More Foreclosure Mandates Coming Your Way

August 5, 2021 at 9:19 am Leave a comment

This week the Governor signed legislation imposing additional requirements on lenders foreclosing on residential property in New York State but did so only after citing technical flaws with the bill that the Legislature has agreed to address. The measure takes effect on January 1st.

Let’s review New York’s alphabet soup of mortgage requirements. Section 6-l and 6-m impose additional disclosure requirements for high-cost and subprime loans. Section 595-a imposes general requirements on mortgage lenders in New York, such as a prohibition against misrepresenting material fact.  But this statute has never been part of New York’s foreclosure process.

What is clear is that the intent of this Legislation is to mandate that all foreclosing parties must affirmatively state that they have possession of both the note and the mortgage on which they are seeking to foreclose. As originally drafted the legislation would have imposed all of 6-l and 6-m’s requirements on residential mortgages in New York State. This would have meant, for example, that you would have been required to provide mortgage escrows for all of your homeowners.

Frankly, even with the amendments, it is still challenging to figure out precisely who has what obligations under this new measure. Hopefully the amendments that are made by the legislature will clarify precisely what provisions of New York Law now apply to all mortgages in New York that become subject to a foreclosure. For example, as drafted a lender not only has to comply with the certain provisions of 6-l and 6-m but also section 595-a.  We will keep you updated on the proposed legislative fix.

Entry filed under: Compliance, Mortgage Lending, New York State. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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