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NEW YORK, Oct 21 (Reuters Legal) - New York courts are the first in the United States to require lawyers handling foreclosures for banks and servicers to take steps to ensure the procedure is done properly, the state's top judge said on Wednesday.
Effective immediately, lawyers representing the plaintiffs in residential foreclosure actions must file signed affirmations that they took "reasonable" steps to verify the accuracy of the underlying documents.
Jonathan Lippman, the chief judge of the New York State Court of Appeals, said the rule is in response to "unprecedented revelations" by several mortgage lenders of problems in the foreclosure process, including in the notarization and so-called "robosigning" of documents.
"There is a national crisis," Lippman said in an interview. "Given the magnitude and consequences of this kind of systemic problem we're having, we think it behooves lawyers to talk to their clients and make sure the Is are dotted and the Ts are crossed."
New York is the third-most populous U.S. state, and one of 23 states where court approval is needed to foreclose.
Lippman said nearly 80,000 foreclosure actions are pending in the state's courts.
Foreclosures face greater scrutiny, including by regulators and all 50 state attorneys general, after revelations that the review of some paperwork at Bank of America Corp. and Ally Financial Inc.'s GMAC Mortgage unit was handled sloppily, and perhaps not at all.
Many analysts say the defects may cloud title for thousands of homeowners, and drag on a much-weakened housing market.
Maryland's Court of Appeals on Tuesday approved its own measure to improve the integrity of foreclosures, including the appointments of special examiners to screen paperwork.
Lippman said he did not talk with judges in other states before adopting the new rule for New York, and is not planning to impose the rule retroactively.
He also expects no delays in foreclosure proceedings from requiring lawyers to state in writing that they have reviewed the underlying documents.
"Lawyers should be doing this anyway," he said. "We thought it essential to preserve the integrity of the court process and fix it at the front end, and not to have it bounce back to us to clean up the mess."
Reporting by Jonathan Stempel