A recent law.com story, “New York Grants Right to Claim Attorney Fees to Prevailing Homeowners in Foreclosures” reports that New York Governor David Paterson has signed into law a measure that will allow prevailing homeowners in many foreclosure actions to claim attorney fees from lenders.  The Access to Justice in Lending Act, will put defendants in foreclosure proceedings on the same footing as lenders, who often include in mortgage documents the right to recoup reasonable attorney fees if they bring a successful action.  Supporters of the new requirement say that it will encourage attorneys to volunteer their services to homeowners facing foreclosure, many of them who cannot afford to hire a lawyer.  At the same time, they say the measure will give the homeowners leverage to negotiate concessions from lenders seeking to avoid the cost of litigation.

The new law, Real Property Law § 282, provides that all mortgage agreements giving lenders the right to attorney fees, must be read to grant that right to borrowers as well.  The law was opposed by the state Bankers Association in a memorandum (pdf) to the governor drafted by Wilson, Elser, Moskowitz, Edelman & Dicker LLP.

Assemblyman Rory Lancman (D-Queens), an attorney, said the attorney fees to homeowners’ lawyers would likely be low in most cases –ranging from a few thousand dollars to “low five figures” – because skilled attorneys could determine problems with the lenders case early on.  He said attorneys would not make a fortune from foreclosure cases, but the profits would be enough to justify picking up the most meritorious cases.