Requires a loan counseling disclosure as part of contract of sale for the transfer of property

Title of bill

An act to amend the real property law, in relation to requiring a loan counseling disclosure as part of contract of sale for the transfer of property

Purpose

Requires a loan counseling disclosure rider to be attached and signed at the time a real estate contract is generated.

Summary of provisions

The real property law is amended by adding a new section 242-a to require a loan counseling disclosure rider for all residential real property contracts of sale.

Section 242(a) subsections a-f define the terms "list", "residence", "mortgagor", "division", "loan counselor" and "residential real property". Section 242(2) requires a loan counseling disclosure rider for all residential real property contracts of sale. Section 242 (3)indicates that the form shall be provided by the attorney and/or broker responsible for generating the contract of sale. Section 242 (4) indicates the required language of the form. Section 242 (5) provides that failure to comply with the provisions of this measure shall not create a cause of action nor invalidate a contract of sale. However, the Banking Department or Attorney General may investigate the repeated failure of an attorney or broker to comply with this legislation and may publicly disclose same.

Justification

There is currently a mortgage crisis in the United States and the State of New York. Rising interest rates are dramatically increasing the amounts of required monthly mortgage payments for home owners who financed their property by using Adjustable Rate Mortgages. In some cases consumers are required to pay double what their former payments were under their old rates. In addition, "Interest Only" payment plans, "No Money Down" and 40-year mortgage loans are also leading consumers to greater hardship and financial difficulty. Inability to pay mortgages leads more consumers to bankruptcy or foreclosure. Buyers should know that there are financial professionals available that will advise them on the perils and pitfalls of the various mortgages available in the market. Consulting with a home loan counselor early in the buying process can save New York consumers time, money, frustration and legal peril.

Existing law

There is currently no requirement for a loan counseling disclosure form to be attached to contracts of sale of property.

Legislative history

S.5135 of 2007

Fiscal implications

None.

Local fiscal implications

None.

Effective date

This act shall take effect immediately.