:

<< NY BANK § 36 >> 10. All reports of examinations and investigations, correspondence and memoranda concerning or arising out of such exami-nation and investigations, including any duly authenticated copy or copies thereof in the possession of any banking organiza-tion, bank holding company or any subsidiary thereof (as such terms "bank holding company" and "subsidiary" are defined in article three-A of this chapter), any corporation or any other entity affiliated with a banking organization within the meaning of subdivision six of this section and any non-banking subsidiary of a corporation or any other entity which is an affiliate of a banking organization within the meaning of subdivision six-a of this section, foreign banking corporation, licensed lender, licensed casher of checks, licensed mortgage banker, registered mortgage broker, licensed sales finance company, registered mortgage loan servicer, licensed insurance premium finance agency, licensed transmitter of money, licensed budget plan-ner, or the department, shall be confidential communications, shall not be subject to subpoena and shall not be made public unless, in the judgment of the superintendent, the ends of justice and the public advantage will be subserved by the publica-tion thereof, in which event the superintendent may publish or authorize the publication of a copy of any such report or any part thereof in such manner as may be deemed proper. For the purposes of this subdivision, "reports of examinations and in-vestigations, and any correspondence and memoranda concerning or arising out of such examinations and investigations", includes any such materials of a bank, insurance or securities regulatory agency or any unit of the federal government or that of this state any other state or that of any foreign government which are considered confidential by such agency or unit and which are in the possession of the department or which are otherwise confidential materials that have been shared by the de-partment with any such agency or unit and are in the possession of such agency or unit. § 15. Subdivisions 1, 2 and 5 of section 39 of the banking law, as amended by chapter 553 of the laws of 2007, are amended to read as follows:

<< NY BANK § 39 >> 1. To appear and explain an apparent violation. Whenever it shall appear to the superintendent that any banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, registered mortgage loan servicer, author-ized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or representative or other offices in this state, or foreign banking corporation licensed by the superinten-dent to do business or maintain a representative office in this state has violated any law or regulation, he or she may, in his or her discretion, issue an order describing such apparent violation and requiring such banking organization, bank holding com-pany, registered mortgage broker, licensed mortgage banker, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or representative or other offices in this



state, or foreign banking corporation to appear before him or her, at a time and place fixed in said order, to present an expla-nation of such apparent violation. 2. To discontinue unauthorized or unsafe and unsound practices. Whenever it shall appear to the superintendent that any banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, registered mortgage loan servicer, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance compa-ny, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or representative or other offices in this state, or foreign banking corporation li-censed by the superintendent to do business in this state is conducting business in an unauthorized or unsafe and unsound manner, he or she may, in his or her discretion, issue an order directing the discontinuance of such unauthorized or unsafe and unsound practices, and fixing a time and place at which such banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, registered mortgage loan servicer, authorized mortgage loan originator, li-censed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, li-censed transmitter of money, licensed budget planner, out-of-state state bank that maintains a branch or branches or repre-sentative or other offices in this state, or foreign banking corporation may voluntarily appear before him or her to present any explanation in defense of the practices directed in said order to be discontinued. 5. To keep books and accounts as prescribed. Whenever it shall appear to the superintendent that any banking organization, bank holding company, registered mortgage broker or, licensed mortgage banker, registered mortgage loan servicer, au-thorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insur-ance premium finance agency, licensed transmitter of money, licensed budget planner, agency or branch of a foreign banking corporation licensed by the superintendent to do business in this state, does not keep its books and accounts in such manner as to enable him or her to readily ascertain its true condition, he or she may, in his or her discretion, issue an order requiring such banking organization, bank holding company, registered mortgage broker, licensed mortgage banker, registered mort-gage loan servicer, authorized mortgage loan originator, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed budget planner, or foreign banking corporation, or the officers or agents thereof, or any of them, to open and keep such books or accounts as he or she may, in his or her discretion, determine and prescribe for the purpose of keeping accurate and convenient records of its trans-actions and accounts. § 16. Paragraph (a) of subdivision 1 of section 44 of the banking law, as amended by chapter 553 of the laws of 2007, is amended to read as follows:

<< NY BANK § 44 >> (a) Without limiting any power granted to the superintendent under any other provision of this chapter, the superintendent may, in a proceeding after notice and a hearing, require any safe deposit company, licensed lender, licensed casher of checks, licensed sales finance company, licensed insurance premium finance agency, licensed transmitter of money, licensed mort-gage banker, registered mortgage broker, authorized mortgage loan originator, registered mortgage loan servicer or li-censed budget planner to pay to the people of this state a penalty for any violation of this chapter, any regulation promulgated thereunder, any final or temporary order issued pursuant to section thirty-nine of this article, any condition imposed in writ-ing by the superintendent or banking board in connection with the grant of any application or request, or any written agree-ment entered into with the superintendent. § 17. Section 1302 of the real property actions and proceedings law, as added by chapter 626 of the laws of 2002, is amend-ed to read as follows:

<< NY RP ACT & PRO § 1302 >> § 1302. Foreclosure of high-cost home loans and subprime home loans



1. Any complaint served in a proceeding initiated pursuant to this article relating to a high-cost home loan or a subprime home loan, as such terms are defined in section six-l and six-m of the banking law, respectively, must contain an affirma-tive allegation, which allegation must be proven to the satisfaction of the court before entry of judgment by default or other-wise, that at the time the proceeding is commenced, the plaintiff mortgage banker or exempt organization: (a) is the owner and holder of the subject mortgage and note, or has been delegated the authority to institute a mort-gage foreclosure action by the owner and holder of the subject mortgage and note; and (b) has complied with all of the provisions of section five hundred ninety-five-a of the banking law and any rules and reg-ulations promulgated thereunder, section six-l or six-m of the banking law, and section thirteen hundred four of this article. 2. It shall be a defense to an action to foreclose a mortgage for a high-cost home loan or subprime home loan that the terms of the home loan violates or the actions of the lender violate any provision of section six-l or six-m of the banking law or section thirteen hundred four of this article. § 18. Paragraph b of subdivision 3 of section 5-501 of the general obligations law, as amended by chapter 883 of the laws of 1980, is amended to read as follows:

<< NY GEN OBLIG § 5-501 >> b. notwithstanding any other provision of law, the unpaid balance of the loan or forbearance may be prepaid, in whole or in part, at any time. If prepayment is made on or after one year from the date the loan or forbearance is made, no penalty may be imposed. If prepayment is made prior to such time, no penalty may be imposed unless provision therefor is expressly made in the loan contract, provided that no penalty may be imposed if prohibited by sections six-l and six-m of the banking law. In all cases, the right of prepayment shall be stated in the instrument evidencing the loan or forbearance, provided, however, that the provisions of this subdivision shall not apply to the extent such provisions are inconsistent with any federal law or regulation. § 19. The penal law is amended by adding a new article 187 to read as follows:

ARTICLE 187

RESIDENTIAL MORTGAGE FRAUD Section 187.00 Definitions. 187.05 Residential mortgage fraud in the fifth degree. 187.10 Residential mortgage fraud in the fourth degree. 187.15 Residential mortgage fraud in the third degree. 187.20 Residential mortgage fraud in the second degree. 187.25 Residential mortgage fraud in the first degree.

<< NY PENAL § 187.00 >> § 187.00. Definitions As used in this article:



1. "Person" means any individual or entity, other than an individual who applies for a residential mortgage loan and intends to occupy such residential property which such mortgage secures unless such person acts as an accessory to an individual or entity in committing any crime defined in this article. 2. "Residential mortgage loan" means a loan or agreement to extend credit, including the renewal or refinancing of any such loan, made to a person, which loan is primarily secured by either mortgage, deed of trust, or other lien upon any interest in residential real property or certificate of stock or other evidence of ownership in a corporation or partnership formed for the purpose of cooperative ownership of residential real property. 3. "Residential real property" means real property improved by a one-to-four family dwelling, or a residential unit in a building including units owned as condominiums or on a cooperative basis, used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such dwellings are to be constructed. 4. "Residential mortgage fraud" is committed by any person who, knowingly and with intent to defraud, presents, causes to be presented, or prepares with knowledge or belief that it will be used in soliciting an applicant for a resi-dential mortgage loan, or in applying for, the underwriting of, or closing of a residential mortgage loan, or in docu-ments filed with a county clerk of any county in the state arising out of and related to the closing of a residential mortgage loan, any written statement which he or she knows to: (a) contain materially false information concerning any fact material thereto; or (b) conceal, for the purpose of misleading, information concerning any fact material thereto.

<< NY PENAL § 187.05 >> § 187.05. Residential mortgage fraud in the fifth degree A person is guilty of residential mortgage fraud in the fifth degree when he or she commits residential mortgage fraud. Residential mortgage fraud in the fifth degree is a class A misdemeanor.

<< NY PENAL § 187.10 >> § 187.10. Residential mortgage fraud in the fourth degree A person is guilty of residential mortgage fraud in the fourth degree when he or she commits residential mortgage fraud and thereby receives proceeds or any other funds in the aggregate in excess of one thousand dollars. Residential mortgage fraud in the fourth degree is a class E felony.

<< NY PENAL § 187.15 >> § 187.15. Residential mortgage fraud in the third degree A person is guilty of residential mortgage fraud in the third degree when he or she commits residential mortgage



fraud and thereby receives proceeds or any other funds in the aggregate in excess of three thousand dollars. Residential mortgage fraud in the third degree is a class D felony.

<< NY PENAL § 187.20 >> § 187.20. Residential mortgage fraud in the second degree A person is guilty of residential mortgage fraud in the second degree when he or she commits residential mortgage fraud and thereby receives proceeds or any other funds in the aggregate in excess of fifty thousand dollars. Residential mortgage fraud in the second degree is a class C felony.

<< NY PENAL § 187.25 >> § 187.25. Residential mortgage fraud in the first degree A person is guilty of residential mortgage fraud in the first degree when he or she commits residential mortgage fraud and thereby receives proceeds or any other funds in the aggregate in excess of one million dollars. Residential mortgage fraud in the first degree is a class B felony. § 20. Paragraph (b) of subdivision 8 of section 700.05 of the criminal procedure law, as separately amended by chapters 568 and 570 of the laws of 2007, is amended to read as follows:

