BILL NUMBER: S5124

SPONSOR: PERSAUD
 
TITLE OF BILL:  An act to amend the real property actions and
proceedings law, in relation to requiring the foreclosing party in a
residential foreclosure action to offer a refinancing opportunity to the
mortgagor

 
PURPOSE:

To provide homeowners the opportunity to refinance their home when they
receive a foreclosure notice.

 
SUMMARY OF PROVISIONS:

Section one of the bill adds subdivision 3-b to § 1303 of the real prop-
erty actions and proceedings law to require that whenever a bank, or a
financial institution that offer mortgages for residential real property
as part of its regular course of business, is the sole holder of a mort-
gage on the property and delivers a foreclosure notice to a residential
mortgagor of an owner-occupied one-to-four family dwelling, that the
              

aforementioned bank or financial institution also provide an offer to
refinance the mortgage at the same time. The refinancing offer shall be
at the lowest rate offered within the thirty days preceding the origi-
nation of the foreclosure proceeding regardless of the borrower's credit
rating, income, assets, or payment history.The offer to refinance shall
be proffered only once during the foreclosure proceeding or while the
property is owned by the same person. This section also states that its
application is limited to when the foreclosing party is a bank or finan-
cial institution that offers mortgages for residential real property as
part of its regular course of business and is the sole holder of the
mortgage on the property.

Section two of the bill provides the effective date.

 
JUSTIFICATION:

New Yorkers are still feeling the economic impacts of the 2008 financial
crisis. The 2017 Report of the Chief Administrator of the Courts on the
Status of Foreclosures found that there were 50,000 foreclosure cases
pending in New York State. At the time the report was published there
were approximately 27,000 new filings, an amount greater than before the
crisis began in 2007. In addition, according to ATTOM Data Solutions, a
firm that tracks foreclosures, New York was at its highest rate of fore-
closure auctions since 2006, up 9%, bucking the national trend. In fact,
New York ranked 10th in foreclosure rates by state, with 1 home in every
1,672 being foreclosed on. And most alarmingly, according to a 2017
Patch article, the high foreclosure rate for the borough of Brooklyn can
be attributed almost exclusively to impacted neighborhoods in East
Brooklyn.

The legislature has enacted numerous pieces of legislation to assist
homeowners threatened by foreclosure; however, these startling statis-
tics demonstrate that more needs to be done and that homeowners need
other options to foreclosure. One option that banks typically offer
homeowners is a loan modification, which may help a homeowner in the
short term by reducing their monthly payment, but comes at the cost of
considerably lengthening the loan over a significant amount of years and
potentially putting them at risk of losing their home in the future.
A better option to help people stay in their homes is by providing home-
owners the option to refinance their mortgage. Amongst other things,
this option allows homeowners to utilize the equity that they have built
up in their home through any number of factors including but not limited
to, the increase in market value of their home. If a homeowner is able
to refinance their home, potentially at a lower interest rate, they may
be able to receive a monthly mortgage payment that not only is more
manageable but is also structured in such a way where the debt is
significantly less and facilitates an environment that will help home-
owners avoid foreclosure. Enactment of this legislation will afford
people a greater opportunity to stay in their homes.

 
PRIOR LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

None to the State

 
EFFECTIVE DATE:
Sixtieth day after becoming law and shall apply to all foreclosures on
residential properties begun on or after such date.