New York State Assembly

 
•  Summary 
 
•  Actions 
 
•  Committee Votes 
 
•  Floor Votes 
 
•  Memo 
 
•  Text 
 
•  LFIN 
 
•  Chamber Video/Transcript 

S00760 Summary:

S00760 Actions:

S00760 Committee Votes:

S00760 Floor Votes:

S00760 Memo:

Memo not available

S00760 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                           760
 
                               2021-2022 Regular Sessions
 
                    IN SENATE
 
                                       (Prefiled)
 
                                     January 6, 2021
                                       ___________
 
        Introduced  by Sens. BIAGGI, HOYLMAN, KRUEGER, PARKER, SEPULVEDA -- read
          twice and ordered printed, and when printed to  be  committed  to  the
          Committee on Banks
 
        AN  ACT  to  amend  the banking law, the uniform commercial code and the
          civil practice law and  rules,  in  relation  to  reverse  cooperative
          apartment unit loans
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. The banking law is amended by adding a new section  6-o  to
     2  read as follows:
     3    §  6-o. Reverse cooperative apartment unit loans for persons sixty-two
     4  years of age or older. 1. For purposes of this  section,  the  following
     5  terms shall have the following meanings:
     6    (a)  Reverse  cooperative apartment unit loan. A loan which is secured
     7  by shares or membership in a cooperative apartment that is  or  intended
     8  to be the primary residence of the borrower or borrowers the proceeds of
     9  which  are  advanced to the borrower or borrowers during the term of the
    10  loan in equal installments, or in advances through a line of  credit  or
    11  otherwise,  in  a  lump sum, or through a combination thereof.  Interest
    12  and fees will accrue during the life of the loan and will  be  added  to
    13  the  principal  balance of the loan, but will not become due and payable
    14  until the   borrower(s)  dies,  permanently  vacates  the  apartment  or
    15  defaults on the terms of the loan, and will continue to accrue until the
    16  loan is paid in full.
    17    (b) Loan payout options:
    18    (i)  Term payment option. Under the term payment option, equal monthly
    19  payments are made by the lender to the borrower  for  a  fixed  term  of
    20  months chosen by the borrower.
    21    (ii)  Tenure  payment  option.  Under the tenure payment option, equal
    22  monthly payments are made by the lender to the borrower, until the  loan
    23  is prepaid in full or becomes due and payable.
    24    (iii)  Line of credit payment option. Under the line of credit payment
    25  option, payments are made by the lender to the borrower at times and  in
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02964-01-1
        S. 760                              2
 
     1  amounts  determined by the borrower as long as the amounts do not exceed
     2  the maximum amount of loan proceeds.
     3    (iv) Single lump sum payment option. Under the single lump sum payment
     4  option,  the  borrower  receives an amount from the lender that does not
     5  exceed the maximum amount of loan  proceeds.  Set  asides  required  for
     6  disbursements  such  as  loan  closing  costs or for monthly maintenance
     7  fees, will be deducted from the amount  of  proceeds  available  to  the
     8  borrower.
     9    (c) Authorized lender. Any bank, trust company, national banking asso-
    10  ciation,  savings  bank,  savings  and loan association, federal savings
    11  bank, federal savings and loan association,  credit  union,  or  federal
    12  credit  union or any licensed mortgage banker approved for the making of
    13  reverse mortgage loans by the superintendent or any entity exempted from
    14  licensing pursuant to section five hundred ninety of  this  chapter  and
    15  approved for the making of reverse mortgage loans by the superintendent.
    16    (d)  Borrower.  A tenant in severalty who is sixty-two years of age or
    17  older, or if the cooperative apartment unit is held by  tenants  by  the
    18  entirety  or  by joint tenancy, the youngest of which is sixty-two years
    19  age or older.
    20    (e) Superintendent. The superintendent of financial services  of  this
    21  state.
    22    (f) Department. The department of financial services of this state.
    23    (g) Third-party contact. The lender must ask the borrower if they want
    24  to  designate  a  third-party  contact, such as a family member, trusted
    25  friend, advisor or other party  whom  the  borrower  would  like  to  be
    26  contacted. It shall be the borrower's discretion to choose if the third-
    27  party  contact  is  to be contacted if (i) the borrower has not returned
    28  the occupancy form, and/or (ii) the loan is in default  for  any  reason
    29  and  the lender plans to proceed on collecting on the loan, i.e., initi-
    30  ating eviction or  foreclosure  and/or  (iii)  the  borrower  cannot  be
    31  reached.
    32    2. A cooperative apartment unit loan pursuant to this section shall be
    33  subject to the following:
    34    (a)  the  borrower shall be granted lifetime possession of the subject
    35  premises of the cooperative apartment unit which is the security for the
    36  reverse cooperative apartment unit loan, as long as such apartment  unit
    37  remains  the  borrowers'  primary  residence  and the borrower is not in
    38  default under the reverse cooperative apartment unit loan. The  borrower
    39  or borrowers must certify annually on each anniversary of the loan, that
    40  they reside in the unit and that it is their primary residence;
    41    (b)  the lender shall ask the borrower if they designate a third party
    42  contact, collect such information from  the  borrower  and  update  such
    43  information annually on each anniversary of the loan;
    44    (c)  subject  to  such  rules or regulations as the superintendent may
    45  adopt, a reverse cooperative apartment unit loan shall be made at either
    46  a fixed or variable rate of interest;
    47    (d) subject to such rules or regulations  as  the  superintendent  may
    48  adopt,  the  authorized lender may require a borrower to establish a set
    49  aside account for the purposes of paying property taxes, maintenance  or
    50  cooperative  fees,  insurance  premiums  of  the  property  securing the
    51  reverse cooperative apartment unit loan, or for the payment of any other
    52  fees and expenses;
    53    (e) a lender who fails to make loan advances as required in  the  loan
    54  documents, and fails to cure an actual default after notice as specified
    55  in  the  loan  documents, shall forfeit any right to collect interest or
    56  service charges under the contract. The  lender's right to  recovery  at
        S. 760                              3

     1  loan  maturity  shall  be  limited to the outstanding  balance as of the
     2  date of lender's default, minus all interest.  However, a  lender  shall
     3  not be required to make loan advances under a loan if the borrower is in
     4  default under  the loan;
     5    (f)  the  outstanding  balance  may be prepaid in full by the borrower
     6  without penalty at any time during  the  reverse  cooperative  apartment
     7  unit loan term;
     8    (g)  an  authorized  lender  is prohibited from using or attaching any
     9  property or asset of the borrower or heirs of the  borrower  except  the
    10  apartment  unit  securing the reverse cooperative apartment unit loan in
    11  settlement of a reverse loan  obligation--the  loan  is  a  non-recourse
    12  loan;
    13    (h)  an authorized lender shall deliver to the applicant upon applica-
    14  tion, a statement prepared  by  the  department  providing  the  contact
    15  information  for  New  York  approved, or U.S. Department of Housing and
    16  Urban Development approved, reverse  mortgage  housing  counselors  with
    17  cooperative housing training approved by the department whom the cooper-
    18  ative  apartment  owner can call for independent counseling and informa-
    19  tion services. Further, no reverse loan commitment shall  be  issued  by
    20  the  authorized  lender until the applicant presents, in writing, a form
    21  that certifies the terms of the reverse cooperative apartment unit  loan
    22  have  been explained to them by a New York or U.S. Department of Housing
    23  and Urban Development approved reverse mortgage housing  counselor  with
    24  cooperative  housing  training  approved  by the department. The form of
    25  such statement and affidavit and cooperative housing counseling services
    26  shall be approved by the superintendent;
    27    (i) an authorized lender shall deliver to an  applicant  such  disclo-
    28  sures  as may be required by the superintendent which shall describe the
    29  relevant portions of the reverse loan being offered, and  shall  include
    30  but not be limited to the following items:
    31    (i)  a  schedule  of  payments  to and from the borrower and the total
    32  payments in dollars over the life expectancy of the youngest borrower of
    33  the reverse cooperative apartment unit loan for the borrower;
    34    (ii) a statement prominently displayed advising applicants to  consult
    35  with  appropriate  authorities  regarding tax and estate planning conse-
    36  quences of a reverse cooperative apartment unit loan;
    37    (iii) where applicable a description  of  prepayment  and  refinancing
    38  features;
    39    (iv)  to  the  extent determinable at or prior to the inception of the
    40  reverse cooperative apartment unit loan, the interest rate and, an esti-
    41  mate of the total interest payable on the reverse cooperative  apartment
    42  unit loan;
    43    (v)  a  statement  concerning  the  compliance  of the lender with the
    44  criteria established by the superintendent  that  an  authorized  lender
    45  must  meet  before  it may make reverse cooperative apartment unit loans
    46  pursuant to this section;
    47    (vi) a statement setting forth those events which would cause the loan
    48  to become due and payable (or cause the borrower to default) the reverse
    49  cooperative apartment unit loan;
    50    (vii) the loan is subject to a three day right of  rescission  by  the
    51  borrower; and
    52    (viii)  a  financial  statement setting forth an estimate of all costs
    53  associated with the loan;
    54    (j) an authorized lender shall deliver to each borrower at the time of
    55  closing of a reverse cooperative unit loan two copies of the  borrower's
        S. 760                              4
 
