BILL NUMBER: S671

SPONSOR: SANDERS
 
TITLE OF BILL:

An act to amend the banking law, in relation to modifying delinquent
home 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:

Section one of the bill adds § 6-o to the banking law. Subdivision one
              

requires the lender to provide a borrower who is delinquent on his or
her home loan sixty day or more and chooses to pursue a loan modifica-
tion or other foreclosure prevention alternative, a single point of
contact for the borrower to reach the lender regarding pursuing a loan
modification.The borrower shall make his or her request for the contact
information in writing or by electronic communication and once received,
the lender is required to provide the contact information to the borrow-
er within ten days. The lender is also required to notify the borrower
if the contact information provided to the borrower changes within five
days.This subdivision also provides that the duties imposed on the lend-
er by this section may be also be performed by a mortgage servicer
acting on behalf of the lender.

Subdivision two requires that the single point of contact to be respon-
sible for the following:

A. Communicating the options available to the borrower for modifying his
or her delinquent home loan.

B. Assisting the borrower with identifying documents necessary for
pursuing a loan modification.

C. Providing the borrower accurate information regarding the status of
his or her loan modification application should the borrower choose to
apply for a modification.

Subdivision three requires that the single point of contact remain
assigned to the borrower's account until the lender determines all loss
modification options have been exhausted or the borrower's account
becomes current. Subdivision four provides that "home loan" shall have
the same definition as paragraph (e) of subdivision one of section six-1
of this article.

Section two of the bill provides the effective date.

 
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
available 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 Settle-
ment").The National Mortgage Settlement is the largest consumer finan-
cial protection settlement in United States history. The National Mort-
gage Settlement was made after state and federal investigations into
mortgage foreclosure activities revealed extensive mortgage servicing
misconduct, including, but not limited to, deceptive practices in the
loan modification process such as telling borrowers that a loan modifi-
cation was imminent while simultaneously foreclosing, repeatedly asking
for the same documents, denying a modification and not informing the
borrowers, and giving the borrower incorrect information regarding their
modification application.

This bill will require a lender 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 fore-
close mitigation process and of the very large mortgage servicers.

 
PRIOR LEGISLATIVE HISTORY:

2019 - S.2105 / A.7513 - Passed Senate / Referred to Banks

2017-2018: - S.3216 - Referred to Banks

2015-2016: - S.3768 - Referred to Banks 2014: S.6243 - Referred to Banks

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Sixty days after becoming law and shall apply to home loans enter into
after the effective date.