Requires the provision of notice to mortgagors in default for thirty days or more

BILL NUMBER:S765

Title of bill

An act to amend the real property actions and proceedings law, in relation to requiring the provision of notice to mortgagors in default for thirty days or more

Purpose

To require mortgagors in default be notified of their default in a timely manner, be provided with information of legal organizations available to provide assistance and be provided a reminder of the mortgagor's continuing responsibilities for the mortgages property.

Summary of specific provisions

Section one amends the real property actions and proceedings law by adding a new section 1304 - a to require that, when a mortgagor is in default for thirty days or more, the lender, assignee or mortgage loan servicer must send a notice to the mortgagor. The notification must be sent by registered or certified mail, no later than forty five (4.5) days after the mortgagor defaults. The notice will list the name and contact information for a legal service provider and a housing counselor approved by the New York State Attorney General and located in the same county as the mortgaged property, It also requires that the notice list the contact information for both the toll-free foreclosure helpline maintained by the New York State Attorney General and the toll-free helpline maintained by the New York State Department of Financial Services, Finally, the notification lists the responsibilities of a homeowner (i.e., upkeep, property taxes, utility bills).

Justification

This bill aims to reduce the incidence of foreclosure by providing sufficient notice of delinquency to property owners who have fallen behind on mortgages and helpful information of the many resources and services available to assist them through what can be a stressful, complicated and often confusing process.

While a mortgagor has options available to prevent foreclosure, including legal services, housing counselors, and two toll-free hotlines maintained by New York State, these services are most effective early in the process. By providing notice no later than forty five days after a mortgage goes into default, the bill seeks to address the situation before it is too late.

The notice provided for in this bill also includes the responsibilities that property owners have even though their property is in default. When faced with foreclosure, some simply abandon their property or erroneously assume that they are no longer responsible for a property in default, As a result, some properties are neglected and fall into disrepair. Sometimes completely abandoned, properties become blighted, dilapidated, and unsafe. They can house illegal drug operations, are a magnet for arsonists and can create death traps for firefighters and emergency responders. Furthermore, emergency

demolitions of dangerous structures create a huge drain on local budgets. This bill seeks to avert these potential problems by ensuring that property owners are aware of their responsibilities, and continue to safely maintain them.

This bill complements the federal Dodd-Frank act, enacted in response to the national foreclosure crisis and which contains a similar notice provision. The federal regulations currently proposed require an oral notice of delinquency after thirty days, and written notice forty days after default. The second notice includes information about the foreclosure process, housing counselors, the mortgagor's state housing finance authority, and in some cases loss mitigation options that may be available. The federal law does not include a description of a mortgagor's right and responsibilities, and does not take effect until January 10, 2014.

Prior legislative history

2013-14: S.3818 REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately.