Appellate Ruling Dooms CPLR 3408
In reversing Justice Jeffrey Spinner in IndyMac Bank, F.S.B. v. Yano-Horoski, 17926/05, the Appellate Division, Second Department has obliviated (see Harry Potter1) CPLR 3408 requiring mandatory settlement conferences ("Panel Upsets Ruling That Cancelled Mortgage," NYLJ, Nov. 22) The appellate division has now provided ammunition to all lenders not to attempt any modification of mortgages since, as the court stated, "The reasoning of the Supreme Court that its equitable powers included the authority to cancel the mortgage and note was erroneous, since there was no acceptable basis for relieving the homeowner of her contractual obligations to the bank." Now, all lenders will argue that there is never an acceptable basis for relieving a homeowner of its "contractual obligations" and thus, the lenders can refuse to modify any loans.
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