Bill Text: NY S04408 | 2019-2020 | General Assembly | Introduced

Bill Title: Requires an authorized lender which seeks to foreclose upon a reverse mortgage issued under the federal home equity conversion mortgage program to provide notice thereof to the department of financial services and to the mortgagor; directs such department to provide notice to the mortgagor of legal service organizations which may assist them with the default or foreclosure; prohibits authorized lenders from making advance payment of debts upon the mortgaged real property.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Passed) 2020-12-15 - APPROVAL MEMO.43 [S04408 Detail]

Download: New_York-2019-S04408-Introduced.html

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                    IN SENATE
                                     March 11, 2019
        Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
          printed to be committed to the Committee on Aging
        AN  ACT to amend the real property law, in relation to the regulation of
          default and foreclosure of reverse mortgages issued under the  federal
          home equity conversion mortgage for seniors program
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. The real property law is amended by adding  a  new  section
     2  280-d to read as follows:
     3    §  280-d. Federal home equity conversion mortgage default and foreclo-
     4  sure regulation. 1. For the purposes  of  this  section,  the  following
     5  terms shall have the following meanings:
     6    (a)  Reverse  mortgage  loan.  A  reverse  mortgage loan as defined in
     7  section two hundred eighty of this article,  which  is  issued  in  this
     8  state  pursuant  to  the  home  equity  conversion  mortgage for seniors
     9  program operated by the federal Department of Housing and Urban Develop-
    10  ment.
    11    (b) Authorized lender. An authorized lender as defined in section  two
    12  hundred  eighty  of  this  article  authorized  to make reverse mortgage
    13  loans, as defined in this section.
    14    (c) Department.  The  department  of  financial  services  established
    15  pursuant to section one hundred two of the financial services law.
    16    2.  In  the  event of a default or foreclosure upon a reverse mortgage
    17  loan, the authorized lender, upon the commencement  of  the  foreclosure
    18  proceeding,  shall  transmit  to  the  department proof that the federal
    19  Department of Housing and Urban Development has granted  prior  approval
    20  to accelerate the loan, proof of the default notice to the mortgagor and
    21  any  such  information  relating  to  the loans and the mortgagor as the
    22  department shall determine to be necessary. Upon receipt of such  infor-
    23  mation,  the department shall provide notice of and information relating
    24  to the foreclosure to the mortgagor. Such notice shall include a  notice
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 4408                             2
     1  of  the mortgagor's rights in the foreclosure process and contact infor-
     2  mation for legal service organizations which may be able to  assist  the
     3  mortgagor with the mortgage default and/or foreclosure.
     4    3.  No  reverse mortgage loan commitment shall be issued by an author-
     5  ized lender unless such commitment provides in writing notice  that  the
     6  department  will  be  provided notice of any default or foreclosure upon
     7  the loan so as to provide assistance to the mortgagor.
     8    4. No authorized lender shall make an advance payment  for  any  obli-
     9  gation arising from mortgaged real property. Furthermore, in the event a
    10  mortgagor defaults upon the payment of mortgage insurance premium, home-
    11  owners  insurance  premium or real property tax related to the mortgaged
    12  property, the authorized lender may only pay those premiums and/or taxes
    13  which are in arrears.
    14    5.  The department shall issue regulations which shall require mortga-
    15  gees to engage in mandatory loss mitigation procedures to  be  specified
    16  by  the  department.  These loss mitigation procedures shall comply with
    17  any restrictions on loss mitigation issued by the federal Department  of
    18  Housing and Urban Development for reverse mortgages and shall be updated
    19  when  necessary  to ensure compliance with federal rules.  The mortgagee
    20  shall provide information to the department about loans  receiving  such
    21  loss  mitigation assistance.  This includes maintaining loan level, loss
    22  mitigation data and providing the department with the following informa-
    23  tion for loans associated with a repayment plan:
    24    (a) monthly surplus income;
    25    (b) term of repayment plan;
    26    (c) amount of monthly repayment plan payment;
    27    (d) due date of next monthly payment;
    28    (e) when a mortgagor experiences a hardship; and
    29    (f) reason for hardship.
    30    6. Any person who has been injured by reason of any violation of  this
    31  section may bring an action in his or her own name to recover treble his
    32  or her actual damages, plus the prevailing plaintiff's reasonable attor-
    33  ney's fees.
    34    7.  The  requirements of this section shall be conditions precedent to
    35  commencing an action to foreclose upon a home equity conversion mortgage
    36  which is subject to the provisions  of  this  section,  and  failure  to
    37  comply therewith shall be a complete defense to a foreclosure action.
    38    § 2. This act shall take effect on the one hundred twentieth day after
    39  it shall have become a law; provided, however, that effective immediate-
    40  ly,  any  actions  necessary  for  the implementation of this act on its
    41  effective date are authorized and directed to be completed on or  before
    42  such date.