senate Bill S5896D
(D) 34th Senate District
- In Committee
- On Floor Calendar
- Passed Senate
- Passed Assembly
- Delivered to Governor
- Signed by Governor
Relates to distressed property consultants advertisements.
TITLE OF BILL:
to amend the real property law, in relation to distressed property
This bill requires that distressed property consultants provide
information about the availability of free state-funded services in
SUMMARY OF PROVISIONS:
Section 1: Adds a new subdivision 3-a to Real Property Law section
265-b to provide that any advertisements, be they in print media or
electronic media, for the services of a distressed property
consultant must include a statement that such services are available
and can be provided for free from certified Housing Counselors.
Further that a listing of such counselors is available from the NYS
This bill requires that all companies that offer distressed property
consulting services as defined by law, must include a statement that
alerts consumers that the services that they provide can often be
provided for free through housing counselors funded by New York State
and that they should consult an attorney before signing such a
contract. It also requires that these companies must provide the
number of the New York State Banking Department as part of the
consumer disclosure statement.
With the onset of the subprime lending crisis and the resulting
economic crisis, the nationwide jump in foreclosures and mortgage
defaults has triggered a corresponding rise in the number of
predatory scams targeting financially-strapped homeowners. The
federal government recently announced a crackdown on loan
modification and foreclosure rescue scams.
Further, the FBI is currently targeting more than 2,000 companies for
allegedly scamming troubled homeowners with "rescue" offers -- up
400% from five years ago. Also, a recent Federal Trade Commission
(FTC) investigation of nationwide online and print ads offering
mortgage foreclosure rescue assistance found that about 70 separate
companies were running questionable ads.
In the spring of 2009, Attorney General Andrew Cuomo announced that
his office was conducting a statewide investigation into the loan
modification industry. Subpoenas were filed against twelve companies
that offer these services to consumers across New York. According to
the Attorney General's investigation, many of these companies lured
consumers through false and misleading tactics, such as using company
names and advertisements that give the false impression that they are
affiliated with a government agency. Further, such advertisements
falsely claim to have extraordinarily high success rates - of as much
as 100 percent, and falsely claimed to have a special relationship
with the homeowner's lender.
Capitalizing on the current economic downturn and housing crisis,
these companies often scour foreclosure notices and filings and prey
on consumers desperate to save their homes from being foreclosed.
Their solicitations may be in person, by mail, telephone or e-mail,
or via advertisements. Often, these scammers use titles that sound
official, such as "foreclosure or mortgage consultant" or falsely
market themselves as a "foreclosure service" or "foreclosure rescue
By requiring a consumer warning statement in all distressed property
consultant advertisements with the phone number of the New York State
Banking Department as well as a reminder that New York State provides
free counseling services, this legislation will reduce the number of
distressed New York State homeowners who compound their financial
difficulties by falling victim to the misleading advertisements of
distressed property consulting companies.
The amendment from the "C" Print to "D" Print was a minor revision of
the disclosure statement contained in subdivision (3-a) (a) of this
On the sixtieth day after becoming law.
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