<< NY CRIM PRO § 700.05 >> (b) Any of the following felonies: assault in the second degree as defined in section 120.05 of the penal law, assault in the first degree as defined in section 120.10 of the penal law, reckless endangerment in the first degree as defined in section 120.25 of the penal law, promoting a suicide attempt as defined in section 120.30 of the penal law, criminally negligent hom-icide as defined in section 125.10 of the penal law, manslaughter in the second degree as defined in section 125.15 of the penal law, manslaughter in the first degree as defined in section 125.20 of the penal law, murder in the second degree as de-fined in section 125.25 of the penal law, murder in the first degree as defined in section 125.27 of the penal law, abortion in the second degree as defined in section 125.40 of the penal law, abortion in the first degree as defined in section 125.45 of the penal law, rape in the third degree as defined in section 130.25 of the penal law, rape in the second degree as defined in sec-tion 130.30 of the penal law, rape in the first degree as defined in section 130.35 of the penal law, criminal sexual act in the third degree as defined in section 130.40 of the penal law, criminal sexual act in the second degree as defined in section 130.45 of the penal law, criminal sexual act in the first degree as defined in section 130.50 of the penal law, sexual abuse in the first degree as defined in section 130.65 of the penal law, unlawful imprisonment in the first degree as defined in section 135.10 of the penal law, kidnapping in the second degree as defined in section 135.20 of the penal law, kidnapping in the first degree as defined in section 135.25 of the penal law, labor trafficking as defined in section 135.35 of the penal law, custodial interference in the first degree as defined in section 135.50 of the penal law, coercion in the first degree as defined in section 135.65 of the penal law, criminal trespass in the first degree as defined in section 140.17 of the penal law, burglary in the third degree as defined in section 140.20 of the penal law, burglary in the second degree as defined in section 140.25 of the penal law, burglary in the first degree as defined in section 140.30 of the penal law, criminal mischief in the third degree as defined in section 145.05 of the penal law, criminal mischief in the second degree as defined in section 145.10 of the penal law, criminal mischief in the first degree as defined in section 145.12 of the penal law, criminal tampering in the first degree as defined in section 145.20 of the penal law, arson in the fourth degree as defined in section 150.05 of the penal law, arson in the third degree as defined in section 150.10 of the penal law, arson in the second degree as defined in section 150.15 of



the penal law, arson in the first degree as defined in section 150.20 of the penal law, grand larceny in the fourth degree as defined in section 155.30 of the penal law, grand larceny in the third degree as defined in section 155.35 of the penal law, grand larceny in the second degree as defined in section 155.40 of the penal law, grand larceny in the first degree as defined in section 155.42 of the penal law, health care fraud in the fourth degree as defined in section 177.10 of the penal law, health care fraud in the third degree as defined in section 177.15 of the penal law, health care fraud in the second degree as defined in section 177.20 of the penal law, health care fraud in the first degree as defined in section 177.25 of the penal law, robbery in the third degree as defined in section 160.05 of the penal law, robbery in the second degree as defined in section 160.10 of the penal law, robbery in the first degree as defined in section 160.15 of the penal law, unlawful use of secret scientific mate-rial as defined in section 165.07 of the penal law, criminal possession of stolen property in the fourth degree as defined in section 165.45 of the penal law, criminal possession of stolen property in the third degree as defined in section 165.50 of the penal law, criminal possession of stolen property in the second degree as defined by section 165.52 of the penal law, criminal possession of stolen property in the first degree as defined by section 165.54 of the penal law, trademark counterfeiting in the second degree as defined in section 165.72 of the penal law, trademark counterfeiting in the first degree as defined in section 165.73 of the penal law, forgery in the second degree as defined in section 170.10 of the penal law, forgery in the first degree as defined in section 170.15 of the penal law, criminal possession of a forged instrument in the second degree as defined in section 170.25 of the penal law, criminal possession of a forged instrument in the first degree as defined in section 170.30 of the penal law, criminal possession of forgery devices as defined in section 170.40 of the penal law, falsifying business rec-ords in the first degree as defined in section 175.10 of the penal law, tampering with public records in the first degree as de-fined in section 175.25 of the penal law, offering a false instrument for filing in the first degree as defined in section 175.35 of the penal law, issuing a false certificate as defined in section 175.40 of the penal law, criminal diversion of prescription medications and prescriptions in the second degree as defined in section 178.20 of the penal law, criminal diversion of pre-scription medications and prescriptions in the first degree as defined in section 178.25 of the penal law, residential mortgage fraud in the fourth degree as defined in section 187.10 of the penal law, residential mortgage fraud in the third degree as defined in section 187.15 of the penal law, residential mortgage fraud in the second degree as defined in section 187.20 of the penal law, residential mortgage fraud in the first degree as defined in section 187.25 of the penal law, escape in the second degree as defined in section 205.10 of the penal law, escape in the first degree as defined in section 205.15 of the penal law, absconding from temporary release in the first degree as defined in section 205.17 of the penal law, promoting prison contraband in the first degree as defined in section 205.25 of the penal law, hindering prosecution in the second degree as defined in section 205.60 of the penal law, hindering prosecution in the first degree as defined in section 205.65 of the penal law, sex trafficking as defined in section 230.34 of the penal law, criminal possession of a weapon in the third degree as defined in subdivisions two, three and five of section 265.02 of the penal law, criminal possession of a weap-on in the second degree as defined in section 265.03 of the penal law, criminal possession of a dangerous weapon in the first degree as defined in section 265.04 of the penal law, manufacture, transport, disposition and defacement of weapons and dangerous instruments and appliances defined as felonies in subdivisions one, two, and three of section 265.10 of the penal law, sections 265.11, 265.12 and 265.13 of the penal law, or prohibited use of weapons as defined in subdivision two of sec-tion 265.35 of the penal law, relating to firearms and other dangerous weapons, or failure to disclose the origin of a recording in the first degree as defined in section 275.40 of the penal law; § 21. Paragraph (a) of subdivision 1 of section 460.10 of the penal law, as amended by chapter 568 of the laws of 2007, is amended to read as follows:

<< NY PENAL § 460.10 >> (a) Any of the felonies set forth in this chapter: sections 120.05, 120.10 and 120.11 relating to assault; sections 125.10 to 125.27 relating to homicide; sections 130.25, 130.30 and 130.35 relating to rape; sections 135.20 and 135.25 relating to kid-napping; section 135.35 relating to labor trafficking; section 135.65 relating to coercion; sections 140.20, 140.25 and 140.30 relating to burglary; sections 145.05, 145.10 and 145.12 relating to criminal mischief; article one hundred fifty relating to arson; sections 155.30, 155.35, 155.40 and 155.42 relating to grand larceny; sections 177.10, 177.15, 177.20 and 177.25 re-lating to health care fraud; article one hundred sixty relating to robbery; sections 165.45, 165.50, 165.52 and 165.54 relating to criminal possession of stolen property; sections 165.72 and 165.73 relating to trademark counterfeiting; sections 170.10, 170.15, 170.25, 170.30, 170.40, 170.65 and 170.70 relating to forgery; sections 175.10, 175.25, 175.35, 175.40 and 210.40



relating to false statements; sections 176.15, 176.20, 176.25 and 176.30 relating to insurance fraud; sections 178.20 and 178.25 relating to criminal diversion of prescription medications and prescriptions; sections 180.03, 180.08, 180.15, 180.25, 180.40, 180.45, 200.00, 200.03, 200.04, 200.10, 200.11, 200.12, 200.20, 200.22, 200.25, 200.27, 215.00, 215.05 and 215.19 relating to bribery; sections 187.10, 187.15, 187.20 and 187.25 relating to residential mortgage fraud, sections 190.40 and 190.42 relating to criminal usury; section 190.65 relating to schemes to defraud; sections 205.60 and 205.65 relating to hin-dering prosecution; sections 210.10, 210.15, and 215.51 relating to perjury and contempt; section 215.40 relating to tamper-ing with physical evidence; sections 220.06, 220.09, 220.16, 220.18, 220.21, 220.31, 220.34, 220.39, 220.41, 220.43, 220.46, 220.55 and 220.60 relating to controlled substances; sections 225.10 and 225.20 relating to gambling; sections 230.25, 230.30, and 230.32 relating to promoting prostitution; section 230.34 relating to sex trafficking; sections 235.06, 235.07 and 235.21 relating to obscenity; section 263.10 relating to promoting an obscene sexual performance by a child; sections 265.02, 265.03, 265.04, 265.11, 265.12, 265.13 and the provisions of section 265.10 which constitute a felony relating to firearms and other dangerous weapons; and sections 265.14 and 265.16 relating to criminal sale of a firearm; and section 275.10, 275.20, 275.30, or 275.40 relating to unauthorized recordings; and sections 470.05, 470.10, 470.15 and 470.20 relating to money laundering; or § 22. Section 78 of the banking law, as added by chapter 321 of the laws of 1992, is amended to read as follows:

<< NY BANK § 78 >> § 78. Powers of the bureau If the criminal investigations bureau has a reasonable suspicion that a person or entity subject to the jurisdiction of the de-partment has, in connection with activities authorized by this chapter, engaged in, or is engaging in an activity which is a misdemeanor or felony under this chapter or under articles article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred eighty-seven, one hun-dred ninety, two hundred, two hundred ten or four hundred seventy of the penal law, the superintendent may undertake such investigation as is deemed necessary, and in the enforcement of this chapter, determine whether any such person or entity has violated or is about to violate any of the above referenced laws or articles. Provided, however, that the scope of authority set forth in this section shall not be deemed to otherwise limit or impair the ability of the department to assist any other entity in an investigation involving a violation of law. § 23. Subdivision 2 of section 592 of the banking law, as amended by chapter 146 of the laws of 2003, is amended to read as follows:

<< NY BANK § 592 >> 2. The superintendent may refuse to issue a license pursuant to this article if he or she shall find that the applicant, or any person who is a director, officer, partner, agent, employee, substantial stockholder of the applicant, consultant or person hav-ing a relationship with the applicant similar to a consultant, (a) has been convicted of a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred eighty-seven, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the Unit-ed States, provided that such crime would be a felony if committed and prosecuted under the laws of this state or (b) has had a license or registration revoked by the superintendent or (c) has been a director, partner, or substantial stockholder of an enti-ty which has had a license or registration revoked by the superintendent or (d) has been an agent, employee or officer of an entity, or a consultant to, or person having had a similar relationship with, any entity which has had a license or registration revoked by the superintendent where such person shall have been found by the superintendent to bear responsibility in con-nection with the revocation. The term "substantial stockholder", as used in this subdivision, shall be deemed to refer to a per-son owning or controlling directly or indirectly ten per centum or more of the total outstanding stock of a corporation.



§ 24. Subdivision 2 of section 592-a of the banking law, as amended by chapter 146 of the laws of 2003, is amended to read as follows:

<< NY BANK § 592-a >> 2. The superintendent may refuse to issue a certificate pursuant to this article if he or she shall find that the applicant, or any person who is a director, officer, partner, agent, employee, substantial stockholder of the applicant, consultant or person hav-ing a relationship with the applicant similar to a consultant, (a) has been convicted of a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred eighty-seven, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the Unit-ed States, provided that such crime would be a felony if committed and prosecuted under the laws of this state or (b) has had a license or registration revoked by the superintendent or (c) has been a director, partner, or substantial stockholder of an enti-ty which has had a license or registration revoked by the superintendent or (d) has been an agent, employee or officer of an entity, or a consultant to, or person having had a similar relationship with, any entity which has had a license or registration revoked by the superintendent where such person shall have been found by the superintendent to bear responsibility in con-nection with the revocation. The term "substantial stockholder", as used in this subdivision, shall be deemed to refer to a per-son owning or controlling directly or indirectly ten per centum or more of the total outstanding stock of a corporation. § 25. Paragraph (a) of subdivision 3 of section 599-c of the banking law, as amended by chapter 553 of the laws of 2007, is amended to read as follows:

<< NY BANK § 599-c >> (a) The superintendent may refuse to issue a certificate pursuant to this article if he or she shall find that the applicant (i) has been convicted of a crime involving an activity which is a felony under this chapter or under article one hundred fifty-five, one hundred seventy, one hundred seventy-five, one hundred seventy-six, one hundred eighty, one hundred eighty-five, one hundred eighty-seven, one hundred ninety, two hundred, two hundred ten or four hundred seventy of the penal law or any comparable felony under the laws of any other state or the United States, provided that such crime would be a felony if com-mitted and prosecuted under the laws of this state, or (ii) has had an authorization revoked by the superintendent or a regula-tory person or entity of another state that regulates persons engaging in mortgage loan originating, or (iii) has been a director, partner, or substantial stockholder of an originating entity which has had a registration or license revoked by the superinten-dent or a regulatory person or entity of another state that regulates such originating entity, or (iv) has been an employee, of-ficer or agent of, or a consultant to, an originating entity which has had a registration or license revoked by the superintendent or a regulatory person or entity of another state that regulates such originating entity where such person shall have been found by the superintendent or by such similar regulatory person or entity of another state to bear responsibility in connection with such revocation. § 26. The real property law is amended by adding a new section 265-b to read as follows:

