New law could nix foreclosure delays

Daisy and Samuel Vargas went through legal hell and back to resolve their foreclosure with the bank. A bill looks to cut delays.
Photo by David Cruz

Years after the housing bubble burst, the Bronx is still reeling as foreclosure cases filed years ago are still waiting to be resolved.

But homeowners forced into foreclosure folly will find some relief in a bill just signed by Governor Cuomo that puts an end to legal loopholes.

The “Certificate of Merit” Law, sponsored by Sen. Jeff Klein, would force bank attorneys to file the necessary paperwork needed to trigger a settlement conference between banks and homeowners.

Deliberate or not, attorneys have delayed settlement conferences sometimes for months or years, costing homeowners interest on their mortgages as they wait to be heard .

It happened to Daisy and Samuel Vargas, living in a two-family home with their son and her mother in Soundview.

An accountant, she anticipated money problems at the start of 2010 after her husband, a city Corrections officer was hurt on the job, earning half his pay.

Vargas filed an application to re-adjust her mortgage payments with HSBC.

She thought it would be easy, until the bank requested more paperwork and six months soon passed.

Unable to make a payment on time, HSBC soon sent a foreclosure notice, even after she and her husband tried to pay.

“We went to several branches to pay,” said Samuel. “But they refused.”

Their case never made it to the next step – a mandated settlement conference between the bank and homeowner.

Justin Haines, a case worker with Legal Services NYC, stepped in to negotiate with the bank.

Meanwhile, an extra $60,000 in interest, legal costs and other fees piled up. The Vargases now pay an extra $75, more than her original mortgage.

Their credit scores tarnished, they were forced to make major sacrifices.

Klein said their story is like thousands of others in the Bronx, folks so far behind in their mortgage payments they are in jeopardy of losing their home.

Under current law, banks are required to hold a settlement conference 60 days after a foreclosure notice is filed to look for alternatives.

Klein’s bill passed both Albany houses and is awaiting Gov. Cuomo’s signature.

“Because of these legal maneuvers, people like Daisy are spending years and years and years going through foreclosure ,” said Klein at a July 25 news conference with Borough President Ruben Diaz Jr. and Attorney General Eric Schneiderman.

The AG’s office, on a crusade to legally iron out the housing bubble, recently sued HSBC for not complying with the settlement conference rule.

“A foreclosure is bad for the family, but is bad for the entire neighborhood,” said Schneiderman. “Kids get pulled out of school, people lose their job, marriages are threatened.”

David Cruz can be reach via e-mail at or by phone at (718) 742-3383

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