Senate Transcript - February 25, 2009

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1 NEW YORK STATE SENATE 2 3 4 THE STENOGRAPHIC RECORD 5 6 7 8 9 ALBANY, NEW YORK 10 February 25, 2009 11 3:20 p.m. 12 13 14 REGULAR SESSION 15 16 17 18 SENATOR NEIL D. BRESLIN, Acting President 19 ANGELO J. APONTE, Secretary 20 21 22 23 24

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(518) 371-8910 1 P R O C E E D I N G S 2 ACTING PRESIDENT BRESLIN: The 3 Senate will come to order. 4 I ask all present to please rise 5 and repeat the Pledge of Allegiance. 6 (Whereupon, the assemblage recited 7 the Pledge of Allegiance to the Flag.) 8 ACTING PRESIDENT BRESLIN: In the 9 absence of clergy, may we bow our heads for a 10 moment of silence. 11 (Whereupon, the assemblage 12 respected a moment of silence.) 13 ACTING PRESIDENT BRESLIN: Thank 14 you. 15 The reading of the Journal. 16 The Secretary will read. 17 THE SECRETARY: In Senate, 18 Tuesday, February 24, the Senate met pursuant 19 to adjournment. The Journal of Monday, 20 February 23, was read and approved. On 21 motion, Senate adjourned. 22 ACTING PRESIDENT BRESLIN: 23 Without objection, the Journal stands approved 24 as read.

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(518) 371-8910 1 Presentation of petitions. 2 Messages from the Assembly. 3 Messages from the Governor. 4 Reports of standing committees. 5 Reports of select committees. 6 Communications and reports from 7 state officers. 8 Motions and resolutions. 9 Senator Klein. 10 SENATOR KLEIN: Mr. President, 11 are there any substitutions at the desk? 12 ACTING PRESIDENT BRESLIN: There 13 are. 14 The Secretary will read. 15 THE SECRETARY: On page 9, 16 Senator Stavisky moves to discharge, from the 17 Committee on Higher Education, Assembly Bill 18 Number 300 and substitute it for the identical 19 Senate Bill Number 1747, Third Reading 20 Calendar 43. 21 ACTING PRESIDENT BRESLIN: 22 Substitution ordered. 23 Senator Klein. 24 SENATOR KLEIN: Mr. President, I

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(518) 371-8910 1 believe there are a few resolutions at the 2 desk. I ask that the titles of those 3 resolutions be read and move for their 4 separate and immediate adoption. 5 ACTING PRESIDENT BRESLIN: The 6 Secretary will read. 7 THE SECRETARY: By Senator 8 Hassell-Thompson, Legislative Resolution 9 Number 386, memorializing Governor David A. 10 Paterson to proclaim February 2009 as Child 11 Sexual Abuse Prevention Month in the State of 12 New York. 13 ACTING PRESIDENT BRESLIN: 14 Senator Hassell-Thompson. 15 SENATOR HASSELL-THOMPSON: Thank 16 you, Mr. President. 17 Several years ago when I first came 18 to this chamber, I had submitted a bill with 19 the help and support of some of my colleagues 20 in this chamber, including Senator Volker. 21 And over the years, portions of that bill have 22 been passed in this chamber and they have been 23 chaptered. But still there is not the 24 consciousness and the broad-based addressing

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(518) 371-8910 1 of the concern of sexual abuse to children in 2 the State of New York. 3 I am hoping that and I am pleased 4 that the Governor has agreed to declare this 5 child sexual abuse period so that we can be 6 reflective of the behavior of some of the 7 people within our society and hopefully raise 8 the consciousness of the church and others who 9 have been concerned that this bill is directed 10 at them, as opposed to the fact that across 11 this nation children are being abused not by 12 strangers but, rather, by members of the 13 families, close members. When you look at the 14 statistics, that member of the family most apt 15 to abuse or cause abuse to happen are 16 brothers. 17 And so that it is not just the 18 church, but it is a cross-section of family 19 members and people who are sexually abusing 20 our children and causing a lifetime of trauma. 21 I am very hopeful that this will be 22 the year that the State of New York will stand 23 up and that they will pass a full sexual abuse 24 bill in the State of New York and send the

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(518) 371-8910 1 message not only to those who are being abused 2 but those who have historically been 3 traumatized by the fact that they have been 4 abused in their homes. 5 I would like to invite my 6 colleagues to support me in this effort and 7 hope that they too will believe, as I do, that 8 it is time for us to stand up and act as one 9 on behalf of the children and those adults who 10 were once children and were abused in the 11 State of New York. 12 And I thank you. 13 ACTING PRESIDENT BRESLIN: Thank 14 you, Senator Hassell-Thompson. 15 Are there any other Senators who 16 wish to be heard on this resolution? 17 The question is on the resolution, 18 All those in favor say aye. 19 (Response of "Aye.") 20 ACTING PRESIDENT BRESLIN: 21 Opposed, say nay. 22 (No response.) 23 ACTING PRESIDENT BRESLIN: The 24 resolution is adopted.

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(518) 371-8910 1 At the request of the sponsor, the 2 resolution is open for multisponsorship by the 3 entire house. Any member wishing not to be a 4 multisponsor should so inform the desk. 5 The Secretary will continue to 6 read. 7 THE SECRETARY: By Senator 8 Breslin, Legislative Resolution Number 489, 9 memorializing Governor David A. Paterson to 10 proclaim April 9, 2009, as Yellow Ribbon Day 11 in the State of New York. 12 ACTING PRESIDENT BRESLIN: The 13 question is on this wonderful resolution. All 14 those in favor please signify by saying aye. 15 (Response of "Aye.") 16 ACTING PRESIDENT BRESLIN: 17 Opposed, nay. 18 (No response.) 19 ACTING PRESIDENT BRESLIN: The 20 resolution is adopted. 21 At the request of the sponsor, the 22 resolution is open for multisponsorship by the 23 entire house. Any member wishing not to be a 24 multisponsor of the resolution should so

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(518) 371-8910 1 inform the desk. 2 The Secretary will continue to 3 read. 4 THE SECRETARY: By Senator 5 Hannon, Legislative Resolution Number 502, 6 memorializing Governor David A. Paterson to 7 proclaim March 3, 2009, as Chronic Kidney 8 Disease Awareness Day in the State of 9 New York. 10 ACTING PRESIDENT BRESLIN: Are 11 there any Senators wishing to be heard on this 12 resolution? 13 The question is on the resolution. 14 All those in favor please signify by saying 15 aye. 16 (Response of "Aye.") 17 ACTING PRESIDENT BRESLIN: 18 Opposed, nay. 19 (No response.) 20 ACTING PRESIDENT BRESLIN: The 21 resolution is adopted. 22 At the request of the sponsors, the 23 resolution is open for multisponsorship by the 24 entire house. Any member wishing not to be a

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(518) 371-8910 1 multisponsor of the resolution should so 2 inform the desk. 3 Senator Klein. 4 SENATOR KLEIN: Mr. President, at 5 this time can we please go to the 6 noncontroversial reading of Senate Calendar 7 Number 10. 8 ACTING PRESIDENT BRESLIN: The 9 Secretary will read. 10 THE SECRETARY: Calendar Number 11 18, by Senator Klein, Senate Print 1182, an 12 act to amend the General Obligations Law, in 13 relation to conditions on real property. 14 SENATOR LIBOUS: Lay that bill 15 aside, please. 16 ACTING PRESIDENT BRESLIN: The 17 bill is laid aside. 18 THE SECRETARY: Calendar Number 19 27, by Senator Sampson, Senate Print 148, an 20 act to amend the Executive Law, in relation to 21 the designation of a "Holocaust Remembrance 22 Day" as a day of commemoration. 23 ACTING PRESIDENT BRESLIN: Read 24 the last section.

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(518) 371-8910 1 THE SECRETARY: Section 2. This 2 act shall take effect on the 60th day. 3 ACTING PRESIDENT BRESLIN: Call 4 the roll. 5 (The Secretary called the roll.) 6 ACTING PRESIDENT BRESLIN: 7 Announce the results. 8 THE SECRETARY: Ayes, 58. 9 ACTING PRESIDENT BRESLIN: The 10 bill is passed. 11 The Secretary will continue to 12 read. 13 THE SECRETARY: Calendar Number 14 28, by Senator C. Kruger, Senate Print 337, an 15 act to amend the Executive Law, in relation to 16 designation of a "Senior Citizens' Day" as a 17 day of commemoration. 18 ACTING PRESIDENT BRESLIN: Read 19 the last section. 20 THE SECRETARY: Section 2. This 21 act shall take effect on the 30th day. 22 ACTING PRESIDENT BRESLIN: Call 23 the roll. 24 (The Secretary called the roll.)

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(518) 371-8910 1 ACTING PRESIDENT BRESLIN: 2 Announce the results. 3 THE SECRETARY: Ayes, 58. 4 ACTING PRESIDENT BRESLIN: The 5 bill is passed. 6 THE SECRETARY: Calendar Number 7 29, by Senator C. Kruger, Senate Print 983, an 8 act to amend the New York State Printing and 9 Public Documents Law and others, in relation 10 to consolidating and reducing. 11 SENATOR KLEIN: Would you please 12 lay the bill aside for the day. 13 ACTING PRESIDENT BRESLIN: The 14 bill is laid aside for the day. 15 The Secretary will continue to 16 read. 17 THE SECRETARY: Calendar Number 18 30, by Senator Savino, Senate Print 1406, an 19 act to amend the Civil Service Law, in 20 relation to extending the effectiveness. 21 ACTING PRESIDENT BRESLIN: Read 22 the last section. 23 THE SECRETARY: Section 2. This 24 act shall take effect immediately.

