Relates to home mortgage loans, the crime of mortgage fraud and the filing of transfers and assignments of mortgages

Section 2: Amends section 1301 of the Real Property Actions and Proceedings Law (RPAPL) to require foreclosure summonses to contain notices to tenants of residential buildings.

Section 3: Amends section 1303 of RPAPL to include in the notice requirement upon the commencement of a foreclosure action mandated counseling before any settlement conference, the hotline homeowners must call to receive information about not-for-profits which administer such counseling and the eligibility for a foreclosure post- ponement after participating in such counseling. It also gives tenants in residential buildings notice similar to the notice already given to homeowners in foreclosure of the availability of housing counseling services.

Section 4: Amends RPAPL § 1304 to: (1) expand the 90-day notice requirement, currently applicable to "high-cost," "subprime" and "non-traditional" home loans, to all home loans made before September 1, 2008; (2) make clear that the requirement to send a 90-day notice applies not only to the original lender, but to its assignee as well, if applicable; (3) require lenders, servicers and assignees to mail the 90-day notice to the borrower in a separate envelope from any other mailing or notice; (4) eliminate the requirement that the principal amount of loan be less than the Federal National Mortgage Association ("Fannie Mae") conforming loan size limit in order for the loan to qualify as a "home loan"; and (5) include loans made for the purchase of cooperative ownership within the definition of "home loan."

Section 5: Adds a new section 1305 of the RPAPL to require notice to tenants in residential buildings of the commencement of a foreclosure action, the result of that action and any resulting change in building ownership. New-tenants must also be given notice of the pendency and status of a foreclosure action at the time they sign a lease. If notice of a change of building ownership is not given within 30 days to tenants in a residential building with fewer than such tenants are relieved of their obligation to pay rent until such notice is given.

Section 6: Adds a new RPAPL, § 1306 to require each lender, assignee or mortgage loan servicer to make a regulatory filing with the Superintendent of Banks ("Superintendent"). In particular, the filing would be made within three business days of the mailing of the 90-day notice to the borrower under RPAPL, § 1304, and would include the name, address and the last known telephone number of the borrower, the amount claimed as due and owing on the mortgage, and any other information the Superintendent may require to determine the type of loan at issue.

Further, it require the Superintendent, with the assistance of the Commissioner of the Division of Housing and Community Renewal ("Commissioner"), to, among other things, develop an electronic database capable of receiving all filings required by this section, and to compile information allowing the State to target counseling and foreclosure prevention efforts to borrowers at risk of foreclosure. The information acquired by the Superintendent under this section of the bill would be exempt from the Freedom of Information Law and various parts of the Personal Privacy Law. Finally, this section of the bill would authorize the Superintendent to promulgate rules and regulations to implement the purpose of this section.

Section 7: Adds a new RPAPL section 1307 requiring a prevailing party in foreclosure action to maintain property once vacant and abandoned in a safe, clean, secure and sanitary condition so as not to cause a blighting problem or adversely affect public health or safety.

Section 8: Adds a new RPAPL section 1308 to (1) allow the foreclosing party in a residential action relief in state court; (2) postpone a judgment of foreclosure for 90 days under this act and allow a nine month abeyance of any foreclosure action if the homeowner receives counseling and participates in a mandatory settlement conference pursuant to this act. This abeyance is solely for the purpose to come to a settlement with the foreclosing party to keep the homeowner in their home; (3) waive all fees associated with the filing of a foreclosure action pursuant to this act; (4) establish the minimum requirements to be met in filing a foreclosure action; (5) and (6) allow the court officer presiding over the settlement conference to facilitate negotiation of a payment schedule by which a homeowner can continue to pay the mortgage actionable in the foreclosure so as to preserve the financial interest of the homeowner in the property until a settlement can be reached. This payment schedule shall last for no more than one year without a re-examination of the circumstances, and failure to adhere to such a payment schedule may result in foreclosure or a termination of the abeyance; (7) allow for any party to apply to the court officer or mediator for a revision of such payment schedule based on the fact that the terms of the payment plan are no longer just and equitable.

Section 9: Amends sections 1311 of the RPAPL to provide that tenancy of tenants not named in a foreclosure action is not affected by the judgment in that action.

Section 10: Amends RPAPL by adding a new section 1316 which allows any homeowner who has had an action for foreclosure on a residential mortgage initiated prior to this act but where no final judgment has been entered the opportunity to request a settlement conference.

Section 11: Amends sections 1351 of the RPAPL to provide that tenancy of tenants not named in a foreclosure action is not affected by the judgment in that action.

Section 12: Amends section 221 of the RPAPL to afford tenants in residential buildings 90 days notice prior to an execution directing delivery of the premises if that property has been foreclosed in the prior 6 months.

Section 13: Amends section 713 of the RPAPL to afford tenants in residential buildings 90 days notice prior to commencement of a special proceeding to obtain possession the premises if that property has been foreclosed in the prior 6 months.

Section 14: Adds a new section 713-b to the RPAPL to allow a special proceeding to obtain possession of a dwelling after a foreclosure if no tenant landlord relationship exists only if tenant was named in the foreclosure.

