New York increases homeowner safeguards, closes loopholes to prevent deed fraud and mortgage scams

State Issues State Legislation Mortgages Foreclosure

On August 14, the New York governor signed a package of bills intended to increase consumer homeowner protections. According to a press release issued by the governor, the three measures enact homeowner safeguards and close loopholes to prevent deed fraud and mortgage scams.

• A 92 imposes obligations on banks or financial institutions that sell or transfer a mortgage after a borrower has applied for a loan modification. Specifically, the law requires the original holder of the loan to provide the borrower with a list of all modification application documents provided to the buyer or transferee of the mortgage. The measure also requires the new mortgage servicer to honor the terms and conditions of a loan modification that was approved by the original servicer. The act takes effect in 90 days.
• A 1800 requires servicers of vacant or abandoned residential properties to continue to pay homeowners’ association fees or cooperative fees on properties in the state to ensure they do not become dilapidated before a foreclosure is finalized. The act takes effect immediately.
• A 5615 amends state law related to distressed home loans to extend consumer protections for homes in default and foreclosure by, among other things, (i) providing homeowners additional time to cancel a covered contract with a purchaser; (ii) preventing distressed property consultants from inducing the consumer to transfer the deed to the consultant or anyone else; and (iii) allowing consumers to void contracts, deeds, or other agreements material to the consumer’s property where an individual was convicted of or pled guilty to making false statements in connection with that agreement. The act takes effect immediately.