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(518) 371-8910 1 ACTING PRESIDENT BRESLIN: Call 2 the roll. 3 (The Secretary called the roll.) 4 ACTING PRESIDENT BRESLIN: 5 Announce the results. 6 THE SECRETARY: Ayes, 58. 7 ACTING PRESIDENT BRESLIN: The 8 bill is passed. 9 Senator Klein, that completes the 10 reading of the noncontroversial calendar. 11 SENATOR KLEIN: Mr. President, at 12 this time can we please move to the 13 controversial reading of the calendar. 14 ACTING PRESIDENT BRESLIN: The 15 Secretary will please ring the bell. Members 16 are all asked to come to the chamber for the 17 controversial reading of the calendar. 18 The Secretary will read. 19 THE SECRETARY: Calendar Number 20 18, by Senator Klein, Senate Print 1182, an 21 act to amend the General Obligations Law. 22 SENATOR LIBOUS: Explanation. 23 ACTING PRESIDENT BRESLIN: 24 Senator Klein, an explanation has been

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(518) 371-8910 1 requested. 2 SENATOR KLEIN: Thank you, 3 Mr. President. 4 This legislation would impose a 5 duty to keep property in a mortgage 6 foreclosure action in a safe and habitable 7 condition when the lending institution takes 8 over the said property. 9 ACTING PRESIDENT BRESLIN: 10 Senator Bonacic. 11 SENATOR BONACIC: Mr. President, 12 will Senator Klein yield for a couple of 13 questions? 14 ACTING PRESIDENT BRESLIN: 15 Senator Klein, will you yield for a question 16 or two? 17 SENATOR KLEIN: Mr. President, 18 I'd be happy to yield. 19 ACTING PRESIDENT BRESLIN: 20 Senator Bonacic. 21 SENATOR BONACIC: As you know, 22 Senator Klein, I've supported this legislation 23 in the Judiciary; I intend to support it 24 today. I just have a couple of technical

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(518) 371-8910 1 questions that I would like to ask you about 2 the language and what you intended. Okay? 3 My first question is when you're 4 dealing with foreclosure property, do you 5 think we should have stuck it under the Real 6 Property and Proceedings Law, which deals with 7 foreclosures, rather than the General 8 Obligations Law? 9 And I would ask you to consider 10 that as the bill moves after today. 11 ACTING PRESIDENT BRESLIN: 12 Senator Klein. 13 SENATOR KLEIN: Through you, 14 Mr. President, I will take that under 15 consideration. 16 But the reason why we thought that 17 this bill was so important was based on a 18 study that my office conducted earlier in the 19 year where we just looked at New York City, 20 Westchester, and Nassau County, where we found 21 close to 3,000 abandoned properties. Needless 22 to say -- and I think we talked about it today 23 at the Banking Committee -- there was another 24 study that was done which shows that for every

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(518) 371-8910 1 foreclosed property on a block, the 2 surrounding property values go down, on 3 average, $18,000. Also, violent crime 4 increases 6.5 percent. 5 So I think it just made sense to 6 put it in this section of the law, being that 7 the only thing we're doing is creating a 8 standard of "safe and habitable" that, by the 9 way, every other homeowner across the state 10 has to abide to in the way they actually keep 11 their properties. 12 SENATOR BONACIC: Would Senator 13 Klein continue to yield to a question? 14 ACTING PRESIDENT BRESLIN: 15 Senator Klein, will you continue to yield to 16 Senator Bonacic? 17 SENATOR KLEIN: I will continue 18 to yield. 19 ACTING PRESIDENT BRESLIN: 20 Senator Bonacic. 21 SENATOR BONACIC: I understand 22 it's important that the party that is going to 23 get title to the property get in there as soon 24 as possible and fix it up so we're not hurting

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(518) 371-8910 1 the other homes in the neighborhood. I think 2 that's the goal. 3 In your mind, under this bill, if a 4 foreclosure is started, when do I have the 5 right to go on that property? When title 6 passes? Because you refer to a judgment, and 7 that's different than when title passes. 8 Because some mortgages don't give the 9 mortgagor the right to go in until title 10 passes. 11 So what was your -- could you 12 please explain what you were thinking in 13 there? 14 SENATOR KLEIN: Through you, 15 Mr. President, that's a very good point. 16 The way it works now is once a 17 property is foreclosed upon, there's a referee 18 sale, it has to be posted for four to six 19 weeks. And once the sale takes place, the 20 lending institution then moves, when they take 21 back the property, to take title. 22 It's my belief that now this would 23 be an impetus for the lending institution to 24 move very quickly after they foreclose on the

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(518) 371-8910 1 property, after they now repurchase the 2 property at sale, to take title to the 3 property, to actually maintain the property in 4 a safe and habitable standard. 5 One of the things we've seen time 6 and time again is that lending institutions of 7 course are very quick to foreclose on 8 properties, and in many cases now that they 9 have this property, they tend to hold the 10 property for a long period of time because the 11 market isn't what it should be, and they tend 12 to hold it, turn it over to a management 13 company. 14 And what we've seen, time and time 15 again, these management companies are not 16 really taking care of the properties. And 17 that's how they've become a problem. 18 So I'm hopeful that this process 19 will cause a lending institution to move 20 quickly, take title -- which, by the way, 21 isn't a very lengthy process once the 22 foreclosure takes place -- and actually 23 maintain the property as it should be. 24 SENATOR BONACIC: Would Senator

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(518) 371-8910 1 Klein yield for another question? 2 ACTING PRESIDENT BRESLIN: 3 Senator Klein, will you yield for another 4 question? 5 SENATOR KLEIN: Mr. President, 6 I'll be happy to yield. 7 ACTING PRESIDENT BRESLIN: You 8 may proceed. 9 SENATOR BONACIC: Let's say the 10 bank now takes title to the property, and we 11 want to make sure that they fix it up. But 12 what I have seen in some examples is people 13 strip the house. They take the appliances, 14 they take the plumbing, they take the copper, 15 they strip it. And stripping a house can run 16 $75,000, $100,000 to put it in a habitable 17 condition. 18 Now, is it your intent that the 19 bank has to make that investment? Or do they 20 have to seal it? Do they have to cut the 21 grass? There's a difference. And I'd just 22 like to know what you're thinking when you say 23 "safe and habitable." 24 ACTING PRESIDENT BRESLIN:

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(518) 371-8910 1 Senator Klein. 2 SENATOR KLEIN: Again, through 3 you, Mr. President. The standard is one, as I 4 said earlier, which is applied to all 5 homeowners. 6 As a matter of fact, under New York 7 City law, when the City of New York takes a 8 property in rem, they own the property, they 9 have to maintain their properties to that same 10 safe and habitable standard. So we're not 11 kind of reinventing the wheel. 12 In answer to your second question, 13 one of the things that I've seen firsthand in 14 my communities are properties that are now 15 abandoned because the lending institution 16 foreclosed, they have these management 17 companies. We've had squatters move into the 18 premises, destroy the premises, and really 19 cause problems for neighboring homeowners. 20 So I think the standard should be 21 more than just boarding up the property, but 22 maintaining the property so they can turn 23 around quickly and sell the property and get a 24 new homeowner in there that's going to take

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(518) 371-8910 1 care of the property and lend stability to the 2 neighborhood. 3 So what I'm saying is the case that 4 I've seen that happened in my district, we had 5 a lending institution that foreclosed on the 6 property, the management company was now 7 taking care of this property. They destroyed 8 the entire house because squatters were in 9 there. As a matter of fact, they ripped open 10 one of the toilets, flooded the neighboring 11 homeowners. 12 And when we called the local 13 buildings department from the City of 14 New York, they said there was nothing they can 15 do because there was no standard in place, 16 there was nothing that they can do other than 17 view what happened on the outside. Which, by 18 the way, wasn't so nice either. 19 And finally, after some effort by 20 my office, we finally got the management 21 company to take care of the property. We also 22 helped in evicting these squatter tenants that 23 were there for two months. 24 So I don't think it's too much to

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(518) 371-8910 1 ask a lending institution that now owns this 2 property and takes title to a property to 3 maintain this property, as every other 4 homeowner on that block, in that neighborhood, 5 in that community has to maintain that home. 6 SENATOR BONACIC: Thank you, 7 Senator Klein. 8 On the bill. 9 ACTING PRESIDENT BRESLIN: 10 Senator Bonacic, on the bill. 11 SENATOR BONACIC: I agree with 12 Senator Klein as to where he wants to go with 13 this legislation. 14 I'm a country attorney. I can tell 15 you that grandmothers, individuals, pension 16 plans own mortgages, not only banks. 17 So the second thing that I'd like 18 to point out is that we are trying to give 19 people in their homes more time to 20 renegotiate -- because payments are too high, 21 maybe they're going to try to work refinancing 22 out -- so the whole foreclosure process is 23 taking longer. 24 And many of the times the bank or

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(518) 371-8910 1 the mortgagee does not have the right to go on 2 those premises until title passes. So now our 3 notice is longer. When the foreclosure 4 process starts, it could take six months to a 5 year. That mortgagee does not have the right 6 to go on that land. 7 And what's happening in that year? 8 That person that occupies that house is 9 saying: I can't pay it. I'm staying here. 10 I'm staying here for free rent as long as I 11 can. So they stay there till the bank is 12 ready to sell it at auction to somebody. 13 Now, let's say the mortgage lien -- 14 and I'm making this up now -- is $300,000. 15 Just making it up. I go to the auction, which 16 I have done many times as a bank attorney, and 17 the bank says: I bid $70,000. And then one 18 of you comes along and bids $71,000. The bank 19 says: I don't want this, I'm not in the real 20 estate business, now you are the owner. 21 That's the first time that you can 22 go on the property and fix the house up to 23 save the neighborhood. 24 I'm going to give you another

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(518) 371-8910 1 worst-case scenario. On the morning of the 2 auction sale, that mortgagor gets an attorney 3 and declares bankruptcy. That kicks the delay 4 another year before we can go in and take care 5 of that house. 6 So I agree with what Senator Klein 7 is trying to do. But we have legal 8 impediments to get us where we want to go. 9 There are other ways that if we're 10 going to stay with this mission and try to 11 accomplish saving neighborhoods from ugly 12 eyesores, then we have to maybe insist that in 13 a standard mortgage document that the 14 mortgagee can get in there sooner, number one. 15 A trigger mechanism before that auction nine 16 months down the road. 17 Or we may have to look into the 18 bankruptcy law to authorize the bankruptcy 19 judge to have a fast-track process to allow 20 that mortgagee to go in and take care of the 21 house. 22 So these are impediments that we 23 have to think about if we're going to 24 accomplish the goals of saving the

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(518) 371-8910 1 neighborhoods from eyesores that according to 2 Senator Klein's bill -- which I will support, 3 but I think more work has to be done to 4 accomplish our goals. 5 Thank you, Mr. President. 6 ACTING PRESIDENT BRESLIN: Thank 7 you, Senator Bonacic. 8 Senator Saland. 9 SENATOR SALAND: Thank you, 10 Mr. President. Mr. President, would Senator 11 Klein yield? 12 ACTING PRESIDENT BRESLIN: 13 Senator Klein, will you yield for a question? 14 SENATOR KLEIN: Yes, 15 Mr. President. 16 ACTING PRESIDENT BRESLIN: 17 Senator Saland. 18 SENATOR SALAND: Thank you, 19 Mr. President. Thank you, Senator Klein. 20 Senator Klein, one of the obviously 21 critical points of your legislation is the 22 obligation to maintain the premises in a safe 23 and habitable condition. Is that defined in 24 statute anywhere?

