Subprime Loan Protections

New York enacted a law which granted subprime mortgage borrowers protections against foreclosure. The new law extends similar protections to prime borrowers and will thus impact thousands of residents. The new protections include:

• A requirement that lenders and mortgage servicers provide notice of foreclosure to borrowers at least 90 days before legal action is taken, so that borrowers may take advantage of counseling that may aid in preventing foreclosure
• The ability for all homeowners to meet face to face with a lending representative in a foreclosure settlement conference, so that the parties may explore the possibility of avoiding foreclosure

• A requirement that mortgage lenders and borrowers make good faith efforts to reach a mutually agreeable solution during eligible foreclosure settlement conference discussions, so that fewer borrowers will ultimately be compelled to foreclose
• A requirement that upon notice of an impending foreclosure, New York State must send the names of the concerned borrower to a counseling agency so that the agency can counsel the borrower regarding foreclosure avoidance strategies
• A requirement that plaintiffs involved in a foreclosure action must maintain their foreclosed property, so that neighborhood property values may be better preserved
• A requirement that all tenants residing in foreclosed property be allowed to remain in their residence for 90 days or the remainder of their lease, whichever is longer, so that tenants have adequate time to seek other housing arrangements
• A ban on up-front fee charges by distressed property consultants, so that owners facing foreclosure can avoid rescue scams