N.Y. Assembly passes 'shadow docket' legislation

N.Y. Assembly passes 'shadow docket' legislation 5/24/2013 By Daniel Wiessner ALBANY, N.Y.(Reuters) - The New York State Assembly this week approved a bill designed to expedite residential foreclosure cases by requiring lenders to file mandatory paperwork earlier in the process. The proposed law would create a new section, 3012-b, of the Civil Practice Law and Rules that would require lenders to file "a certificate of merit," a sworn statement they have standing to foreclose on a home, at the start of an action, along with a summons and complaint. The bill also would amend CPRL Rule 3408 to require lenders to attach copies of mortgage documents to the complaint, and file proof of service within 20 days. Currently, lenders who bring residential foreclosure actions have 120 days to file a proof of service. They must simultaneously file a request for judicial intervention and the certificate of merit. Courts can then schedule a settlement conference. Supporters of the proposal, including Chief Judge Jonathan Lippman, say it would prevent cases from winding up on the "shadow docket" of foreclosure proceedings that have stalled because lenders have not submitted certificates of merit. The Democrat-dominated Assembly on Wednesday approved the bill 111-26. It could, however, face opposition in the Republican-led Senate, which blocked a similar measure last year. A second bill approved by the Assembly on Wednesday would create criminal penalties designed to deter foreclosure fraud. For example, employees of residential mortgage businesses who knowingly prepared or executed false documents in a foreclosure action could face a class A misdemeanor punishable by up to one year in jail. The bill, known as the Foreclosure Fraud Prevention Act, was proposed last year by Attorney General Eric Schneiderman. The assembly approved it in 2012, but it stalled in the Senate.