New York Enacts Foreclosure Legislation

On November 16, New York Governor David Patterson announced the passage of Governor’s Program Bill No. 46, which is aimed to provide protections to New York homeowners and tenants facing foreclosure. The bill expands upon SB 8143, a bill enacted in August 2008 (reported in InfoBytes, Aug. 8, 2008). The new bill, among other things, (i) requires a 90-day pre-foreclosure notice to any borrower facing foreclosure (notice currently is required only to borrowers with subprime loans), (ii) requires lenders who serve such a notice to make a filing with the New York Banking Department within three days, (iii) expands the scope of mandatory settlement conferences from subprime borrowers to all borrowers, (iv) requires that tenants receive written notice of change of ownership of a property and be permitted to remain for the longer of their lease term or 90 days, (v) requires plaintiffs who have obtained a judgment of foreclosure to maintain the foreclosed property, and (vi) prohibits brokers who perform “distressed property consulting services” from accepting upfront fees.