senate Bill S6459

2011-2012 Legislative Session

Establishes the New York state mortgage settlement fund to consist of monies obtained by the state as a result of settlement with mortgage servicers

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Archive: Last Bill Status - In Committee


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

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Senate Actions - UPPERCASE
Feb 10, 2012 referred to finance

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S6459 - Bill Details

Current Committee:
Law Section:
State Finance Law
Laws Affected:
Add ยง97-llll, St Fin L

S6459 - Bill Texts

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Establishes the New York state mortgage settlement fund to consist of monies obtained by the state as a result of settlement with mortgage servicers to be used to compensate eligible homeowners who have been injured by foreclosure abuses; provides that homeowners eligible to receive compensation as a result of such settlement may elect certain bases for calculating such compensation; provides that eligible homeowners may request treble damages.

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BILL NUMBER:S6459

TITLE OF BILL:
An act
to amend the state finance law, in relation to establishing the New York
state mortgage settlement fund

PURPOSE:
To authorize the New York State Comptroller to establish a special
fund to be known as the New York state mortgage settlement fund.

JUSTIFICATION:
In the fall of 2008 New York State and the entire country was reeling
from an onslaught of residential foreclosures which from the
beginning of 2007 to early 2012 saw roughly four million families
lose their homes to foreclosure.
The devastating toll this epidemic took on the country left families
shaken and America's financial system on the brink of collapse. The
foreclosure situation was further exacerbated by evidenced emerging
that the foreclosure process was possibly corrupted by careless
recordkeeping, cut corners and potential fraud, typified by
high-profile cases of "robo-signing" - cases in which foreclosures
took place based on forged or unreviewed documents.

These series of events led to state attorneys general from across the
country bringing mortgage lenders to the negotiating table to address
all of the concerns raised from the process and, amongst other
things, how affected homeowners can receive restitution. It is
estimated that families lost upward of $7,000 dollars due to
foreclosure. In addition, foreclosures caused widespread displacement
and housing instability, financial insecurity and economic hardship,
including damaged credit ratings, reductions in net worth, severe
imbalances in Debt vs. Assets for individuals, personal and family
stress, and in some cases ill health. New York State was
disproportionately affected by this epidemic.

The goal of this legislation is to provide alternative methods of
distribution to effected homeowners from state settlement recovery.
Nominal amounts of recovery fall short of bringing homeowners to as
close to a position as they were in before the devastating lending
and foreclosure practices were implemented by lending institutions.
Homeowners need real restitution in order to help set their lives
back in order.

SUMMARY OF PROVISIONS:

Subsection 5. Under this legislation Homebuyers may elect to receive:

(a) the full amount of the down payment paid on his or her qualifying
residential real property, in addition to the amount of all monthly
mortgage associated with such property, up to and including the later
of the date of the foreclosure action or discovery of the wrong;

(b) twenty percent of the original appraised value of the qualifying
residential real property;


(c) if the eligible homeowner has been foreclosed upon
and is no longer residing in the
qualifying residential real property, the full amount of a
down payment on new residential real property;

(d) if the eligible homeowner has been foreclosed upon and is no
longer residing in the qualifying residential real property and has
not chosen to purchase new residential real property, up to six
months of rental payments;

Subsection 6. In addition to the compensation authorized by subdivision
five of this section, the commissioner of the division of housing and
community renewal shall determine, upon request by an eligible
homeowner and after evaluating the facts surrounding a participating
mortgage servicer's handling of the mortgage on the qualifying
residential real property of the requesting homeowner, if such
homeowner is also entitled to receive treble damages in an amount not
to exceed three times the amount elected by such homeowner pursuant
to subdivision five of this section, as a result of the egregious
nature of such mortgage servicer's conduct.

LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
Proceeds to the state to be determined by settlement agreement.