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(518) 371-8910 1 SENATOR KLEIN: It's actually 2 part of common law, which requires every 3 property to be maintained in that fashion by, 4 you know, anyone who owns either a multifamily 5 dwelling or a single-family house. 6 SENATOR SALAND: So if it's not 7 defined in statute and is defined by practice 8 and common law, then it becomes a question of 9 fact, does it not? 10 SENATOR KLEIN: Yes. 11 SENATOR SALAND: Does the 12 definition of "safe and habitable" require 13 that the premises be maintained in accordance 14 with whatever may be the role of municipal 15 codes or state codes? 16 SENATOR KLEIN: Through you, 17 Mr. President. As a matter of fact, in the 18 legislation it actually states "said premises, 19 subject to the rules and regulations of such 20 association, shall have the right to enforce 21 the provisions of this section." 22 So the legal buildings department, 23 which has their individual specific codes, 24 would be able to apply their standard of "safe

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(518) 371-8910 1 and habitable." 2 SENATOR SALAND: So -- 3 ACTING PRESIDENT BRESLIN: 4 Senator Saland. 5 SENATOR SALAND: Would Senator 6 Klein continue to yield? 7 ACTING PRESIDENT BRESLIN: 8 Senator Klein, do you continue to yield? 9 SENATOR KLEIN: Yes, I'll 10 continue to yield, Mr. President. 11 ACTING PRESIDENT BRESLIN: 12 Senator Saland. 13 SENATOR SALAND: So then it's 14 your interpretation that by that particular 15 sentence any foreclosed property would be 16 subject to being maintained in accordance with 17 whatever the municipal codes of whatever that 18 town, village, or city might be? 19 SENATOR KLEIN: Through you, 20 Mr. President. 21 ACTING PRESIDENT BRESLIN: You 22 may proceed. 23 SENATOR KLEIN: I believe that it 24 would, because it would leave the locality the

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(518) 371-8910 1 ability to determine what "safe and habitable" 2 is. 3 And again, coming back to the 4 example that I saw is that the local buildings 5 department in my community was unable to give 6 a violation because the lending institution 7 who owned the property at that time, after 8 foreclosure and taking title, was not 9 maintaining the property, but they had no 10 mechanism to enforce it. 11 So in other words, they couldn't 12 turn around and say "We're going to fine you X 13 amount of dollars," because they were looking 14 for the actual homeowner. 15 And believe me, we had local police 16 and the buildings department go to various 17 units on many occasions to try to do 18 something, and they just -- their hands were 19 tied in their ability to do that. 20 SENATOR SALAND: If Senator Klein 21 will continue to yield. 22 ACTING PRESIDENT BRESLIN: Do you 23 continue to yield, Senator Klein? 24 SENATOR KLEIN: I will continue

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(518) 371-8910 1 to yield, Mr. President. 2 ACTING PRESIDENT BRESLIN: You 3 may proceed, Senator Saland. 4 SENATOR SALAND: Thank you, 5 Senator Klein. 6 Is it your intention that this 7 particular section of the General Obligations 8 Law would be similarly applicable to both 9 residential and commercial properties? 10 SENATOR KLEIN: This would 11 actually be only applicable to residential 12 properties. This actually could apply to a 13 multifamily dwelling as well. 14 SENATOR SALAND: Is there 15 something in this section that makes it clear 16 that it is not applicable to commercial 17 properties? 18 SENATOR KLEIN: I don't think 19 there's anything specifically in there. But 20 it's -- no, there's nothing specifically in 21 there that would address just residential. 22 SENATOR SALAND: Thank you. 23 If Senator Klein will continue to 24 yield.

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(518) 371-8910 1 ACTING PRESIDENT BRESLIN: 2 Senator Klein, will you continue to yield? 3 SENATOR KLEIN: Mr. President, 4 I'd be happy to continue to yield. 5 SENATOR SALAND: In your 6 responses to Senator Bonacic you at some point 7 made some reference to not asking too much of 8 a lending institution to maintain the 9 premises. Was that on your part an expression 10 of intent that this would not be applicable to 11 purchase money mortgages? 12 SENATOR KLEIN: I'm sorry? 13 SENATOR SALAND: That it would 14 not be applicable to purchase money mortgages, 15 someone sells a piece of property and takes 16 back a mortgage? 17 SENATOR KLEIN: It would actually 18 be anyone who actually took back a piece of 19 property subject to a foreclosure. It's 20 actually when they actually take back title to 21 the premises. 22 SENATOR SALAND: Would Senator 23 Klein continue to yield? 24 ACTING PRESIDENT BRESLIN: Would

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(518) 371-8910 1 you continue to yield, Senator Klein? 2 SENATOR KLEIN: Yes, 3 Mr. President. 4 SENATOR SALAND: So that if my 5 dear old aunt or if I were to sell my property 6 and, in light of the financial circumstances 7 of today, the difficulties in securing a 8 mortgage, I were to take back a purchase money 9 mortgage and that purchaser were to default 10 and it were to take -- and this would be 11 certainly well within the realm of 12 possibility -- eight, 10, 12 months before you 13 might be able to get a judgment of 14 foreclosure, I could find myself in a 15 situation or my dear old aunt could find 16 herself in a situation in which the premises 17 were not vacated, the premises, as is not 18 uncommon in these types of situations, are 19 totally trashed -- the holes in the wall, as 20 Senator Bonacic mentioned, anything of value 21 ripped out. Destruction for destruction's 22 sake. 23 And I now have title. I get a 24 referee's deed, the title is back in me or,

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(518) 371-8910 1 again, my dear old aunt. And she now has to 2 spend -- she can't sell it as-is under this 3 bill any longer. She can't say, "I don't have 4 the money and I can't get a mortgage," but I'm 5 responsible to make it safe and habitable. I 6 assume that would be required under your bill. 7 SENATOR KLEIN: Through you, 8 Mr. President. 9 ACTING PRESIDENT BRESLIN: You 10 may proceed, Senator Klein. 11 SENATOR KLEIN: Again, the 12 purpose of the legislation I think is quite 13 clear. Under that scenario, I suppose that 14 person would be responsible to maintain the 15 property. 16 But once someone is in foreclosure, 17 from the time they're in foreclosure to the 18 time the foreclosure ends in the foreclosing 19 institution taking back the property, the 20 person who actually has the mortgage is still 21 responsible to take care of that property. 22 And the situation we're trying to 23 deal with right now, as I said earlier, is a 24 rather simple one. We are seeing, time and

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(518) 371-8910 1 time again, the fallout from the subprime 2 lending crisis. That's the issue at hand, 3 where lending institutions are foreclosing on 4 properties, very quick to do that, and not 5 giving in many cases individuals the chance, 6 in some cases, to modify their mortgages, keep 7 them in their home, but in many cases holding 8 onto these properties because the properties 9 are not worth what they were a year ago. 10 In the interim, they're turning 11 over the responsibility to maintain these 12 properties to management companies, which 13 quite frankly, according to the investigation 14 conducted by my office, are running these 15 properties into the ground. 16 So what I'm trying to achieve 17 through this legislation is to make sure that 18 anyone who owns a property, a lending 19 institution in this case, or even, I guess, in 20 your aunt's scenario, to maintain this 21 property as any other homeowner would maintain 22 a property to fit in with the neighborhood. 23 And the standard that I chose is safe and 24 habitable.

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(518) 371-8910 1 SENATOR SALAND: Through you, 2 Mr. President. When one takes a mortgage, as 3 I'm sure you're aware, there's a note and a 4 mortgage, the note representing the personal 5 obligation and the mortgage representing the 6 security for the loan. 7 If in fact, going back to my dear 8 old aunt, she has this note -- and as you 9 point out, certainly until title passes the 10 person who gave her the note is responsible 11 for whatever damage has occurred. But that 12 person has gone belly-up. I mean, that's why 13 the property is being foreclosed. And getting 14 a deficiency judgment is a total waste of 15 time. All that my aunt wants to do is to get 16 her property back. 17 But once she has accomplished that, 18 she has a property that has been absolutely 19 wrecked. She's not a person of means. This 20 had been a principal asset in her life. And 21 now, under your bill, she is responsible -- 22 she can't get a mortgage. She can't get a 23 mortgage, the mortgage market is dried up. 24 And even if so, she's an elderly woman with a

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(518) 371-8910 1 badly damaged property that she can't use for 2 security to get the amount of money she needs 3 to repair it. 4 So she's sort of in a never-never 5 land. I mean, she has the obligation -- she's 6 not an institutional lender. She has the 7 obligation to fix up the building and yet at 8 the same time doesn't have the means by which 9 to do it. 10 Would those people -- and it's 11 certainly a small number of people, but 12 they're out there nonetheless -- would they 13 not be better served by your at the very least 14 carving out an exclusion for those types of 15 purchase money mortgages so that those people 16 don't find themselves in the impossible 17 situation of having to take back an asset that 18 they're required to improve and don't have the 19 means to do it? 20 SENATOR KLEIN: Through you, 21 Mr. President. I guess the question I have 22 for the Senator is, was this purchased for 23 investment purposes? Your dear old 24 hypothetical aunt bought the property and --

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(518) 371-8910 1 SENATOR SALAND: She lived in the 2 house with her late husband for 35 years, she 3 sold the property and moved into assisted 4 living, and that was the source of her income. 5 SENATOR KLEIN: And now she 6 rented the property and those are the people 7 who destroyed the entire property. 8 SENATOR SALAND: She sold the 9 property, took back a purchase money mortgage, 10 and after a matter of several months, a couple 11 of years, the money stopped flowing. She now 12 finds herself in this untenuous -- 13 SENATOR KLEIN: Through you, 14 Mr. President. Clearly that's a case where -- 15 you know, which is not the intent of this 16 legislation, of course. But in a case like 17 that, I would say that it would actually pay 18 for the individual in question to fix up the 19 property, maintain the property, and be able 20 to sell it to try to get back some of your 21 losses or maybe even refinance the property. 22 So I think it's in everyone's best 23 interest in any community around our state to 24 make sure that all homes are actually

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(518) 371-8910 1 maintained in a safe and habitable manner. 2 SENATOR SALAND: Well, I think 3 you present an impossibility to perform. 4 SENATOR KLEIN: I'm sorry to put 5 that burden on your aunt. 6 SENATOR SALAND: If Senator Klein 7 will continue to yield. 8 ACTING PRESIDENT BRESLIN: 9 Senator Klein, would you continue to yield? 10 SENATOR KLEIN: Mr. President, 11 I'm happy to continue to yield. 12 ACTING PRESIDENT BRESLIN: You 13 may proceed. 14 SENATOR SALAND: You make this 15 legislation effective immediately. Would it 16 apply prospectively to mortgage foreclosures? 17 Would it apply to those proceedings currently 18 initiated for foreclosure that have not yet 19 gotten to judgment or have not gone to 20 foreclosure? Or would it apply to any 21 foreclosed property currently anywhere in 22 New York State? 23 SENATOR KLEIN: It would apply to 24 foreclosed properties that are actually --

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(518) 371-8910 1 when the actual lending institution or anyone 2 else who takes the property takes new title to 3 the property. 4 ACTING PRESIDENT BRESLIN: 5 Senator Saland. 6 SENATOR SALAND: If you would 7 continue to yield. 8 SENATOR KLEIN: I would continue 9 to yield. 10 ACTING PRESIDENT BRESLIN: 11 Senator Saland. 12 SENATOR SALAND: The XYZ Bank 13 foreclosed 18 months ago on a property, took 14 back title through the referee, and the 15 property has been sitting there for 18 months. 16 Your bill is signed into law the 1st of April. 17 Does the XYZ Bank now find itself having to 18 comply with the terms? 19 SENATOR KLEIN: If they take 20 title after April 1st, yes. 21 SENATOR SALAND: Okay. So what 22 you're saying, then, it's prospective. 23 SENATOR KLEIN: Yes. 24 SENATOR SALAND: It doesn't apply

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(518) 371-8910 1 to anything already in the pipeline or 2 previously foreclosed. 3 SENATOR KLEIN: Correct. 4 Correct. When they take title after 5 April 1st. 6 SENATOR SALAND: Thank you, 7 Senator Klein. 8 Thank you, Mr. President. 9 ACTING PRESIDENT BRESLIN: Thank 10 you, Senator Saland. 11 The chair recognizes Senator 12 Hassell-Thompson. 13 SENATOR HASSELL-THOMPSON: On the 14 bill just very quickly. 15 ACTING PRESIDENT BRESLIN: 16 Senator Hassell-Thompson, on the bill. 17 SENATOR HASSELL-THOMPSON: Thank 18 you, Mr. President. 19 I am not an attorney, and these are 20 days when I'm very glad that I'm not. It just 21 seems very simple and straightforward to me, 22 having had several properties in my own 23 neighborhood that were in foreclosure and 24 those properties were not cared for.

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(518) 371-8910 1 It became the responsibility of the 2 neighborhood association in the beginning to 3 cut the grass, because nobody was taking 4 responsibility for the upkeep of the property. 5 And then several nights ago there was a gas 6 leak which was traced to that property. And 7 for several hours, almost 20 hours, Con Edison 8 was there first to gain access and then later 9 to secure that property. 10 There were lots of live animals and 11 critters sleeping in the tall grass. And it 12 became somewhat unsafe and problematic. 13 The point here, I think, in this 14 bill, as I understand it, is to ensure that 15 someone appropriately take responsibility for 16 securing and the safety and conditions of 17 these abandoned properties. Because for all 18 intents and purposes, if they're not being 19 taken care of, they give the appearance of 20 being abandoned, which in fact sends a message 21 to some of our less lawful citizens that it is 22 in fact a place that can be inhabited, number 23 one. 24 Number two, it also does damage to

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(518) 371-8910 1 the property values of people who live in the 2 neighborhoods. It is difficult enough to see 3 our neighbors in the state of foreclosure. It 4 is even more difficult for us to anticipate 5 that that loss of property on their part can 6 have a slippery-slope effect on the rest of 7 the properties in communities. 8 If those properties are cared for, 9 it sends a different kind of signal. And I 10 think that that's really at the heart of what 11 this bill is speaking to. 12 And so if there is a need for the 13 legalese to be adjusted, then do so. But in 14 the meantime, it falls upon the local 15 municipalities to be responsible for taking 16 care of these properties. And it leaves the 17 bank and others free to dispose of their 18 obligations. 19 So I think that the bill has 20 tremendous merit, and I commend my colleague 21 for its presentation. And I certainly will be 22 voting for the bill. 23 Thank you, Mr. President. 24 ACTING PRESIDENT BRESLIN: Thank

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(518) 371-8910 1 you, Senator Hassell-Thompson. 2 Senator LaValle. 3 SENATOR LaVALLE: Thank you, 4 Mr. President. 5 Senator Klein, I want to say, as I 6 think the other speakers have -- 7 ACTING PRESIDENT BRESLIN: Is 8 this on the bill? 9 SENATOR LaVALLE: On the bill and 10 then I'm going to ask the Senator to yield. 11 ACTING PRESIDENT BRESLIN: 12 Senator Klein, will you yield for a question? 13 SENATOR KLEIN: Mr. President, 14 I'd be happy to yield for a question. 15 ACTING PRESIDENT BRESLIN: 16 Senator LaValle. 17 SENATOR LaVALLE: Senator, first 18 of all, I agree with Senator Bonacic. This 19 section should clearly be in the Real Property 20 Proceedings Law, I don't think there's any 21 doubt. 22 Because the first thing you start 23 off with is the final judgment. And in the 24 final judgment the judge lays out, as you are

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(518) 371-8910 1 aware, what has to take place in terms of 2 securing a referee and notice and so forth. 3 So it's the beginning of a process. 4 My question to you is you say that 5 we have to maintain it in a safe -- I'm on 6 line 8 -- safe and habitable condition until 7 said premises are sold. "Sold" meaning at the 8 auction by the referee? 9 SENATOR KLEIN: No. 10 Mr. President, through you. 11 ACTING PRESIDENT BRESLIN: 12 Senator Klein. 13 SENATOR KLEIN: No. What 14 actually happens is once -- the cases that 15 we're talking about here is when the lending 16 institution actually forecloses on a property, 17 then they take title back to the property -- 18 SENATOR LaVALLE: No, they don't. 19 SENATOR KLEIN: And they take 20 title back to the property after a referee 21 sale. They buy back a property, then take 22 title. 23 SENATOR LaVALLE: Okay. 24 SENATOR KLEIN: And now they're

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(518) 371-8910 1 not maintaining the property in a safe and 2 habitable manner. 3 SENATOR SALAND: That's what I'm 4 saying. 5 ACTING PRESIDENT BRESLIN: 6 Senator LaValle, through the chair, please. 7 SENATOR LaVALLE: I'm sorry, 8 Mr. President. Through you, will Senator 9 Klein continue to yield? 10 ACTING PRESIDENT BRESLIN: 11 Senator Klein, do you continue to yield? 12 SENATOR KLEIN: I'll continue to 13 yield. 14 ACTING PRESIDENT BRESLIN: You 15 may proceed, Senator LaValle. 16 SENATOR LaVALLE: So what we're 17 saying is what I had indicated, premises are 18 sold meaning when the referee sells the 19 property. 20 And that sale, by the way, in 21 probably 25 percent of the cases or more, is 22 purchased or the winning bid is by someone 23 other than the bank. 24 SENATOR KLEIN: Through you,

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(518) 371-8910 1 Mr. President. 2 ACTING PRESIDENT BRESLIN: 3 Senator Klein, you may proceed. 4 SENATOR KLEIN: I've taken part 5 in numerous referee sales. And the referee 6 sales that I took part in, the majority was 7 the foreclosing lender was the one who 8 repurchased the property back. And I would 9 assume, in this unfortunately horrible real 10 estate market, it's even more prevalent now. 11 ACTING PRESIDENT BRESLIN: 12 Senator LaValle. 13 SENATOR LaVALLE: On the bill. 14 ACTING PRESIDENT BRESLIN: 15 Senator LaValle, on the bill. 16 SENATOR LaVALLE: Mr. President, 17 in Suffolk County, where I have been through 18 some foreclosure sales as referee, at least a 19 quarter of the sales are bid and the winning 20 bid is by someone other than the bank. 21 And so the procedure -- and we're 22 assuming, Senator Klein, that the defendant's 23 attorney hasn't brought an action for 24 bankruptcy, as Senator Bonacic has indicated.

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(518) 371-8910 1 In today's world I would say it would almost 2 be legal malpractice not to protect your 3 client as the defendant without bringing a 4 bankruptcy action. 5 So the amount of time from the 6 judgment, the final judgment to the final sale 7 can be a very long period of time. And then 8 from the sale to title, unless there is a 9 provision "time of the essence" in it, can be 10 many, many months more beyond that. 11 So what I'm not understanding here 12 is a couple of things. Number one, and it's 13 been brought out, you should delineate very 14 specifically that we're talking about 15 residential property. Because in other 16 sections of law in the Real Property Law we 17 have, as you know, definition of warranty of 18 habitability. And so we have lots of sections 19 of law here, and you've put everything under 20 the General Obligations Law. 21 Your purpose -- and I think we have 22 to do something, because communities are 23 blighted. There is absolutely no doubt about 24 that. And, you know, when I cast my vote, I'm

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(518) 371-8910 1 probably casting it for something that we 2 should be doing. 3 But in all candor, Senator, I think 4 my learned colleagues Senator Bonacic and 5 Senator Saland, I think, you know, hit the 6 nail on the head, you know, in terms of the 7 actual legal dynamics here that take place 8 from the final judgment to the time title is 9 conveyed. 10 So I probably will vote for the 11 bill based on the purpose but not on the legal 12 action -- that is, the words here -- that you 13 have laid out. 14 Thank you, Mr. President. 15 ACTING PRESIDENT BRESLIN: Thank 16 you, Senator LaValle. 17 Senator Marcellino. 18 SENATOR MARCELLINO: Thank you, 19 Mr. President. Not being an attorney, but I 20 have -- 21 ACTING PRESIDENT BRESLIN: On the 22 bill, Senator Marcellino? 23 SENATOR MARCELLINO: Yes, on the 24 bill right now.

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(518) 371-8910 1 ACTING PRESIDENT BRESLIN: On the 2 bill. 3 SENATOR MARCELLINO: I do hold a 4 real estate broker's license and have been 5 involved in some of these sales. And there is 6 a continuing education requirement in the law 7 for brokers, and I know for attorneys. And 8 the colloquy between Senator Saland and 9 Senator Klein before, I think, would probably 10 qualify anybody in the room for that 11 continuing education program. It was very 12 enlightening. 13 I would never like to see the 14 perfect be the enemy of the good. I think 15 this bill has merit. As has been pointed out, 16 there are obviously communities that are in 17 need of legislation like this. However, I 18 don't think the bill goes far enough. 19 In many cases, municipalities are 20 owners, probably the largest property owners 21 in the area. They've taken buildings, they've 22 taken homes, they've taken structures for tax 23 lien purposes. Being that people, if they're 24 not paying their mortgage, they're also not

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(518) 371-8910 1 paying their taxes. And the municipality 2 generally grabs the property first. 3 Now you have a conflict. Who's 4 responsible for that property? Is it going to 5 be the bank, is it going to be the owner, is 6 it going to be the municipality? 7 I have seen situations where the 8 municipality didn't even know they owned the 9 property. They were totally unaware that one 10 section of the government had seized the 11 property and taken it over, and then 12 consequently the place just sits there and 13 decays. The lawn is about three feet high, 14 and the property is maybe occupied by 15 transients, maybe occupied by squatters and 16 the like, or worse. And the people on either 17 side of the building, if they're trying to 18 live their peaceful life and are law-abiding, 19 they're suffering because of what's next door. 20 So I think what has to be done -- 21 and I don't know if there is a same-as in the 22 other house, Senator Klein. I'm not asking 23 you to yield, but -- Senator Klein, would you 24 yield for -- through you, Mr. President, would

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(518) 371-8910 1 you yield for just one question? 2 ACTING PRESIDENT BRESLIN: 3 Senator Klein, will you yield to Senator 4 Marcellino? 5 SENATOR KLEIN: I'd be happy to 6 yield, Mr. President. 7 ACTING PRESIDENT BRESLIN: 8 Senator Marcellino, you may proceed. 9 SENATOR MARCELLINO: I believe 10 this is a one-house bill. I don't mean that 11 pejoratively. But is there a same-as in the 12 other house? 13 SENATOR KLEIN: Through you, 14 Mr. President, my legislation is a two-house 15 bill. Assemblymember Spano has introduced the 16 bill and it is presently in the Judiciary 17 Committee in the Assembly. 18 SENATOR MARCELLINO: Okay. So 19 then you have -- 20 ACTING PRESIDENT BRESLIN: 21 Through me, please. 22 SENATOR MARCELLINO: I'm sorry. 23 Through you, Mr. President. Back on the bill. 24 So you have time, in a sense, in my

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(518) 371-8910 1 mind, that corrections or amendments could be 2 made to this piece of legislation I think to 3 satisfy some of the concerns that have been 4 registered here. Because I think they're 5 valid concerns. 6 And if we could do it before the 7 bill passes either house, I think we're better 8 off and I think we have a better piece of 9 legislation to go forward with. And I think 10 you get far more votes that way, probably 11 unanimous passing, if that could be done. 12 That would be a recommendation to my 13 colleague. You do with it as you please, 14 obviously. 15 SENATOR KLEIN: Through you, 16 Mr. President. 17 ACTING PRESIDENT BRESLIN: You 18 may proceed, Senator Klein. 19 SENATOR KLEIN: I certainly will 20 take my colleagues on the other side of the 21 aisle, their recommendations. 22 But again, what we talked about 23 before, this is an epidemic. I've been 24 involved in this issue, you know, from the

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(518) 371-8910 1 start. And unfortunately, sometimes I felt 2 like the boy who cried wolf. 3 And I'll be quite honest, when I 4 spoke to my constituents in my district, who 5 luckily weren't as impacted as some of the 6 other communities around the State of New York 7 on the subprime lending crisis, they looked at 8 me in sort of a dazed fashion when I told them 9 that this eventually is going to affect each 10 and every one of us, whether or not we have a 11 home in foreclosure, whether or not we have a 12 subprime loan. 13 Now we're seeing these foreclosed 14 properties actually causing our property 15 values -- innocent people who had nothing to 16 do with the subprime lending crisis to lose 17 value in their property, and their communities 18 are constantly being plagued with crime. 19 So this is a problem that I think 20 we have to deal with immediately. And while I 21 think we did a lot on this issue through the 22 Governor's program bill that we unanimously 23 passed last year, this is one thing that I 24 think we have to deal with now.

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(518) 371-8910 1 And I think, you know, the section 2 can be changed. I guess it could be a 3 stronger bill. But I think, more importantly, 4 this is a very, very important issue that has 5 to be dealt with immediately. And I look 6 forward to quick passage today and then of 7 course in the Assembly as well. 8 ACTING PRESIDENT BRESLIN: Thank 9 you, Senator Klein. 10 SENATOR MARCELLINO: Well, I 11 concur with my colleague, it is an important 12 piece of legislation. The concept is very 13 important. There are communities at risk. 14 One of the things that might occur, 15 though, as Senator Saland pointed out earlier, 16 if the banks are not in the lending business, 17 in many cases you get that private mortgage 18 money, that private individual who may hold 19 back the paper and may actually offer that 20 private mortgage. 21 And we may be causing them, with 22 legislation that puts onto them the potential 23 to have to go back into a property that has 24 been trashed, that has been literally run down

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(518) 371-8910 1 by the occupier -- and they're going to say, 2 hey, maybe I don't even want to get into this 3 lending business, because it could be a 4 potential problem. 5 I would think that it would be -- 6 again, just a recommendation, but I think 7 we're better off if we fix it now. I agree 8 with you we should be doing this, it's 9 important. But it should be done right or 10 better. Because, you know, the concept is 11 fine. I'm going to vote for the bill as it 12 stands. But I do think it could be a better 13 bill and should be a better bill. 14 So again, a recommendation to you 15 in a friendly way. 16 ACTING PRESIDENT BRESLIN: Thank 17 you, Senator Marcellino. 18 Senator Craig Johnson. 19 SENATOR CRAIG JOHNSON: Thank you 20 very much, Mr. President. On the bill. 21 ACTING PRESIDENT BRESLIN: 22 Senator Johnson, on the bill. 23 SENATOR CRAIG JOHNSON: Thank 24 you.

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(518) 371-8910 1 I first want to commend the Deputy 2 Majority Leader for this legislation. He has 3 certainly been extremely dedicated to 4 addressing the issue of the foreclosure crisis 5 in New York State and in particular the 6 suburbs, areas like Nassau County and 7 Suffolk County. 8 Just a couple of months ago, 9 Senator Klein joined me, Supervisor John 10 Kaiman of the Town of North Hempstead, and 11 Town Councilman Robert Troiano, and we stood 12 outside a foreclosed home in my Senate 13 district in the Town of North Hempstead. And 14 we looked at the dilapidated condition of this 15 home. The bank had foreclosed upon it, the 16 bank had taken it, and they had allowed this 17 home, one of many in the community that I 18 represent, to fall into shambles or to 19 continue to fall into shambles. 20 The fact is is that this 21 legislation is truly necessary. 22 Now, I've listened very intently to 23 some very valid points that my colleagues on 24 the other side have made. Senator Bonacic,

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(518) 371-8910 1 you made some excellent points concerning the 2 delays that are facing. The fact is is that 3 in a bankruptcy situation, the one that you 4 indicated, that could add further delay. 5 A bank, a very sophisticated 6 lender, has numerous remedies in the 7 bankruptcy code to expedite and end the 8 bankruptcy to get the foreclosed home to 9 continue a foreclosure sale. And listening to 10 other of my colleagues express concerns about 11 certain hypotheticals, it almost sounded like 12 I was back in law school and listening to 13 hypotheticals about what-ifs and what-ifs. 14 But banks aren't going to stop 15 lending over a certain fee and a requirement 16 to maintain the property. Maybe we can keep 17 pushing banks to stop taking TARP money and 18 fly to Las Vegas and to do special junkets 19 with our tax monies. That's what we should be 20 angry about. 21 So maybe while they're spending 22 that extra TARP money from the federal 23 government and abusing our tax dollars, we 24 could put a new little small obligation to

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(518) 371-8910 1 help maintain the properties that they want to 2 foreclose upon. 3 Yes, in this process now -- when a 4 couple of years ago members of this conference 5 wanted to actually put a stay on foreclosures 6 to stop the process, and we weren't able to do 7 that -- it's nice to see that banks are slowly 8 understanding that maybe it's better to keep 9 people in their homes than have them out of 10 their homes. 11 But the fact is, ladies and 12 gentlemen of this great body, when the banks 13 take it, more often than not they let it go. 14 And many times they're holding onto the 15 properties to try and get as much money -- 16 well, that's fine. That's the American way. 17 But the fact is is that we cannot allow them 18 to take down other people who are the 19 neighbors who are paying their taxes, paying 20 their mortgages, paying their bills, and 21 having this new neighbor, the bank, not take 22 care of their property. 23 I'm proud to support this great 24 piece of legislation. I am honored to serve

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(518) 371-8910 1 as a cosponsor, like many of our colleagues. 2 And because of the new rules, I hope those on 3 the Republican side that vote in favor of this 4 join us to be cosponsors. 5 But this is a great piece of 6 legislation. And I thank Senator Klein for 7 his dedication, for answering the questions, 8 providing the information. I applaud this 9 Senate for taking this step to protect the 10 homeowners of our districts. I'll be voting 11 yes. 12 Thank you very much, Mr. President. 13 ACTING PRESIDENT BRESLIN: Thank 14 you, Senator Johnson. 15 Senator Little. 16 SENATOR LITTLE: Thank you, 17 Mr. President. Would the sponsor yield for a 18 question, please. 19 ACTING PRESIDENT BRESLIN: 20 Senator Klein, would you yield to Senator 21 Little for a question? 22 SENATOR KLEIN: Mr. President, 23 I'd be happy to yield. 24 ACTING PRESIDENT BRESLIN: You

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(518) 371-8910 1 may proceed, Senator Little. 2 SENATOR LITTLE: Thank you. 3 Senator Klein, I spent several 4 years as a realtor, so I definitely understand 5 the purpose in what you're trying to get to in 6 this bill. Because if one house in a 7 neighborhood is allowed to become in 8 disrepair, it affects the value of all the 9 other homes in the neighborhood. 10 But I have a problem with the word 11 "habitable." Because in the North Country, if 12 you have a house and you want to keep it in 13 good condition and there is no one in it, you 14 need to drain the pipes, lower the heat, take 15 care of the house so that the pipes don't 16 burst. And then it is -- no longer could be 17 habitable at that time, so it would not fall 18 under your regulations. 19 You have to shovel the sidewalk and 20 all of those things, which add to the expense. 21 I mean, if a mortgage company or a bank had to 22 heat this house with below zero temperatures, 23 check on it, check the roof, the icicles, 24 check the sidewalk and all, it's an expense.

