New York Governor Wants Further Mortgage Reform

ork Gov. David A. Paterson has proposed legislation that builds upon statutory consumer protections enacted last year. The reforms center on counseling, blight prevention and mandatory settlement conferences. ‘This legislation strengthens protections for homeowners, tenants and neighborhoods by expanding previous laws and establishing safeguards against foreclosure rescue scams," Paterson said in a statement. ‘It has been shown that New Yorkers could lose up to $64 billion in equity by the end of the year due to foreclosed properties,’ the statement continues. ‘We are working to protect New York neighborhoods from decay due to foreclosure, not only by reducing the erosion of area property values, but by also preventing these vacant homes from becoming a site for criminal activity and drug use." A 90-day pre-foreclosure notice that became a requirement for subprime borrowers last year would be expanded under Paterson's proposal to include all home loans closed before Sept. 1, 2008. This measure would allow additional time for many more homeowners to work with their lenders, Paterson says. Lenders that serve a 90-day notice to a borrower would have to file a report with the state's banking department within three days of the notice's being sent. The governor's office says the filing requirement would allow the banking department and the Division of Housing and Community Renewal to provide targeted assistance to borrowers and closely monitor foreclosure stats. In addition to the pre-foreclosure notice, mandatory settlement conferences would be expanded under Paterson's legislation to include borrowers of all home loans and not just those borrowers with subprime loans. Rosiki, Rosiki & Associates' Kelly Ann Poole took a look at last year's law in the article, [link=][u]"Do Mandated Conferences Improve Workout Results?"[/u][/link] that appeared in the January issue of [b][i]Servicing Management[/i][/b]. "While the settlement conference may get the borrower to the table, few borrowers come in with all of the information necessary to complete financial statements, hardship letters and similar documents, which makes it difficult to come to a meeting of the minds on the spot," Poole wrote. "This results in further delays, courts' scheduling of future conference dates and "control' dates so that the court can monitor the progress." Tenants – who received some protections under the Helping Families Save Their Homes Act, signed into law by President Obama last month – would receive written notification if the ownership of their property changes hands. They would be permitted to remain in their home for the remainder of their lease term or 90 days – whichever is longer. Plaintiffs in foreclosure actions would be required to maintain the property, and brokers who perform distressed-property consulting services would be prevented from accepting up-front fees. New York state ranks 37th in the nation for foreclosure filing rates, according to RealtyTrac, but filings increased 32% in the first quarter of 2009 from the fourth quarter of 2008. Foreclosure starts, which reached all-time highs nationally in March, fell for the most part in April, reports LPS. New York, however, was one of seven states that saw an increase in April starts. "While New York's overall rank among other states continues to improve, there are still pockets where foreclosure levels continue to rise at alarming rates," notes Richard H. Neiman, superintendent of banks. "It is imperative that we continue our efforts to help homeowners and restore stability to these communities." SOURCE: Office of Gov. David P


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