senate Bill S4038A

Signed By Governor
2011-2012 Legislative Session

Prohibits home improvement contractors from acting on behalf of mortgage brokers

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Archive: Last Bill Status - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Oct 14, 2011 approval memo.12
signed chap.593
Oct 04, 2011 delivered to governor
Jun 17, 2011 returned to senate
passed assembly
ordered to third reading cal.102
substituted for a1913b
Jun 16, 2011 referred to codes
delivered to assembly
passed senate
Jun 13, 2011 amended on third reading 4038b
May 24, 2011 advanced to third reading
May 23, 2011 2nd report cal.
May 18, 2011 1st report cal.781
Apr 12, 2011 print number 4038a
amend and recommit to banks
Mar 15, 2011 referred to banks

Votes

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Bill Amendments

Original
A
B (Active)
Original
A
B (Active)

S4038 - Bill Details

See Assembly Version of this Bill:
A1913A
Law Section:
Banking Law
Laws Affected:
Add §595-c, Bank L
Versions Introduced in 2009-2010 Legislative Session:
S5102, A170

S4038 - Bill Texts

view summary

Prohibits home improvement contractors from also acting on behalf of mortgage brokers; prohibits a mortgage broker from paying a home improvement contractor directly unless they perform their own inspection of the completed work.

view sponsor memo
BILL NUMBER:S4038

TITLE OF BILL:
An act
to amend the banking law, in relation to the dealings of mortgage
brokers and home improvement contractors

PURPOSE OR GENERAL IDEA OF BILL:
This legislation prohibits home
improvement contractors from acting on behalf of mortgage brokers.

JUSTIFICATION:
A conflict exists when home improvement contractors act
on behalf of mortgage brokers, unscrupulously using high-pressure
sales tactics to coerce people to obtain loans for what are often
unnecessary repairs. Frequently, these contractors target urban,
low-income neighborhoods to solicit high interest second mortgages in
order to finance construction work frequently performed in a careless
or unprofessional manner. Elderly residents are particularly
vulnerable to such schemes and the loss of home ownership often
results.

High-pressure sales, the lack of accessible credit and the absence of
traditional financial institutions has rendered many low income,
urban communities especially susceptible to these deceptive
practices. The purpose of this legislation is to stop this unjust
activity, shield the buyers, and hold sellers accountable. The
foreclosure crisis in New York state and throughout the nation has
helped to plunge our economy into the worst economic crisis since the
great depression. It is therefore important for the legislature to
aggressively mitigate the risk of foreclosure by minimizing
unnecessary second mortgages that often result in a loss of home
ownership.

PRIOR LEGISLATIVE HISTORY:
2009-10: A.170/S.1502 Referred to Banks
2005-06: A.2152/S.7148
2003-04: A.4980
2001-02: A.5969
1990-00: A.4046
1997-98: A.124/S.256
1995-96: A.3150
1993-94: S.4007

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Ninety days after it becomes law.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4038

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 15, 2011
                               ___________

Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
  printed to be committed to the Committee on Banks

AN ACT to amend the banking law, in relation to the dealings of mortgage
  brokers and home improvement contractors

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The banking law is amended by adding a new section 595-c to
read as follows:
  S  595-C. REGULATION OF DEALINGS OF MORTGAGE BROKERS AND HOME IMPROVE-
MENT CONTRACTORS. 1. A HOME IMPROVEMENT CONTRACTOR SHALL NOT REPRESENT A
MORTGAGE BROKER WHILE SOLICITING HOME IMPROVEMENT CONTRACTS.  THE  STAFF
OF  A  HOME IMPROVEMENT CONTRACTOR SHALL NOT ACT ON BEHALF OF A MORTGAGE
BROKER IN ANY TRANSACTION.
  2. A MORTGAGE BROKER SHALL  NOT  PAY  A  HOME  IMPROVEMENT  CONTRACTOR
DIRECTLY UNLESS THEY PERFORM THEIR OWN INSPECTION OF THE COMPLETED WORK.
  3.  FOR  THE  PURPOSE  OF  THIS SECTION, "HOME IMPROVEMENT CONTRACTOR"
MEANS A PERSON, FIRM OR  CORPORATION  WHICH  OWNS  OR  OPERATES  A  HOME
IMPROVEMENT BUSINESS OR WHO UNDERTAKES, OFFERS TO UNDERTAKE OR AGREES TO
PERFORM ANY HOME IMPROVEMENT FOR A FEE AND FOR WHOM THE TOTAL CASH PRICE
OF  ALL OF HIS HOME IMPROVEMENT CONTRACTS WITH ALL HIS CUSTOMERS EXCEEDS
ONE THOUSAND FIVE HUNDRED DOLLARS DURING ANY PERIOD  OF  TWELVE  CONSEC-
UTIVE  MONTHS.  HOME  IMPROVEMENT  CONTRACTOR DOES NOT INCLUDE A PERSON,
FIRM, CORPORATION, LANDLORD, COOPERATIVE CORPORATION, CONDOMINIUM  BOARD
OF  MANAGERS,  JOINT TENANT OR CO-TENANT THAT OWNS, IN WHOLE OR IN PART,
THE PROPERTY TO BE IMPROVED.
  S 2. This act shall take effect on the ninetieth day  after  it  shall
have become a law.


 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04664-01-1

S4038A - Bill Details

See Assembly Version of this Bill:
A1913A
Law Section:
Banking Law
Laws Affected:
Add §595-c, Bank L
Versions Introduced in 2009-2010 Legislative Session:
S5102, A170

S4038A - Bill Texts

view summary

Prohibits home improvement contractors from also acting on behalf of mortgage brokers; prohibits a mortgage broker from paying a home improvement contractor directly unless they perform their own inspection of the completed work.

view sponsor memo
BILL NUMBER:S4038A

TITLE OF BILL:
An act
to amend the banking law, in relation to the dealings of mortgage
brokers and home improvement contractors

PURPOSE OR GENERAL IDEA OF BILL:
This legislation prohibits home
improvement contractors from acting on behalf of mortgage brokers.

JUSTIFICATION:
A conflict exists when home improvement contractors act
on behalf of mortgage brokers, unscrupulously using high-pressure
sales tactics to coerce people to obtain loans for what are often
unnecessary repairs. Frequently, these contractors target urban,
low-income neighborhoods to solicit high interest second mortgages in
order to finance construction work frequently performed in a careless
or unprofessional manner. Elderly residents are particularly
vulnerable to such schemes and the loss of home ownership often
results.

High-pressure sales, the lack of accessible credit and the absence of
traditional financial institutions has rendered many low income,
urban communities especially susceptible to these deceptive
practices. The purpose of this legislation is to stop this unjust
activity, shield the buyers, and hold sellers accountable. The
foreclosure crisis in New York State and throughout the nation has
helped to plunge our economy into the worst economic crisis since the
great depression. It is therefore important for the legislature to
aggressively mitigate the risk of foreclosure by minimizing
unnecessary second mortgages that often result in a loss of home
ownership.

PRIOR LEGISLATIVE HISTORY:
2009-10: A.170/S.1502 Referred to Banks
2005-06: A.2152/S.7148
2003-04: A.4980
2001-02: A.5969
1990-00: A.4046
1997-98: A.124/S.256
1995-96: A.3150
1993-94: S.4007

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Ninety days after it becomes law.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4038--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 15, 2011
                               ___________

Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
  printed to be  committed  to  the  Committee  on  Banks  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN ACT to amend the banking law, in relation to the dealings of mortgage
  brokers and home improvement contractors