EFFECTIVE DATE:
Immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6459

                            I N  S E N A T E

                            February 10, 2012
                               ___________

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

AN ACT to amend the state finance law, in relation to  establishing  the
  New York state mortgage settlement fund

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

  Section 1. The state finance law is amended by adding  a  new  section
97-1111 to read as follows:
  S 97-1111. NEW YORK STATE MORTGAGE SETTLEMENT FUND. 1. THERE IS HEREBY
ESTABLISHED IN THE CUSTODY OF THE STATE COMPTROLLER A SPECIAL FUND TO BE
KNOWN AS THE NEW YORK STATE MORTGAGE SETTLEMENT FUND.
  2.  SUCH  FUND  SHALL CONSIST OF ALL MONIES OBTAINED BY THE STATE AS A
RESULT OF ANY AND ALL SETTLEMENTS NEGOTIATED WITH, BY OR  ON  BEHALF  OF
NEW YORK STATE WITH THE MORTGAGE SERVICERS, ANY OTHER MONEYS RECEIVED IN
LIEU  OF  SUCH AGREEMENT, AND ALL OTHER MONEYS APPROPRIATED, CREDITED OR
TRANSFERRED THERETO PURSUANT TO LAW.
  3. MONIES IN THE NEW YORK STATE MORTGAGE SETTLEMENT FUND SHALL BE KEPT
SEPARATE AND SHALL NOT BE COMMINGLED WITH ANY OTHER MONIES IN THE CUSTO-
DY OR CONTROL OF THE STATE COMPTROLLER.
  4. FOR PURPOSES OF THIS SECTION, THE FOLLOWING TERMS  SHALL  HAVE  THE
FOLLOWING MEANINGS:
  (A)  "MASTER SETTLEMENT AGREEMENT" SHALL MEAN THE SETTLEMENT AGREEMENT
AND RELATED DOCUMENTS ENTERED INTO IN THE YEAR TWO  THOUSAND  TWELVE  BY
THE STATE AND PARTICIPATING MORTGAGE SERVICERS.
  (B)  "MORTGAGE  SERVICER" SHALL HAVE THE SAME MEANING AS PARAGRAPH (H)
OF SUBDIVISION ONE OF SECTION FIVE HUNDRED NINETY OF THE BANKING LAW.
  (C) "PARTICIPATING MORTGAGE SERVICER" SHALL MEAN EACH MORTGAGE  SERVI-
CER  THAT  ENTERED  INTO THE MASTER SETTLEMENT AGREEMENT WITH THE STATE,
INCLUDING ALLY/GMAC, BANK OF AMERICA, CITI,  JPMORGAN  CHASE  AND  WELLS
FARGO.
  (D)  "ELIGIBLE  HOMEOWNER"  SHALL  MEAN ANY RESIDENT OF THIS STATE WHO
CURRENTLY OWNS AND RESIDES OR DID OWN AND RESIDE IN QUALIFYING  RESIDEN-
TIAL  REAL  PROPERTY,  WHO  THE COMMISSIONER DETERMINES, PURSUANT TO THE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14624-01-2

