What's happening
This bill requires banks selling or transferring mortgages during modification to provide borrowers with documentation and obligates new servicers to honor prior modification agreements.
Why it matters
Protects homeowners from losing progress. By requiring new mortgage servicers to honor previously approved loan modifications or foreclosure prevention agreements, the bill ensures borrowers do not have to start over if their mortgage is sold or transferred mid-process.
Promotes transparency and documentation. The mandate for banks to provide borrowers with a written list of all modification-related documents given to the new servicer helps borrowers keep track of their application and reduces the risk of lost paperwork or miscommunication.
Reduces risk of wrongful foreclosure. By obligating the new servicer to assume all duties tied to an existing modification agreement, the bill aims to prevent situations where borrowers face foreclosure due to administrative errors or lack of information transfer during servicing changes.
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Who cares
Headline styles
Protect Mortgage Modification Applicants
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Substituted by A92A
- Ordered to third reading cal.1819
- Committee discharged and committed to rules
- Print number 5017a
- Amend (t) and recommit 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.
Protect Mortgage Modification Rights
Signed by Governor · Sponsor N. Nick Perry
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5017--A
2019-2020 Regular Sessions
IN SENATE
April 3, 2019
Introduced by Sen. PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Banks -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the banking law, in relation to requiring a bank or financial institution selling or transferring a mortgage during a modification process to provide the borrower with a written list of all documents relating to such application for modification that were provided to the bank or financial institution to which such mortgage was sold or transferred; and relating to the obligations of subsequent mortgage servicer shall assume all duties and obligations related to any previously approved first lien loan modification or other foreclosure prevention alternative
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. If a mortgage that is the subject of an application for a modification of the mortgage terms is sold or transferred during the modification process, the bank or financial institution selling or transferring such mortgage shall provide the borrower with a written list of all documents relating to such application for modification that were provided to the bank or financial institution to which such mortgage was sold or transferred.
2. If a borrower has been approved in writing for a first lien loan modification or other modification to avoid foreclosure, and the servicing of such borrower's loan is transferred or sold to another mortgage servicer, the subsequent mortgage servicer shall assume all duties and obligations related to any previously approved first lien loan modifica-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05248-06-9
S. 5017--A 2
tion or other foreclosure prevention alternative in accordance with the provisions of this section.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law and shall apply to all mortgages entered into on or after such date.
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 a bank or financial institution selling or transferring a mortgage during a modification process to provide the borrower with a written list of all documents relating to such application for modifica- tion that were provided to the bank or financial institution to which such mortgage was sold or transferred; and relating to the obligations of subsequent mortgage servicer shall assume all duties and obligations related to any previously approved first lien loan modification or other foreclosure prevention alternative
Purpose
To provide homeowners who are in negotiations to modify the terms of their mortgage with a written list of documents relating to the modifi- cation which were provided to the bank or financial institution who acquired the loan when was sold or transferred and to ensure that if the loan is sold or transferred after a homeowner has been approved for a modification of their mortgage that the subsequent mortgage servicer honor the terms and conditions of the approval.
Summary of specific provisions
Section one of the bill adds § 6-n to the banking law. Subdivision one requires that a bank or financial institution who enters into negoti- ations to modify a mortgage and sells or transfers the mortgage during the modification process be responsible for providing the borrower with a written list of all the documents relating to the loan modification that were furnished to the bank of financial institution to which the mortgage was sold or transferred.
Subdivision two provides that if a borrower has been approved in writing for a first lien loan modification or other modification to avoid fore- closure and the servicing of the borrower's loan is sold or transferred to another mortgage servicer that the subsequent mortgage servicer be required to assume all duties and obligations related to any previously approved first lien loan modification or other foreclosure alternative.
Section two of the bill provides the effective date.
Justification
This legislation is necessary in light of the growing loan modification crisis enveloping New York State. The modification process is difficult enough, so New York State must provide a mechanism to ensure that banks and financial institutions treat homeowners in a fair and equitable manner during the course of this difficult process.
In many instances, homeowners have complained of having sent requested documentation and later being told that the same documents were not received or that specific pages were unsigned by the homeowners. Home- owners report that this problem is exasperated when their loan is sold to another lender during the course of a pending modification.
This legislation seeks to assist homeowners whose mortgage has been sold or transferred while they are in the midst of a loan modification by requiring that when negotiations to modify a mortgage take place and the loan is sold, transferred, or bundled for provision to a third party that the bank or financial institution that sold or transferred the mortgage provide the homeowner a written list of documents that were provided to the third party. Furthermore, if the homeowner has been approved for a loan modification in writing and the loan is subsequently sold or transferred, the bank or financial institution to which the mortgage has been sold or transferred to will be required to honor the terms and conditions of the approved loan modification.
Prior legislative history
2017-18: S2223 - REFERRED TO BANKS
2015-16: S.2752 - Referred to Banks
2013-14: S.5496 - Referred to Banks
FISCAL IMPLICATIONS::
None.
EFFECTIVE DATE::
Ninety days after becoming a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.