The New York State Assembly today passed a rather robust legislative package aimed at addressing the “national sub-prime lending crisis.”
The four-bill bundle contains legislation that, if enacted, would offer assistance to homeowners in default or facing foreclosure, establish requirements on all home loans, provide consumer info to all residential mortgage applicants, and most notably, create a one-year foreclosure moratorium for New York residents.
Assembly Speaker Sheldon Silver slammed the Feds for bailing out mortgage lender and investment bank Bear Stearns while leaving everyday homeowners at risk of losing their homes.
He insisted that the slew of bills was not a bailout, but rather an assistance program to help homeowners keep the American dream alive.
The first bit of the legislation would provide assistance payments up to an amount equal to three months of mortgage payments and provide legal services and counseling to help select homeowners in default or facing foreclosure.
The second part of the package would establish the duties of mortgage brokers and remedies for violations, ensure that lenders verify borrower income and the ability to repay loans, and prohibit practices such as balloon mortgage payments, negative amortization and prepayment penalties.
The third bill would permit the courts to delay foreclosure up to one year for subprime borrowers who meet specific conditions, allowing at-risk homeowners to work with their respective lenders to avoid losing their homes.
The final piece of the legislative package would create a “Mortgage Applicant’s Bill of Rights,” which requires mortgage lenders and brokers to provide consumers with a pamphlet that must be read and signed by the borrower prior to applying for a mortgage.