New Laws Provide Protections for Tenants of Foreclosed Properties

 

 

 

 

 

 

 

 

 

 

Above: Legal Services NYC Director of Foreclosure Prevention Litigation Jacob Inwald (2nd from left) and Legal Services NYC-Bronx Foreclosure Unit Director William Loeb (5th from left) join other foreclosure prevention and tenant advocates at the event organized by Senators Brian Foley and Jeff Klein (center).

Deputy Majority Leader Senator Jeff Klein
of the Bronx and Senator Brian Foley of Suffolk County announced
details of new statewide foreclosure laws taking effect in mid-April
while touring neighborhoods in Suffolk County on April 6th. The announcement took place at a event that included advocates from Legal Services NYC Bronx and the Legal Support Unit. The legislation provides desperately needed protections for
tenants in foreclosed properties and defends our communities from the
blight of abandonment that all too often follows mortgage default and
foreclosure.

The official press release from Senators Klein and Foley follows:

 

Saving Homes and Preserving Neighborhoods 

NEW YORK, NY – Deputy Majority Leader Senator Jeff Klein
(D-Bronx/Westchester) and Senator Brian X. Foley (D-Suffolk) announced
details of new statewide foreclosure laws taking effect in mid-April
while touring neighborhoods in Suffolk County on Tuesday.

Under the law (S66007, Section 6), banks must clean and maintain
properties they already own also called Real Estate Owned Properties
(REOs) as well as properties that enter a judgment of foreclosure and
sale. Banks will carry that responsibility until ownership is
transferred through the closing of a title in foreclosure, or other
disposition, and the deed for the property has been recorded. If a
tenant currently occupies the property, the law states banks must also
keep the property in a safe and habitable condition. The municipality
where the property is located, any tenant, board of managers of a
condominium or homeowners association may enforce the obligation.

“We must not allow the foreclosure crisis of recent years to turn
any more of our vibrant communities into deteriorating neighborhoods.
As the banks fail to maintain foreclosed properties, the likelihood of
drugs and crime increases while property values decrease,” said Senator
Klein. “Beginning April 15th, struggling New York homeowners and
declining neighborhoods will get a much needed shot in the arm as we
put in place better protections to keep the dream of homeownership
alive and preserve our neighborhoods.”

"This sweeping foreclosure protection legislation will immediately
help families and communities in Suffolk County and across New York
State," said Senator Brian X. Foley (D-Suffolk). "From stabilizing our
neighborhoods to stopping loan modification scams that prey on
vulnerable homeowners, to limiting additional foreclosures, this
legislation is a major step towards full recovery from the foreclosure
crisis. As Chairman of the Senate Banking Committee, it has been my
privilege to work with Senator Jeff Klein and Senator Craig Johnson in
crafting this comprehensive legislation and helping protect the
American Dream of home ownership."

"This law not only protects families that have been caught in this
foreclosure wave, but also the hard working taxpayers who have played
by the rules and yet have to live with the fallout of a foreclosure in
their neighborhoods," said Senator Craig M. Johnson, (D-Nassau). ''I
commend Deputy Majority Leader Klein and Banking Committee Chairman
Foley for their work on this very important issue, and for their
commitment to seeing this very important legislation become law."

Klein and Foley also released new data showing the financial impact
of unmaintained foreclosed properties nationwide and across New York
State. Citing 2009 reports by the Center for Responsible Lending, it is
estimated that homeowners living near foreclosed properties will see
their property values decrease an average of $7,500 per each foreclosed
home. In New York State the number of neighboring homes experiencing
devaluation in 2009 due to foreclosures was more than 5.2 million. The
combined monetary decrease in home values/tax base due to subprime
foreclosures in 2009 was $65.3 billion dollars.

Realtytrac.com reports that in Nassau County 7,500 homes went into
some stage of foreclosure in 2009; 8,500 in Suffolk County. The website
also notes that in Nassau County, lending institutions owned 253 homes
in the past year and in Suffolk County, lending institutions owned 235
homes. The top five lending institutions with the most REO properties
on Long Island are as follows: Deutsche Bank (106), US Bank (78), Wells
Fargo (64), HSBC (31), Bank of America (29).

