New York FC Law Extends Subprime Reforms To All Borrowers

New York Gov. David A. Paterson has signed into law foreclosure legislation that expands on the state's subprime lending reform law enacted last year.

Introduced in the state assembly at Paterson's request, the law expands the scope of early mandatory settlement conferences to include borrowers of all home loans and not just borrowers with subprime loans. It also protects tenants from premature evictions, Paterson says, by requiring that they receive written notification of the change in property ownership and be permitted to remain in their home for the remainder of the lease term or 90 days, whichever is longer.

"By helping owners of single family homes and multifamily 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," says Senate Majority Leader Pedro Espada Jr., who also chairs the senate's standing committee on housing, construction and community development.

Also under the law, servicers must send a 90-day pre-foreclosure notice to borrowers at risk of foreclosure and make a regulatory filing with the state's banking department within three days of that service. The filing will allow the department and the Division of Housing and Community Renewal to provide targeted assistance to distressed homeowners during the critical pre-foreclosure timeframe and closely monitor foreclosure statistics, Paterson's office says.

Other provisions focus on blight prevention and loan modification scams. The law requires plaintiffs in a foreclosure action that obtain a judgment of foreclosure and sale to maintain the foreclosed property, and it provides enhanced consumer protections that prevent brokers who perform distressed-property consulting services from accepting up-front fees.

SOURCE: Office of Gov. David Paterson

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