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The banking law is amended by adding a new section 595-c to
read as follows:
  S 595-C. REGULATION OF DEALINGS OF MORTGAGE BROKERS AND HOME  IMPROVE-
MENT  CONTRACTORS.  1.  NO HOME IMPROVEMENT CONTRACTOR NOR ANY AGENTS OR
SALESPERSONS THEREOF SHALL REPRESENT, ACT AS AN AGENT FOR, OR ADVERTISE,
PROMOTE OR ARRANGE FOR THE SERVICES OF A MORTGAGE BROKER OR  ITS  AFFIL-
IATE WHILE SOLICITING HOME IMPROVEMENT CONTRACTS NOR RECEIVE ANYTHING OF
VALUE  FROM  A  MORTGAGE  BROKER  OR ITS AFFILIATE FOR THE REFERRAL OF A
BORROWER TO A MORTGAGE BROKER. THE STAFF OF A HOME IMPROVEMENT  CONTRAC-
TOR SHALL NOT ACT ON BEHALF OF A MORTGAGE BROKER IN ANY TRANSACTION.
  2.  A  MORTGAGE  BROKER  SHALL  NOT  PAY A HOME IMPROVEMENT CONTRACTOR
DIRECTLY. A HOME IMPROVEMENT CONTRACTOR MAY  RECEIVE  PAYMENT  FROM  THE
PROCEEDS  OF  A HOME IMPROVEMENT LOAN PAYABLE SOLELY TO THE BORROWER OR,
AT THE ELECTION OF THE BORROWER,  THROUGH  AN  INDEPENDENT  THIRD  PARTY
ESCROW  AGENT  IN  ACCORDANCE  WITH  THE  TERMS ESTABLISHED IN A WRITTEN
AGREEMENT SIGNED BY THE BORROWER, THE LENDER AND THE CONTRACTOR PRIOR TO
DISBURSEMENT. A MORTGAGE BROKER SHALL NOT OFFER  A  HOMEOWNER  DIFFERENT
LOAN  TERMS  CONTINGENT  ON  THE  HOMEOWNER  EXECUTING  AN AGREEMENT FOR
PAYMENT THROUGH AN INDEPENDENT THIRD PARTY AS DESCRIBED IN THE PRECEDING
SENTENCE. ANY SUCH AGREEMENT  SHALL  CONTAIN  A  CLEAR  AND  CONSPICUOUS
DISCLOSURE:  YOU  ARE  NOT  REQUIRED  TO EXECUTE THIS AGREEMENT. YOU MAY
INSTEAD RECEIVE PAYMENT DIRECTLY FROM (NAME OF MORTGAGE BROKER).   (NAME

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04664-03-1

S. 4038--A                          2

OF  MORTGAGE  BROKER)  MAY NOT OFFER YOU DIFFERENT TERMS ON YOUR LOAN TO
SIGN THIS AGREEMENT.
  3. A MORTGAGE BROKER SHALL NOT PERMIT A HOME IMPROVEMENT CONTRACTOR TO
BE  A  COSIGNER  OR  TO  ACT AS A GUARANTOR FOR A MORTGAGE LOAN FOR HOME
IMPROVEMENT.
  4. FOR THE PURPOSE OF THIS  SECTION,  "HOME  IMPROVEMENT  CONTRACTOR",
MEANS,  WITH  RESPECT  TO ANY HOME IMPROVEMENT, A PERSON, FIRM OR CORPO-
RATION WHICH OWNS OR OPERATES A HOME IMPROVEMENT BUSINESS OR WHO  UNDER-
TAKES, OFFERS TO UNDERTAKE OR AGREES TO PERFORM ANY HOME IMPROVEMENT FOR
A  FEE  AND  FOR WHOM THE TOTAL PRICE FOR ALL LABOR, MATERIALS AND OTHER
ITEMS IS EQUAL TO OR GREATER THAN TWO HUNDRED DOLLARS. HOME  IMPROVEMENT
CONTRACTOR DOES NOT INCLUDE A PERSON, FIRM, CORPORATION, LANDLORD, COOP-
ERATIVE  CORPORATION,  CONDOMINIUM  BOARD  OF  MANAGERS, JOINT TENANT OR
CO-TENANT THAT OWNS, IN WHOLE OR IN PART, THE PROPERTY TO BE IMPROVED.
  5. THIS SECTION SHALL NOT ANNUL, ALTER, AFFECT OR  EXEMPT  ANY  PERSON
SUBJECT  TO THE PROVISIONS OF THIS SECTION FROM COMPLYING WITH THE LAWS,
ORDINANCES, RULES OR REGULATIONS OF ANY LOCALITY OR  OTHER  GOVERNMENTAL
BODY,  RELATING  TO DEBT COLLECTION PRACTICES, EXCEPT TO THE EXTENT THAT
SUCH LAWS, ORDINANCES, RULES OR REGULATIONS ARE  INCONSISTENT  WITH  ANY
PROVISION  OF  THIS  SECTION,  BUT NO SUCH LAW, ORDINANCE, RULE OR REGU-
LATION  SHALL  BE  CONSIDERED  INCONSISTENT,  IF  IT   AFFORDS   GREATER
PROTECTION TO THE HOMEOWNER FROM PERSONS SUBJECT TO THIS SECTION.
  S  2.  This  act shall take effect on the ninetieth day after it shall
have become a law.