The top ten zip codes on Long Island with the most REO properties
are as follows: 11550 (Hempstead), 42 REO properties; 11520 (Freeport),
20 REO properties; 11717 (Brentwood), 19 REO properties; 11003
(Elmont), 19 REO properties; 11767 (Nesconset), 17 REO properties;
11575 (Roosevelt), 16 REO properties; 11590 (Westbury), 15 REO
properties; 11706 (Bay Shore), 13 REO properties; 11722 (Central
Islip), 12 REO properties; 11701 (Amityville), 10 REO properties. In
Suffolk County, zip code 11717 (Brentwood) had the most REO properties
with 19. In Nassau County, zip code 11550 (Hempstead) had the most REO
properties.

In addition to requiring banks to maintain foreclosed properties,
the foreclosure law also includes expanding the 90-day notice
requirement to all distressed borrowers, expanding the mandatory
settlement conference to include all loan types and requiring lenders,
services and assignees of mortgage loans to make regular data filings
with the NYS Superintendents of Banks.

“Brooklyn Housing & Family Services applauds the comprehensive
nature of this legislation. This legislation will have a far reaching
impact on the quality of life in neighborhoods across the state as well
as on the stability of families. Neighborhoods will be protected from
decay and crime while families are protected from displacement and the
threat of homelessness,” said Carol Finegan, Director of Administration
for Brooklyn Housing & Family Services, Inc.

“The NeighborWorks® Alliance of NYS, representing twenty-two
NeighborWorks organizations from Long Island to Niagara Falls, thanks
Senators Klein and Foley for their leadership roles in assisting
homeowners and communities that are reeling from mortgage foreclosures.
The new State law will benefit homeowners who are currently in default
as well as benefiting neighborhoods by requiring maintenance of
foreclosed properties” said Hilary Lamishaw, Director of NeighborWorks
Alliance of NYS.

“This legislation provides desperately needed protections for
tenants in foreclosed properties and defends our communities from the
blight of abandonment that all too often follows mortgage default and
foreclosure,” said Jonathan Levy, Housing Unit Deputy Director for
Legal Services NYC-Bronx.

“Community Development Corporation of Long Island applauds Senators
Klein and Foley for this initiative. These new laws, in addition to the
default and foreclosure counseling being provided to thousands of
homeowners on Long Island through HUD certified Housing Counseling
organizations like CDC, will help to provide stability to distressed
communities.” said Eileen Anderson, Senior Vice President of CDC of
Long Island.

“Long Island Housing Services (LIHS) applauds this new law as a
great asset for municipalities, homeowners, tenants and their
neighbors. This measure [requiring upkeep and maintenance of
properties] should improve and help stabilize communities sorely
affected by the foreclosure crisis. This legislation will help not only
maintain properties and neighborhoods, but also protect tenant’s
rights. In addition, once the banks realize the financial burden and
difficulty of maintaining millions of properties, the new law may drive
banks to come up with sustainable mortgages for current homeowners and
thereby avoid the entire foreclosure process,” said Maria DeGennaro,
Housing Counseling Program Coordinator for Long Island Housing Services.

“Neighborhood Initiatives Development Corporation thanks NYS Senator
Jeff Klein and Senator Foley for putting together this important
legislation designed to protect the families in our community from
losing their homes and requiring banks to maintain their properties,”
said Andrew Laiosa, Senior Housing Specialist for Neighborhood
Initiatives Development Corporation.

“As the new bill goes into effect, it is our hope that the banks
will proactively work with homeowners to keep them out of foreclosure
and in their homes,” said Sarah Fouquart, Group Manager for GreenPath
Debt Solutions. “Such a move would allow the homeowner to maintain the
property and help preserve neighborhood property values.”

"Long Island has been particularly hard hit by the mortgage crisis,
with Suffolk County having the third highest foreclosure rate of all
counties in the state. While federal regulators were asleep at the
switch, state lawmakers have stood up to the powerful Wall Street
lobbies by working to protect New Yorkers. Senators Foley and Klein led
the way last year in passing legislation that will help Suffolk
homeowners hold on to their homes and ensure that houses that have been
foreclosed will be maintained to protect neighborhoods from decline,"
said Russ Haven, Legislative Counsel for New York Public Interest
Research Group, Inc.

“REO homes decrease the property value of neighborhoods and when
properties are not properly maintained it creates an unnecessary blight
to a community. The new law will protect our communities from further
devastation,” said Connie Lassandro, Director of Nassau County Office
of Housing & Homeless Services.

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