Requires mortgage lenders and brokers to provide consumer with mortgage bill of rights pamphlet which must be signed by the consumer prior to mortgage application

18 Co-sponsors

• Adriano Espaillat
• Thomas Alfano
• Peter Rivera
• Robert Reilly
• William Colton
• Kenneth Zebrowski
• Harvey Weisenberg
• William Boyland
• Mike Spano
• Joan Christensen
• Micah Kellner
• Linda Rosenthal
• Michael Benjamin
• Ellen C. Jaffee
• Margaret Markey
• Vanessa Gibson
• David Weprin
• Vivian Cook

13 Multi-sponsors

• Herman D. Farrell
• Timothy P. Gordon
• Aileen Gunther
• Carl Heastie
• Earlene Hooper
• Rhoda Jacobs
• Vito Lopez
• Nettie Mayersohn
• Audrey Pheffer
• Jack Quinn III
• Joseph Saladino
• William Scarborough
• Helene Weinstein

BILL NUMBER:A10502

Title of bill

An act to amend the banking law, in relation to directing licensed mort- gage bankers and authorized mortgage loan originators to provide mort- gage applicants with a mortgage bill of rights pamphlet on residential mortgages

Purpose

Requires mortgage lenders and brokers to provide consumer with mortgage bill of rights pamphlet which must be signed by the consumer prior to mortgage application.

Summary of provisions

The superintendent of Banks shall develop, post on the Departments website, print and distribute in sufficient numbers to every licensed mortgage lenders and banking organization, a mortgage bill of rights pamphlet. A copy of such pamphlet shall be given to each person inquir- ing about a mortgage loan. Furthermore, no licensed mortgage lender or banking organization shall accept an application for a residential mort- gage until applicant(s) has signed a statement that he/she has read and understands,the mortgage bill pamphlet.

Justification

With the emergence of the sub-prime mortgage crisis since 2007, and the subsequent cascade of foreclosures throughout New York State and the nation at large, it behooves the State to ensure that New York State residents are knowledgeable of their rights in the mortgage lending application process. At the crux of this housing crisis were deceptive and predatory mortgage loans that imposed an artificially low interest rate for the short-term, thus masking the much higher interest payments to be incurred by the homeowner after this payment initial period lapsed.

These mortgage programs thereby relied on a system of ever-rising real estate prices, which allowed for homeowners to refinance their mortgages or sell their homes once the higher interest rate on their mortgage ensued. Once the housing bubble burst and this payment system was no longer sustainable, the homeowners in question not only suffered, but the foundation of the entire domestic and global economy was put in jeopardy.

Pursuant to this bill, the New York State Banking Department is required to create an informational pamphlet for authorized lenders to distribute to their clients prior to originating a home loan. Additionally, these pamphlets must be signed and returned to the lender in question so as to ensure that potential New York State homeowners are made aware of the risks at hand and protections available to them.

This reform is vital not only to protecting citizens against unadvisable lending practices, but also as a means of safeguarding the housing

market and economy from another real estate bubble and foreclosure crisis.

Legislative history

2007-2008 A10219A 05/07/08 - Passed Assembly 05/07/08 - Delivered to Senate - Referred to Banks

Fiscal implications

To be determined.

Effective date

This act shall take effect on the one hundred twentieth day after it shall have become a law; provided that, effective immediately, any and all actions necessary to implement the provisions of this act on its effective date are authorized and directed to be completed on or before such date.