New York Governor David A. Paterson is looking to keep more distressed borrowers in their homes by expanding previous laws and establishing safeguards against foreclosure scams.
New legislation would require banks and mortgage lenders to give all homeowners a 90-day pre-foreclosure notice so they have more time to work on viable alternatives; this was previously in place only for subprime loans.
Lenders would also be required to make a regulatory filing with the Banking Department within three days of the pre-foreclosure notice, providing specified borrower information so the Division of Housing and Community Renewal could provide targeted assistance to those most in need.
Tenants living in foreclosed properties would be given written notice of change of ownership and the opportunity to remain in the homes until the lease expires, or for an additional 90 days, whichever is longer.
Plaintiffs who obtain a judgment of foreclosure would be required to maintain the foreclosed property, and brokers who perform distressed property consulting services would be barred from accepting upfront fees.
Additionally, $25 million would be set aside to fund counseling and legal services to homeowners facing default or foreclosure.
“This legislation will provide added protections for homeowners who are behind on their mortgages and crack down on scams that prey on vulnerable homeowners,” said President and Chief Executive Officer of “NYHomes” Priscilla Almodovar, in the release.
“It will also offer greater opportunity to offer counseling to homeowners to help them stay in their homes. These proposals are consistent with our efforts to promote sustainable homeownership in New York State.”
Unfortunately, we’ve seen similar legislation in California do little more than delay an inevitable problem.