What's happening
This bill requires banks to complete mortgage modifications even if the mortgage is sold or transferred during the process.
Why it matters
Provides greater stability for homeowners. By ensuring mortgage modification processes continue even if a loan is sold or bundled, homeowners are less likely to have their applications delayed, restarted, or denied due to changes in mortgage ownership.
Holds purchasers of mortgages accountable. Any entity that buys or acquires a mortgage undergoing modification must honor the terms and decisions made during the modification process, including interest rates and repayment plans.
Prevents banks from avoiding modification obligations. Banks and financial institutions can no longer evade or disrupt the modification process by selling or securitizing troubled loans, which had sometimes resulted in homeowners falling through bureaucratic cracks.
Applies to a wide range of mortgage situations. The law covers any mortgage loan at least three months old, ensuring protections for most homeowners seeking relief, not just newly originated mortgages.
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Who cares
Headline styles
Banks Must Finish Mortgage Mods
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to banks
- Referred to banks
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Banks Must Finish Mortgage Mods
In Assembly Committee · Banks · Sponsor N. Nick Perry
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2223
2017-2018 Regular Sessions
IN SENATE
January 12, 2017
Introduced by Sen. PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Banks
AN ACT to amend the banking law, in relation to requiring banks and financial institutions entering into negotiations to modify a mortgage on real property located in this state to be responsible for the continuation of the modification process until its completion regardless of whether the mortgage is sold
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The banking law is amended by adding a new section 6-n to read as follows:
§ 6-n. Responsibility of banks for mortgages being processed for modification. 1. Notwithstanding any provisions of law to the contrary, any bank or financial institution entering into negotiations, including but not limited to processing an application, to modify a mortgage on real property located in this state shall be responsible for the continuation of the modification process until its completion regardless of whether the mortgage is sold, transferred or bundled into a security package for provision to a third party during the modification process.
2. If a mortgage that is the subject of negotiations or application for a modification of the mortgage terms is sold, transferred or bundled into a security package for provision to a third party during the modification process, such mortgage shall be automatically deemed to have been modified as specified in the mortgage modification application and the purchaser of such mortgage must accept any decision rendered with regard to such modification and be bound by the terms of the modification agreement, including the interest rate in effect at the time of processing. The purchaser shall assume all rights and responsibilities necessary to comply with the modified loan.
3. The provisions of this section shall apply to any mortgage loan which is three months or older at the time of the modification process.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06250-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the banking law, in relation to requiring banks and financial institutions entering into negotiations to modify a mortgage on real property located in this state to be responsible for the continuation of the modification process until its completion regardless of whether the mortgage is sold
Purpose or general idea of bill
This bill will amend the banking law to require that a bank or financial institution entering into negotiation to modify a mortgage shall be responsible for the continuation of the modification process until its completion.
Summary of specific provisions
This bill amends the banking law by adding a new section 6-n to require that a bank or financial institution entering into negotiations to modify a mortgage on real property in this state shall be responsible for the continuation of the modification process until its completion regardless of whether the mortgage is sold, transferred or bundled into a security package for provision to a third party during the modification process.
Additionally, if a mortgage is in the process of negotiation or application for modification of the mortgage terms and is sold, transferred or bundled into a security package for provision to a third party during the modification process, such mortgage shall be automatically deemed to have been modified and the purchaser of such mortgage must accept any decision rendered and be bound by the terms of the modification agreement, including the interest rate in effect at the time of processing. The purchaser also assumes ail rights and responsibilities necessary to comply with this modified loan.
Justification
This legislation is necessary in light of the growing loan modification crisis sweeping across New York State. It will helm stabilize the housing industry and provide much needed protection for homeowners. The modification process is difficult enough, so we must provide a mechanism to ensure that banks and financial institutions deal with homeowners in a fair and equitable manner during the course of this grueling process.
In many instances, homeowners have complained of having sent documentation, as requested and later being told that such documents were missing or not received or that certain page(s) had not been signed, contrary to the homeowner's assertions. Additionally, many homeowners complained of having been notified that their loan had been sold to another lender, while the modification was pending, yet they were notified after the fact.
This legislation will address situations such as these by requiring that negotiations to modify a mortgage will continue to its completion, whether it is sold, transferred or bundled for provision to a third party. Furthermore, this mortgage will be deemed to have been modified as specified in the modification application and the purchaser of said mortgage is determined to have accepted the interest rate in effect at the time of processing and all other rights and responsibilities accompanying the loan as modified.
Prior legislative history
2015-16: S.2752 - Referred to Banks 2013-14: S.5496 - Referred to Banks 2011-2012: A.7954
Fiscal implications
NONE.
Effective date
The act shall take effect on the 90th day after it shall have become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.