Governor Paterson Signs Comprehensive Foreclosure Legislation into Law
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Governor Paterson Signs Comprehensive Foreclosure Legislation into Law


Albany, NY – December 15, 2009 – (RealEstateRama) — Governor David A. Paterson today signed into law comprehensive foreclosure legislation which provides additional critical protections for New York State homeowners, tenants and neighborhoods in the wake of the ongoing foreclosure crisis. The legislation builds upon Governor Paterson’s landmark subprime lending reform law, enacted last year, by assisting homeowners currently at risk of foreclosure and minimizing the negative impacts that foreclosures have on communities. The Governor proposed the legislation as one of his program bills and submitted it as part of the agenda for the recent extraordinary session of the Legislature. 

“This legislation protects homeowners by providing mandatory settlement conferences and protects tenants from premature evictions. It also safeguards New York neighborhoods from the decay caused by foreclosure by reducing the erosion of area property values and by preventing vacant homes from becoming sites of criminal activity,” Governor Paterson said. “The laws we have passed in New York have stood as a national model for foreclosure mitigation. This effort is about keeping New Yorkers in their homes and protecting them during this economic crisis.”

“I want to thank my legislative colleagues for their work on this important legislation that will make a real difference for New Yorkers across the entire State,” the Governor added. “I also want to thank the State agencies that have participated in the implementation of these programs for their dedication to New York’s homeowners and tenants.”

This legislation, introduced at Governor Paterson’s request, expands the reforms achieved in last year’s law in several ways to protect homeowners, tenants and neighborhoods. The law will:

  • Require the 90-day pre-foreclosure notice currently sent for subprime loans to be expanded to include all home loans. This measure allows additional time for many more homeowners to work with their lenders to find an affordable solution to prevent unnecessary foreclosures.
  • Require those lenders who serve a 90-day notice on a homeowner to make a regulatory filing with the Banking Department within three days of that service with specified information. This regulatory filing will allow the Banking Department and the Division of Housing and Community Renewal (DHCR) to provide targeted assistance to distressed homeowners during the critical pre-foreclosure timeframe and closely monitor foreclosure statistics.
  • Expand the scope of the early mandatory settlement conference to include borrowers of all home loans and not just borrowers with subprime loans.
  • Establish protections for tenants in foreclosed properties by requiring that they receive written notification of the change in ownership of the property and be permitted to remain in their home for the remainder of their lease term or 90 days, whichever is longer.
  • Require plaintiffs in a foreclosure action who obtain a judgment of foreclosure and sale to maintain the foreclosed property.
  • Enhance consumer protections to prevent homeowners from falling prey to rescue scams, and prevent brokers who perform distressed property consulting services from accepting upfront fees.

Under Governor Paterson’s leadership, New York has brought together diverse stakeholders and service providers, including bank regulators, housing finance agencies, community groups and the lending industry, to develop lasting solutions to the foreclosure crisis.

New York’s extensive response to the mortgage crisis includes the funding and administration of grant programs for counseling and legal services; outreach and loan modification events that bring homeowners face-to-face with lenders and servicers; refinancing and mortgage programs such as the introduction of the forty-year fixed rate mortgage through the State of New York Mortgage Agency; neighborhood stabilization initiatives to return foreclosed properties to productive use; and enforcement actions through the creation of a Mortgage Fraud Unit within the Banking Department.

Legislation passed last year established protections to address the mortgage crisis in New York State. There were 39,923 foreclosure filings in New York State during the first three quarters of 2009, representing an 11 percent decrease when compared to the first three quarters of 2008. The 11 percent decrease year over year, compared to the national 22 percent increase over the same period, demonstrates the success of New York’s foreclosure prevention policies.

In addition, Governor Paterson has taken administrative steps to help stem the foreclosure crisis. In 2008, DHCR funded 64 foreclosure prevention programs across the State. As a result, at least one provider offering outreach/education, counseling and legal services to homeowners facing default or foreclosure is operating in each county. The 2009-2010 State Budget included an additional $25 million to support the foreclosure prevention measures.

###The following statements were provided in support of the Comprehensive Foreclosure Legislation:Democratic Conference Leader John L. Sampson said: “As we work to rebuild the economy in New York, and across the nation, ensuring that individuals and families do not lose their homes is of paramount importance. I thank Governor Paterson for signing this very important bill into law, which takes the necessary measures to safeguard all New Yorkers and ensure that they maintain their homes.”Senate President Malcolm A. Smith said: “With this legislation we can stabilize the housing market and return our state to prosperity. These measures effectively ward off the threat of foreclosure for high risk individuals, while ensuring that every possible measure is taken to lower the foreclosure rate going forward. I commend Governor Paterson for working with the legislature to sign this bill into law.”

Senate Majority Leader Pedro Espada, Jr., Chairman of the Senate Standing Committee on Housing, Construction and Community Development, said: “This new law provides a long-term lifeline to people most in need during this economic crisis. Foremost, it protects tenants against being uprooted and displaced from their homes by providing struggling owners of rental housing with assistance to help them avert foreclosure. By helping owners of single family homes and multi-family apartment dwellings stay afloat, this new law also prevents urban decay to our neighborhoods and maintains quality, affordable housing that is so desperately needed in communities in the outer boroughs.”

