BILL NUMBER:S5496

TITLE OF BILL:  An act to amend the banking law, in relation to
requiring banks and financial institutions entering into negotiations
to modify a mortgage on real property located in this state to be
responsible for the continuation of the modification process until its
completion regardless of whether the mortgage is sold

PURPOSE OR GENERAL IDEA OF BILL: This bill will amend the banking law
to require that a bank or financial institution entering into
negotiation to modify a mortgage shall be responsible for the
continuation of the modification process until its completion.

SUMMARY OF SPECIFIC PROVISIONS: This bill amends the banking law by
adding a new section 6-n to require that a bank or financial
institution entering into negotiations to modify a mortgage on real
property in this state shall be responsible for the continuation of
the modification process until its completion regardless of whether
the mortgage is sold, transferred or bundled into a security package
for provision to a third party during the modification process.

Additionally, if a mortgage is in the process of negotiation or
application for modification of the mortgage terms and is sold,
transferred or bundled into a security package for provision to a
third party during the modification process, such mortgage shall be
automatically deemed to have been modified and the purchaser of such
              

mortgage must accept any decision rendered and be bound by the terms
of the modification agreement, including the interest rate in effect
at the time of processing. The purchaser also assumes ail rights and
responsibilities necessary to comply with this modified loan.

JUSTIFICATION: This legislation is necessary in light of the growing
loan modification crisis sweeping across New York State. It will helm
stabilize the housing industry and provide much needed protection for
homeowners. The modification process is difficult enough, so we must
provide a mechanism to ensure that banks and financial institutions
deal with homeowners in a fair and equitable manner during the course
of this grueling process.

In many instances, homeowners have complained of having sent
documentation, as requested and later being told that such documents
were missing or not received or that certain page(s) had not been
signed, contrary to the homeowner's assertions. Additionally, many
homeowners complained of having been notified that their loan had been
sold to another lender, while the modification was pending, yet they
were notified after the fact.

This legislation will address situations such as these by requiring
that negotiations to modify a mortgage will continue to its
completion, whether it is sold, transferred or bundled for provision
to a third party. Furthermore, this mortgage will be deemed to have
been modified as specified in the modification application and the
purchaser of said mortgage is determined to have accepted the interest
rate in effect at the time of processing and all other rights and
responsibilities accompanying the loan as modified.

PRIOR LEGISLATIVE HISTORY:  2011-2012 A.7954


FISCAL IMPLICATIONS: NONE.

EFFECTIVE DATE:  The act shall take effect on the 90th day after it
shall have become law.