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(518) 371-8910 1 And it certainly is reducing what they're 2 going to ever get from this house. 3 And it's not just the bank or the 4 mortgage company. Many of these mortgages -- 5 and this is where the problems have come 6 from -- were purchased and securitized, and 7 the assets are not what they were made out to 8 be. Therefore, people whose pensions, people 9 who have stock in these places are losing. 10 So I would just ask if you would 11 consider changing that one word to be able to 12 keep the house "safe and in good condition." 13 ACTING PRESIDENT BRESLIN: 14 Senator Klein. 15 SENATOR KLEIN: With all due 16 respect to Senator Little, I think -- again, 17 as I said before, I don't think it's too much 18 to ask that we apply a standard which is 19 applied to homeowners throughout the state to, 20 in this case -- in my example, it's a lending 21 institution that now owns this property. 22 I mean, I can't emphasize enough 23 the problems this has caused all over the 24 State of New York. As I said, in New York

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(518) 371-8910 1 there's over 3,552,000 homes which have 2 experienced devaluation last year because of 3 subprime foreclosures. That's resulting in a 4 combined monetary decrease in home values and 5 tax base in New York State of $36.8 billion, 6 $36.8 billion. 7 As my colleague Senator Johnson 8 pointed out, we all know now about the 9 bailouts to the lending institutions. Another 10 thing that I had the opportunity to look at is 11 that the 10 banks that were responsible for 12 the most number of foreclosures in New York 13 State got $110 billion from that bailout 14 package. 15 So in all due respect, Senator 16 Little, I do not think it's too much to ask 17 that these lending institutions, as you said, 18 now drain the water out of the pipes to make 19 sure the pipes don't explode or do anything 20 they have to to maintain this property so it's 21 not a blight in the community and it doesn't 22 cause innocent homeowners to have their 23 property values decrease and it doesn't cause 24 the community to be rampant in crime, which is

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(518) 371-8910 1 also a very strong correlation between 2 foreclosed properties and an increase in 3 crime. 4 Again, I don't know why we're now 5 coddling these lending institutions that were 6 very quick to foreclose on these properties. 7 And now the only thing I'm asking through this 8 legislation is that they maintain the 9 properties they now have title to. 10 SENATOR LITTLE: Thank you. 11 And through you, Mr. President. 12 Senator Klein -- 13 ACTING PRESIDENT BRESLIN: 14 Senator Klein, would you continue to yield to 15 Senator Little? 16 SENATOR KLEIN: I continue to 17 yield, Mr. President. 18 ACTING PRESIDENT BRESLIN: You 19 may proceed. 20 SENATOR LITTLE: I'm really not 21 disagreeing with the fact that you maintain 22 the property. 23 But I'm saying that in my area, if 24 you were going to leave your property and even

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(518) 371-8910 1 go south for a few months, you do drain the 2 pipes, you do lower the heat, and you do that. 3 Then the house is no longer habitable. 4 So I'm questioning just that one 5 word that I think that you could clarify and 6 come to the exact same conclusion in -- 7 SENATOR KLEIN: I will clarify 8 that. Through you, Mr. President. 9 As I think I am mentioned to one of 10 my other colleagues on the other side of the 11 aisle before, what this legislation would do, 12 it would give the authority to the legal 13 buildings department to apply what their 14 definition of safe and habitable is. Because 15 again, it's the local buildings department of 16 the locality which would go in upon a call 17 from, I guess, one of your constituents to go 18 in and give a violation to this property which 19 isn't being maintained properly. 20 So I guess in your case it would 21 apply to how in your county would apply the 22 "safe and habitable." 23 ACTING PRESIDENT BRESLIN: 24 Senator Little.

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(518) 371-8910 1 SENATOR LITTLE: It would. 2 However, through you, sir -- 3 SENATOR KLEIN: In other words, 4 the "safe and habitable" standard would 5 apply -- 6 SENATOR LITTLE: Where is that in 7 the -- 8 ACTING PRESIDENT BRESLIN: 9 Senator Klein, will you continue to yield to 10 Senator Little? 11 SENATOR KLEIN: I'm sorry, 12 Mr. President? 13 ACTING PRESIDENT BRESLIN: Will 14 you continue to yield Senator Little? 15 SENATOR KLEIN: Yes, I continue 16 to yield, Mr. President. 17 SENATOR LITTLE: I'm sorry, 18 Mr. President, through you. 19 That would definitely answer the 20 question. But I don't see it in the 21 legislation. So how does it come about? Is 22 it through -- 23 SENATOR KLEIN: I'll point it out 24 in the legislation. It said "said premises,

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(518) 371-8910 1 subject to the rules and regulations of such 2 association, shall have the right to enforce 3 the provisions of this section." 4 The municipality in which the 5 presences are located or a homeowner's 6 association, if said premises are subject to 7 the rules and regulations of such 8 associations, shall have the right to enforce 9 the provisions of the section. 10 SENATOR LITTLE: Okay. Thank 11 you. 12 ACTING PRESIDENT BRESLIN: Thank 13 you, Senator Little. 14 Senator Volker. 15 SENATOR VOLKER: Mr. President -- 16 first of all, I want to tell you, Senator 17 Klein, that -- 18 ACTING PRESIDENT BRESLIN: 19 Senator Volker, on the bill? 20 SENATOR VOLKER: Yes, on the 21 bill. 22 I agree with much of what you've 23 said about banks and about all the things that 24 are involved here and that they need

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(518) 371-8910 1 protection and all that. But there's one 2 small problem. I think this bill probably was 3 drafted by the Center for Responsible Lending, 4 whoever the heck that is, because people like 5 that tend to use the General Obligations Law. 6 And I've been involved in real 7 estate -- my family, my father -- for years. 8 You don't use the General Obligations Law in 9 real estate, you use the Real Property Law or 10 the -- the problem with this bill is -- I know 11 what you're trying to do, and it's laudable. 12 But it is drafted in such a way that if it 13 ever gets to the Governor, it will vetoed, I 14 don't think there's any question about it. 15 And I'm just going to have to vote 16 against it, because -- and you keep talking 17 about the banks. And it's very true that some 18 of the banks have certainly been 19 irresponsible, although you have to realize 20 something. We have very, very few subprime 21 mortgages in upstate New York, because the 22 banks in upstate New York wouldn't do them. I 23 mean, most of the subprime mortgages in this 24 state are in Queens and down in the City, some

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(518) 371-8910 1 on Long Island. I mean, we didn't have them. 2 But we do have a huge problem in 3 Buffalo. Not with subprime mortgages, just 4 with bad housing and foreclosing and all that 5 sort of stuff. And I've been involved in a 6 lot of those. I've been in housing court 7 quite a bit. It might be hard to believe, but 8 I have -- even now that my practice is down 9 quite a bit, I go in with people that have 10 been clients of my father's and so forth. And 11 I've sat with the housing judge and talked to 12 him. What a mess. I tell you, it's sad. 13 But I have to tell you very 14 honestly, I'm going to have to vote against 15 this bill. Because I really think you ought 16 to change this from the General Obligations 17 Law and I think make it a little bit tighter, 18 because -- and I don't see how you can 19 possibly make it effective immediately. I 20 just -- I just can't see it. I think you've 21 got to give it a little bit of time. Because 22 I think what will happen is the first time you 23 try to use it, I suspect that a judge is 24 probably going to throw it out.

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(518) 371-8910 1 That's just me. As I said, I've 2 done a lot of real estate over the years. 3 Your intent is great. I happen to 4 agree with most everything you've said. But I 5 just think this bill is not drawn in a way 6 that will accomplish what you want to 7 accomplish. 8 ACTING PRESIDENT BRESLIN: Thank 9 you, Senator Volker. 10 Senator Bonacic. 11 SENATOR BONACIC: I apologize to 12 Senator Klein for getting up a second time. I 13 don't normally do that. But as the 14 discussions were going on, I just have two 15 other questions I'd like to ask you that I 16 don't think were covered. Would you yield to 17 two quick questions? 18 ACTING PRESIDENT BRESLIN: 19 Senator Klein, would you yield for two quick 20 questions? 21 SENATOR KLEIN: I'd be happy to 22 yield, Mr. President. 23 ACTING PRESIDENT BRESLIN: You 24 may proceed, Senator Bonacic.

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(518) 371-8910 1 SENATOR BONACIC: I read the bill 2 very closely. You used the word "property." 3 Was the intent "residence"? 4 Because we deal with farm 5 properties upstate. And, you know, it's a 6 barn, it's other farm buildings and a 7 residence. And many a times when land was 8 expensive, that farmer sold to a speculator 9 who was eventually going to put in a 10 subdivision. The market changed, and he 11 didn't do anything, that speculator. And that 12 farmer gets the land back. 13 The question is, does he have to 14 fix up all the outer buildings too? Because 15 you used the word "property." Is the intent 16 "residence"? 17 SENATOR KLEIN: The word 18 "property" -- through you, Mr. President, the 19 word "property" I used, as I said earlier in 20 the explanation, was under common law how real 21 property is supposed to be maintained, in a 22 safe and habitable manner. 23 SENATOR BONACIC: But, I mean, 24 all of these buildings --

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(518) 371-8910 1 ACTING PRESIDENT BRESLIN: 2 Senator Bonacic, through the chair, please. 3 Senator Klein, would you yield -- 4 SENATOR BONACIC: But all of the 5 farm buildings and the barns and the residence 6 is real property. So I'd just ask you to look 7 at that. 8 ACTING PRESIDENT BRESLIN: Would 9 you continue to yield, Senator Klein? 10 SENATOR KLEIN: Yes, I continue 11 to yield. 12 ACTING PRESIDENT BRESLIN: You 13 may proceed. 14 SENATOR BONACIC: Okay. My other 15 question is, does the mortgagee, if he makes a 16 decision that the value of the land is worth 17 more than the value of the house to 18 rehabilitate it, would you give him the option 19 of tearing the house down instead of putting 20 it in a safe and habitable condition? 21 SENATOR KLEIN: Again, that would 22 be up to the owner of the property. 23 Because again, I'm not forcing the 24 locality to make the repairs and then bill the

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(518) 371-8910 1 lending institution. What I'm doing in this 2 case is merely allowing the local buildings 3 department to enforce their standard of safe 4 and habitable. 5 So if they feel, I guess, if the 6 fines are so great that it would pay for them 7 to knock down the property and I guess sell 8 the vacant land, I guess they would have the 9 opportunity to do that. 10 SENATOR BONACIC: Okay. And my 11 last question for Senator Klein, I promise 12 it's my last question. 13 ACTING PRESIDENT BRESLIN: 14 Senator Klein, do you continue to yield to 15 Senator Bonacic? 16 SENATOR KLEIN: I'll continue to 17 yield. 18 ACTING PRESIDENT BRESLIN: You 19 may proceed. 20 SENATOR BONACIC: Some people get 21 themselves in a foreclosure position because 22 they can't pay their property taxes; has 23 nothing to do with the bank or a mortgagee. 24 And many a times the counties upstate get

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(518) 371-8910 1 properties in a foreclosure because of tax 2 sales where they take title. 3 Is it your intent that if the 4 counties took a collection of these properties 5 for taxes that they have to put all of those 6 houses in a safe and habitable condition? Or 7 did you mean it to apply to a foreclosure with 8 a traditional bank or any mortgagor? 9 SENATOR KLEIN: Through you, 10 Mr. President. One of the cases in the case 11 law that I cited early on is that the "safe 12 and habitable" standard applies to in rem 13 properties. So in the City of New York, the 14 City of New York, when they take over 15 properties, they have a duty, they have a duty 16 to maintain the properties in that standard. 17 So in answer to your question, yes. 18 SENATOR BONACIC: Thank you, 19 Senator Klein. 20 ACTING PRESIDENT BRESLIN: Thank 21 you, Senator Bonacic. 22 Senator DeFrancisco. 23 SENATOR DeFRANCISCO: I'm not 24 going to repeat the various areas --

