§ 265-b. Distressed property consulting contracts. 1. Definitions. The
following definitions shall apply to this section:

(a) "Homeowner" means a natural person who is the mortgagor with
respect to a distressed home loan or who is in danger of losing a home
for nonpayment of taxes.

(b) "Consulting contract" or "contract" means an agreement between a
homeowner and a distressed property consultant under which the
consultant agrees to provide consulting services.

(c) "Consulting services" means services provided by a distressed
property consultant to a homeowner that the consultant represents will
help to achieve any of the following:

(i) stop, enjoin, delay, void, set aside, annul, stay or postpone a
foreclosure filing, a foreclosure sale or the loss of a home for
nonpayment of taxes;

(ii) obtain forbearance from any servicer, beneficiary or mortgagee or
relief with respect to the potential loss of the home for nonpayment of
taxes;

(iii) assist the homeowner to exercise a right of reinstatement or
similar right provided in the mortgage documents or any law or to
refinance a distressed home loan;

(iv) obtain any extension of the period within which the homeowner may
reinstate or otherwise restore his or her rights with respect to the
property;

(v) obtain a waiver of an acceleration clause contained in any
promissory note or contract secured by a mortgage on a property in
foreclosure;

(vi) assist the homeowner to obtain a loan or advance of funds;

(vii) assist the homeowner in answering or responding to a summons and
complaint, or otherwise providing information regarding the foreclosure
complaint and process;

(viii) avoid or ameliorate the impairment of the homeowner's credit
resulting from the commencement of a foreclosure proceeding or tax sale;
or

(ix) save the homeowner's property from foreclosure or loss for
non-payment of taxes.

(d) "Distressed home loan" means a home loan for which an installment
payment is more than sixty days past due, or a home loan where the
lender has commenced a foreclosure action. For purposes of this
paragraph, a "home loan" is a loan in which the debt is incurred by the
homeowner primarily for personal, family or household purposes, and the
loan is secured by a mortgage or deed of trust on property upon which
there is located or there is to be located a structure or structures
intended principally for occupancy of from one to four families which is
or will be occupied by the homeowner as the homeowner's principal
dwelling.

(e) "Distressed property consultant" or "consultant" means an
individual or a corporation, partnership, limited liability company or
other business entity that, directly or indirectly, solicits or
undertakes employment to provide consulting services to a homeowner for
compensation or promise of compensation with respect to a distressed
home loan or a potential loss of the home for nonpayment of taxes. A
distressed property consultant does not include the following:

(i) an attorney admitted to practice in the state of New York when the
attorney is directly providing legal representation to a homeowner
pursuant to a retainer agreement, and has entered an appearance on
behalf of a homeowner, in the course of his or her regular legal
practice. This exception shall not apply to non-attorney individuals
engaged in activities covered by subdivision two of this section who are
employed by, associated with, or consultants for law firms when such law
firms are not providing legal representation to a homeowner in a
foreclosure action pursuant to a retainer agreement;

(ii) a person or entity who holds or is owed an obligation secured by
a lien on any property in foreclosure while the person or entity
performs services in connection with the obligation or lien;

(iii) a bank, trust company, private banker, bank holding company,
savings bank, savings and loan association, thrift holding company,
credit union or insurance company organized under the laws of this
state, another state or the United States, or a subsidiary or affiliate
of such entity or a foreign banking corporation licensed by the
superintendent of financial services or the comptroller of the currency;

(iv) a federal Department of Housing and Urban Development approved
mortgagee and any subsidiary or affiliate of such mortgagee, and any
agent or employee of these persons while engaged in the business of such
mortgagee;

(v) a judgment creditor of the homeowner, if the judgment creditor's
claim accrued before the written notice of foreclosure sale is sent;

(vi) a title insurer authorized to do business in this state, while
performing title insurance and settlement services;

(vii) a person licensed as a mortgage banker or registered as a
mortgage broker or registered as a mortgage loan servicer as defined in
article twelve-D of the banking law, provided that no such person shall
take any upfront fee in conjunction with activities constituting the
business of a distressed property consultant;

(viii) a bona fide not-for-profit organization that offers counseling
or advice to homeowners in foreclosure or loan default; or

(ix) a person licensed or registered in the state to engage in the
practice of other professions that the superintendent of financial
services has determined should not be subject to this section.

(f) "Property" shall mean real property located in this state improved
by a one-to-four family dwelling used or occupied, or intended to be
used or occupied, wholly or partly, as the home or residence of one or
more persons, but shall not refer to unimproved real property upon which
such dwellings are to be constructed.

(g) "Business day" shall mean any calendar day except Sunday or the
public holidays as set forth in section twenty-four of the general
construction law.

2. Prohibitions. A distressed property consultant is prohibited from
doing the following:

(a) performing consulting services without a written, fully executed
consulting contract with a homeowner;

(b) charging for or accepting any payment for consulting services
before the full completion of all such services, including a payment to
be placed in escrow pending the completion of such services;

(c) taking a power of attorney from a homeowner;

(d) retaining any original loan document or other original document
related to the distressed home loan, the property or the potential loss
of the home for nonpayment of taxes;

(e) inducing or attempting to induce a homeowner to enter a consulting
contract that does not fully comply with the provisions of this article;

(f) inducing the transfer of a deed to any person or entity, including
to the distressed property consultant;

(g) accepting or taking ownership of a deed from a homeowner for any
period of time whatsoever;

(h) simulating in any manner a law enforcement officer, or a
representative of any governmental agency;

(i) disclosing or threatening to disclose information affecting the
homeowner's reputation for credit worthiness with knowledge or reason to
know that the information is false;

(j) communicating with the homeowner or any member of his family or
household with such frequency or at such unusual hours or in such a
manner as can reasonably be expected to abuse or harass the homeowner;

(k) claiming, attempting, or threatening to enforce a right with
knowledge or reason to know that the right does not exist;

(l) using a communication which simulates in any manner legal or
judicial process or which gives the appearance of being authorized,
issued or approved by a government, governmental agency, or attorney at
law when it is not; or

(m) encumbering the property with a lien without any contractual or
legal basis.

If any provision of this subdivision or the application thereof to any
person or circumstances is held invalid, the invalidity thereof shall
not affect other provisions or applications of this subdivision which
can be given effect without the invalid provision or application, and to
this end the provisions of this subdivision are severable.

3. Distressed property consulting contracts. (a) A distressed
property consulting contract shall:

(i) contain the entire agreement of the parties;

(ii) be provided in writing to the homeowner for review before
signing;

(iii) be printed in at least twelve point type and written in the same
language that is used by the homeowner and was used in discussions
between the consultant and the homeowner to describe the consultant's
services or to negotiate the contract;

(iv) fully disclose the exact nature of the distressed property
consulting services to be provided by the distressed property consultant
or anyone working in association with the distressed property
consultant;

(v) fully disclose the total amount and terms of compensation for such
consulting services;

(vi) contain the name, business address and telephone number of the
consultant and the street address (if different) and facsimile number or
email address of the distressed property consultant where communications
from the homeowner may be delivered;

(vii) be dated and personally signed by the homeowner and the
distressed property consultant and be witnessed and acknowledged by a
New York notary public; and

(viii) contain the following notice, which shall be printed in at
least fourteen point boldface type, completed with the name of the
distressed property consultant, and located in immediate proximity to
the space reserved for the homeowner's signature:
"NOTICE REQUIRED BY NEW YORK LAW

You may cancel this contract, without any penalty or obligation, at
any time before midnight of (fifth business day after
execution).

(Name of Distressed Property Consultant) (the "Consultant") or
anyone working for the Consultant may not take any money from you or ask
you for money until the Consultant has completely finished doing
everything this Contract says the Consultant will do.
You should consider consulting an attorney or a government-approved
housing counselor before signing any legal document concerning your
home. It is advisable that you find your own attorney, and not consult
with an attorney recommended or provided to you by the Consultant. A
list of housing counselors may be found on the website of the New York
State Department of Financial Services, (enter web address) or by
calling the Department of Financial Services toll-free at (enter
number). The law requires that this contract contain the entire
agreement between you and the Consultant. You should not rely upon any
other written or oral agreement or promise."
The distressed property consultant shall accurately enter the date on
which the right to cancel ends.

(b)(i) The homeowner has the right to cancel, without any penalty or
obligation, any contract with a distressed property consultant until
midnight of the fifth business day following the day on which the
distressed property consultant and the homeowner sign a consulting
contract. Cancellation occurs when the homeowner, or a representative of
the homeowner, either delivers written notice of cancellation in person
to the address specified in the consulting contract or sends a written
communication by facsimile, by United States mail or by an established
commercial letter delivery service. A dated proof of facsimile delivery
or proof of mailing creates a presumption that the notice of
cancellation has been delivered on the date the facsimile is sent or the
notice is deposited in the mail or with the delivery service.
Cancellation of the contract shall release the homeowner of all
obligations to pay fees or any other compensation to the distressed
property consultant.

