Assembly Bill A9784

                                BILL NUMBER:A9784A

TITLE  OF BILL:  An act to amend the real property law, in relation to
distressed property consultants advertisements

PURPOSE:  With over 235,000 homes projected to be lost over  the  next
four  years  in  New  York  State  alone, the need for legitimate loan
modification services has risen exponentially. This fact coupled  with
the  reality  that  currently financial institutions are not modifying
loans at a  substantial  pace  despite  the  bailout  by  the  Federal
Government,  more  and more families are forced to turn to agencies to
assist them with  efforts  to  save  their  home.  While  HUD-approved
counseling  services  are  standing at the helm ready to help New York
families, so too are companies advertising their  services  to  modify
loans.  Unfortunately,  like the wave of unscrupulous mortgage brokers
who preyed on the financial inadequacies of many families in New York,
these loan modification companies have begun an  all  out  assault  on
those fighting to keep their homes.

Advertisements  targeting  those  who are currently in foreclosure are
everywhere in New York. They are on Saturday afternoon television,  on
the  internet,  and in local newspapers. Direct mailings to homeowners
disguised with government seals or the markings of the  United  States
Department  of  Housing and Urban Development are inundating mailboxes
across the state. Potential victims are profiled  by  these  companies
according  to  ethnicity  and language spoken at home, so much so that
              

mailings in various languages are being sent to homes where English is
a second language. The efforts of legitimate HUD  approved  counseling
agencies and the New York State Banking Department is no match for the
hundreds  of thousands of dollars being spent on targeting New Yorkers
with loan modification assistance.

According to testimony given in May 2009 before  the  Subcommittee  on
Housing  and Community Opportunity House Financial Services Committee,
the  amount  of  money  spent  by  loan  modification   companies   on
advertising  has  a  serious consequence of obscuring the message that
there is free qualified  help  that  is  available  from  BUD-approved
housing counseling agencies. One website, USHUD.com, even claims to be
"America's   Only   Free  Foreclosure  Resource".  Other  modification
companies discourage homeowners from contacting HUD approved  agencies
claiming  their connections with lenders and their years of expertise.
Yet neither  federal  nor  New  York  State  legislation  imposes  any
requirements on these advertisements.

In  the  spring  of 2009, Attorney General Andrew Cuomo announced that
his office has been conducting  a  statewide  investigation  into  the
so-called  "foreclosure  rescue"  industry  with  subpoenas  to twelve
companies that offer loan modification services  to  consumers  across
New York. According to the Attorney General's investigation, many loan
modification  companies  lure  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,
falsely claiming to have extraordinarily high success rates  -  of  as
much   as  100  percent,  and  falsely  claiming  to  have  a  special
relationship with the homeowner's lender.


Too often, in order to investigate and prosecute these companies  that
are advertising on a daily basis to New Yorkers, we must wait for them
to  deceive  innocent  homeowners  and profit from their hard times by
charging them thousands of dollars for insufficient loan  modification
efforts.  While  there  are  numerous laws in place that require clear
contracts, no upfront fees and non  deceptive  practices,  legislation
needs  to  be  in  place to try to prevent those homeowners from being
deceived in the first place.

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 is announced a crackdown on loan modification and
foreclosure rescue scams, with the FBI currently targeting  more  than
2,000  companies  allegedly  seaming 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  about   70
separate companies running questionable ads.

SUMMARY OF PROVISIONS:  This legislation would require a disclaimer in
all  advertisements  that  includes  the number for the New York State
Banking Department as well as a reminder that New York State  provides
free  counseling  services, this legislation will hopefully 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. A  company
that  fails to display this disclaimer on their advertisements will be
subject to the enforcement of the Attorney General as laid out in  RPL
235-b.

JUSTIFICATION:    Currently under the New York State Real Property Law
255-b, New York State regulates distressed  property  consultants  and
the  terms  and requirements they must abide by or risk prosecution by
the Office of the Attorney General.  unfortunately,  across  New  York
State many consumers are unaware of this legislation and unfortunately
many  times  have to be deceived before law enforcement can intervene.
Under  proposed  legislation  all  companies  that  offer   distressed
property   consulting  as  defined  by  the  New  York  State  Banking
Department must include  a  disclaimer  alerting  consumers  that  the
services  that  they  provide can be provided for free through housing
counselors funded by New York State.   It  would  also  require  these
companies  to  provide  the  number  to  the  New  York  State Banking
Department as part of the disclaimer. Such disclaimer would read:

In New York State Approved Housing Counselors provide similar services
for free. A list of housing counselors may be found on the website  of
the  New  York State Banking Department, www.banking.state.ny.us or by
calling   the   Banking   Department   Toll-Free   at   1-877-BANK-NYS
(1-877-226-5697).  You are advised to consult with an approved housing
counselor before signing any contract.

PRIOR LEGISLATIVE HISTORY:  New Legislation

FISCAL IMPLICATIONS: None


EFFECTIVE DATE:  Immediately

                                BILL NUMBER:A9784B

TITLE  OF  BILL:   An act to amend the real property law, in relation to
distressed property consultants advertisements

PURPOSE:   This  bill  requires  that  distressed  property  consultants
provide information about the availability of free state-funded services
in their advertisements.

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 Counse-
lors. Further that a listing of such counselors is  available  from  the
NYS Banking Department.

JUSTIFICATION:    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,  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  target-
ing  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 4000
from five years ago. Also,  a  recent  Federal  Trade  Commission  (FTC)
investigation of nationwide online and print ads offering mortgage fore-
closure  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 modifica-
tion 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 froth 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  them-
selves as a "foreclosure service" or "foreclosure rescue company."

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 diffi-
culties by falling victim to the misleading advertisements of distressed
property consulting companies.

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS:; None.

EFFECTIVE DATE:  On the sixtieth day after becoming law.

                                BILL NUMBER:A9784C

TITLE  OF  BILL:   An act to amend the real property law, in relation to
distressed property consultants advertisements

PURPOSE: This bill requires that distressed property consultants provide
information about the availability  of  free  state-funded  services  in
their advertisements.

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 Counse-
lors. Further that a listing of such counselors is  available  from  the
NYS Banking Department.

JUSTIFICATION:   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,  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  target-
ing  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 4000
from five years ago. Also,  a  recent  Federal  Trade  Commission  (FTC)
investigation of nationwide online and print ads offering mortgage fore-
closure  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 modifica-
tion 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 froth 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 them-
selves as a "foreclosure service" or "foreclosure rescue company."

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 diffi-
culties by falling victim to the misleading advertisements of distressed
property consulting companies.

LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS:; None.

EFFECTIVE DATE: On the sixtieth day after becoming law.