Relates to establishing the community restoration fund

1 Co-sponsor

• Bill Perkins

Title of bill

An act to amend the state finance law, in relation to establishing the community restoration fund

Purpose

To use funds from judgments and settlements received in cases with lending institutions relating to subprime and predatory lending, and other mortgage and real estate industry practices to help communities recover from the foreclosure crisis and keep homeowners in their home.

Summary of provisions

Section 1 sets forth a statement of legislative purpose and findings.

Section 2 sets forth definitions of terms in this section.

Section 3 adds a new section 99-z to state finance law to establish the community restoration fund from monies obtained by the Attorney General in cases involving lending institutions for subprime and predatory loans, mortgage servicing and other claims, to provide powers and duties to fund and program managers, create a community restoration fund counsel to advise in performance of said duties and powers, outline use of funds.

Section 4 establishes the Community restoration fund council, sets forth its purpose and scope and its membership.

Section 5 sets forth the requirements for the annual report.

Section 6 provides that urban development corporation is authorized to conduct a rulemaking to promulgate any rules necessary to carry forth the purpose of this legislation that must be completed within 180 days of the effective date of this act.

Section 7 sets forth the effective date.

Justification

In the early 2000's the economy was moving along and homes sales and loan approvals were occurring in record numbers as people felt secure in reaching for the American Dream of homeownership. However, in 2008 the bubble burst and many questionable tactics were uncovered showing how loans were being given to people in high risk of foreclosure. When the mortgage crisis occurred foreclosures sky rocketed. While much of the country has recovered New York is still suffering.

A report by the Empire Justice Center found that while in 2014 the national foreclosure rate fell to 2.1%, in New York the foreclosure rate was 5.4%. In addition, the state delinquency rate is a full point higher than the national delinquency rate. The report confirmed that New York is still fighting this crisis and will be for some time. Many of these foreclosures were based upon mortgages practices that are coming under question and have resulted and will continue to result in settlements to New York State. The state must use this money toward helping those that were harmed by the actions of the lending institutions. This legislation will create a statewide mechanism for keeping New Yorker's in their homes by modifying underwater mortgages, purchased distressed assets and improving them, injecting funds into our communities and increasing the values of homes throughout New York state.

Legislative history

A new bill.

Fiscal implications

None. The fund does not affect the state budget because it is funded by settlement proceeds and judgment collection from the attorney general.

Effective date

This act shall take effect immediately.