Assembly Passes Onerous Abandoned Property Bill
The Assembly passed a package of bills yesterday that would make New York’s cumbersome foreclosure process even more inefficient and costly and most likely exacerbate some of the very problems it is seeking to address.
Most importantly, the Assembly passed A6932a/S4781a, introduced at the request of the Attorney General, “the New York State Abandoned Property Neighborhood Relief act of 2016.” I’ve already talked about this bill extensively. It makes lienholders responsible for abandoned property on which they have not foreclosed; however doesn’t do enough to expedite foreclosures on these properties or clarify precisely how much maintenance credit unions and banks will be responsible for.
By the way, municipalities often have first lien priority on abandoned property because of unpaid tax bills. This bill is a backdoor means of shifting responsibilities to banks and credit unions that are ultimately the responsibility of localities.
Another bill, A1298/S5242 wouldn’t streamline New York’s requirement for judicially supervised settlement conferences, a proposal that would be in everyone’s best interest. Instead, it expands the explicit scope on these get-togethers by explaining that resolutions can include, but are not limited to, loan modifications, “short sales” and “deeds in lieu of foreclosure.” This goes into the “wow, why didn’t I think of that” category. Lenders have already considered and used these alternatives. There is no need to put this language into statute unless the Legislature believes it knows more about loss mitigation than the lender losing money on a delinquent mortgage. A second possibility may be that it is seeking to give judges greater authority to force lenders to accept “good faith” resolutions.
Finally, if the Legislature is going to propose all these new obligations on lenders, one would hope that it isn’t also inclined to make it even more difficult to foreclose. But, alas A247 would do just that. This bill makes it easier for defendant’s to raise a defense that a foreclosing lender lacks standing.
Taken as a whole, this package of reforms will increase legal protections for delinquent homeowners, make lienholders responsible for homes they don’t own and make foreclosing even more litigious and time consuming. Lost in all of this is the simple fact that delinquent homeowners are in homes they can no longer afford. Fortunately, none of these bills have been passed by the Senate yet. We will have to see if cooler heads prevail in the closing weeks of the session.