BILL NUMBER: S5017A

SPONSOR: PARKER
 
TITLE OF BILL:  An act to amend the banking law, in relation to
requiring a bank or financial institution selling or transferring a
mortgage during a modification process to provide the borrower with a
written list of all documents relating to such application for modifica-
tion that were provided to the bank or financial institution to which
such mortgage was sold or transferred; and relating to the obligations
of subsequent mortgage servicer shall assume all duties and obligations
related to any previously approved first lien loan modification or other
foreclosure prevention alternative

 
PURPOSE:

To provide homeowners who are in negotiations to modify the terms of
their mortgage with a written list of documents relating to the modifi-
cation which were provided to the bank or financial institution who
acquired the loan when was sold or transferred and to ensure that if the
loan is sold or transferred after a homeowner has been approved for a
modification of their mortgage that the subsequent mortgage servicer
honor the terms and conditions of the approval.
              

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one of the bill adds § 6-n to the banking law. Subdivision one
requires that a bank or financial institution who enters into negoti-
ations to modify a mortgage and sells or transfers the mortgage during
the modification process be responsible for providing the borrower with
a written list of all the documents relating to the loan modification
that were furnished to the bank of financial institution to which the
mortgage was sold or transferred.

Subdivision two provides that if a borrower has been approved in writing
for a first lien loan modification or other modification to avoid fore-
closure and the servicing of the borrower's loan is sold or transferred
to another mortgage servicer that the subsequent mortgage servicer be
required to assume all duties and obligations related to any previously
approved first lien loan modification or other foreclosure alternative.

Section two of the bill provides the effective date.

 
JUSTIFICATION:

This legislation is necessary in light of the growing loan modification
crisis enveloping New York State. The modification process is difficult
enough, so New York State must provide a mechanism to ensure that banks
and financial institutions treat homeowners in a fair and equitable
manner during the course of this difficult process.

In many instances, homeowners have complained of having sent requested
documentation and later being told that the same documents were not
received or that specific pages were unsigned by the homeowners.  Home-
owners report that this problem is exasperated when their loan is sold
to another lender during the course of a pending modification.

This legislation seeks to assist homeowners whose mortgage has been sold
or transferred while they are in the midst of a loan modification by
requiring that when negotiations to modify a mortgage take place and the
loan is sold, transferred, or bundled for provision to a third party
that the bank or financial institution that sold or transferred the
mortgage provide the homeowner a written list of documents that were
provided to the third party. Furthermore, if the homeowner has been
approved for a loan modification in writing and the loan is subsequently
sold or transferred, the bank or financial institution to which the
mortgage has been sold or transferred to will be required to honor the
terms and conditions of the approved loan modification.

 
PRIOR LEGISLATIVE HISTORY:

2017-18: S2223 - REFERRED TO BANKS

2015-16: S.2752 - Referred to Banks

2013-14: S.5496 - Referred to Banks

 
FISCAL IMPLICATIONS::

None.

 
EFFECTIVE DATE::

Ninety days after becoming a law.