New York Foreclosure Prevention Efforts

For 2009, New York ranked 38th among all states in foreclosure rate, an increase of only 0.67% from the year before. Nationally, 2009 was the worse year for foreclosures in US history, with 2.8 million property owners receiving a foreclosure notice.

Queens County has the most foreclosures followed closely by Nassau and Suffolk. According to a New York Times report, minorities are bearing the brunt of the foreclosure crisis at a rate three times greater than in other communities.

In New York judicial foreclosures are more common than those handled out of court. In the state the process can take up to 15 months, longer than elsewhere. Lenders file a complaint against the borrower then obtain a decree of sale from a court in the county where the property is located. If the borrower is found in default, he or she will be given a set period of time to pay the delinquent amount, plus costs. If the borrower does not pay within the time frame, the court will then order the property to be sold by the local sheriff.

The foreclosure auction is usually set at the county courthouse at least four weeks after the court ruling. The notice must be published in a newspaper of general circulation once a week for at least four weeks prior to the sale. Borrowers have no right of redemption after the sale.

Effective July 1, 2009, anybody servicing a New York residential mortgage must be registered with the Superintendent of Banks as a Mortgage Loan Servicer.

On November 19, 2009 Governor David A. Paterson and Legislative Leaders today announced passage of the Governor’s Program Bill No. 46, which provides additional critical protections for New York State homeowners, tenants and neighborhoods in the wake of the ongoing foreclosure crisis.
The bill would:

• Require the 90-day pre-foreclosure notice currently sent for subprime loans to be expanded to include all home loans. This measure allows additional time for many more homeowners to work with their lender to find an affordable solution to prevent unnecessary foreclosures.
• Require those lenders who serve a 90-day notice on a homeowner to within three days of that service make a regulatory filing with the Banking Department with specified information. This regulatory filing will allow the Banking Department and the Division of Housing and Community Renewal (DHCR) to provide targeted assistance to distressed homeowners during the critical pre-foreclosure timeframe and closely monitor foreclosure statistics.
• Expand the scope of the early mandatory settlement conference to include borrowers of all home loans and not just borrowers with subprime loans.
• Establish protections for tenants in foreclosed properties by requiring that they receive written notification of the change in ownership of the property and be permitted to remain in their home for the remainder of their lease term or 90 days, whichever is longer.
• Require plaintiffs in a foreclosure action who obtain a judgment of foreclosure and sale to maintain the foreclosed property.
• Prevent brokers who perform distressed property consulting services from accepting upfront fees.

Since the mortgage crisis originated with subprime loans, recent legal changes focused on this area of lending as codified in Chapter 472 of the Laws of 2008:

• Subprime lenders are now required to send a pre-foreclosure notice to borrowers at least 90 days before initiating foreclosure proceedings. This additional time is to allow lenders and homeowners the chance to resolve the default.
• The pre-foreclosure notice must list the name and telephone numbers of government-approved housing counselors in the homeowner’s area.
• Subprime borrowers are granted a mandatory settlement conference in court prior to foreclosure proceedings.
• Those who make subprime loans must meet more stringent underwriting standards.
• Mortgage brokers are required to present the loans most appropriate for the borrower.
• Mortgage fraud is now considered a crime.
• Additional protections have been established to fight mortgage rescue scams.

In June, Governor David A. Paterson introduced the 2009 Foreclosure Prevention Bill that would extend many of the subprime loan protections to all mortgages, while expanding the scope of counseling and legal services.

The state Division of Housing and Community Renewal urges its residents to contact a local not-for-profit housing counselor.

Click here for a U.S. Department of Housing and Urban Development (HUD) list of approved counselors in the state of New York.

If you live in New York City, call 311 and ask to speak to a foreclosure counseling specialist at the Center for New York City Neighborhoods (CNYCN) also reached at 646-786-0888.

Another local option is:
Foreclosure Prevention Hotline
South Brooklyn Legal Services
105 Court Street, 3rd Floor
Brooklyn, NY 11217
718-246-3279
Fax: 718-875-8546
Email:foreclosure@sbls.org

If you are unable to reach your servicer or local state program, or if you would like additional assistance in this process contact Mortgage Outreach at 1-866-408-0420. Mortgage Outreach works directly with many servicers to help find solutions for borrowers that are struggling to keep up with their payments.