S. 6459                             2

ELIGIBILITY RESTRICTIONS SET FORTH IN SUCH MASTER SETTLEMENT  AGREEMENT,
IS A HOMEOWNER CONTEMPLATED BY SUCH AGREEMENT.
  (E)  "QUALIFYING  RESIDENTIAL REAL PROPERTY" MEANS PROPERTY LOCATED IN
THIS STATE THAT IS OR WAS SUBJECT TO A HOME LOAN SERVICED BY  A  PARTIC-
IPATING  MORTGAGE  SERVICER AND (I) IS CURRENTLY OWNED AND OCCUPIED AS A
PRIMARY RESIDENCE BY AN ELIGIBLE HOMEOWNER; OR (II) WAS OWNED AND  OCCU-
PIED  AS A PRIMARY RESIDENCE BY AN ELIGIBLE HOMEOWNER BUT WAS FORECLOSED
UPON  BETWEEN  JANUARY  FIRST,   TWO   THOUSAND   EIGHT   AND   DECEMBER
THIRTY-FIRST, TWO THOUSAND ELEVEN.
  5.  SUBJECT  TO  THE TERMS AND CONDITIONS OF THE SETTLEMENT AGREEMENT,
ALL MONIES IN THE FUND SHALL BE USED,  WITHOUT  APPROPRIATION  THEREFOR,
FOR  THE  SOLE  PURPOSE OF DIRECTLY COMPENSATING ELIGIBLE HOMEOWNERS WHO
HAVE BEEN INJURED BY FORECLOSURE  ABUSES.  AN  ELIGIBLE  HOMEOWNER  MAY,
SUBJECT  TO  FURTHER ELIGIBILITY REQUIREMENTS DESCRIBED IN THIS SUBDIVI-
SION, ELECT TO RECEIVE COMPENSATION FOR INJURIES IN ONE OF THE FOLLOWING
AMOUNTS:
  (A) THE FULL AMOUNT OF THE DOWN PAYMENT PAID ON HIS OR HER  QUALIFYING
RESIDENTIAL  REAL  PROPERTY,  IN  ADDITION  TO THE AMOUNT OF ALL MONTHLY
MORTGAGE ASSOCIATED WITH SUCH PROPERTY, UP TO AND INCLUDING THE LATER OF
THE DATE OF THE FORECLOSURE ACTION OR DISCOVERY OF THE WRONG;
  (B) TWENTY PERCENT OF THE ORIGINAL APPRAISED VALUE OF  THE  QUALIFYING
RESIDENTIAL REAL PROPERTY;
  (C) IF THE ELIGIBLE HOMEOWNER HAS BEEN FORECLOSED UPON AND IS NO LONG-
ER RESIDING IN THE QUALIFYING RESIDENTIAL REAL PROPERTY, THE FULL AMOUNT
OF A DOWN PAYMENT ON NEW RESIDENTIAL REAL PROPERTY;
  (D) IF THE ELIGIBLE HOMEOWNER HAS BEEN FORECLOSED UPON AND IS NO LONG-
ER  RESIDING  IN  THE  QUALIFYING  RESIDENTIAL REAL PROPERTY AND HAS NOT
CHOSEN TO PURCHASE NEW RESIDENTIAL REAL PROPERTY, UP TO  SIX  MONTHS  OF
RENTAL PAYMENTS;
  6.  IN  ADDITION TO THE COMPENSATION AUTHORIZED BY SUBDIVISION FIVE OF
THIS SECTION, THE COMMISSIONER OF THE DIVISION OF HOUSING AND  COMMUNITY
RENEWAL SHALL DETERMINE, UPON REQUEST BY AN ELIGIBLE HOMEOWNER AND AFTER
EVALUATING  THE  FACTS  SURROUNDING  A PARTICIPATING MORTGAGE SERVICER'S
HANDLING OF THE MORTGAGE ON THE QUALIFYING RESIDENTIAL REAL PROPERTY  OF
THE  REQUESTING HOMEOWNER, IF SUCH HOMEOWNER IS ALSO ENTITLED TO RECEIVE
TREBLE DAMAGES IN AN AMOUNT NOT TO EXCEED THREE TIMES THE AMOUNT ELECTED
BY SUCH HOMEOWNER PURSUANT TO SUBDIVISION FIVE OF  THIS  SECTION,  AS  A
RESULT OF THE EGREGIOUS NATURE OF SUCH MORTGAGE SERVICER'S CONDUCT.
  7.  THE  MONIES OF THE FUND SHALL BE PAID OUT ON THE AUDIT AND WARRANT
OF THE COMPTROLLER ON VOUCHERS CERTIFIED OR APPROVED BY THE COMMISSIONER
OF THE DIVISION OF HOUSING AND COMMUNITY RENEWAL OR  BY  AN  OFFICER  OR
EMPLOYEE  OF THE DIVISION OF HOUSING AND COMMUNITY RENEWAL DESIGNATED BY
SUCH COMMISSIONER.
  S 2. This act shall take effect immediately.

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