(ii) The consulting contract shall be accompanied by two copies of a
form, captioned "notice of cancellation" in at least twelve-point bold
type. This form shall be attached to the contract, shall be easily
detachable, and shall contain the following statement written in the
same language as used in the contract, and the contractor shall insert
accurate information as to the date on which the right to cancel ends
and the contractor's contact information:
"NOTICE OF CANCELLATION
Note: You may cancel this contract, without any penalty or obligation,
at any time before midnight of ______. (Enter date)
To cancel this contract, sign and date both copies of this cancellation
notice and personally deliver one copy or send it by facsimile, United
States mail, or an established commercial letter delivery service,
indicating cancellation to the Distressed Property Consultant at one of
the following:
Name of Contractor_________________________
Street Address_____________________________
City, State, Zip___________________________
Facsimile:_________________________________
I hereby cancel this transaction.
Name of Homeowner:_________________________
Signature of Homeowner:____________________
Date:______________________________________"

(iii) Within ten days following receipt of a notice of cancellation
given in accordance with this subdivision, the distressed property
consultant shall return any original contract and any other documents
signed by or provided by the homeowner. Cancellation shall release the
homeowner of all obligations to pay any fees or compensation to the
distressed property consultant.

3-a. Distressed property consultant advertisements. (a) All
advertisements disseminated by a distressed property consultant must
prominently include the following statement: "In New York State, Housing
Counselors, who are approved by the U.S. Department of Housing & Urban
Development or the New York State Department of Financial Services, may
provide the same or similar services as a distressed property consultant
for free. A list of approved Housing Counselors can be found on the New
York State Department of Financial Services website at (enter web
address) or by contacting the New York State Department of Financial
Services toll-free at (enter number). You should consider consulting an
attorney or a government-approved housing counselor before signing any
legal document concerning a distressed property consultant." Such
statement, if disseminated by print media or the internet, shall be
clearly and legibly printed or displayed in not less than twelve-point
bold type, or, if the advertisement is printed to be displayed in print
that is smaller than twelve point, in bold type print that is no smaller
than the print in which the text of the advertisement is printed or
displayed.

(b) For the purposes of this subdivision, the term "advertisement"
shall include, but is not limited to, all forms of marketing,
solicitation, or dissemination of information related, directly or
indirectly, to securing or obtaining a consulting contract or services.
Further, it shall include any and all commonly recognized forms of media
marketing via television, radio, print media, all forms of electronic
communication via the internet, and all prepared sales presentations
given in person or over the internet to the general public.

(c) The advertising provisions of this subdivision shall apply to all
distressed property consultants who disseminate advertisements in the
state of New York or who intend to directly or indirectly contact a
homeowner who has property located in New York state. Distressed
property consultants shall establish and at all times maintain control
over the content, form and method of dissemination of all advertisements
of its services. Further, all advertisements shall be sufficiently
complete and clear to avoid the possibility of deception or the ability
to mislead or deceive.

4. Penalties and other provisions. (a) If a court finds that a
distressed property consultant has violated any provision of this
section, the court may make null and void any agreement between the
distressed homeowner and the distressed property consultant.

(b) If the distressed property consultant violates any provision of
this section and the homeowner suffers damage because of the violation,
the homeowner may recover actual and consequential damages and costs
from the distressed property consultant in an action based on this
section. If the distressed property consultant intentionally or
recklessly violates any provision of this section, the court may award
the homeowner treble damages, attorneys' fees and costs.

(c) Any provision of a consulting contract that attempts or purports
to limit the liability of the distressed property consultant under this
section shall be null and void. Inclusion of such provision shall at the
option of the homeowner render the consulting contract void. Any
provision in a contract which attempts or purports to require
arbitration of any dispute arising under this section shall be void at
the option of the homeowner. Any waiver of the provisions of this
section shall be void and unenforceable as contrary to public policy.

(d) In addition to the other remedies provided, whenever there shall
be a violation of this section, application may be made by the attorney
general in the name of the people of the state of New York to a court or
justice having jurisdiction by a special proceeding to issue an
injunction, and upon notice to the defendant of not less than five days,
to enjoin and restrain the continuance of such violations; and if it
shall appear to the satisfaction of the court or justice that the
defendant has, in fact, violated this section, an injunction may be
issued by such court or justice, enjoining and restraining any further
violation, without requiring proof that any person has, in fact, been
injured or damaged thereby. In any such proceeding, the court may make
allowances to the attorney general as provided in paragraph six of
subdivision (a) of section eighty-three hundred three of the civil
practice law and rules, and direct restitution. Whenever the court shall
determine that a violation of this section has occurred, the court may
impose a civil penalty of not more than ten thousand dollars for each
violation. In connection with any such proposed application, the
attorney general is authorized to take proof and make a determination of
the relevant facts and to issue subpoenas in accordance with the civil
practice law and rules.

(e) The provisions of this section are not exclusive and are in
addition to any other requirements, rights, remedies, and penalties
provided by law.

5. The department of financial services shall prescribe the telephone
number and web address to be included in the notice.