<< NY REAL PROP § 265-b >> § 265-b. Distressed property consulting contracts 1. Definitions. The following definitions shall apply to this section: (a) "Homeowner" means a natural person who is the mortgagor with respect to a distressed home loan or who is in danger of losing a home for nonpayment of taxes. (b) "Consulting contract" or "contract" means an agreement between a homeowner and a distressed property con-



sultant under which the consultant agrees to provide consulting services. (c) "Consulting services" means services provided by a distressed property consultant to a homeowner that the con-sultant represents will help to achieve any of the following: (i) stop, enjoin, delay, void, set aside, annul, stay or postpone a foreclosure filing, a foreclosure sale or the loss of a home for nonpayment of taxes; (ii) obtain forbearance from any servicer, beneficiary or mortgagee or relief with respect to the potential loss of the home for nonpayment of taxes; (iii) assist the homeowner to exercise a right of reinstatement or similar right provided in the mortgage documents or any law or to refinance a distressed home loan; (iv) obtain any extension of the period within which the homeowner may reinstate or otherwise restore his or her rights with respect to the property; (v) obtain a waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a property in foreclosure; (vi) assist the homeowner to obtain a loan or advance of funds; (vii) assist the homeowner in answering or responding to a summons and complaint, or otherwise providing infor-mation regarding the foreclosure complaint and process; (viii) avoid or ameliorate the impairment of the homeowner's credit resulting from the commencement of a foreclo-sure proceeding or tax sale; or (ix) save the homeowner's property from foreclosure or loss for nonpayment of taxes. (d) "Distressed home loan" means a home loan that is in danger of being foreclosed because the homeowner has one or more defaults under the mortgage that entitle the lender to accelerate full payment of the mortgage and repossess the property, or a home loan where the lender has commenced a foreclosure action. For purposes of this paragraph, a "home loan" is a loan in which the debt is incurred by the homeowner primarily for personal, family or household purposes, and the loan is secured by a mortgage or deed of trust on property upon which there is located or there is to be located a structure or structures intended principally for occupancy of from one to four families which is or will be occupied by the homeowner as the homeowner's principal dwelling. (e) "Distressed property consultant" or "consultant" means an individual or a corporation, partnership, limited lia-bility company or other business entity that, directly or indirectly, solicits or undertakes employment to provide con-sulting services to a homeowner for compensation or promise of compensation with respect to a distressed home loan or a potential loss of the home for nonpayment of taxes. A consultant does not include the following: (i) an attorney admitted to practice in the state of New York; (ii) a person or entity who holds or is owed an obligation secured by a lien on any property in foreclosure while the person or entity performs services in connection with the obligation or lien; (iii) a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift



holding company, credit union or insurance company organized under the laws of this state, another state or the Unit-ed States, or a subsidiary or affiliate of such entity or a foreign banking corporation licensed by the superintendent of banks or the comptroller of the currency; (iv) a federal Department of Housing and Urban Development approved mortgagee and any subsidiary or affiliate of such mortgagee, and any agent or employee of these persons while engaged in the business of such mortgagee; (v) a judgment creditor of the homeowner, if the judgment creditor's claim accrued before the written notice of fore-closure sale is sent; (vi) a title insurer authorized to do business in this state, while performing title insurance and settlement services; (vii) a person licensed as a mortgage banker or registered as a mortgage broker or registered as a mortgage loan ser-vicer as defined in article twelve-D of the banking law; (viii) a bona fide not-for-profit organization that offers counseling or advice to homeowners in foreclosure or loan default; or (ix) a person licensed or registered in the state to engage in the practice of other professions that the superintendent of banks has determined should not be subject to this section. (f) "Property" shall mean real property located in this state improved by a one-to-four family dwelling used or occu-pied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such dwellings are to be constructed. (g) "Business day" shall mean any calendar day except Sunday or the public holidays as set forth in section twenty-four of the general construction law. 2. Prohibitions. A distressed property consultant is prohibited from doing the following: (a) performing consulting services without a written, fully executed consulting contract with a homeowner; (b) charging for or accepting payment for consulting services before the full completion of such services; (c) taking a power of attorney from a homeowner; (d) retaining any original loan document or other original document related to the distressed home loan, the property or the potential loss of the home for nonpayment of taxes; or (e) inducing or attempting to induce a homeowner to enter a consulting contract that does not fully comply with the provisions of this article. 3. Distressed property consulting contracts. (a) A distressed property consulting contract shall: (i) contain the entire agreement of the parties; (ii) be provided in writing to the homeowner for review before signing;



(iii) be printed in at least twelve point type and written in the same language that is used by the homeowner and was used in discussions between the consultant and the homeowner to describe the consultant's services or to negotiate the contract; (iv) fully disclose the exact nature of the distressed property consulting services to be provided by the distressed property consultant or anyone working in association with the distressed property consultant; (v) fully disclose the total amount and terms of compensation for such consulting services; (vi) contain the name, business address and telephone number of the consultant and the street address (if different) and facsimile number or email address of the distressed property consultant where communications from the home-owner may be delivered; (vii) be dated and personally signed by the homeowner and the distressed property consultant and be witnessed and acknowledged by a New York notary public; and (viii) contain the following notice, which shall be printed in at least fourteen point boldface type, completed with the name of the distressed property consultant, and located in immediate proximity to the space reserved for the home-owner's signature: "NOTICE REQUIRED BY NEW YORK LAW You may cancel this contract, without any penalty or obligation, at any time before midnight of ........ (fifth business day after execution). ........ (Name of Distressed Property Consultant) (the "Consultant") or anyone working for the Consultant may not take any money from you or ask you for money until the Consultant has completely finished doing everything this Contract says the Consultant will do. You should consider consulting an attorney or a government-approved housing counselor before signing any legal document concerning your home. It is advisable that you find your own attorney, and not consult with an attorney recommended or provided to you by the Consultant. A list of housing counselors may be found on the website of the New York State Banking Department, www.banking.state.ny.us or by calling the Banking Department toll-free at 1- 877-BANK-NYS (1-877-226-5697). The law requires that this contract contain the entire agreement between you and the Consultant. You should not rely upon any other written or oral agreement or promise." The distressed property consultant shall accurately enter the date on which the right to cancel ends. (b)(i) The homeowner has the right to cancel, without any penalty or obligation, any contract with a distressed prop-erty consultant until midnight of the fifth business day following the day on which the distressed property consultant and the homeowner sign a consulting contract. Cancellation occurs when the homeowner, or a representative of the homeowner, either delivers written notice of cancellation in person to the address specified in the consulting contract or sends a written communication by facsimile, by United States mail or by an established commercial letter delivery service. A dated proof of facsimile delivery or proof of mailing creates a presumption that the notice of cancellation has been delivered on the date the facsimile is sent or the notice is deposited in the mail or with the delivery service. Cancellation of the contract shall release the homeowner of all obligations to pay fees or any other compensation to the distressed property consultant. (ii) The consulting contract shall be accompanied by two copies of a form, captioned "notice of cancellation" in at



least twelve-point bold type. This form shall be attached to the contract, shall be easily detachable, and shall contain the following statement written in the same language as used in the contract, and the contractor shall insert accurate information as to the date on which the right to cancel ends and the contractor's contact information: "NOTICE OF CANCELLATION Note: You may cancel this contract, without any penalty or obligation, at any time before midnight of ....... (Enter date) To cancel this contract, sign and date both copies of this cancellation notice and personally deliver one copy or send it by facsimile, United States mail, or an established commercial letter delivery service, indicating cancellation to the Distressed Property Consultant at one of the following: Name of Contractor......................... Street Address............................. City, State, Zip........................... Facsimile:................................. I hereby cancel this transaction. Name of Homeowner:......................... Signature of Homeowner:.................... Date:......................................" (iii) Within ten days following receipt of a notice of cancellation given in accordance with this subdivision, the dis-tressed property consultant shall return any original contract and any other documents signed by or provided by the homeowner. Cancellation shall release the homeowner of all obligations to pay any fees or compensation to the dis-tressed property consultant. 4. Penalties and other provisions. (a) If a court finds that a distressed property consultant has violated any provision of this section, the court may make null and void any agreement between the distressed homeowner and the distressed property consultant. (b) If the distressed property consultant violates any provision of this section and the homeowner suffers damage be-cause of the violation, the homeowner may recover actual and consequential damages and costs from the distressed property consultant in an action based on this section. If the distressed property consultant intentionally or recklessly violates any provision of this section, the court may award the homeowner treble damages, attorneys' fees and costs. (c) Any provision of a consulting contract that attempts or purports to limit the liability of the distressed property consultant under this section shall be null and void. Inclusion of such provision shall at the option of the homeowner render the consulting contract void. Any provision in a contract which attempts or purports to require arbitration of any dispute arising under this section shall be void at the option of the homeowner. Any waiver of the provisions of this section shall be void and unenforceable as contrary to public policy.



(d) In addition to the other remedies provided, whenever there shall be a violation of this section, application may be made by the attorney general in the name of the people of the state of New York to a court or justice having jurisdic-tion by a special proceeding to issue an injunction, and upon notice to the defendant of not less than five days, to en-join and restrain the continuance of such violations; and if it shall appear to the satisfaction of the court or justice that the defendant has, in fact, violated this section, an injunction may be issued by such court or justice, enjoining and restraining any further violation, without requiring proof that any person has, in fact, been injured or damaged thereby. In any such proceeding, the court may make allowances to the attorney general as provided in paragraph six of subdivision (a) of section eighty-three hundred three of the civil practice law and rules, and direct restitution. Whenever the court shall determine that a violation of this section has occurred, the court may impose a civil penalty of not more than ten thousand dollars for each violation. In connection with any such proposed application, the attor-ney general is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in ac-cordance with the civil practice law and rules. (e) The provisions of this section are not exclusive and are in addition to any other requirements, rights, remedies, and penalties provided by law. § 27. Severability clause. If any clause, sentence, paragraph, section or part of this act shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section or part thereof directly involved in the controversy in which such judgment shall have been rendered.

<< Note: NY BANK §§ 6-l, 599-b >>

<< Note: NY BANK §§ 6-m, 590-b >>

<< Note: NY GEN OBLIG § 5-501 >>

<< Note: NY RP ACT & PRO §§ 1302, 1303 >> § 28. This act shall take effect immediately; provided, however, that: a. sections one and seventeen of this act shall apply to actions that are commenced on or after September 1, 2008; b. sections two and twenty-six of this act shall take effect September 1, 2008; c. sections four, five, six, thirteen and eighteen of this act shall apply to loans that are consummated on or after September 1, 2008; d. section four-a of this act shall of this act take effect July 1, 2010; e. sections seven through twelve and fourteen through sixteen of this act shall take effect July 1, 2009; f. sections nineteen through twenty-five of this act shall take effect on the first day of November next succeeding the date upon which it shall have become a law; and g. provided however, effective immediately the promulgation of any rules, regulations or actions necessary for timely im-plementation of the provisions of this act are hereby authorized. NY LEGIS 472 (2008)



END OF DOCUMENT

1

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF ------------------------------------------------------------------------------X

Index No. VERIFIED

SECOND AMENDED ANSWER WITH

AFFIRMATIVE DEFENSES

AND COUNTERCLAIMS Plaintiff, -against- , JOHN DOE (Said name being fictitious, it being the intention of Plaintiff to designate any and all occupants of premises being foreclosed herein, and any parties, corporations or entities, if any, having or claiming an interest or lien upon the mortgaged premises.), Defendants. ----------------------------------------------------------------------------X Defendant

(hereinafter “Defendant”) by her attorneys, Citak & Citak, Esqs., as and for her Second Amended

Answer to the Verified Complaint herein, alleges as follows:

1. Denies the allegations set forth in paragraph SIXTH of the Verified Complaint.

2. Denies knowledge and information sufficient to form a belief as to the allegations

set forth in paragraphs FIRST, FIFTH, SEVENTH, EIGHTH, NINTH, TENTH, ELEVENTH,

TWELFTH and THIRTEENTH of the Verified Complaint.


set forth in paragraphs SECOND AND THIRD, except admits that she signed various documents

2

at a purported mortgage loan closing on or about June 12, 2007, and respectfully refers the Court

to a reading of any and all documents signed in connection with said mortgage loan closing for a

full interpretation thereof.


set forth in paragraphs FOURTH, except admits that the premises at which she resides is known

as , NY.