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(518) 371-8910 1 ACTING PRESIDENT BRESLIN: 2 Senator DeFrancisco, on the bill. 3 SENATOR DeFRANCISCO: On the bill 4 for the moment. 5 I'm not going to repeat some of 6 these areas, but I think there have been some 7 constructive ways to make the bill better and 8 to make it enforceable and make it work. 9 Because the concept is a good concept. 10 And I think right now if this bill 11 went into effect and a bank was in a 12 foreclosure proceeding, found out the property 13 was worthless, they're just going to withdraw 14 the petition for foreclosure. And the 15 property is just going to deteriorate and look 16 pretty bad with no one having any 17 responsibility to do it and not have any 18 effect. So that should be a consideration as 19 to the value of this bill. 20 Secondly -- and I'd ask Senator 21 Klein to yield to a question, if he would, 22 please. 23 ACTING PRESIDENT BRESLIN: 24 Senator Klein, would you yield to Senator

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(518) 371-8910 1 DeFrancisco for a question? 2 SENATOR KLEIN: Yes, 3 Mr. President, I'd yield for a question. 4 ACTING PRESIDENT BRESLIN: The 5 question through me, Senator DeFrancisco. 6 SENATOR DeFRANCISCO: Through 7 you. 8 Would Senator Klein agree with me 9 that the way the bill is written right now 10 that the bank, if they take the property back 11 in a foreclosure action, has the duty to keep 12 the property in a safe and habitable condition 13 until it's sold? 14 ACTING PRESIDENT BRESLIN: 15 Senator Klein? 16 SENATOR KLEIN: Yes. 17 SENATOR DeFRANCISCO: Would 18 Senator Klein also yield to another question. 19 ACTING PRESIDENT BRESLIN: Do you 20 yield to another question, Senator Klein? 21 SENATOR KLEIN: Yes, 22 Mr. President. 23 ACTING PRESIDENT BRESLIN: You 24 may proceed, Senator DeFrancisco.

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(518) 371-8910 1 SENATOR DeFRANCISCO: If a bank 2 wanted to avoid the provisions of this 3 particular bill, is there anything in the bill 4 that would prohibit the bank to take the title 5 in foreclosure and sell it for a dollar to 6 someone else? Because the way I understand 7 the bill, the prevailing party at the 8 foreclosure actions has the duty until they 9 sell it. 10 If they sell it for a dollar that 11 same day to another corporation or a dummy 12 corporation, my understanding of the way the 13 bill reads is the dummy corporation has no 14 duty whatsoever. They were not the prevailing 15 party. 16 ACTING PRESIDENT BRESLIN: 17 Senator Klein. 18 SENATOR KLEIN: Through you, 19 Mr. President. I doubt that would happen, 20 because the lending institution is foreclosing 21 on the property. And if they were willing to 22 sell the property, which still has value, they 23 wouldn't have been so quick to foreclose on 24 the homeowner and give them an opportunity

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(518) 371-8910 1 maybe to modify their mortgage, change the 2 terms of their mortgage, and keep the owner in 3 their home, which is certainly a lot more 4 profitable than selling the said property for 5 a dollar. 6 SENATOR DeFRANCISCO: On the 7 bill. 8 ACTING PRESIDENT BRESLIN: 9 Senator DeFrancisco, on the bill. 10 SENATOR DeFRANCISCO: The purpose 11 of the question -- I think everybody 12 understands what a dummy corporation is. It's 13 a corporation that's set up to do very little 14 other than to maybe receive a piece of 15 property. 16 If the bank wanted to go through 17 the bother of getting a foreclosure and didn't 18 want to pay to make it habitable and safe, 19 they could sell it for a dollar to another 20 corporation. They've accomplished their 21 purpose; they have control through a new 22 corporation that has no duty other than to 23 avoid the law. And as a result, the whole 24 bill would be very -- well, it would be

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(518) 371-8910 1 emasculated, to say the least. 2 The reason I bring this up is that 3 in view of that and all the other potential 4 problems here, it seems to me that there ought 5 to be some more thought given to this bill to 6 make sure it's a workable bill and some of 7 these holes that have been mentioned and some 8 of these concerns that have been mentioned 9 could be dealt with. 10 So that was the purpose of my 11 question and I'm sure the purpose of the other 12 constructive suggestions that were made here 13 today. 14 ACTING PRESIDENT BRESLIN: Thank 15 you, Senator DeFrancisco. And thank you for 16 your attentiveness to direct your questions 17 through the chair. 18 Senator Young. 19 SENATOR YOUNG: Thank you, 20 Mr. President. 21 Senator Bonacic did a very good job 22 in asking the questions that I was planning on 23 asking, so I pass at this particular time. 24 ACTING PRESIDENT BRESLIN: Thank

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(518) 371-8910 1 you, Senator Young. 2 Are there any other Senators 3 wishing to be heard on the bill before us? 4 Hearing none, the debate is closed. 5 The Secretary will ring the bells. 6 Read the last section. 7 THE SECRETARY: Section 2. This 8 act shall take effect immediately. 9 ACTING PRESIDENT BRESLIN: Call 10 the roll. 11 (The Secretary called the roll.) 12 ACTING PRESIDENT BRESLIN: 13 Senator Schneiderman, to explain his vote. 14 SENATOR SCHNEIDERMAN: Thank you, 15 Mr. President. 16 I'm very proud to support this 17 legislation. And I think that many of us who 18 are supporters of the legislation and admirers 19 of Senator Klein's pursuit of this cause have 20 chosen not to speak just because the hour is 21 late. 22 But I want to say to anyone who has 23 expressed concerns here today, there's a 24 bigger concern. And Senator Klein came to

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(518) 371-8910 1 Washington Heights, in my district, where 2 we're dealing with the same problem. We're 3 talking about all of the hardworking families 4 who are on blocks and in neighborhoods where 5 there are houses in states of disrepair. 6 And I would urge all of you, you 7 have a lot more, Senator Saland, beloved aunts 8 who are living down the street from a house 9 that's falling down. And their own houses, 10 where they are paying the mortgages, are at 11 risk. 12 This is the first serious effort to 13 address the collateral damage of the mortgage 14 crisis caused to neighborhoods all over our 15 state where there are people who are still 16 working harder than ever to pay their 17 mortgages, but they're faced with a 18 catastrophe in their own property values 19 because there are houses around them that are 20 not being maintained by financial institutions 21 that hold mortgages. 22 There are a few families that hold 23 mortgages of individuals, but over 90 percent 24 of mortgages are held by financial

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(518) 371-8910 1 institutions. So let's not let specific 2 anecdotal problems prevent us from addressing 3 a tremendously serious crisis in many 4 communities. 5 I commend Senator Klein for his 6 work on this. Believe me, this will benefit 7 every community you represent, and I urge 8 everyone here to vote yes. 9 ACTING PRESIDENT BRESLIN: 10 Senator Adams, to explain his vote. 11 SENATOR ADAMS: Thank you, 12 Mr. President. 13 I too just want to thank Senator 14 Klein for this piece of legislation, and also 15 want to thank all of the Senators on both 16 sides of the aisle who all recognize that this 17 is a serious problem and the bipartisan 18 understanding that we need to address the 19 issue that's taking place with these abandoned 20 properties. 21 I know I have one on my block, and 22 it's just -- it's an eyesore. It's dealing 23 with property value. And when there's 24 emergencies, it's a safe haven for those who

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(518) 371-8910 1 want to commit crimes, who want to sell drugs. 2 It just becomes really a deterrent to anyone 3 to invest in the community. 4 So I think this is an important 5 piece of legislation. I believe it's 6 important to listen to what our colleagues 7 said on the other side of the aisle. If we 8 need to do things better, there's always an 9 opportunity to do so. 10 But I want to thank Senator Klein, 11 who has really taken this foreclosure issue on 12 and has been a voice throughout the last few 13 years on how we must do something with the 14 foreclosure issues, and this is another aspect 15 of it. And I want to thank him, and I vote 16 aye on this bill. 17 ACTING PRESIDENT BRESLIN: Thank 18 you, Senator Adams. 19 Senator Stewart-Cousins, to explain 20 her vote. 21 SENATOR STEWART-COUSINS: Yes, I 22 too wanted to rise and really commend Senator 23 Klein for the diligence in terms of this whole 24 process.

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(518) 371-8910 1 This is a continuum, it's a natural 2 continuum from when we as a conference, and 3 certainly with Senator Klein's leadership in 4 this matter, looked at the subprime mortgages, 5 looked at how people were not faring well. 6 And he has continued consistently to put our 7 attention on this very huge issue right down 8 to what blighted homes do to neighborhoods, 9 right down to how our properties are devalued, 10 and right down to really saying to banks as 11 they foreclose: These will be the 12 consequences should you continue with a 13 foreclosure. Maybe you do want to sit down 14 and speak to the homeowner and talk about what 15 we can do. Maybe they don't want to have to 16 maintain and upkeep housing. 17 So this gives more options. It 18 sends a message. And it certainly is 19 something that I readily support and again 20 commend Senator Klein for the continued 21 persistence of keeping our attention on what 22 this means on every level for our housing and 23 for our homeowners. 24 ACTING PRESIDENT BRESLIN: Thank

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(518) 371-8910 1 you, Senator Stewart-Cousins. 2 Senator Perkins, to explain his 3 vote. 4 SENATOR PERKINS: Thank you very 5 much. 6 I just want to again commend 7 Senator Klein for his leadership. The problem 8 of the blight in our communities with 9 abandoned properties is a very significant 10 one. 11 I would only hope, however, that we 12 do much better than the in rem process has 13 been in some respects as far as our 14 communities are concerned, because that has 15 not always worked out so well. 16 But I think the approach that 17 you're taking will not only be good in terms 18 of what we're doing, but I think it may also 19 be a model for others to use to guarantee that 20 when these unfortunate circumstances take 21 place that the communities won't have to 22 suffer the consequences in terms of blight. 23 So congratulations to you and also 24 to our colleagues on the other side who

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(518) 371-8910 1 engaged in such an important discussion about 2 the value of this approach and raising some 3 concerns that I think help us to understand 4 even better the importance of the legislation. 5 So thank you very much. I vote 6 aye. 7 ACTING PRESIDENT BRESLIN: Thank 8 you, Senator Perkins. 9 Senator Liz Krueger, to explain her 10 vote. 11 SENATOR LIZ KRUEGER: Thank you. 12 I rise to thank Senator Klein for 13 his legislation and to support it. 14 I just want to remind all my 15 colleagues that actually this isn't just a 16 question of subprime mortgages, this is any 17 foreclosure in New York State. And in fact, 18 the statistics are getting worse and they're 19 growing. 20 We had a presentation at the 21 Banking Committee this morning by the banking 22 commissioner showing the statistics on 23 foreclosures, and the foreclosures are 24 everywhere in the State of New York. They are

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(518) 371-8910 1 in Long Island, they are in upstate New York, 2 they are in Buffalo, they are throughout the 3 state. 4 And this is a fundamental issue for 5 the economics of our state, for the future 6 protection of the housing market and our 7 communities. Let's not forget, whoever ends 8 up owning these houses, if they collapse, if 9 they are not habitable, then they have no 10 resale value. And if they have no resale 11 value, we have lost an incredible resource for 12 our communities as we work to get out of this 13 economic crisis. 14 So this is a win/win for the 15 communities, for the housing stock of the 16 State of New York. And in fact even the banks 17 should support this legislation if they end up 18 owning these houses, because they don't want 19 to have something that has no value in the 20 market. They don't want to deal with trying 21 to resell their houses, hopefully as the 22 economy improves. If in fact they own 20 or 23 30 in a community, they will lose housing 24 value as well.