Section 15: Amends Rule 3408 of the CPLR concerning mandatory settlement conferences to (1) establish the purpose of the mandatory settlement conference; (2) include in the notice of such conference the requirement that the homeowner participate in both the mandatory settlement conference and complete a counseling session with an approved counselor prior to such conference; (3) require such counselor to send a modification proposal reached in the counseling session to the foreclosing party at least 10 days prior to the settlement conference and the foreclosing party to make a good faith effort to reach a settlement with the homeowner prior to the settlement conference; (4) allow the court to appoint counsel and adjourn the settlement conference if a homeowner appears pro se; (5) allow the homeowner to be represented by counselor a representative with the authority to dispose of the case at the settlement conference; (6) require a homeowner at the settlement conference to present proof of participation in a counseling session with an approved counselor to take advantage of the nine month postponement option; (7) allow the court to preside over the mandatory settlement conference to facilitate a repayment plan that allows the homeowner to stay in their home: (8) require the court to provide all approved loan counseling agencies with a list of all home-owners served with a mandatory settlement conference notice; (9) require the court to detail any agreements made in a mandatory settlement conference into record for the action; and (10) provide penalties for plaintiffs who fail to appear without good cause or who are not represented by an individual authorized to negotiate and settle the claim.

Section 16: Amends Chapter 472 of the Laws of 2008 to require notice to a defendant in a pending foreclosure case involving home loans made prior to January 1, 2003 of his or her right to a settlement conference.

Section 17: Amends Banking Law § 6-1 to amend the definition of "home loan" to make clear that it includes loans for the purchase of cooperatives.

Section 18:Amend Banking Law § 6-1 to make clear that the prohibition on pre-payment penalties is not overridden by General Obligations Law § 5-501, which allows prepayment penalties during the first year of a loan. This section of the bill also makes clear that a mortgage broker must disclose the amount and methodology of total compensation that the broker will receive on the transaction.

Section 19: Amends Banking Law § 6-m to: (1) clarify that the definition of "subprime home loan" includes loans for the purchase of cooperatives; (2) clarify that mortgage bankers, like Mortgage brokers

are prohibited from giving or accepting kickbacks; and (3)make certain other technical and conforming charges.

Section 20: Makes technical changes to Banking Law § 6-m and provide or modify titles for each subdivision.

Section 21: Adds banking law section 6-n which assigns responsibility to the New York State Banking Department in establishing the procedure by which homeowners are counseled. If a resolution is reached between homeowner and the foreclosing party before the mandatory settlement conference, a certificate of resolution is to be filed with the court. If no resolution is made prior to the settlement conference a certificate of participation is to be filed with the courts.

Section 22: Amends Banking Law § 590 to clarify that it includes cooperatives within the definition of "mortgage loan." The term also would include manufactured homes if so determined by the Banking Board.

Section 23: Permits the promulgation of rules and regulations pertaining to the origination, sale or servicing of manufactured home loans.

Section 24: Amends Banking Law § 590 to make clear that the Superintendent may require all registrations and notifications of mortgage loan servicers to be made through the Nationwide Mortgage Loan System and Registry, and that such an application must be accompanied by a fee as provided by law.

Section 25: Amends Banking Law § 595-a to prohibit a licensee or registrant from taking any upfront fees in connection with activities constituting the business of distressed property consulting.

Sections 26 & 27: Amends the definition of "person" in Penal Law § 187.00 due to a technical error with that definition and add a new Penal law § 187.01 to create an exemption from mortgage fraud for an individual person who applies for a loan and who intends to occupy the mortgaged property, other than as part of a criminal conspiracy. Section 17 of the bill also amends the definition of "residential mortgage loan" to conform it to the definition in Banking Law §§ 6-l and 6-m.

Section 28: Adds a new judiciary law section 2-c to ensure, as practicable under the individual assignment system of each court, that all foreclosure actions be assigned to the same judge or pool of judges.

Section 29: Amend the Real Property Law § 265-b to make certain technical and conforming changes.

Section 30: Amends sections 1, 2 and 3 of Part of Chapter 57 of the laws of 2008, which was part of the 2008 enacted budget to expand the pool of homeowners who are eligible to receive loan counseling by non for profit counseling agencies that benefit from funds appropriated under Chapter 57 of the laws of 2208.

Section 31: Contains the severability clause of the legislation

Justification

The mortgage crisis of the past several years has reduced home prices, up rooted families, and forced many individuals and families to leave their homes due to the inability to pay their mortgages or due to pending or completed foreclosure proceedings. This situation is now beginning to devastate neighborhoods because many homes in certain neighborhoods are being left vacant and readily accessible to vandalism and arson. In 2008, New York had over 50,000 foreclosure filings, an increase of almost 3096 since 2007. As the mortgage foreclosure difficulties have expanded so has the scope of persons affected. Not only are owners of single family dwellings being affected by this mortgage crises, but the tenants of smaller 2 to 6 family buildings where the owner lives in the building are being affected. This means that tenants, who no fault of their own, are now feeling the effects of dislocations due to foreclosure proceedings on the owners of these smaller duplexes and smaller apartment buildings.

In 2008, Chapter 472 was enacted comprehensive subprime lending reform legislation to protect borrowers at risk of losing their homes and to prevent a similar crisis from occurring again in the future. This bill builds upon Chapter 472 of the Laws of 2008 to provide further assistance to homeowners who are at risk of losing their homes and destabilizing the living conditions of families and children. The Summary of Provisions of this bill memorandum outlines the specific types of relief to be provided to homeowners and those tenants that live in smaller apartment units that are also at risk of being foreclosed upon.

Fiscal implications

None.

Effective date

See Effective Date portion of the bill in Section 32.