Governor Signs Comprehensive Reforms To Address Foreclosure Crisis

Governor David A. Paterson today signed into law a critical subprime
lending reform bill which directly addresses the mortgage crisis in New
York State. The Governor signed the bill in Queens, one of the areas in
New York that has been hit hardest by the foreclosure crisis. The new
law will immediately help protect people from losing their homes and
mandates reforms to help avoid a similar crisis in the future. The bill
also takes into consideration the importance of striking the right
balance between consumer protection and the availability of affordable
credit.

This bill – passed by
the state Legislature in June – works in two ways: immediately helping
to prevent New Yorkers from losing their homes by assisting those who
are currently facing foreclosure, and by attacking flaws in New York’s
banking regulations to prevent such a crisis from happening again.

The bill requires lenders to send a pre-foreclosure notice
to borrowers at least 90 days before foreclosure proceedings may be
initiated. This will encourage homeowners to seek help prior to the
initiation of foreclosure proceedings. The bill would also require
lenders to list in the notice government-approved housing counselors
serving the borrower’s area.

The bill establishes a mandatory settlement conference for foreclosure
proceedings involving homeowners with certain subprime loans. For
homeowners who cannot afford an attorney, the court, under certain
circumstances, may appoint one.

The bill requires plaintiffs in an action against a homeowner to make
an affirmative allegation that they have standing to bring the
foreclosure action and have complied with certain applicable laws.
Ownership of the mortgage and the note is sometimes uncertain, which
has lead to questionable foreclosure practices.

The bill includes provisions to address foreclosure rescue scams
intended to take advantage of borrowers when they are most vulnerable.
This bill will prohibit upfront fees and require a written contract
from so-called “distressed property consultants.”

 Read the full press release from the Governor's Office.

Through our Foreclosure Prevention Projects, Legal Services NYC is at
the forefront of the national fight against predatory lending practices
in the subprime lending market. Predatory lending practices lead to
foreclosure, homelessness, financial devastation and loss of
hard-earned equity (which is the sole source of wealth for many lower
income homeowners), displacement of long-time residents and
destabilization of neighborhoods.

Legal Services NYC's work includes providing legal assistance, including advice, advocacy and litigation services, to homeowners; providing advice and assistance to community-based organizations on specific cases;and helping to coordinate and provide training for foreclosure prevention advocates throughout the City.

Foreclosure Assistance programs are offered at Legal Services NYC- Bronx, Brooklyn Legal Services Corporation A, South Brooklyn Legal Services, and Staten Island Legal Services.