Assembly Speaker Sheldon Silver said: “Since the subprime mortgage crisis began, the Assembly has taken the lead in ensuring safeguards to stanch the impact of widespread foreclosure in New York. The passage of the New York Responsible Lending Act of 2008 was an important step that increased the availability of and access to financial counseling for owners facing foreclosure. The legislation the Governor signed today builds upon our previous efforts. The safeguards contained in this law are necessary to ensure that homeowners are not preyed upon by lenders during the foreclosure process. This bill also requires that banks maintain upkeep of foreclosed properties in order to maintain the quality of our neighborhoods. I commend my Assembly colleagues for the hard work in protecting homeowners, discouraging predatory lending and improving the foreclosure proceeding process.”

Senator Jeff Klein said: “Since I first saw signs of the foreclosure crisis crippling communities and devastating families more than two years ago, I’ve made homeowner and tenant protection a top priority. This Mortgage Foreclosure bill is landmark legislation that is long overdue – it holds banks more responsible, protects thousands of New York homeowners and renters and insures our neighborhoods remain safe. I applaud the Governor for signing a bill we’ve worked hard to make a model for other states battling foreclosures nationwide.”

Assemblywoman Helene Weinstein, Chair of the Assembly Judiciary Committee, said: “This measure will protect a greater number of homeowners at risk of losing their homes by allowing them to benefit from newly strengthened settlement conference procedures. It will protect neighborhoods from blight and ensure livable conditions for tenants. I thank the Governor for signing this landmark legislation into law today.”

Senator John Bonacic said: “Preventing foreclosures strengthens communities. When a home is foreclosed upon, it has a life-changing and potentially life-long effect on every member of that household. Foreclosures also diminish property values in the neighborhood where the foreclosure takes place. This important legislation will help maintain communities, and help families who can develop a reasonable loan payment plan, keep their most important asset.”

Senator Brian X. Foley said: “This landmark foreclosure protection legislation will help working-families across New York State deal with the home foreclosure crisis. As a senator from Suffolk County, which has the second highest rate of foreclosures in the entire state, I have seen the plight of countless families who are struggling to hang on to their homes due to this crisis. As chairman of the Senate Banking Committee, I was proud to help craft the sweeping foreclosure protections that are featured in this bill. I am grateful to my colleagues in the legislature, particularly Senator Jeff Klein, as well as Governor Paterson for helping pass these important measures and look forward to continuing to work with them to ensure that our families’ American Dream of homeownership does not turn into their worst nightmare.”

Senator Thomas P. Morahan said: “Due to the current economic situation, it is important that we amend the foreclosure laws in New York State for the benefit of the people whose properties are being foreclosed, as well as to protect innocent parties to these foreclosure actions such as tenants and municipalities.”

Senator Andrea Stewart-Cousins said: “This expansive legislation is critical to so many New Yorkers – homeowners and tenants as they struggle to maintain housing in a difficult economic time. I am pleased that the Governor’s signing of this legislation into law furthers a comprehensive strategy designed to keep people in their homes.”

Assemblyman Darryl Towns, Chair of the Assembly Committee on Banking, said: “The legislation signed today encourages greater cooperation from lenders to avoid foreclosures, which have had drastic negative impacts on communities throughout New York. The authorization of ‘shared appreciation’ agreements will help to reduce the principal owed on a mortgage while allowing for lenders to share in the appreciation of a property when it is sold. This important component boosts the New York Responsible Lending Act of 2008 and will drastically aid in our efforts to prevent the sweeping foreclosures we have seen in recent years.”

Assemblyman James Brennan said: “With tens of thousands of regular mortgages now in foreclosure in New York State, it is critical that we expand protections past subprime mortgages to regular mortgages.”

Assemblywoman Vivian E. Cook said: “As a representative of Queens County, an area with one of the highest rates of foreclosures in New York State, I am pleased that the Governor has signed this much needed comprehensive foreclosure legislation into law. This new law will help strengthen the protections for homeowners by allowing additional time to work with lenders to find an affordable solution to prevent foreclosure. It will also provide protections for tenants who may face eviction as a result. This new law will help to decrease the number of foreclosure filings in New York State that has plagued our communities.”

Assemblyman Vito J. Lopez, Chair of the Assembly Committee on Housing, said: “I am pleased that Governor Paterson is signing this important foreclosure notification bill, which will help marginal homeowners obtain due process and provide tenants with the necessary support and maintenance to remain in their homes.”

Assemblyman Mike Spano said: “As long as families are being edged out of their homes due to foreclosures, New York needs to put more effective measures in place to make sure that homeowners’ and tenants’ rights are protected. This law will help Yonkers survive the effects of the mortgage crisis, keeping people in their homes and preserving the fabric of our communities.”

Superintendent of Banking Richard H. Neiman said: “While the foreclosure crisis began with borrowers in inappropriate subprime or exotic mortgages, the recession has expanded the impact of this crisis to homeowners with loans that were originally affordable. This makes the expanded scope of this legislation so timely. In addition, with commercial and multifamily mortgages potentially at risk, the added protections for renters are critical to assist displaced families and to stabilize New York neighborhoods.”

Deborah VanAmerongen, Commissioner of the Division of Housing and Community Renewal, said: “Thanks to the leadership of Governor Paterson and the State Legislature, New York has been a national leader in providing counseling and legal services to homeowners threatened by foreclosure. Additionally, the bill would help tenants who through no fault of their own have the misfortune of living in a foreclosed building.”


DAVID A. PATERSON became New York’s 55th Governor on March 17, 2008. In his first address as Governor, Paterson spoke about the challenges New York faces and his plan for New York’s future.


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Albany, NY 12224

Phone: 518-474-8390

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