New York lawmakers this week passed legislation that would provide additional protections for HECM borrowers who are facing foreclosure.
Assembly Bill 5627/Senate Bill 4408 will be sent to Governor Andrew Cuomo for his signature but there’s no indication yet when or if he will sign it into law.
Bill highlights include:
- In the event of a default or foreclosure, the authorized lender, upon the commencement of the foreclosure proceeding, must transmit to the New York Department of Financial Services (NYDFS) proof that HUD has granted prior approval to accelerate the loan, proof of the default notice to the mortgagor (borrower), and any such information relating to the loan and the mortgagor as the NYDFS determines to be necessary;
- Upon receipt of such information, the NYDFS must provide notice of and information relating to the foreclosure to the mortgagor. Such notice must include a notice of the mortgagor’s rights in the foreclosure process and contact information for legal service organizations which may be able to assist the mortgagor with the mortgage default and/or foreclosure;
- A mortgagee must provide information to the NYDFS about loans receiving such loss mitigation assistance. This includes maintaining loan level, loss mitigation data and providing the NYDFS with certain specified information for loans associated with a repayment plan;
- In addition to impacting servicers, the bill would require lenders to inform mortgagors in the loan commitment that the NYDFS will be given notice of any default or foreclosure action on the loan so as to provide assistance to the mortgagors;
- Any person who has been injured by any violation of the bill’s requirements may bring an action to recover treble damages, plus the prevailing plaintiff’s attorney’s fees; and
- Failure to comply with such requirements will be a complete defense to a foreclosure action.
NRMLA will provide additional updates as we get more information.