On June 23, New York Gov. Andrew Cuomo signed S8159 into law, which among other things contains provisions relating to:
- Mandatory settlement conferences in residential foreclosures. The new law modifies New York’s mandatory settlement conference provisions for residential mortgage foreclosures to among other things allow courts to sanction mortgagees up to $25,000 and award attorney fees in favor of the borrower for non-compliance, clarifies that the failure to offer or accept an offer is not sufficient to establish lack of good faith participation, and allows borrowers who participate in settlement conferences to have defaults vacated.
- A pre-foreclosure duty for mortgagees to register and maintain vacant properties. The new law imposes a duty on mortgagees to register, maintain and secure residential real property collateral where there is a reasonable basis to believe the property is vacant and abandoned, allows penalties of up to $500 per violation, per property, per day, and provides for a statewide electronic registry of vacant and abandoned properties as well as communication between local governments and mortgagees.
- An expedited or fast-track foreclosure process for vacant and abandoned properties. The new law allows mortgagees to file a motion or application in residential foreclosures to have the collateral property deemed vacant and abandoned, provides standards for the court to use in determining whether a residential property is “vacant and abandoned,” requires related disclosures to the mortgagors, prohibits mortgagees from trying to force occupants of the property to vacate or abandon the property, allows judgments of foreclosure and sale to be entered quickly if the court finds that the property is vacant and abandoned, and sets deadlines for conducting foreclosure auctions and marketing REO.
- New default disclosure requirements. The new law requires the New York Department of Financial Services to publish a “Consumer Bill of Rights” detailing the rights and responsibilities of the parties in foreclosure and for courts to provide the disclosure to foreclosure defendants and revises the language of New York’s mandatory pre-foreclosure notice (including translation obligations “for any borrower known to have limited English proficiency”).
A copy of the bill showing the revisions added and removed as to various statutory sections is available here: Link to S8159.
The new law provides limited preemption of local laws for “any state or federally chartered bank, savings bank, savings and loan association or credit union that originates, owns, services or maintains mortgages” relating to affected properties. See pp. 12-13, 25-26 of the bill.
Generally, the new law will become effective “on the one hundred eightieth day after it shall have become a law,” which is Dec. 23, 2016.
However, “(a) The amendments to subdivision (a) of rule 3408 of the civil practice law and rules made by section two of this act shall be subject to the expiration and reversion of such subdivision pursuant to chapter 507 of the laws of 2009, as amended, when upon such date the provisions of section three of this act shall take effect; and (b) The amendments to subdivisions 1, 2, 5 and 6 of section 1304 of the real property actions and proceedings law made by section six of this act shall be subject to the expiration and reversion of such subdivisions pursuant to chapter 507 of the laws of 2009, as amended, when upon such date the provisions of section seven of this act shall take effect.”