New York - New Law Offers More Protection for Foreclosure Victims |
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News Source: NY Daily News
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New York - As the foreclosure crisis grinds on, state lawmakers have approved a set of provisions to protect city residents.
The bill that passed both houses in Albany last week includes protections for homeowners and renters in distressed buildings, plus a crackdown on scammers who defraud homeowners facing foreclosure.
“It’s the most comprehensive legislation on mortgage foreclosure in the United States,” said state Sen. Jeffery Klein (D-Bronx), who has championed various provisions of the law over the past 2-1/2 years.
The new law places several obligations on mortgage lenders to prevent foreclosures and limit the collateral damage they wreak on tenants and neighbors.
Renters in foreclosed properties - who until now could be evicted by marshals with just 48 hours notice - will have to be notified at least 90 days before a new owner takes legal action to remove them.
The law also mandates that foreclosing banks must allow tenants to stay in their homes for the remainder of their leases or 90 days after notification, whichever is longer.
To protect neighboring property values, the new law will require lenders to maintain foreclosed properties so they don’t fall into disrepair. If tenants still live in the building, it must also be kept habitable by the bank.
And to prevent foreclosures in the first place, the law expands the state’s existing court-based loan modification program - previously limited to subprime borrowers - to include all homeowners and all types of loans.
The law also expands protections against shady “distressed property consultants,” prohibiting all consultants from accepting up-front fees, and requiring them to disclose the exact amount of total compensation the broker will receive and for exactly what services.
“I hope this is a step toward putting these operations out of business,” said Klein.
Antoinette Coffi-ahibo fell victim to a mortgage-consultant scam when her Queens home was heading for foreclosure. She paid more than $4,000 up front and was shocked when she received a foreclosure notice anyway.
“They did nothing for me but take my money and waste my time,” said Coffi-ahibo, whose home is still in mortgage limbo, though the state Attorney General’s office helped her get her fees back from the scammers.
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Read Comments (4) — Post Yours »
1
Nov 27, 2009 at 10:28 AM Anonymous Says:Report as Inappropriate
At first blush this "comprehensive legislation" appears to help distressed property owners by slowing down the foreclosure process to snail pace through requiring a ninety day advance notice and almost useless settlement conferences. Additionally, it provides for a "crackdown on scammers who defraud homeowners facing foreclosure."
I think, and I wonder how others feel, that these new laws will ultimately, if it hasn't already, have a negative effect on the credit market in New York State.
First, interest rates on New York loans will increase dramatically as well as reduce the loan to value permitted because of the greater risk created when foreclosure takes an exorbitant amount of time. (Presently in Kings County I heard estimates that a foreclosure cannot be completed in less than three years.) Also, because of this new maze of laws there is a much greater risk for error when prosecuting a foreclosure action.
Second, the settlement conferences are really not helpful in settling cases. The New York Law Journal recently reported that “According to the most recent court statistics, in the last three-month period, more than 1,000 settlement conferences have been held in Brooklyn Supreme Court, of which 27 have settled.” It appears that the only way to settle these cases is to call the bank directly and send in an application for a loan modification – not through these conferences.
Third, the “crackdown on scammers” is complete silliness. Anyone who owns real estate is smart enough to consult with a lawyer before they enter into these types of agreements. This law will, again, slow down the process of helping people get out of foreclosure by allowing investors to purchase their distressed property.
People are often unaware the slower the foreclosure takes the more default interest accumulates. At the end of the day it is the property owner who often suffers.
Please post any thoughts/opinions. I wonder how others feel.
2
Nov 27, 2009 at 01:36 PM Hate em Tatem Says:Report as Inappropriate
“ At first blush this "comprehensive legislation" appears to help distressed property owners by slowing down the foreclosure process to snail pace through requiring a ninety day advance notice and almost useless settlement conferences. Additionally, it provides for a "crackdown on scammers who defraud homeowners facing foreclosure."
I think, and I wonder how others feel, that these new laws will ultimately, if it hasn't already, have a negative effect on the credit market in New York State.
First, interest rates on New York loans will increase dramatically as well as reduce the loan to value permitted because of the greater risk created when foreclosure takes an exorbitant amount of time. (Presently in Kings County I heard estimates that a foreclosure cannot be completed in less than three years.) Also, because of this new maze of laws there is a much greater risk for error when prosecuting a foreclosure action.
Second, the settlement conferences are really not helpful in settling cases. The New York Law Journal recently reported that “According to the most recent court statistics, in the last three-month period, more than 1,000 settlement conferences have been held in Brooklyn Supreme Court, of which 27 have settled.” It appears that the only way to settle these cases is to call the bank directly and send in an application for a loan modification – not through these conferences.
Third, the “crackdown on scammers” is complete silliness. Anyone who owns real estate is smart enough to consult with a lawyer before they enter into these types of agreements. This law will, again, slow down the process of helping people get out of foreclosure by allowing investors to purchase their distressed property.
People are often unaware the slower the foreclosure takes the more default interest accumulates. At the end of the day it is the property owner who often suffers.
Please post any thoughts/opinions. I wonder how others feel.
”
Well said, I totally agree.
The law is self-defeating for other reasons. People who get 90 days notice for foreclosure stall foreclosure sales, which leads to more costs for the bank. In turn, the banks will pass the higher costs to the consumers with higher interest rates. Higher interest rates will mean less buyers and less credit, Less buyers and less credit will lead to stifling of the already very weak real estate sector.
In California the legislature passed anti-deficiency statutes some years ago, which means that if a mortgagee forecloses and the foreclusre sale price does not satisfy the mortgagor's debt, the mortgagee cannot go after anything else. This law, although well intentioned, caused mortgage rates to go up. Another example of self-defeating legislation.
3
Nov 28, 2009 at 09:46 AM No Says:Report as Inappropriate
Does it mean that the banks hv to offer loan modification before persuing foreclosure ??
4
Nov 28, 2009 at 06:51 PM Anonymous Says:Report as Inappropriate
#2 The California law is actually good it means banks have to be responsible about appraisals. Banks were very greedy in the last decade they accepted bloated appraisals and no income no asset verifications. Now they get bail out money at the taxpayer's expense!