The bill makes homeowner and tenant protection top priorities, requiring maintenance of foreclosed properties by lending institutions, tenant notification before a home goes into foreclosure, and seeks to protect the American dream of home ownership from predatory and fraudulent rescue scam artists.
Lending institutions would be required to maintain the property so that it remains in a safe and habitable condition, thereby protecting neighboring property values and preventing health hazards, vandalism, squatting, fires, and graffiti that plague abandoned and unkept foreclosed homes.
To protect the tenant, the lending institution that acquires the foreclosed property must notify the tenant at least 90 days before taking legal action, a welcome safety net. Previously, tenants could be evicted by marshals with just 48 hours notice.
The Mortgage Foreclosure bill also improves the efficiency of the existing court-based settlement conference process to include all homeowners and all types of loans, including the debilitating sub-prime loans, to negotiate loan modifications so that families can stay in their homes.
It also requires mortgage loan distributors to regularly report information with the Superintendent of Banks that pertains to tenants or homeowners who were given a 90-day foreclosure notice. This provision will help to prevent foreclosures because it identifies distressed homeowners as soon as possible so that they can receive effective counseling.
Previous legislation enacted some safeguards for distressed homeowners, such as prohibiting distressed property consultants from accepting upfront fees, but it exempted mortgage bankers and brokers regulated by the Banking Department.
This bill prohibits all consultants from accepting upfront fees and it mandates that mortgage brokers must disclose the exact amount of total compensation and why the broker will receive that amount in the transaction. Governor Paterson must sign this bill into law now.