BILL NUMBER:S6541

TITLE OF BILL:
An act to amend the real property law, in relation to prohibiting mort-
gagee from refusing to accept partial mortgage payments

PURPOSE:

To require that banks, lenders and mortgagees accept partial mortgage
payments which represent at a minimum a mortgage payment but not the
total arrearages that may be due and owing.

SUMMARY OF PROVISIONS:

It has become apparent that banks, lenders and mortgagees have taken the
position that they will not accept mortgage payments under circumstances
where those payments fail to bring the mortgage current.

In some instances they accept payments but do not apply them to the
outstanding arrearages and place them in a suspension account where they
hold the funds but do not apply them to the arrearages.

JUSTIFICATION:

Due to the state of the economy many people may find themselves in dire
straits, due to lost of employment, under employment, or illness and
              

despite these circumstances are still attempting to pay their mortgage
obligations and many may fall into arrears.

The banks, lenders or mortgagees have taken the position that they will
only accept the total amount of the arrearages or if they do take a
payment they will not apply it to the outstanding indebtedness while
placing it into a special account which gains interest; but neither the
payment or interest is credited to the mortgagor's arrearages on their
mortgage.

The provisions of this proposed section will allow payments to be
received and credited and will not act as a bar to any procedural rights
of the banks, lenders or mortgagees.

The aim of this bill is to forestall foreclosures and give mortgagor's
an incentive and opportunity to redeem their property; and limit the
destructive effects of foreclosure and its concomitant societal
concerns.

LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:
Takes effect on the thirtieth day after it shall become a law.