On December 7, Governor Andrew M. Cuomo announced the publication of the NYDFS Residential Foreclosure Actions Consumer Bill of Rights – intended to offer guidance to homeowners facing foreclosure in New York. Concurrently, the New York Governor also announced new NYDFS regulations intended to curb the threat to communities posed by vacant and abandoned properties (“zombie properties”) by “expediting foreclosure proceedings, improving the efficiency and integrity of the mandatory settlement conferences, and obligating banks and mortgage servicers to secure, protect and maintain vacant and abandoned properties before and during foreclosure proceedings.”
The Consumer Bill of Rights acts as guidance for homeowners facing foreclosure, and specifies that homeowners have certain rights and obligations, including, among others: (i) the right to stay in the home unless and until a court orders the homeowner to vacate the property; (ii) the right to be represented by an attorney; (iii) the right to be free from harassment and foreclosure scams; (iv) the right to avoid foreclosure by making a full or negotiated payment prior to foreclosure sale; (v) the right to be notified at least 90 days prior to a foreclosure suit being filed; (vi) the right to explore loss mitigation options; and (vii) the right to receive a copy of legal papers in a lawsuit. The Consumer Bill of Rights also outlines various obligations of a homeowner, including to respond to complaints, appearing at court, and negotiating in good faith. Under the law, the court must provide homeowners a copy of the Consumer Bill of Rights at the initial mandatory settlement conference.
With respect to vacant and abandoned properties, the new regulations target blight caused by such zombie properties by, among other things, requiring that bank and mortgage servicers: (i) complete an inspection of a property subject to delinquency within 90 days; (ii) secure and maintain the property where the bank or servicer has a reasonable basis to believe that the property is vacant and abandoned; (iii) report all such vacant and abandoned properties to NYDFS; and (iv) submit quarterly reports detailing both their efforts to secure and maintain the properties and the status of any foreclosure proceedings. The NYDFS Superintendent is authorized under the new regulations to issue civil penalties of $500 per day per property for violations of the new regulations.
Additional information about the new regulations and procedures for complying with the new law’s inspection, maintenance and reporting requirements can be found here.