AS AND FOR A FIRST AFFIRMATIVE DEFENSE

5. The Complaint fails to state a cause of action against Defendant for which relief

may be granted.

AS AND FOR A SECOND AFFIRMATIVE DEFENSE

6. Upon information and belief, Plaintiff is not the holder of the Note that is the

underlying obligation upon which this foreclosure action is premised.

7. As a result of the foregoing, Plaintiff does not have standing to maintain this

action.

8. As a result of the foregoing, the Complaint should be dismissed.

AS AND FOR A THIRD AFFIRMATIVE DEFENSE

9. Upon information and belief, Plaintiff has failed to comply with the terms of the

subject Mortgage by its failure to duly serve notice of default, as is required by the terms of the

subject Mortgage.

AS AND FOR A FOURTH AFFIRMATIVE DEFENSE

10. Upon information and belief, Plaintiff has acted with unclean hands and should be

estopped from proceeding herein.

3

AS AND FOR A FIFTH AFFIRMATIVE DEFENSE

11. Upon information and belief, Plaintiff’s conduct, actions and inactions in

connection with the origination and servicing of the subject Mortgage were undertaken in bad

faith and were unconscionable, precluding a judgment of foreclosure.

AS AND FOR A SIXTH AFFIRMATIVE DEFENSE

12. Upon information and belief, Plaintiff failed to investigate Defendant’s repayment

ability or creditworthiness at any time prior to approving and issuing the subject Mortgage.

AS AND FOR A SEVENTH AFFIRMATIVE DEFENSE AND FIRST COUNTERCLAIM

13. Defendant is a resident of the County of , State of New York.

14. Upon information and belief, due to an alleged Certificate of Merger, the Plaintiff

of this action is now Bank of America, successor by merger to the named Plaintiff La Salle Bank

National Association.

15. Upon information and belief, Bank of America was and still is a banking

corporation duly organized and existing under and by virtue of the laws of the State of Delaware.

16. Upon information and belief, Plaintiff is the successor-in-interest of First Franklin

Financial Corp., the entity with which Defendant entered into the mortgage dated June 12, 2007

(hereinafter the “Subject Mortgage”) for the purchase of her home located at

NY.

17. Upon information and belief, Plaintiff is responsible and liable for all actions and

inactions undertaken by First Franklin Financial Corp. and its predecessors-in-interest, agents,

employees, representatives, and/or servants, in connection with the origination and servicing of

the Subject Mortgage issued to Defendant on June 12, 2007.

4

18. In or about 1975, Defendant, a senior citizen, emigrated to the United States.

19. Beginning in or about 1999 through June 2007, Defendant resided at an apartment

at in the Bronx, NY, for which Defendant paid monthly rent of $550.00 in 2007.

20. For the year 2007, Defendant reported gross income of $37,173.00.

21. In or about the early spring of 2007, Defendant expressed her dream of owning her

own home to her close of friend , Carol .

22. Upon information and belief, Carol informed Defendant that if Defendant was

sincere in her desire to own her own home, she knew a real estate broker, ‘______________”

(hereinafter “ ) who could make her dream a reality.

23. Upon information and belief, in or about March or April 2007, Defendant met with

representatives of RE BROKER .

24. Upon information and belief, in or about April 2007, Defendant looked at several

houses that we for sale with representatives of RE BROKER .

25. In or about April 2007, Defendant went with representatives of RE BROKER to

see the Subject Premises.

26. At the time Defendant saw the Subject Premises, it was in need of several repairs,

which were to cost several thousands of dollars, including but not limited to: i) installing a toilet

and sink in the first floor bathroom; ii) providing heat to the kitchen; iii) replacing the front screen

door; iv) putting a new wall on the front porch; and v) replacing a portion of the back wall.

27. Upon information and belief, in or about April 2007, Defendant contracted for an

Inspection Report of the Subject Premises to be completed.

5

28. Upon information and belief, the Seller informed Defendant that she would only

sell the Subject Premises in “as is” condition.

29. Defendant, a senior citizen and anxious to fulfill her dream of becoming a

homeowner, informed RE BROKER referred Defendant to MORTGAGE BROKER (hereinafter

”), a mortgage broker, and ATTORNEY Esq. (hereinafter “Attorney ”).

32. Upon information and belief, representatives of MORTGAGE BROKER in

particular Ms. Jones, and ATTORNEY informed Defendant that they would “take care of her”

throughout the mortgage application process and through her purchase of the Subject Premises.

33. At all times relevant herein, RE BROKER. MORTGAGE BROKER, their

respective employees, agents, and representatives, and ATTORNEY were aware that Defendant

was a visting nurse with a gross income of approximately $37,000.00.

34. Upon information and belief, in or about May 2007, Defendant visited the Subject

Premises and observed several defects about which she inquired with the Seller, who deceptively

and falsely represented the condition of the Subject Premises.

35. Upon information and belief, during that visit to the Subject Premises, Defendant

was introduced to the purported tenants residing at the Subject Premises, who Defendant was

informed paid monthly rent which would offset her potential monthly mortgage payment.

36. In or about May 2007, ATTORNEY encouraged and advised Defendant to retain

the tenants to offset her monthly loan payments, since the tenants were paying total monthly rent

of approximately $2,535.00

6

37. On or about May , 2007, Defendant entered into a Contract of Sale for the

purchase of the Subject Premises, which provided for a purchase price of $514,000.00, a

downpayment of $5,000.00, and a Seller’s Concession of $29,100.00.

38. Upon information and belief, the $29,100 “Seller’s Concession” was included to

inflate the purchase price for the purpose of obtaining a higher loan amount to finance all closing

costs, including those to be paid to the Lender, its agents, representatives, and affiliates.

39. Upon information and belief, the tenants residing at the Subject Premises were

residing thereat illegally and without leases.

40. Upon information and belief, ATTORNEY was aware that the Tenants were

residing at the Subject Premises were residing thereat illegally and without leases.

41. Upon information and belief, RE BROKER. MORTGAGE BROKER and

ATTORNEY did not inform Defendant that she was not permitted to rent the Subject Premises to

the Tenants or any other tenants and that the Tenants lacked leases to reside at the Subject

Premises pursuant to which they were legally obligated to pay rent.

42. Upon information and belief, the rental income purportedly to be collected by

Defendant from the Tenants was communicated by RE BROKER and/or ATTORNEY to Plaintiff

to justify the Subject Mortgage.

43. Upon information and belief, after RE BROKER and/or ATTORNEY submitted

the knowingly false and fraudulent information to Plaintiff regarding rental income to be collected

from the Tenants, Plaintiff did not inquire about that information, nor did Plaintiff act to verify

any of that information.

7

44. Upon information and belief, the rental income purportedly to be collected by

Defendant from the Tenants was included as part of a Loan Application submitted by RE

BROKER and/or ATTORNEY to Plaintiff on Defendant’s behalf, but of which Defendant had no

knowledge.

45. Upon information and belief, Plaintiff knew the information regarding the Tenants

in the Loan Application was false and fraudulent.

46. Upon information and belief, Plaintiff ratified and approved the Loan Application

and/or information provided to it by RE BROKER and/or ATTORNEY regarding Defendant’s

purported repayment ability to justify a higher loan amount, which would make the loan more

attractive in the secondary market.

47. The Mortgage Agreement presented to Defendant contained language to the effect

that, should she make false, misleading, or inaccurate statements to the Lender, the Lender may

treat those actions as a default thereunder.

48. Upon information and belief, on June 12, 2007, First Franklin agreed to extend a

loan to Defendant in the sum of $514,000.00 at an annual interest rate of 9.3%, with the monthly

payments due thereon to be in the sum of $4,984.14 (including monthly escrow payments).

49. Upon information and belief, the closing costs incurred at closing totaled

approximately $25,000.00, all of which were financed by Plaintiff and none of which Defendant

was made aware prior to closing.

50. The Mortgage Agreement presented to Defendant contained language to the effect

that, should she make false, misleading, or inaccurate statements to the Lender, the Lender may

treat those actions as a default thereunder.

8

51. Upon information and belief, ATTORNEY represented both the Defendant and the

Plaintiff Lender at that closing.

52. Upon information and belief, ATTORNEY never disclosed to Defendant that he

represented the Lender in connection with the issuance of the Subject Mortgage.

53. Upon information and belief, Defendant never consented to ATTORNEY’S

representation of the Lender and her at the closing.

54. Upon information and belief, at no time did ATTORNEY advise Defendant not to

close on the Subject Mortgage based upon several defects existing thereat and contained in the

Inspection Report.

55. Upon information and belief, in or about July 2007, Defendant received her first

mortgage statement from Plaintiff, which demanded a payment due of approximately $4,984.14.

56. The monthly mortgage payment demanded therein by Plaintiff exceeded

Defendant’s cumulative monthly income, of which Plaintiff was aware before making the loan to

Defendant.

57. Commencing in or about August 2007, and continuing through February 2009, the

Tenants refused to pay rent despite living in all four (4) bedrooms in the Subject Premises.

58. As a result of the Tenants’ illegal occupation of the Subject Premises, Defendant

was forced to sleep in the dining room of the Subject Premises.

59. As a result of the dilapidated condition in which Defendant purchased the Subject

Premises, she has incurred approximately $15,000.00 in expenses to repair the Subject Premises,

while several other portions of the Subject Premises remain in an utter state of disrepair.

9

60. Upon information and belief, in or about February 2009, the last of the Tenants

permanently moved from the Subject Premises.

61. On or about April 21, 2009, a “Qualified Written Request” (“QWR”) was mailed

to Plaintiff’s servicer, which was servicing the Subject Mortgage Loan, requesting certain

documents and information regarding irregularities in connection with the origination and

servicing of Defendant’s mortgage loan account.

62. On or about April 21, 2009, an Authorization signed by Defendant, dated April 21,

2009 (hereinafter the “Authorization”), was mailed to Plaintiff’s servicer.

63. Upon information and belief, on or about April 24, 2009, Plaintiff received the

QWR.

64. Upon information and relief, on or about April 24, 2009, Plaintiff received the

Authorization.

65. Pursuant to this Authorization, Defendant explicitly and unambiguously, inter alia:

a. authorized her attorneys and its employees, agents, servants and affiliates

to communicate with her Lender and request and receive all information

and documentation available from the Lender in connection with her

mortgage loan with Plaintiff; and

b. instructed that all communications, whether written, oral, electronic or

otherwise, regarding the Subject Mortgage Loan with Plaintiff be directed

to her attorneys on her behalf and not directly to her.

66. Upon information and belief, Plaintiff failed to provide Defendant’s attorneys with

a proper response to the QWR within sixty (60) days of its receipt thereof.

10

67. On or about June 30, 2009, as a result of Plaintiff’s unresponsiveness, a second

notification was mailed to Plaintiff advising it of the outstanding QWR and enclosing another

copy of the QWR.

68. Defendant received a letter dated September 22, 2009 from Plaintiff, wherein

Plaintiff advised Defendant that she may be eligible for a loan modification under a federal

program.

69. Upon information and belief, Plaintiff, and/or its predecessors in interest, directly

and/or through its agents, servants and employees, including loan servicers, mortgage brokers and

real estate brokers, have acted improperly, unconscionably and in bad faith in the application

process leading to, and including, the closing of the Subject Mortgage Loan being foreclosed

herein.

