BILL NUMBER: S2105

SPONSOR: SANDERS
 
TITLE OF BILL:  An act to amend the banking law, in relation to modi-
fying delinquent mortgage loans and single point of contact

 
PURPOSE:

The bill requires creditors to provide a single point of contact to
borrowers in the foreclosure process who will be responsible for provid-
ing accurate account and other information related to the foreclosure
process and loss mitigation efforts. The bill requires creditors to
provide a dedicated electronic mail address, facsimile number and mail-
ing address for borrowers to submit information requested as part of a
loan modification, short sale or other loss mitigation option.

 
SUMMARY OF PROVISIONS:

96-e of the banking law provides that mortgage servicers, as defined in
that section, shall designate a person responsible for communications if
said borrower's mortgage becomes sixty days or more delinquent.
              

If a borrower who becomes delinquent by sixty days or more, a mortgage
servicer shall designate a single point of contact for the borrower in
the event he or she wishes to pursue a loan modification or foreclosure
prevention program. The single point of contact shall be responsible for
all of the following:

(a) Communicating the options available to the borrower, the actions the
borrower must take to be considered for those options and the status of
the mortgage servicer's evaluation of the borrower for those options.

(b) Coordinating receipt of all documents associated with loan modifica-
tion or loss mitigation activities and notifying the borrower of any
missing documents.

(c) Maintaining and providing accurate information about the borrower's
situation and current status in the loss mitigation process.

(d) Ensuring that a borrower, who is not eligible for a federal making
home affordable program, is considered for proprietary or other investor
loss mitigation options.

(e) Having access to individuals with the ability to stop foreclosure
proceedings when necessary to comply with the making home affordable
program or New York law.

The single point of contact shall remain assigned to the borrower's
account until the mortgage services determines that all loss mitigation
options have been exhausted, the borrower's account becomes current, or,
in the case of a borrower in bankruptcy, the borrower has exhausted all
loss mitigation options for which the borrower is potentially eligible
and has applied.

§ 2 provides that this act shall take effect immediately.

 
EXISTING LAW:

 
JUSTIFICATION:
As our state and our nation slowly recover from the nation's financial
crisis, many homeowners are still trying to recover from the financial
impact of the crisis. Massive foreclosures have crippled our economy and
have made the recovery from the crisis very slow.  While the economy
strengthens and employment grows, many citizens are trying to rebuild
their lives.

One way many homeowners have tried to rebuild their lives is to work to
save the largest asset many of them own: their home. As the bottom
dropped out of the economy, many citizens lost their jobs and fell
behind on their mortgages. Many people who had owned their homes for
years or even decades found themselves unable to keep up with their
payments even though they may have never missed a payment before the
crisis.

As the job market has strengthened and people returned to work, homeown-
ers have reached out to their mortgage servicers to determine if there
are any federal, state or investor foreclosure mitigation program avail-
able to them. Many homeowners were told of these programs and were
encouraged to apply. Many homeowners tried to apply for these mitigation
programs only to find out that the programs were nearly impossible to
gain approval.

On February 9, 2012, the U.S. Attorney General announced that the feder-
al government and 49 states had reached a settlement agreement with the
nation's five largest mortgage servicers to address mortgage servicing,
foreclosure, and bankruptcy abuses (the "National Mortgage Settlement").
The National Mortgage Settlement is the largest consumer financial
protection settlement in United States history.  The National Mortgage
Settlement was made after state and federal investigations into mortgage
foreclosure activities revealed extensive mortgage servicing misconduct,
including riot limited to, deceptive practices in the loan modification
process such as telling borrowers that a loan modification was imminent
while simultaneously foreclosing, repeatedly asking for the same docu-
ments, denying a modification and not informing the borrowers and giving
the borrower incorrect information regarding their modification applica-
tion.

This bill will require a mortgagor to appoint to the borrower one
contact person who will be responsible for all communications with the
borrower and who will be responsible for the entire process.  Having one
person responsible will make it less likely that a borrower who is
trying to save his or her home will fall victim to the bureaucracy of
the foreclose mitigation process and of the very large mortgage servi-
cers.

 
LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS:

None

 
LOCAL FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately.