Question regarding N.Y. lender laws and the new Dodd-Frank, SAFE, etc. as they apply to a hard money loan and possible foreclosure defense

[Alan P.]

Hi:

Here is a complicated question that I'm hoping for some guidance on. An elderly parent had a crooked lawyer who helped get him into two different hard money loans in New York, one on his primary residence, the other on a investment property. Both with private lenders.

The lawyer absconded with approximately 120,000 of the closing proceeds from each mortgage. The local DA is investigating the lawyer actively on that matter and we expect an indictment soon. The lawyer is disbarred already.

Both of those loans are now in foreclosure, and I am hoping to help the parent fight the foreclosures, at least until we can find out where those misappropriated funds went.

What I am asking is if any of the new laws I am reading about such as Dodd-Frank, SAFE, or RESPA can be used as a borrower defense against foreclosure in this circumstance. I am thinking specifically about the balloon notes and the interest on the loans, and here are the specifics of the loans, along with the dates:

- 1. 500,000 loan on parent's rental home (investment property) in October 2009. The terms were 13 percent interest, with a balloon note after two years for the balance. All interest payments.

- 2. 450,000 loan on parent's primary residence in August 2011. The terms were 14 percent interest, with a balloon note after 1.5 years for the balance. All interest payments.

In both cases, the proceeds that he DID receive were used for a combination of both personal and business uses.

My personal situation is that I had nothing to do with these loans, but am trying to help a frail parent who got in over their head in a real mess.

I do think my parent should pay back what he borrowed, although fraud has also occurred via the lawyer. But do any of the new laws provide a defense to foreclosure from what I have outlined? Are they outside of the statute of limitations of when the laws kicked in?

I do have a good new lawyer on this, but he is spending much of his time pursuing the former lawyer who absconded with funds. The lenders are claiming they are not in collusion with the lawyer, so the foreclosure defense will have to be a different front. I am doing a fair amount of research myself.

Many thanks.