What's happening
This bill allows injured borrowers to sue mortgage servicers for rule violations and makes compliance a requirement before foreclosure actions.
Why it matters
Empowers homeowners to hold mortgage servicers accountable. by allowing them to sue, counterclaim, or bring third-party claims for violations of mortgage servicing rules—this means individuals have direct legal recourse if they believe their rights have been violated.
Introduces significant financial penalties. for non-compliance, including statutory damages of $1,000 per violation, the possibility of triple (treble) actual damages, and mandatory reimbursement of legal costs and attorneys’ fees if the homeowner wins—potentially deterring abusive or negligent servicing practices.
Makes both mortgage lenders and servicers jointly and severally liable. for damages, ensuring that borrowers can recover from either party and that both entities are incentivized to comply with the rules.
Requires full compliance with servicing rules as a precondition for foreclosure. , meaning that mortgage holders must follow all relevant consumer protection regulations before they can initiate foreclosure or sue to collect on a mortgage note—giving homeowners a robust procedural defense if lenders or servicers break the rules.
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Who cares
Headline styles
Protect Homeowners from Servicers
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- 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.
Protect Homeowners from Bad Servicers
In Senate Committee · Rules · Sponsor Brian Kavanagh
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
10851
IN ASSEMBLY
July 24, 2020
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Dinowitz) -read once and referred to the Committee on Banks
AN ACT to amend the banking law, in relation to mortgage loan servicers
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 595-b of the banking law is amended by adding two new subdivisions 3 and 4 to read as follows:
3. Actions and damages. (a) Any person who has been injured by reason of any violation of any such rules, regulations or policies as the superintendent may promulgate to effectuate the purposes of this article, including but not limited to 3 NYCRR 419 or any subsequently promulgated mortgage servicing rules pursuant to this subdivision, may:
(i) Bring an action in his or her own name;
(ii) Assert a counterclaim; or
(iii) If an action is commenced by the mortgagee or anyone acting on its behalf, bring a third party claim, against either the mortgagee and/or the mortgage servicer to enjoin any violations thereof.
(b) The person injured pursuant to this section:
(i) May recover statutory damages of one thousand dollars per violation;
(ii) May recover treble actual damages; and
(iii) If awarded damages or injunctive relief, shall also be entitled to recover costs and expenses, including but not limited to reasonable attorneys' fees.
(c) The mortgagee and the mortgage servicer shall be jointly and severally liable for any recoveries by an injured mortgagor in any action brought pursuant to this subdivision.
4. Compliance with rules, regulations or policies. Compliance with any such rules, regulations or policies as the superintendent may promulgate to effectuate the purposes of this article, including but not limited to 3 NYCRR 419 or any subsequently promulgated mortgage servicing rules pursuant to this subdivision, shall be a condition precedent to commencing an action to foreclose upon a mortgage subject to this article or an action on the note, and the failure to comply with such rules, regu-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16957-01-0
A. 10851 2
lations or policies shall be a complete defense to a foreclosure action or action on the note, even if servicing has been transferred to a different mortgage servicer when a foreclosure action or action on the note is commenced.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.