Fein Such & Crane, LLP - Assembly Bill 5841 Update

David P. Case, Esq., Partner with Fein Such & Case, LLP provides an update on the "Anti-Kessler Bill"
News out of NEW YORK.  Assembly Bill 5841, more commonly known as the Anti-Kessler Bill, moved out of initial committee this week and was submitted to the Rules Committee.  If it passes out of Rules, it will be ripe for a vote.  Its Senate Counterpart is in the Housing Committee Chaired by State Senator Brian Kavanagh.  The Senate Bill's sponsor is part of that committee.  If the Assembly passes this Bill, passage in the Senate is all but certain.

The Bill would legislatively and retroactively overturn Bank of America v. Kessler—a well-reasoned and considered opinion from the State's highest Court holding that the inclusion of simple non-obtrusive notices about rights under Federal Law do not render  a lender's 90-day Notice under RPAPL §1304 fatally defective.  This means that any 90-day notice that has any disclosure or notice (i.e. FDCPA mini-miranda, SCRA, Bankruptcy, equal opportunity lender, etc.) outside of the prescribed language would render the notice fatally defective.    The Bill includes the same retroactive enacting language the Legislature used in the Foreclosure Abuse Prevention Act (FAPA). That means the Bill would likely be applied to any foreclosure action where the foreclosure auction has not taken place.  To prospectively legislate a “fix” to a vagary the Legislature created in 2010 is one thing.  However, the use of the same retroactive enacting language as the Foreclosure Abuse Prevention Act is something else.  If applied retroactively, the Anti-Kessler Bill would disrupt the vested rights of litigants who, in good faith, thought they were following both State and Federal Law and give a windfall-benefit of a very small fraction of New Yorkers who refused to pay their mortgage obligations.  FAPA's retroactive application is being challenged on multiple fronts.  If this Bill is passed with the same retroactive enacting language, hundreds, if not thousands, of mortgage foreclosures that have already been litigated on the 90-day issue will be litigated all over again with Constitutional challenges.