70. Upon information and belief, as a result of Plaintiff’s actions herein, Plaintiff is

liable to Defendant for each and every improper and tortious act committed by Plaintiff and/or its

predecessors in interest, directly and/or through its agents, servants and employees, including loan

servicers, mortgage brokers and real estate brokers, as if it were committed by Plaintiff itself.

71. Upon information and belief, the improper acts undertaken by Plaintiff and/or its

predecessors in interest, directly and/or through its agents, servants and employees, including loan

servicers, mortgage brokers and real estate brokers, include, but are not limited to, knowingly

improper inflating of Defendant’s income (i) so as to justify the making of a loan that Defendant

could not, in actuality, afford, and/or (ii) to enable the lender to place the loan into compliance

with certain formulas and guidelines necessary to facilitate the lender's immediate sale of the loan

to the secondary mortgage market, failure to comply with obligations under the Truth-In-Lending

11

Act, failure to provide a proper Good Faith Estimate of Closing Costs, exerting undue duress

upon Defendant to close a loan under terms and at a cost that Defendant could not afford but for

which she was desperate, all of which has damaged, and continues to damage, Defendant.

72. As a result of the foregoing, Defendant has been, and remains, entitled to rescind

the Subject Mortgage.

73. As a further result of the foregoing, Defendant has suffered, and, upon information

and belief, will continue to suffer damages.

74. Upon information and belief, Plaintiff’s acts, as set forth herein were undertaken

intentionally, deliberately, wantonly and maliciously, and in reckless disregard of Defendant’s

rights; as a result, Defendant is entitled to recover exemplary and punitive damages in an amount

found to be reasonably related to the compensatory damages she has incurred, in a sum to be

determined at trial.

AS AND FOR AN EIGHTH AFFIRMATIVE DEFENSE AND SECOND COUNTERCLAIM -- VIOLATION OF REAL ESTATE SETTLEMENT

PROCEDURES ACT, 12 USC § 2601

75. Defendant repeats and re-alleges each and every allegation contained in paragraphs

“13” through “74” above with the same force and effect as if fully set forth herein.

76. On or about April 21, 2009, at Defendant’s request and on Defendant’s behalf, a

“Qualified Written Request” pursuant to RESPA was sent to Plaintiff which, upon information

and belief, was received by Plaintiff on April 24, 2009.

77. Upon information and belief, Plaintiff has committed multiple violations of

RESPA after having received said duly delivered “Qualified Written Request” under RESPA,

having failed to comply with the requirements and restrictions imposed upon them thereby.

12

78. As a result of the foregoing, Defendant has suffered, and, upon information and

belief, will continue to suffer damages, including actual damages and additional damages

prescribed by the applicable statute, the latter being in the amount of $1,000 for each violation.

79. Upon information and belief, Plaintiff’s acts, as set forth herein were undertaken

intentionally, deliberately, wantonly and maliciously, and in reckless disregard of Defendant’s

rights; as a result, Defendant is entitled to recover exemplary and punitive damages in an amount

found to be reasonably related to the compensatory damages she has incurred, in a sum to be

determined at trial.

AS AND FOR A NINTH AFFIRMATIVE DEFENSE AND THIRD COUNTERCLAIM --

VIOLATION OF GENERAL BUSINESS LAW § 349 et seq.


“75” through “79” above with the same force and effect as if fully set forth herein.

81. Upon information and belief, Plaintiff engaged in materially misleading and

deceptive conduct by, inter alia:

a) Knowingly and fraudulently issuing a loan to Defendant which it knew she could

not afford and for which the monthly payments were greater than Defendant’s total

monthly income; and

b) Knowingly and fraudulently permitting a loan application and/or information

material to Defendant’s eligibility for the Subject Mortgage to be submitted to it with false

information reported therein and purportedly accepting same so that the Mortgage

Agreement would be more attractive and valuable in the secondary mortgage market;

13

82. Upon information and belief, the acts of Plaintiff toward Defendant were

“consumer oriented” because A) Defendant is a natural person and B) the services allegedly to be

performed by Plaintiff were for financial services, to wit, a new mortgage loan.

83. Upon information and belief, Plaintiff represented to Defendant and the general

public that it was engaged in the business of issuing mortgage loans based upon the potential

borrower’s ability to pay that loan.

84. Upon information and belief, Plaintiff’s representations to Defendant and the

general public were materially misleading and/or false in that Plaintiff represented it would only

issue loans that it knew, through its own due diligence and verification, a potential borrower could

afford and only based upon a loan application verified and signed by the potential borrowers.

85. Upon information and belief, the misleading actions, misrepresentations and/or

material omissions of RE BROKER MORTGAGE BROKER and/or ATTORNEY and their

respective representatives, employees, agents and Plaintiff and its representatives, agents, and

employees, induced Defendant to enter into the Subject Mortgage Agreement with Plaintiff, as a

result of which Plaintiff and its predecessors-in-interest, agents, including but not limited to RE

BROKER MORTGAGE BROKER and/or ATTORNEY and their representatives, servants and

employees were paid considerable sums and received considerable compensation.

86. Plaintiff’s deceptive practices and conduct caused Defendant to suffer a severe loss

of a source of income and a substantial loss of property that had been used by Defendant for her

personal care and maintenance and which were assets essential to Defendant’s health or welfare.

87. Because of Defendant’s longing and desire to own the Subject Premises and lack

of business sophistication, she was particularly more vulnerable to the Plaintiff’s deceptive

14

conduct and she suffered emotional and economic damage as a result of Plaintiff’s deceptive

practices and conduct.

88. The deceptive and misleading practices and conduct of Plaintiff, RE BROKER

MORTGAGE BROKER and/or ATTORNEY, and their respective agents, employees,

representatives and servants, were perpetrated against Defendant, an elderly person over sixty-

five (65) years old, to wit Sixty-Nine (69) years old.

89. Upon information and belief, Plaintiff, RE BROKER MORTGAGE BROKER

and/or ATTORNEY, and their respective agents, employees, representatives and servants, were

cognizant that their deceptive practices and conduct were directed at Defendant, an elderly

person, in willful disregard of Defendant’s rights.

90. As a result of the actions, representations, misrepresentations and/or material

omissions of Plaintiff, Defendant has been damaged in an amount to be determined at trial, but in

no event less than the sum of $514,000.00, plus costs and legal fees.

91. Pursuant to GBL § 349(h), an additional One Thousand ($1,000.00) Dollars should

be awarded to Defendant because Plaintiff willfully and knowingly violated GBL § 349.

92. Pursuant to GBL § 349-c, an additional civil penalty of Ten Thousand

($10,000.00) Dollars should be assessed against Plaintiff for its deceptive practices and conduct

perpetrated against Defendant, an elderly person.

93. In addition, as a result of the deliberate, willful, intentional and malicious actions

and/or inactions of Plaintiff, as outlined above, which were undertaken, in whole or in part, with

the intent inter alia to harass, injure, harm and cause damage to Defendant, Defendant is entitled

to punitive damages in a sum that is found at trial to be reasonably proportionate to the damages

15

inflicted and suffered by Defendant, which sum is believed to be not less than One Million

($1,000,000.00) Dollars.

AS AND FOR AN TENTH AFFIRMATIVE DEFENSE AND FOURTH COUNTERCLAIM -- BREACH OF CONTRACT


“80” through “93” with the same force and effect as if fully set forth herein.

95. The Mortgage Agreement contained an implied and reciprocal covenant of good

faith and fair dealing in the course of its performance by the parties thereto.

96. The Mortgage Agreement imposed a reciprocal duty on Plaintiff not to make any

false, misleading, or inaccurate statements important to Defendant’s eligibility for the Subject

Mortgage Loan or to knowingly and intentionally accept and ratify false, misleading, or

inaccurate statements important to Defendant’s eligibility for the Subject Mortgage Loan.

97. In entering into that Agreement, Plaintiff, implicitly and explicitly, covenanted that

it would do nothing that would effectively destroy, damage, dilute, diminish or injure Defendant’s

rights to receive the intended benefits and bargain of that Agreement.

98. Upon information and belief, Plaintiff destroyed Defendant’s rights to receive the

intended benefits and bargain of that Agreement by, inter alia:

a) Making and/or knowingly and intentionally ratifying false, misleading and

inaccurate statements made by RE BROKER MORTGAGE BROKER and/or

ATTORNEY regarding Defendant’s eligibility for the Subject Mortgage and repayment

ability, when Plaintiff knew those statements to be false;

a) Imposing loan terms on Defendant which Plaintiff knew were beyond what she

could afford; and

16

c) Causing Defendant undue stress, distress and anxiety in seeking collection of

monies not owed under the Mortgage Agreement.

99. Plaintiff breached its obligations under the Mortgage Agreement that Defendant

justifiably understood would be included as part and parcel thereof.

100. As a result of the foregoing, Defendant is entitled to damages in an amount to be

determined at trial, which sum Defendant reasonably believes exceeds $514,000.00.

101. In addition, as a result of the deliberate, willful, intentional and malicious acts

and/or inactions of Plaintiff as described above, Defendant is entitled to punitive damages in a

sum that is found at trial to be reasonably proportionate to the damages incurred and suffered by

Defendant, which sum is believed to be not less than One Million ($1,000,000.00) Dollars.

AS AND FOR A ELEVENTH AFFIRMATIVE DEFENSE and FIFTH COUNTERCLAIM --

AIDING AND ABETTING BREACH OF FIDUCIARY DUTY

102. Defendant repeats and realleges each and every allegation set forth in paragraphs

“94” through “101” above as if fully set forth herein.

103. Upon information and belief, Defendant’s real estate broker had a fiduciary duty to

act in the utmost good faith and in Defendant’s best interests throughout their relationship.

104. Upon information and belief, Defendant’s mortgage broker had a fiduciary duty to

act in the utmost good faith and in Defendant’s best interests throughout their relationship.

105. Upon information and belief, Attorney as Defendant’s attorney had a fiduciary

duty to act in the utmost good faith and in Defendant’s best interests throughout their relationship.

17

106. Upon information and belief, Defendant engaged RE BROKER MORTGAGE

BROKER and/or ATTORNEY, respectively, based upon their special fitness and expertise.

107. Upon information and belief, RE BROKER MORTGAGE BROKER and/or

ATTORNEY breached their fiduciary duty by acting in a manner contrary to the interests of

Defendant by inter alia fraudulently reporting the rental income to be collected from the Tenants

by Defendant so as to procure a loan for Defendant that RE BROKER MORTGAGE BROKER

and/or ATTORNEY Knew she could not afford and for which the monthly payments would

exceed her gross monthly income.

108. Upon information and belief, Plaintiff rendered substantial assistance to RE

BROKER MORTGAGE BROKER and/or ATTORNEY in breaching their respective fiduciary

duties to Defendant by, inter alia:

a) Knowingly and fraudulently permitting material information and/or a loan

application to be submitted to it with false information reported therein and purportedly

accepting same so that the Mortgage Agreement would be more attractive and valuable in

the secondary mortgage market; and

b) Failing to inquire about the information received and/or contained in the loan

application and/or failing to act to verify any of the information received from RE

BROKER MORTGAGE BROKER and/or ATTORNEY and/or set forth on that loan

application.

109. By reason of the foregoing, Defendant is entitled to damages in an amount to be

determined at trial, which sum Defendant reasonably believe exceeds $514,000.00.

18


and/or inactions of Plaintiff as described above, Defendant is entitled to punitive damages in a

sum that is found at trial to be reasonably proportionate to the damages incurred and suffered by

Defendant, which sum is believed to be not less than One Million ($1,000,000.00) Dollars.

