Comprehensive New York foreclosure legislation provides additional critical protections for New York State homeowners, tenants and neighborhoods in the wake of the ongoing foreclosure crisis.

The legislation builds upon the 2008 landmark sub-prime lending reform law protecting homeowners currently at risk of foreclosure and minimizing the negative impacts that foreclosures have on communities. It protects homeowners in Buffalo, Rochester, Niagara Falls and throughout New York state by providing mandatory settlement conferences and protects tenants from premature evictions.

It also safeguards New York neighborhoods from the decay caused by foreclosure by reducing the erosion of area property values and by preventing vacant homes from becoming sites of criminal activity. This legislation expands the reforms in several ways to protect New York homeowners, tenants and neighborhoods. The new law:

• Expands the 90-day pre-foreclosure notice currently sent for subprime loans to include all New York home loans, including loans on cooperative apartments.
• Requires lenders who serve a 90-day notice on a New York homeowner to make, within three days of that service, a regulatory filing with the New York Banking Department with information to allow the Banking Department and the Division of Housing and Community Renewal to provide targeted assistance to distressed homeowners during the pre-foreclosure period and closely monitor foreclosure statistics.
• Expands the scope of early mandatory settlement conferences to include borrowers of all New York home loans and not just borrowers with subprime loans and requires both plaintiffs and defendants to negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.
• Establishes protections for New York tenants in foreclosed properties by requiring that they receive written notification of the foreclosure action and the change in ownership of the property, and be permitted to remain in their home for the remainder of their lease term or 90 days, whichever is longer, provided that such lease requires the payment of rent that is not substantially less than fair market rent.
• Requires plaintiffs in a New York foreclosure action who obtain a judgment of foreclosure and sale to maintain the foreclosed property so that it does not pose a blight or nuisance, or create a blighting influence on neighboring properties. If the property is occupied by a tenant, the plaintiff must also maintain the property in a safe and habitable condition.
• Prevents brokers who perform distressed property consulting services from accepting upfront fees.
• Permits the court to award reasonable attorneys’ fees to a prevailing borrower in a foreclosure action.

Residential tenants in New York and most other states used to have their leases extinguished at foreclosure and could be evicted by the new owners. The Protecting Tenants at Foreclosure Act (PTFA) provides residential tenants with new  protections when landlords lose rental units to foreclosure of federally related mortgages.

Tenants living in foreclosed rental units must be given a minimum 90-day pre-eviction notice after the buyer takes legal title from the foreclosure referee.

PTFA protects tenants:

(a)  with  month-to-month leases;
(b) with leases terminable at-will;
(c) without formal leases but verifiable rent payment history, and;
(d) with  Section 8 leases and  subsidy contracts

However, if the tenant has more than 90 days remaining  on the lease, the tenant must be allowed to stay until the lease ends, unless the buyer will occupy the property as a primary residence.

Protections are limited to “bona fide” leases in which:

1) the tenant is not the mortgagor, the mortgagor’s child, spouse, or parent;
2) the lease is the result of an arms-length transaction, and;
3) the rent is not substantially less than market rent, unless reduced by a subsidy.

Federally related mortgages are those:

(a) insured, regulated, guaranteed, supplemented or assisted by the federal government or;
(b) intended to be sold to the Federal National Mortgage Association, the Government National Mortgage Association or  the Federal Home Loan Mortgage Corporation.

#5) The new rules ensure that consumers receive “good faith estimates” of the costs of a mortgage earlier in the application process and that the disclosures better explain the costs and terms of a loan. The disclosures will cover areas such as the potential for mortgage payments to increase, any penalty for paying off the loan early, and any fees paid by the lender to a mortgage broker for bringing in business.

(a) Lenders will still be required to provide early disclosures to consumers for loans to purchase a primary residence, but now they also must do so for mortgage refinancings, home equity loans (but not home equity lines of credit) and mortgages used to purchase any home, such as a vacation home or second home.
(b) At least seven business days must pass between when a lender delivers or mails the early disclosures to a consumer and the mortgage loan closing.
(c) If the Annual Percentage Rate (APR) which is the cost of the loan expressed as a yearly rate, including interest and certain fees increases by a certain margin above what was previously disclosed, the consumer must receive a corrected disclosure at least three business days before the loan closing.
(d) A lender cannot charge any fee in connection with an application until after the consumer has received the early disclosures, except for the fee to obtain the consumer’s credit report.

#6) Lenders and mortgage brokers are required to use the same form to provide good faith estimates of settlement costs and disclosures of key loan terms. The rules also include changes to HUD’s “uniform settlement statement” ( HUD-1 form) that will make it easier for consumers to compare the estimated costs to the actual costs charged. The new rules limit how much actual costs can increase above the estimates.

