New York Foreclosure Mills Are Using The Federal Courts To Kick You Out Of Your Home Faster

New York foreclosure mills are using a new tactic to speed up the foreclosure process. They are using Diversity of Citizenship to move the cases from state court to federal court.

Foreclosures in New York average 18-24 months. New York foreclosure mills hope to cut that time by 75% by bypassing the safeguards put in by the Foreclosure Prevention and Responsible Lending Act.

To get into federal court, a lender needs to have diversity. This means the citizenship of the plaintiff or lender is different than the citizenship of the homeowner. 

Let’s say the lender is Ocwen. Ocwen holds the note and they are in Florida. The borrower and the property are in New York. Because the citizenships are different, they’re diverse. 

Foreclosure mill attorneys using the Diversity of Citizenship argument is not new. They have been using it in non-judicial foreclosure states like Michigan for almost a decade. Foreclosure mill attorneys use it to avoid getting a locally elected judge who may be sympathetic to a homeowner.

New York foreclosure mills are using the federal courts to simply bypass New York state’s foreclosure settlement conferences. They argue the conference requirement enforced by the courts, not by a state administrative agency. 

New York foreclosure mills are exploiting a flaw in the FPRLA. They argue the federal courts can have jurisdiction because it’s the state courts that run the settlement conference requirement under the FPRLA, not Albany.

New York foreclosure mills also seem ignorant and short sighted. Most federal courts also have a mediation process for foreclosure cases. 

New York law and legal precedence would still apply. Foreclosures are considered a states rights issue protected under the 10th Amendment.