Albany, NY – November 16, 2009 – (RealEstateRama) — Governor David A. Paterson and Legislative Leaders today announced passage of the Governor’s Program Bill No. 46, 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 laws we have passed in New York have stood as a national model for foreclosure mitigation. This is about keeping New Yorkers in their homes and protecting them during this economic crisis,” Governor Paterson said. “This legislation protects 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. While the critical work of closing New York’s budget deficit still needs to be completed, I commend the legislature for passing this important piece of legislation.”
The Governor’s program bill expands the protections of reforms achieved in last year’s law. The bill would:
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- 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 lender to find an affordable solution to prevent unnecessary foreclosures.
- Require those lenders who serve a 90-day notice on a homeowner to within three days of that service make a regulatory filing with the Banking Department 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.
- Prevent brokers who perform distressed property consulting services from accepting upfront fees.
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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.
Superintendent of Banks 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.”
Priscilla Almodovar, President and Chief Executive Officer of NYHomes, said: “This legislation will provide added protections for homeowners who are behind on their mortgages. It will also offer greater opportunities for homeowners to get counseling to help them stay in their homes. These proposals are consistent with our efforts to promote sustainable homeownership in New York State.”