Co-Sponsors

S4038B (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A1913A
Law Section:
Banking Law
Laws Affected:
Add §595-c, Bank L
Versions Introduced in 2009-2010 Legislative Session:
S5102, A170

S4038B (ACTIVE) - Bill Texts

view summary

Prohibits home improvement contractors from also acting on behalf of mortgage brokers; prohibits a mortgage broker from paying a home improvement contractor directly unless they perform their own inspection of the completed work.

view sponsor memo
BILL NUMBER:S4038B

TITLE OF BILL:
An act
to amend the banking law, in relation to the dealings of mortgage
brokers and home improvement contractors

PURPOSE OR GENERAL IDEA OF BILL:
This legislation prohibits home
improvement contractors from acting on behalf of mortgage brokers.

JUSTIFICATION:
A conflict exists when home improvement contractors act
on behalf of mortgage brokers, unscrupulously using high-pressure
sales tactics to coerce people to obtain loans for what are often
unnecessary repairs. Frequently, these contractors target urban,
low-income neighborhoods to solicit high interest second mortgages in
order to finance construction work frequently performed in a careless
or unprofessional manner. Elderly residents are particularly
vulnerable to such schemes and the loss of home ownership often
results.

High-pressure sales, the lack of accessible credit and the absence of
traditional financial institutions has rendered many low income,
urban communities especially susceptible to these deceptive
practices. The purpose of this legislation is to stop this unjust
activity, shield the buyers, and hold sellers accountable. The
foreclosure crisis in New York State and throughout the nation has
helped to plunge our economy into the worst economic crisis since the
great depression. It is therefore important for the legislature to
aggressively mitigate the risk of foreclosure by minimizing
unnecessary second mortgages that often result in a loss of home
ownership.

PRIOR LEGISLATIVE HISTORY:
2009-10 A.170/S.1502 Passed the Assembly 2009 and 2010
2005-06 A.2152/S.7148 Passed the Assembly 2005 and 2006

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Ninety days after it becomes law.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4038--B
    Cal. No. 781

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 15, 2011
                               ___________

Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
  printed to be  committed  to  the  Committee  on  Banks  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to  said  committee -- reported favorably from said committee, ordered
  to first and second report, ordered to a third  reading,  amended  and
  ordered reprinted, retaining its place in the order of third reading

AN ACT to amend the banking law, in relation to the dealings of mortgage
  brokers and home improvement contractors