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(518) 371-8910 1 So I am very happy to support this 2 bill. Thank you. 3 ACTING PRESIDENT BRESLIN: Thank 4 you, Senator Krueger. 5 Senator Montgomery, to explain her 6 vote. 7 SENATOR MONTGOMERY: Yes, 8 Mr. President, thank you. 9 I just want to rise and thank 10 Senator Klein for all the work that he has 11 done on the issue of what do we do about 12 foreclosures, what do we do to help people who 13 are victimized by subprime activities, what do 14 we do to protect communities. 15 And so this is what I believe to be 16 a wonderful answer to those areas, especially 17 areas like mine. But I've been in other parts 18 of the state. I was in Senator Bonacic's 19 district, I've been in Senator Oppenheimer's 20 district. So one has rural area, one has 21 suburban area. And I drive through and I see 22 signs: "Foreclosure. Owned by the bank," and 23 properties just sitting there, looking like 24 they've been abandoned. This is a real

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(518) 371-8910 1 problem. 2 And in districts like mine, where 3 the foreclosure, the subprime foreclosures was 4 one of the most dramatic, drastic issues for 5 us -- so many of our properties were 6 foreclosed because of the subprime mortgages. 7 So I have whole blocks where there are several 8 buildings on a block that are boarded up. And 9 it invites all kinds of problems for the 10 people who live in that block. 11 So I thank you, Senator Klein. I 12 vote aye on this legislation because it would 13 require that any property that is in 14 foreclosure be kept up until that property is 15 disposed of. And that's what we want. We do 16 not want boarded-up properties to be sitting 17 dormant for months and months and months, no 18 upkeep, and it eventually will bring down the 19 value in the entire community and in the 20 entire block. 21 So thank you, Mr. President. I 22 vote aye. 23 ACTING PRESIDENT BRESLIN: Thank 24 you, Senator Montgomery.

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(518) 371-8910 1 Senator Saland, to explain his 2 vote. 3 SENATOR SALAND: Thank you, 4 Mr. President. 5 Mr. President, I listened to the 6 entire debate. And first let me commend 7 Senator Klein for bringing this issue before 8 us. And I certainly believe the issue is one 9 that has to be dealt with. 10 Unfortunately, and regrettably, I 11 believe that the draftsmanship of this 12 particular proposal leaves a lot to be 13 desired. And I would suggest to you that 14 unlike one of the comments I heard from one of 15 my colleagues earlier that this was great 16 legislation, I think it comes up rather short 17 and is severely lacking. Perhaps my standards 18 are too high. 19 The fact of the matter is is that 20 there is not a single building that was 21 referred to as being boarded-up currently that 22 will get any benefit from this legislation. 23 In my exchange with Senator Klein, he said 24 that this applied prospectively. We used a

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(518) 371-8910 1 theoretical adoption date of the 1st of April, 2 and it applied to those properties after the 3 1st of April. So all those abandoned, 4 boarded-up buildings get no additional 5 maintenance because of this bill. 6 And I would suggest to you that if 7 the desire is to bring more mortgage money 8 into our respective communities and to avoid 9 the kinds of problems that we have run into 10 both in subprime and now in mortgages that are 11 not subprime, this will have the absolutely 12 opposite effect. This would have a chilling 13 effect. 14 You're going to need a credit score 15 of somewhere in the area of 750 or more to be 16 able to get a mortgage, and you're going to 17 have to put a substantial down payment in 18 before a bank is going to take the risk of 19 taking on the responsibility of a foreclosed 20 piece of property that in all likelihood has 21 been trashed and they're going to have to pour 22 major dollars into. 23 So I welcome the concept. I would 24 hope that we can revisit this and do it in a

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(518) 371-8910 1 fashion that will actually provide the kinds 2 of relief that the sponsor would hope to see. 3 But I don't think this vehicle gets us there, 4 and I'm going to vote in the negative. 5 Thank you. 6 ACTING PRESIDENT BRESLIN: Thank 7 you, Senator Saland. 8 Senator Stavisky. 9 SENATOR STAVISKY: Thank you, 10 Mr. President. 11 First of all, there are many 12 foreclosures in Queens County, as there are 13 throughout the state. 14 But I rise really to vote yes but 15 also to thank Senator Klein for his commitment 16 to help many of the people that are the 17 victims of the economy and particularly the 18 foreclosure crisis. 19 This is not a newfound issue with 20 Senator Klein. He has been interested in this 21 entire problem for many, many years. And I'm 22 delighted that we're at least attempting to 23 solve some of the problems, and perhaps by the 24 end of the session we will have a whole

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(518) 371-8910 1 package of bills dealing with the subprime, 2 dealing with foreclosure. And by then 3 hopefully things will have resolved 4 themselves. 5 I vote aye. 6 ACTING PRESIDENT BRESLIN: Thank 7 you, Senator Stavisky. 8 Senator Klein, to explain his vote. 9 SENATOR KLEIN: Thank you, 10 Mr. President, to explain my vote. 11 You know, clearly we've seen the 12 impact of the subprime lending crisis all 13 across our state and all across our country. 14 I want to give a tremendous amount of thanks 15 to my colleagues for their hard work on this 16 issue. 17 During this past year, the Senate 18 Democratic conference kicked off a program 19 called Operation Protect Your Home where we 20 traveled all over the state and we worked with 21 lending institutions in modifying mortgages 22 for distressed homeowners. To date, we have 23 modified over 3,500 mortgages, keeping people 24 in their homes. I think that's everyone's

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(518) 371-8910 1 intent, that's what we should try to be doing. 2 But as I said earlier, 3 unfortunately, some homes do fall into 4 foreclosure. And I do find that the lending 5 institutions were very quick to foreclose on 6 these properties, not giving the homeowner the 7 opportunity to modify their mortgages. 8 And I'll give you an example. Last 9 year, across the country, 58 percent of 10 individuals whose mortgages ended in 11 foreclosure had no contact with their lending 12 institution. So there was really no 13 give-and-take or no calling up a distressed 14 borrower to say, hey, is there anything we can 15 do to keep you in your home, put you in a 16 mortgage you can afford, lower your interest 17 rate to, let's say, 6 percent instead of 18 10 percent. 19 So what we're seeing now is a 20 subprime fallout in communities all over the 21 state. This is not a New York City problem. 22 We have seen foreclosures as far away as 23 Chemung County. Suffolk County is hard-hit. 24 The area of Buffalo, which I visited with my

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(518) 371-8910 1 two colleagues from the Erie County area, has 2 a tremendous amount of foreclosures because of 3 subprime products. 4 So I think it's incumbent upon us 5 now to protect innocent homeowners, people who 6 had nothing to do with the subprime lending 7 crisis, and make sure their communities are 8 stable and safe. And I think this legislation 9 will do that. 10 I know everyone is talking about 11 we're not going to be able to sell homes 12 again. Well, you know something? I think 13 maybe we can light a fire under these lending 14 institutions to quickly take title to these 15 properties, maintain their properties and sell 16 them, sell these properties to homeowners who 17 will maintain them as the surrounding homes in 18 that community do so, and bring our 19 communities back. 20 Because right now what we're seeing 21 is on every foreclosed property, innocent 22 homeowners are seeing their property values 23 plummet. And we need to put an end to that. 24 So I urge all of my colleagues to vote yes.

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(518) 371-8910 1 And, Mr. President, I vote yes on 2 this legislation. 3 ACTING PRESIDENT BRESLIN: Thank 4 you, Senator Klein. 5 Senator Johnson, to explain his 6 vote. 7 SENATOR OWEN JOHNSON: Yes, I'd 8 like to explain my vote. 9 Senator Klein, you've done a good 10 job getting a sentiment out there in the bill. 11 But the bill, as has been demonstrated by all 12 the questions asked, is not perfected. The 13 bill is very imprecise in many respects. And 14 of course it ever got before the Governor, I'm 15 sure it wouldn't be signed. 16 So I think, Mr. Klein, if this 17 doesn't go down or whatever you choose to do, 18 if it gets passed or not, it will have to come 19 back again. And when it comes back again, 20 I'll vote for it when the problems that have 21 been pointed out to you so far today are 22 rectified. 23 Thank you. So I vote no. 24 ACTING PRESIDENT BRESLIN: Thank

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(518) 371-8910 1 you, Senator Johnson. 2 Announce the results. 3 THE SECRETARY: Those recorded in 4 the negative on Calendar Number 18 are 5 Senators Alesi, DeFrancisco, Golden, 6 O. Johnson, Lanza, Leibell, Nozzolio, Saland, 7 Seward, Volker and Young. 8 Absent from voting: Senators 9 Farley, Hannon and Winner. 10 Senator Flanagan, excused. 11 Ayes, 47. Nays, 11. 12 ACTING PRESIDENT BRESLIN: The 13 bill is passed. 14 Senator Klein, that completes the 15 controversial reading of the calendar. 16 SENATOR KLEIN: Mr. President, is 17 there any further business at the desk? 18 ACTING PRESIDENT BRESLIN: 19 Senator Klein, the desk is clear. 20 SENATOR KLEIN: There being none, 21 I move that we adjourn until Thursday, 22 February 26th, at 11:00 a.m. 23 ACTING PRESIDENT BRESLIN: There 24 being no further business to come before the

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(518) 371-8910 1 Senate, on motion, the Senate stands adjourned 2 until Thursday, February 26th, at 11:00 a.m. 3 (Whereupon, at 4:53 p.m., the 4 Senate adjourned.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

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(518) 371-8910

Wednesday, February 25, 2009

Transcript

Bills on the floor