AS AND FOR A TWELFTH AFFIRMATIVE DEFENSE AND SIXTH COUNTERCLAIM --

FRAUDULENT INDUCEMENT



112. Upon information and belief, Plaintiff, by and through its agent ATTORNEY

knowingly misrepresented to Defendant that she could and would receive rental income from

Tenants residing at the Subject Premises in the approximate sum of $2,350.00.

113. Upon information and belief, ATTORNEY did so with the purpose and intent of

inducing Defendant to enter into an agreement with a lender, specifically First Franklin, for a

mortgage loan, while knowing that the Tenants were not legally residing at the Subject Premises

and did not have leases for rental of rooms within the Subject Premises, and that Defendant would

not be able afford the approximately $5,000.00 monthly payment due under the Subject

Mortgage.

114. Upon information and belief, despite Plaintiff’s and its agent’s numerous and

repeated false and fraudulent representations to Defendant that she would receive rental income

from the Tenants and that she could afford the the monthly payments under the Subject Mortgage,

the Tenants did not pay monthly rental income to Defendant and Defendant could not afford the

monthly payments under the Subject Mortgage.

19

115. Upon information and belief, Plaintiff and its agent fraudulently induced

Defendant to enter into a mortgage loan in the principal sum of $514,000.00, some of which was

used to finance excessive mortgage broker fees and exorbitant closing costs of which Defendant

was never made aware.

116. Upon information and belief, Defendant justifiably relied upon the deceitful and

intentional fraudulent misrepresentations made by Plaintiff and its agent.

117. Upon information and belief, Plaintiff and its agent acted with the purpose and

intent of inducing Defendant to rely upon those representations and enter into a loan that they

knew she could not afford.

118. Upon information and belief, as a result of Plaintiff’s and its agents’ knowing,

intentional and material misrepresentations, Defendant was duped and swindled into paying

approximately $5,000.00 per month to Plaintiff for many months.


determined at trial, but in no event less than the sum of $514,000.00, plus costs and attorneys

fees.


and/or inactions of Plaintiff and ATTORNEY as described above, Defendant is entitled to

punitive damages in a sum that is found at trial to be reasonably proportionate to the damages

incurred and suffered by Defendant, which sum is believed to be not less than One Million

($1,000,000.00) Dollars.

20

AS AND FOR A THIRTEENTH AFFIRMATIVE DEFENSE AND SEVENTH COUNTERCLAIM --

VIOLATION OF NY BANKING LAW § 6-l



122. Upon information and belief, the Subject Mortgage is a “home loan” under NY

Banking Law § 6-l, since:

a. The principal amount of the Subject Mortgage does not exceed the conforming

loan size limit for a comparable dwelling;

b. Defendant is a natural person;

c. The debt was incurred by Defendant primarily for personal, family, or household

purposes;

d. The Subject Mortgage is secured by a mortgage on real estate upon on which there

is located a structure intended principally for occupancy of one family which is occupied by

Defendant as her principal dwelling; and

e. The Subject Property is located in the State of New York.

123. Upon information and belief, the Subject Mortgage is a “high cost home loan”

since the points and fees incurred by Defendant in connection with the settlement or closing of the

Subject Mortgage exceed Five (5%) Percent total loan amount of that loan.

124. Upon information and belief, Plaintiff and BROKER violated §6-l of the NY

Banking Law by, inter alia:

a. Making and arranging the Subject Mortgage without due regard to Defendant’s

repayment ability, since the Subject Morttgage was arranged and made without any

21

consideration and contrary to Defendant’s current and expected income, current

obligations, employment status and other financial resources, and whose purported ability

to repay was based upon fraudulent and fabricated information of which Defendant had no

knowledge and which was neither verified by detailed documentation of all sources of

income or corroborated by independent verification.

b. Failing to deliver, place in the mail, fax or electronically transmit to Defendant at

the time of or after her purported Loan Application a notice in twelve point type stating

that she “should consider financial counseling prior to executing loan documents. The

enclosed list of counselors is provided by the New York State Banking Department”;

c. Failing to provide the required notice to Defendant within three (3) days after

determining the Subject Mortgage was a high-cost home loan and ten (10) days prior to

the closing;

d. Directly or indirectly financing points and fees, including but not limited to Gold

Star’s fee, all of which exceeded three (3%) Percent of the principal amount of the Subject

Mortgage;

e. Accepting and/or giving fees, kickbacks, things of value, portions, splits or

percentages of charges other than as payment for goods or facilities that were actually

furnished or services that were actually performed.



fees.

22

126. By reason of the foregoing, Defendant is entitled to statutory damages in the sum

not less $500,000.00.

127. By reason of the foregoing, in light of Plaintiff’s intentional violation of numerous

provisions of this statute, the Subject Mortgage and Note should be rendered void, and Plaintiff

shall have no right to collect, receive or retain any principal, interest, or other charges whatsoever

under the Subject Mortgage and Note, and Defendant is entitled to recover any and all payments

made under the Subject Mortgage Agreement and Note.

AS AND FOR A FOURTEENTH AFFIRMATIVE DEFENSE AND EIGHTH COUNTERCLAIM -- NEGLIGENCE



129. Upon information and belief, ATTORNEY , had a duty to act in the best interests

of Defendant throughout the process of purchasing the Subject Premises and procuring the

Subject Mortgage.

130. Upon information and belief, ATTORNEY breached his duty to Defendant.

131. Upon information and belief, at all times relevant herein, Defendant’s obligations

under the Subject Mortgage and the repairs for which she paid at the Subject Premises arose from

the negligence and carelessness of ATTORNEY, in failing to ensure that Defendant could afford

the Subject Mortgage and that the sale of the Subject Premises did not inure to Defendant’s

detriment.

23

132. Upon information and belief, the damages sustained by Defendant were caused

solely by the negligence of ATTORNEY, whose acts and/or inactions are imputed to Plaintiff

since ATTORNEY was, at all times relevant herein, an agent of Plaintiff.



fees.


and/or inactions of Plaintiff and ATTORNEY as described above, Defendant is entitled to

punitive damages in a sum that is found at trial to be reasonably proportionate to the damages

incurred and suffered by Defendant, which sum is believed to be not less than One Million

($1,000,000.00) Dollars.

AS AND FOR A FIFTEENTH AFFIRMATIVE DEFENSE AND NINTH COUNTERCLAIM -- VIOLATION OF TRUTH-IN-LENDING ACT, 15 USC § 1601 et

seq. and REGULATION “Z”, 12 CFR § 201 et seq.



136. Upon information and belief, Plaintiff violated the Truth-In-Lending Act and that

statute’s implementing Regulation, by, inter alia:

a. Failing to make the proper statutory disclosures regarding the terms of the Subject

Mortgage to Defendant before the consummation of the Mortgage Agreement;

b. Failing to make the proper statutory disclosures regarding Defendant’s Right to

Rescind the Subject Mortgage and Note;

24

c. Failing to make good faith estimates of the amount financed, itemize the amount

financed, accurately disclose the finance charge to be imposed upon Plaintiff, and all

other disclosures required under law and deliver or place those disclosures in the mail

to Plaintiffs at any time prior to the consummation of the Subject Mortgage; and

d. Failing to deliver or place in the mail to Defendant a Good Faith Estimate at least

seven (7) days prior to the consummation of the Subject Mortgage.



fees.

138. Additionally, by reason of the foregoing, Defendant is entitled to rescind the

Subject Mortgage and Note and Plaintiff is barred from taking any actions to collect any sums

purportedly due thereunder.

AS AND FOR A SIXTEENTH AFFIRMATIVE DEFENSE AND TENTH COUNTERCLAIM -- VIOLATION OF FAIR DEBT COLLECTION PRACTICES ACT,

15 USC § 1692 et seq.

139. Plaintiffs repeat and reallege the allegations set forth in paragraphs “135” through

“138” with the same force and effect as set forth fully herein.

140. Upon information and belief, at all relevant times herein, Plaintiff, via its agent

First Franklin Loan Services, was a debt collector under the applicable statute.

141. Upon information and belief, through Defendant’s Authorization and subsequent

communications from her attorneys, Plaintiff knew or should have known that Defendant was

represented by an attorney with respect to any debt purportedly owed on the Subject Mortgage.

25

142. Upon information and belief, after Plaintiff knew or should have known that

Defendant was represented by an attorney it contacted Defendant in writing, regarding the alleged

debt owed on the Subjecr Mortgage Loan.

143. By reason of the foregoing, Defendant has suffered, and, upon information and

belief, will continue to suffer damages, including actual damages and additional damages

prescribed by the applicable statute, the latter being in the amount of $1,000 for each violation,

plus costs and attorneys fees incurred in bringing this action.

144. Upon information and belief, the acts of Plaintiff, as set forth herein, were

undertaken intentionally, deliberately, wantonly and maliciously, and in reckless disregard of

Defendant’s rights; as a result, Plaintiffs are entitled to recover exemplary and punitive damages

in an amount found to be reasonably related to the compensatory damages they have incurred, in a

sum to be determined at trial.

WHEREFORE, Defendant respectfully demands relief from this Court as follows:

A. Issuance of an Order and entry of Judgment dismissing Plaintiff’s Complaint;

B. On the First Counterclaim: Issuance of an Order and entry of Judgment rescinding

the mortgage loan and entering of a Judgment in favor of Defendant against Plaintiff in an amount

no less than $514,000, plus exemplary and punitive damages in an amount found to be reasonably

related to the compensatory damages she has incurred, in a sum to be determined at trial.

C. On the Second Counterclaim: Issuance of an Order and entry of Judgment

rescinding the mortgage loan and entering of a Judgment in favor of Defendant against Plaintiff in

the amount of $100,000, plus exemplary and punitive damages in an amount found to be

reasonably related to the compensatory damages she has incurred, in a sum to be determined at

26

trial.

D. On the Third Counterclaim: Issuance of an Order and entry of Judgment rescinding

the mortgage loan, awarding Defendant compensatory damages in an amount to be determined at

trial, but in no event less than the sum of $514,000.00 and punitive damages in a sum that is

found at trial to be reasonably proportionate to the damages inflicted and suffered by Defendant,

which sum is believed to be not less than $1,000,000.00 and assessing additional statutory

penalties of $10,000 and $1,000.00, respectively, against Plaintiff, plus costs and expenses.

E. On the Fourth Counterclaim: awarding Defendant compensatory damages in an

amount to be determined at trial, but in no event less than the sum of $514,000, plus costs and

attorney’s fees and punitive damages in a sum that is found at trial to be reasonably proportionate

to the damages inflicted and suffered by Defendant, which sum is believed to be not less than

$1,000,000.00.

F. On the Fifth Counterclaim: awarding Defendant compensatory damages in an




$1,000,000.00.

G. On the Sixth Counterclaim: awarding Defendant compensatory damages in an




$1,000,000.00.

27

H. On the Seventh Counterclaim: i) awarding Defendant compensatory damages in an

amount to be determined at trial, but in no event less than the sum of $514,000.00; ii) statutory

damages in the sum not less $500,000.00, plus costs and attorney’s fees; and iii) directing that the

Subject Mortgage and Note be rendered void, and Plaintiff shall have no right to collect, receive

or retain any principal, interest, or other charges whatsoever under the Subject Mortgage and

Note, and Defendant is entitled to recover any and all payments made under the Subject Mortgage

and Note.

I. On the Eighth Counterclaim: awarding Defendant compensatory damages in an




$1,000,000.00.

J. On the Ninth Counterclaim: awarding Defendant compensatory damages in an

amount to be determined at trial, but in no event less than the sum of $514,000.00, plus costs and

attorneys fees; ii) granting Defendant the right to rescind the Subject Mortgage and Note; and iii)

barring Plaintiff from taking any actions to collect thereon.

K. On the Tenth Counterclaim: awarding Defendant statutory damages in the amount

of One Thousand ($1,000.00) Dollars for each violation of the applicable statute, plus costs and


to the damages inflicted and suffered by Defendant, which sum is believed to be not less than One

Million ($1,000,000.00) Dollars.