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The banking law is amended by adding a new section 595-c to
read as follows:
  S 595-C. REGULATION OF DEALINGS OF MORTGAGE BROKERS AND HOME  IMPROVE-
MENT  CONTRACTORS.  1.  NO HOME IMPROVEMENT CONTRACTOR NOR ANY AGENTS OR
SALESPERSONS THEREOF SHALL REPRESENT, ACT AS AN AGENT FOR, OR ADVERTISE,
PROMOTE OR ARRANGE FOR THE SERVICES OF A MORTGAGE BROKER OR  ITS  AFFIL-
IATE WHILE SOLICITING HOME IMPROVEMENT CONTRACTS NOR RECEIVE ANYTHING OF
VALUE  FROM  A  MORTGAGE  BROKER  OR ITS AFFILIATE FOR THE REFERRAL OF A
BORROWER TO A MORTGAGE BROKER. THE STAFF OF A HOME IMPROVEMENT  CONTRAC-
TOR SHALL NOT ACT ON BEHALF OF A MORTGAGE BROKER IN ANY TRANSACTION.
  2. WHERE A MORTGAGE BROKER HAS SOLICITED, PROCESSED, PLACED OR NEGOTI-
ATED  A  MORTGAGE  LOAN, A HOME IMPROVEMENT CONTRACTOR SHALL NOT BE PAID
DIRECTLY BUT INSTEAD MAY RECEIVE PAYMENT FROM THE  PROCEEDS  OF  A  HOME
IMPROVEMENT  LOAN  PAYABLE SOLELY TO THE BORROWER OR, AT THE ELECTION OF
THE BORROWER, THROUGH AN INDEPENDENT THIRD PARTY ESCROW AGENT IN ACCORD-
ANCE WITH THE TERMS ESTABLISHED IN A WRITTEN  AGREEMENT  SIGNED  BY  THE
BORROWER,  THE  LENDER AND THE CONTRACTOR PRIOR TO DISBURSEMENT. A MORT-
GAGE BROKER SHALL NOT OFFER A HOMEOWNER DIFFERENT LOAN TERMS  CONTINGENT
ON THE HOMEOWNER EXECUTING AN AGREEMENT FOR PAYMENT THROUGH AN INDEPEND-
ENT  THIRD PARTY AS DESCRIBED IN THE PRECEDING SENTENCE. ANY SUCH AGREE-
MENT SHALL CONTAIN A CLEAR  AND  CONSPICUOUS  DISCLOSURE:  YOU  ARE  NOT

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04664-04-1

S. 4038--B                          2

REQUIRED  TO  EXECUTE  THIS  AGREEMENT.  YOU MAY INSTEAD RECEIVE PAYMENT
DIRECTLY.  (NAME OF MORTGAGE BROKER) MAY NOT OFFER YOU  DIFFERENT  TERMS
ON YOUR LOAN TO SIGN THIS AGREEMENT.
  3. A MORTGAGE BROKER SHALL NOT PERMIT A HOME IMPROVEMENT CONTRACTOR TO
BE  A  COSIGNER  OR  TO  ACT AS A GUARANTOR FOR A MORTGAGE LOAN FOR HOME
IMPROVEMENT.
  4. FOR THE PURPOSE OF THIS  SECTION,  "HOME  IMPROVEMENT  CONTRACTOR",
MEANS,  WITH  RESPECT  TO ANY HOME IMPROVEMENT, A PERSON, FIRM OR CORPO-
RATION WHICH OWNS OR OPERATES A HOME IMPROVEMENT BUSINESS OR WHO  UNDER-
TAKES, OFFERS TO UNDERTAKE OR AGREES TO PERFORM ANY HOME IMPROVEMENT FOR
A  FEE  AND  FOR WHOM THE TOTAL PRICE FOR ALL LABOR, MATERIALS AND OTHER
ITEMS IS EQUAL TO OR GREATER THAN TWO HUNDRED DOLLARS. HOME  IMPROVEMENT
CONTRACTOR DOES NOT INCLUDE A PERSON, FIRM, CORPORATION, LANDLORD, COOP-
ERATIVE  CORPORATION,  CONDOMINIUM  BOARD  OF  MANAGERS, JOINT TENANT OR
CO-TENANT THAT OWNS, IN WHOLE OR IN PART, THE PROPERTY TO BE IMPROVED.
  5. THIS SECTION SHALL NOT ANNUL, ALTER, AFFECT OR  EXEMPT  ANY  PERSON
SUBJECT  TO THE PROVISIONS OF THIS SECTION FROM COMPLYING WITH THE LAWS,
ORDINANCES, RULES OR REGULATIONS OF ANY LOCALITY OR  OTHER  GOVERNMENTAL
BODY,  RELATING TO HOME IMPROVEMENT CONTRACTS, EXCEPT TO THE EXTENT THAT
SUCH LAWS, ORDINANCES, RULES OR REGULATIONS ARE  INCONSISTENT  WITH  ANY
PROVISION  OF  THIS  SECTION,  BUT NO SUCH LAW, ORDINANCE, RULE OR REGU-
LATION  SHALL  BE  CONSIDERED  INCONSISTENT,  IF  IT   AFFORDS   GREATER
PROTECTION TO THE HOMEOWNER FROM PERSONS SUBJECT TO THIS SECTION.
  S  2.  This  act shall take effect on the ninetieth day after it shall
have become a law.

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