#7) The rules will ban several advertising practices that the agency found to be deceptive or misleading:
(a) Prohibits any advertisement from indicating that a rate or payment is “fixed” when it can change;

(b) For home equity lines of credit, if an advertisement mentions a minimum payment — which may result in a large, lump-sum “balloon payment” due at the end of the loan term — the ad must state that fact with equal prominence and in close proximity to the minimum payment information;

(c) And requires advertisements to show all interest rates or payment amounts with equal prominence and in close proximity to any low promotional or “teaser” rate or payment.
Before committing to a mortgage that is too complex to understand, you should  seek help from an attorney or a trained, reputable housing counselor.

You can find a counselor at NeighborWorks America or by calling 1-888-995-HOPE (4673). For a referral to a local HUD-certified counseling agency, visit www.hud.gov or call 1-800-569-4287.

Shopping for a mortgage takes time and effort. Choosing the wrong mortgage can be very costly. It could lead to the loss of your home if you can’t afford the payments. But new federal consumer protections will increase the likelihood of finding a fair mortgage that you can afford for many years.

The new rules recognize that disclosures alone can not always protect mortgage borrowers from the harm caused by unfair and abusive lending practices.

Rules # 1 through #3 and #7 went into effect on October 1, 2009. Rules #4 and  #5 went into effect on July 30, 2009. Rule #6 will go into effect on January 1, 2010.

#1) For home mortgage loans (not including home equity lines of credit), mortgage lenders and brokers are prohibited from coercing or encouraging real estate appraisers to misrepresent the value of a home. This is intended to ensure the integrity and accuracy of an appraisal, so that a consumer is not overpaying for a home or borrowing more money than the home is worth.

#2) Mortgage loan servicers (companies that collect mortgage payments and perform other duties for lenders) are prohibited from engaging in these unfair actions: (a) failing to credit a loan payment on the date it is received; and (b) deducting a late-payment fee from a loan payment without informing the borrower and thereby creating a shortage that triggers additional fees for the borrower, month after month, even when the next loan payments arrive on time.

#3) For mortgages with a relatively high interest rate typically because the applicant is considered a subprime credit risk, the new rules contain these protections: (a)a lender is prohibited from making a higher-priced loan without regard to a borrower’s ability to repay from income and assets other than the home’s value; (b)lenders of higher-priced mortgages are required to verify a loan applicant’s income and assets using reliable, third-party documents and not based on the word of the borrower.; and (c)in certain cases, the lender cannot impose a prepayment penalty if the borrower pays a loan off early.

#4) The U.S. Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the SAFE Act) requires mortgage loan originators — including loan officers at financial institutions and independent mortgage brokers — to register with the government and enter information about their background and disciplinary history into a central database that consumers can access. The SAFE Act is intended to enhance consumer protections and reduce fraud in the residential mortgage industry.

Before committing to a mortgage that is too complex to understand, you should  seek help from an attorney or a trained, reputable housing counselor. You can find a counselor at NeighborWorks America (www.nw.org) or by calling 1-888-995-HOPE (4673). For a referral to a local HUD-certified counseling agency, visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call 1-800-569-4287.

The New York State Legislature created the Buffalo Housing Court in 1978 to address a crisis of deteriorating housing stock that continues today. The Housing Court has the duty to protect and promote the public interest.  It fashions innovative remedies for the thousands of building code violation cases that it handles each year.

The Buffalo Housing Court is dedicated to treating each problem property in its neighborhood context and solving the underlying causes of abandonment, degradation and distress in the City of Buffalo communities.

Over the past several years, Buffalo Housing Court Judge Henry Nowak has undertaken a reform effort designed to improve the court’s ability to dramatically improve the quality of life for city residents, workers and businesses. These improvements include:

(a) a restructuring of the court’s intake and scheduling methods to facilitate community participation and feedback,;
(b) the creation of receivership programs that allows the court to oversee property repairs and fine collection;
(c) the contribution of community liaisons who provide assistance with case management, research and communication with neighborhood activists.; and
(d)coordinating landlord-tenant eviction cases with the housing code violations cases.

If you are a New York resident and are having trouble paying your mortgage, or are at risk of foreclosure, contact a not-for-profit housing counselor in your area.

Not-for-profit housing counselors provide free, professional advice. They can help you assess your options, negotiate with your lender and find free legal services and other resources in your area.

New York not-for-profit housing counseling organizations are listed county-by-county at http://nysdhcr.gov/Programs/ForeclosurePrevention/CounselListing.htm and have received some type of public funding to provide foreclosure prevention services. Those agencies denoted with an “NIS” hyperlink have adopted National Industry Standards for Home Ownership Counseling to ensure that homeowners receive quality and professional counseling.

Call in advance to see if an appointment is necessary and what documents you should bring with you. Be wary of those who promise to help save your home from foreclosure in exchange for the payment of fees upfront. New York law prohibits the collection of such fees, except in limited circumstances.