L. On All Counterclaims: Issuance of an Order and entry of Judgment awarding

28

Defendant reasonable attorneys’ fees in a sum to be determined at trial but which is believed will

not be less than $50,000, together with the costs and disbursements of this action.

M. Such other and further relief as to the court may be deemed just and proper under

the circumstances herein.

Dated: New York, NY 2009 CITAK & CITAK, ESQS.

By ____________________________ Donald L. Citak

Attorneys for Defendant 270 Madison Avenue - Suite 1203

New York, NY 10016 (212) 759-9585 (212) 759-2979 [email protected] To: Steven J. Baum, P.C. Attorneys for Plaintiff 220 Northpointe Parkway, Suite G Amherst, NY 14228

Page 1

LEXSEE

[*1] Countrywide Home Loans, Inc., appellant, v Anthony Gress, respondent, et al., defendants. (Index No. 1193/07)

2008-09808

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DE-

PARTMENT

2009 NY Slip Op 8989; 68 A.D.3d 709; 888 N.Y.S.2d 914; 2009 N.Y. App. Div. LEXIS 8815

December 1, 2009, Decided NOTICE:

THE LEXIS PAGINATION OF THIS DOCU-MENT IS SUBJECT TO CHANGE PENDING RE-LEASE OF THE FINAL PUBLISHED VERSION. THIS OPINION IS UNCORRECTED AND SUBJECT TO REVISION BEFORE PUBLICATION IN THE OFFICIAL REPORTS. COUNSEL: Rosicki, Rosicki & Associates, P.C., Plain-view, N.Y. (Edward Rugino of counsel), for appellant. Steinberg, Fineo, Berger, & Fischoff, P.C., Woodbury, N.Y. (Gary C. Fischoff and Jessica Anne Gould of coun-sel), for respondent. JUDGES: PETER B. SKELOS, J.P., RANDALL T. ENG, JOHN M. LEVENTHAL, CHERYL E. CHAM-BERS, JJ. SKELOS, J.P., ENG, LEVENTHAL and CHAMBERS, JJ., concur. OPINION

[**709] [***914] DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court, Nassau County (Feinman, J.), dated June 25, 2008, as granted that branch of the motion of the defendant Anthony Gress which was to dismiss the complaint insofar as asserted against him pursuant to CPLR 3211(a)(3).

ORDERED that the order is affirmed insofar as ap-pealed from, with costs.

Contrary to the plaintiff's contention, the Supreme Court properly granted that branch of the motion of the defendant Anthony Gress which was to dismiss the com-plaint insofar as asserted against him pursuant to CPLR 3211(a)(3) on the ground that the plaintiff lacked stand-ing to bring this action. In order to commence a foreclo-sure action, the plaintiff must have a legal or equitable interest in the subject mortgage (see Wells Fargo Bank, N.A. v Marchione, ___ AD3d ___, 887 N.Y.S.2d 615, 2009 NY Slip Op 07624 [2d Dept 2009]; Katz v East-Ville Realty Co., 249 AD2d 243, 672 N.Y.S.2d 308; Kluge v Fugazy, 145 AD2d 537, 538, 536 N.Y.S.2d 92). "Where the plaintiff is the assignee of the mortgage and the underlying note at the time the foreclosure action was commenced, the plaintiff has standing to maintain the action" (Federal Natl. Mtge. Assn. v Youkelsone, 303 AD2d 546, 546-547, 755 N.Y.S.2d 730; see Wells Fargo Bank, N.A. v Marchione, ___ AD3d ___, 887 N.Y.S.2d 615, 2009 NY Slip Op [**710] 07624 [2d Dept 2009]; First Trust Natl. Assn. v Meisels, 234 AD2d 414, 651 N.Y.S.2d 121). Here, it is undisputed that the subject mortgage was not assigned to the plaintiff until July 5, 2007, more than five months after the commencement of this [***916] action on January 22, 2007. Furthermore, although the July 5, 2007, assignment recited that it was effective retroactive to August 1, 2006, "a retroactive assignment cannot be used to confer standing upon the assignee in a foreclosure action commenced prior to the execution of the assignment" (Wells Fargo Bank, N.A. v Marchione, ___ AD3d ___, 887 N.Y.S.2d 615, 2009 NY Slip Op 07624 [2d Dept 2009]; see LaSalle Bank Natl. Assn. v Ahearn , 59 AD3d 911, 912, 875 N.Y.S.2d 595).

Page 2 2009 NY Slip Op 8989, *; 68 A.D.3d 709, **;

888 N.Y.S.2d 914, ***; 2009 N.Y. App. Div. LEXIS 8815

In light of our determination, we need not reach the parties' remaining contentions.

SKELOS, J.P., ENG, LEVENTHAL and CHAM-BERS, JJ., concur.

F air D ebt C ollectionP racticesA ct

1

THE FAIR DEBT COLLECTION PRACTICES ACTAs amended by Pub. L. 109-351, §§ 801-02, 120 Stat. 1966 (2006)

As a public service, the staff of the Federal Trade Commission (FTC) has prepared the following complete text of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p.

Please note that the format of the text differs in minor ways from the U.S. Code and West’s U.S. Code Annotated. For example, this version uses FDCPA section numbers in the headings. In addition, the relevant U.S. Code citation is included with each section heading. Although the staff has made every effort to transcribe the statutory material accurately, this compendium is intended as a convenience for the public and not a substitute for the text in the U.S. Code.

Table of ConTenTs

§ 801 Short title § 802 Congressional findings and declaration of purpose§ 803 Definitions§ 804 Acquisition of location information§ 805 Communication in connection with debt collection§ 806 Harassment or abuse§ 807 False or misleading representations§ 808 Unfair practices § 809 Validation of debts§ 810 Multiple debts§ 811 Legal actions by debt collectors§ 812 Furnishing certain deceptive forms§ 813 Civil liability § 814 Administrative enforcement § 815 Reports to Congress by the Commission§ 816 Relation to State laws§ 817 Exemption for State regulation§ 818 Exception for certain bad check enforcement programs operated by

private entities§ 819 Effective date

2

§ 801 15 USC 1601 note

§ 801. Short Title This title may be cited as the “Fair Debt Collection Prac-

tices Act.”

§ 802. Congressional findings and declaration of purpose(a) There is abundant evidence of the use of abusive, decep-

tive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.

(b) Existing laws and procedures for redressing these injuries are inadequate to protect consumers.

(c) Means other than misrepresentation or other abusive debt collection practices are available for the effective collec-tion of debts.

(d) Abusive debt collection practices are carried on to a sub-stantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate com-merce.

(e) It is the purpose of this title to eliminate abusive debt col-lection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt col-lection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

§ 803. Definitions As used in this title—

(1) The term “Commission” means the Federal Trade Commission.

(2) The term “communication” means the conveying of information regarding a debt directly or indirectly to any person through any medium.

(3) The term “consumer” means any natural person obli-gated or allegedly obligated to pay any debt.

15 USC 1601 note

15 USC 1692

15 USC 1692a

3

§ 803 15 USC 1692a

(4) The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating col-lection of such debt for another.

(5) The term “debt” means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

(6) The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Not-withstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempt-ing to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include—(A) any officer or employee of a creditor while, in

the name of the creditor, collecting debts for such creditor;

(B) any person while acting as a debt collector for another person, both of whom are related by com-mon ownership or affiliated by corporate control, if the person acting as a debt collector does so only

4

§ 803 15 USC 1692a

for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(D) any person while serving or attempting to serve le-gal process on any other person in connection with the judicial enforcement of any debt;

(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquida-tion of their debts by receiving payments from such consumers and distributing such amounts to credi-tors; and

(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation

or a bona fide escrow arrangement;(ii) concerns a debt which was originated by such

person;(iii) concerns a debt which was not in default at the

time it was obtained by such person; or(iv) concerns a debt obtained by such person as a

secured party in a commercial credit transac-tion involving the creditor.

(7) The term “location information” means a consumer’s place of abode and his telephone number at such place, or his place of employment.

(8) The term “State” means any State, territory, or posses-sion of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdi-vision of any of the foregoing.

5

§ 804 15 USC 1692b

§ 804. Acquisition of location information Any debt collector communicating with any person other

than the consumer for the purpose of acquiring location infor-mation about the consumer shall—

(1) identify himself, state that he is confirming or correct-ing location information concerning the consumer, and, only if expressly requested, identify his employer;

(2) not state that such consumer owes any debt; (3) not communicate with any such person more than once

unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;

(4) not communicate by post card; (5) not use any language or symbol on any envelope or

in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communi-cation relates to the collection of a debt; and

(6) after the debt collector knows the consumer is repre-sented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.

§ 805. Communication in connection with debt collection(a) COMMUNICATION WITH THE CONSUMER GENER-

ALLY. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the col-lection of any debt—

(1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the

15 USC 1692b

15 USC 1692c

6

§ 805 15 USC 1692c

consumer. In the absence of knowledge of circumstanc-es to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock antimeridian and before 9 o’clock postmeridian, local time at the consumer’s location;

(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowl-edge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or

(3) at the consumer’s place of employment if the debt col-lector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.

(b) COMMUNICATION WITH THIRD PARTIES. Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the ex-press permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connec-tion with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

(c) CEASING COMMUNICATION. If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collec-tor shall not communicate further with the consumer with respect to such debt, except—

(1) to advise the consumer that the debt collector’s further efforts are being terminated;

(2) to notify the consumer that the debt collector or credi-tor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or

7

§ 805 15 USC 1692c

(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified rem-edy.

If such notice from the consumer is made by mail, notifica-tion shall be complete upon receipt.

(d) For the purpose of this section, the term “consumer” in-cludes the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.

§ 806. Harassment or abuse A debt collector may not engage in any conduct the natu-

ral consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or prop-erty of any person.

(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of sec-tion 603(f) or 604(3)1 of this Act.

(4) The advertisement for sale of any debt to coerce pay-ment of the debt.

(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(6) Except as provided in section 804, the placement of telephone calls without meaningful disclosure of the caller’s identity.

1. Section 604(3) has been renumbered as Section 604(a)(3).

15 USC 1692d

8

§ 807 15 USC 1692e

§ 807. False or misleading representations A debt collector may not use any false, deceptive, or mis-

leading representation or means in connection with the col-lection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.

(2) The false representation of— (A) the character, amount, or legal status of any debt; or (B) any services rendered or compensation which may

be lawfully received by any debt collector for the collection of a debt.

(3) The false representation or implication that any indi-vidual is an attorney or that any communication is from an attorney.

(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to— (A) lose any claim or defense to payment of the debt;

or (B) become subject to any practice prohibited by this

title. (7) The false representation or implication that the con-

sumer committed any crime or other conduct in order to disgrace the consumer.

15 USC 1692e

9

§ 807 15 USC 1692e

(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.

(9) The use or distribution of any written communication which simulates or is falsely represented to be a docu-ment authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, autho-rization, or approval.

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

(11) The failure to disclose in the initial written communi-cation with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempt-ing to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.

(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.

(13) The false representation or implication that documents are legal process.

(14) The use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.

(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.

(16) The false representation or implication that a debt col-lector operates or is employed by a consumer reporting agency as defined by section 603(f) of this Act.

10

§ 808 15 USC 1692f

§ 808. Unfair practices A debt collector may not use unfair or unconscionable

means to collect or attempt to collect any debt. Without limit-ing the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obli-gation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten nor less than three busi-ness days prior to such deposit.

(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecu-tion.

(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.

(5) Causing charges to be made to any person for com-munications by concealment of the true propose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if— (A) there is no present right to possession of the prop-

erty claimed as collateral through an enforceable security interest;

(B) there is no present intention to take possession of the property; or

(C) the property is exempt by law from such disposses-sion or disablement.

15 USC 1692f

11

§ 808 15 USC 1692f

(7) Communicating with a consumer regarding a debt by post card.

(8) Using any language or symbol, other than the debt col-lector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt col-lection business.

§ 809. Validation of debts (a) Within five days after the initial communication with a

consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice contain-ing—

(1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer, within thirty days

after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt col-lector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt col-lector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the con-sumer requests the name and address of the original credi-

15 USC 1692g

12

§ 809 15 USC 1692g

tor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this title may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the con-sumer requests the name and address of the original credi-tor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.

(c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

(d) A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a).

(e) The sending or delivery of any form or notice which does not relate to the collection of a debt and is expressly required by the Internal Revenue Code of 1986, title V of Gramm-Leach-Bliley Act, or any provision of Federal or State law relating to notice of data security breach or priva-cy, or any regulation prescribed under any such provision of law, shall not be treated as an initial communication in connection with debt collection for purposes of this sec-tion.

§ 810. Multiple debts If any consumer owes multiple debts and makes any single

payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer’s directions.

15 USC 1692h

13

§ 811 15 USC 1692i

§ 811. Legal actions by debt collectors (a) Any debt collector who brings any legal action on a debt

against any consumer shall—(1) in the case of an action to enforce an interest in real

property securing the consumer’s obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity—(A) in which such consumer signed the contract sued

upon; or (B) in which such consumer resides at the commence-

ment of the action. (b) Nothing in this title shall be construed to authorize the

bringing of legal actions by debt collectors.

§ 812. Furnishing certain deceptive forms(a) It is unlawful to design, compile, and furnish any form

knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participat-ing.

(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 813 for failure to comply with a provi-sion of this title.

§ 813. Civil liability (a) Except as otherwise provided by this section, any debt col-

lector who fails to comply with any provision of this title with respect to any person is liable to such person in an amount equal to the sum of—

15 USC 1692i

15 USC 1692k

15 USC 1692j

14

§ 813 15 USC 1692k

(1) any actual damage sustained by such person as a result of such failure;

(2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or (B) in the case of a class action,

(i) such amount for each named plaintiff as could be recovered under subparagraph (A), and

(ii) such amount as the court may allow for all other class members, without regard to a mini-mum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work ex-pended and costs.

(b) In determining the amount of liability in any action un-der subsection (a), the court shall consider, among other relevant factors—

(1) in any individual action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intention-al; or

(2) in any class action under subsection (a)(2)(B), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector’s noncompliance was intentional.

15

§ 813 15 USC 1692k

(c) A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of evidence that the violation was not inten-tional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) An action to enforce any liability created by this title may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

(e) No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformi-ty with any advisory opinion of the Commission, notwith-standing that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

§ 814. Administrative enforcement (a) Compliance with this title shall be enforced by the Com-

mission, except to the extent that enforcement of the requirements imposed under this title is specifically com-mitted to another agency under subsection (b). For purpose of the exercise by the Commission of its functions and powers under the Federal Trade Commission Act, a viola-tion of this title shall be deemed an unfair or deceptive act or practice in violation of that Act. All of the functions and powers of the Commission under the Federal Trade Com-mission Act are available to the Commission to enforce compliance by any person with this title, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests in the Federal Trade Commission Act, including the power to enforce the provisions of this title in the same manner as if the violation had been a vio-lation of a Federal Trade Commission trade regulation rule.

(b) Compliance with any requirements imposed under this title shall be enforced under—

15 USC 1692l

16

(1) section 8 of the Federal Deposit Insurance Act, in the case of— (A) national banks, and Federal branches and Fed-

eral agencies of foreign banks, by the Office of the Comptroller of the Currency;

(B) member banks of the Federal Reserve System (other than national banks), branches and agen-cies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organi-zations operating under section 25 or 25(a) of the Federal Reserve Act, by the Board of Governors of the Federal Reserve System; and

(C) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation;

(2) section 8 of the Federal Deposit Insurance Act, by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;

(3) the Federal Credit Union Act, by the Administrator of the National Credit Union Administration with respect to any Federal credit union;

(4) the Acts to regulate commerce, by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;

(5) the Federal Aviation Act of 1958, by the Secretary of Transportation with respect to any air carrier or any foreign air carrier subject to that Act; and

(6) the Packers and Stockyards Act, 1921 (except as pro-vided in section 406 of that Act), by the Secretary of Agriculture with respect to any activities subject to that Act.

§ 814 15 USC 1692l

17

The terms used in paragraph (1) that are not defined in this title or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

(c) For the purpose of the exercise by any agency referred to in subsection (b) of its powers under any Act referred to in that subsection, a violation of any requirement im-posed under this title shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b), each of the agencies referred to in that subsection may exercise, for the purpose of enforcing com-pliance with any requirement imposed under this title any other authority conferred on it by law, except as provided in subsection (d).

(d) Neither the Commission nor any other agency referred to in subsection (b) may promulgate trade regulation rules or other regulations with respect to the collection of debts by debt collectors as defined in this title.

§ 815. Reports to Congress by the Commission (a) Not later than one year after the effective date of this title

and at one-year intervals thereafter, the Commission shall make reports to the Congress concerning the administra-tion of its functions under this title, including such recom-mendations as the Commission deems necessary or ap-propriate. In addition, each report of the Commission shall include its assessment of the extent to which compliance with this title is being achieved and a summary of the en-forcement actions taken by the Commission under section 814 of this title.

(b) In the exercise of its functions under this title, the Com-mission may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 814 of this title.

15 USC 1692m

§ 814 15 USC 1692l

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§ 816 15 USC 1692n

§ 816. Relation to State laws This title does not annul, alter, or affect, or exempt any

person subject to the provisions of this title from comply-ing with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title if the protection such law af-fords any consumer is greater than the protection provided by this title.

§ 817. Exemption for State regulation The Commission shall by regulation exempt from the

requirements of this title any class of debt collection practices within any State if the Commission determines that under the law of that State that class of debt collection practices is sub-ject to requirements substantially similar to those imposed by this title, and that there is adequate provision for enforcement.

§ 818. Exception for certain bad check enforcement programs operated by private entities

(a) In General.—(1) TREATMENT OF CERTAIN PRIVATE ENTITIES.—

Subject to paragraph (2), a private entity shall be excluded from the definition of a debt collector, pursu-ant to the exception provided in section 803(6), with respect to the operation by the entity of a program de-scribed in paragraph (2)(A) under a contract described in paragraph (2)(B).

(2) CONDITIONS OF APPLICABILITY.—Paragraph (1) shall apply if—(A) a State or district attorney establishes, within the

jurisdiction of such State or district attorney and with respect to alleged bad check violations that do not involve a check described in subsection (b), a pretrial diversion program for alleged bad check offenders who agree to participate voluntarily in such program to avoid criminal prosecution;

15 USC 1692p

15 USC 1692o

15 USC 1692n

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§ 818 15 USC 1692p

(B) a private entity, that is subject to an administrative support services contract with a State or district attorney and operates under the direction, supervi-sion, and control of such State or district attorney, operates the pretrial diversion program described in subparagraph (A); and

(C) in the course of performing duties delegated to it by a State or district attorney under the contract, the private entity referred to in subparagraph (B)—(i) complies with the penal laws of the State;(ii) conforms with the terms of the contract and

directives of the State or district attorney;(iii) does not exercise independent prosecutorial

discretion;(iv) contacts any alleged offender referred to in

subparagraph (A) for purposes of participating in a program referred to in such paragraph—

(I) only as a result of any determination by the State or district attorney that probable cause of a bad check violation under State penal law exists, and that contact with the alleged offender for purposes of participa-tion in the program is appropriate; and

(II) the alleged offender has failed to pay the bad check after demand for payment, pur-suant to State law, is made for payment of the check amount;

(v) includes as part of an initial written commu-nication with an alleged offender a clear and conspicuous statement that—

(I) the alleged offender may dispute the valid-ity of any alleged bad check violation;

(II) where the alleged offender knows, or has reasonable cause to believe, that the al-leged bad check violation is the result of theft or forgery of the check, identity theft,

20

§ 818 15 USC 1692p

or other fraud that is not the result of the conduct of the alleged offender, the alleged offender may file a crime report with the appropriate law enforcement agency; and

(III) if the alleged offender notifies the private entity or the district attorney in writing, not later than 30 days after being contacted for the first time pursuant to clause (iv), that there is a dispute pursuant to this subsec-tion, before further restitution efforts are pursued, the district attorney or an em-ployee of the district attorney authorized to make such a determination makes a determination that there is probable cause to believe that a crime has been committed; and

(vi) charges only fees in connection with services under the contract that have been authorized by the contract with the State or district attorney.

(b) Certain Checks Excluded.—A check is described in this subsection if the check involves, or is subsequently found to involve—

(1) a postdated check presented in connection with a pay-day loan, or other similar transaction, where the payee of the check knew that the issuer had insufficient funds at the time the check was made, drawn, or delivered;

(2) a stop payment order where the issuer acted in good faith and with reasonable cause in stopping payment on the check;

(3) a check dishonored because of an adjustment to the is-suer’s account by the financial institution holding such account without providing notice to the person at the time the check was made, drawn, or delivered;

(4) a check for partial payment of a debt where the payee had previously accepted partial payment for such debt;

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§ 818 15 USC 1692p

(5) a check issued by a person who was not competent, or was not of legal age, to enter into a legal contractual obligation at the time the check was made, drawn, or delivered; or

(6) a check issued to pay an obligation arising from a transaction that was illegal in the jurisdiction of the State or district attorney at the time the check was made, drawn, or delivered.

(c) Definitions.—For purposes of this section, the following definitions shall apply:

(1) STATE OR DISTRICT ATTORNEY.—The term “State or district attorney” means the chief elected or ap-pointed prosecuting attorney in a district, county (as defined in section 2 of title 1, United States Code), mu-nicipality, or comparable jurisdiction, including State attorneys general who act as chief elected or appointed prosecuting attorneys in a district, county (as so de-fined), municipality or comparable jurisdiction, who may be referred to by a variety of titles such as district attorneys, prosecuting attorneys, commonwealth’s attorneys, solicitors, county attorneys, and state’s at-torneys, and who are responsible for the prosecution of State crimes and violations of jurisdiction-specific local ordinances.

(2) CHECK.—The term “check” has the same meaning as in section 3(6) of the Check Clearing for the 21st Century Act.

(3) BAD CHECK VIOLATION.—The term “bad check violation” means a violation of the applicable State criminal law relating to the writing of dishonored checks.

§ 819. Effective date This title takes effect upon the expiration of six months

after the date of its enactment, but section 809 shall apply only with respect to debts for which the initial attempt to collect oc-curs after such effective date.

15 USC 1692 note

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legislaTive HisTory

House Report: No. 95-131 (Comm. on Banking, Finance, and Urban Affairs)

Senate Report: No. 95-382 (Comm. on Banking, Housing and Urban Affairs)

Congressional Record, Vol. 123 (1977)

April 4, House considered and passed H.R. 5294.

Aug. 5, Senate considered and passed amended version of H.R. 5294.

Sept. 8, House considered and passed Senate version.

Enactment: Public Law 95-109 (Sept. 20, 1977)

Amendments: Public Law Nos.

99-361 (July 9, 1986)

101-73 (Aug. 9, 1989)

102-242 (Dec. 19, 1991)

102-550 (Oct. 28, 1992)

104-88 (Dec. 29, 1995)

104-208 (Sept. 30, 1996)

109-351 (Oct. 13, 2006)

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Revised January 2009

FOR THE CONSUMER1-877-FTC-HELP

ftc.govFEDERAL TRADE COMMISSION