     1  right  to  cancel  and  instructions  for  how  to cancel the loan to be
     2  prescribed by the superintendent;
     3    (k) a reverse cooperative apartment unit loan pursuant to this section
     4  shall  expressly  and conspicuously bear a legend identifying it as such
     5  in at least fourteen-point font;
     6    (l) a reverse cooperative apartment unit loan shall clearly set  forth
     7  the terms for when the loan becomes due and payable, including:
     8    (i)  regardless of loan payout option chosen by the borrower, the loan
     9  note shall state that the outstanding loan balance will not be  due  and
    10  payable  in  full until the last borrower dies, or if a borrower conveys
    11  all of his or her title in the property and no  other  borrower  retains
    12  title to the property; and
    13    (ii) the loan note shall state that the outstanding loan balance shall
    14  be due and payable in full if any of the following occur:
    15    (1)  the property ceases to be the primary residence of a borrower for
    16  reasons other than death and the property is not the  primary  residence
    17  of at least one other borrower;
    18    (2)  for a period of longer than twelve consecutive months, a borrower
    19  fails to occupy the property because of physical or mental  illness  and
    20  the  property is not the primary residence of at least one other borrow-
    21  er; or
    22    (3) an obligation of the borrower under the loan note is not met;
    23    (m) in the event that an authorized lender or holder  of  the  reverse
    24  cooperative  apartment  unit  loan determines the loan is in default and
    25  intends to initiate proceedings pursuant to the note, the  lender  shall
    26  notify the borrower's third-party contact. In the event that the borrow-
    27  er  has  not  designated a third-party contact to receive such notice of
    28  foreclosure, then the authorized lender or the holder  of  said  reverse
    29  cooperative  apartment unit loan shall notify the local or county office
    30  for the aging of its intent to commence  foreclosure  proceedings.  Such
    31  entity  shall  take  appropriate  action to protect the interests of the
    32  borrower;
    33    (n) a reverse cooperative apartment unit loan secured by a unit  in  a
    34  cooperative  housing  corporation  shall  also  be  subject to the prior
    35  approval by the cooperative's board of directors; and
    36    (o) no reverse cooperative apartment unit loan  shall  be  subject  to
    37  mandatory binding arbitration.
    38    3.  A reverse cooperative apartment unit loan pursuant to this section
    39  may:
    40    (a) provide that an authorized lender  may,  consistent  with  federal
    41  laws  and regulations, include a due-on-sale clause in its reverse coop-
    42  erative apartment unit loan agreement and at  its  option  exercise  and
    43  enforce such clause in accordance with its terms; and
    44    (b)  provide  that  the  borrower's  closing  costs, including but not
    45  limited to loan or commitment fees if any, insurance premiums,  repairs,
    46  legal fees, the costs of third party counseling, the costs of paying off
    47  any existing mortgages or liens, and other appropriate costs be included
    48  in  the  principal  of  the  reverse cooperative apartment unit loan and
    49  disbursed out of the loan proceeds at closing.
    50    4. The superintendent shall adopt such rules or regulations as  he  or
    51  she considers appropriate to govern a reverse cooperative apartment unit
    52  loan  made  pursuant  to  this section. No reverse cooperative apartment
    53  unit loan shall be made unless it conforms to the requirements  of  this
    54  section and such rules and regulations as the superintendent may adopt.
    55    5.  No  authorized  lender  or  any other party or entity shall in any
    56  manner, in the marketing or offering of  reverse  cooperative  apartment
        S. 760                              5
 
     1  unit  loans,  engage  in any unfair or deceptive practices in connection
     2  with the marketing or offering of  reverse  cooperative  apartment  unit
     3  loans, and, additionally, shall not:
     4    (a)  use  the  words  "public service announcement" in any commercial,
     5  mailing, advertisement or writing relating thereto;
     6    (b) use the words  "government  insured"  or  other  similar  language
     7  representing  that reverse cooperative apartment unit loans are insured,
     8  supported and sponsored by any governmental entity  in  any  commercial,
     9  mailing, advertisement or writing relating thereto; or
    10    (c) represent that any such loan is other than a commercial product.
    11    6.  (a) Every authorized lender and assignee must obtain a surety bond
    12  in the amount of one hundred thousand dollars for the benefit of  claims
    13  against  the lender/assignee for failure to perform their obligations to
    14  the borrower. The superintendent will hold the surety bond. In addition,
    15  a lender or assignee shall maintain an  irrevocable  standby  letter  of
    16  credit  from  a  financial institution approved by the superintendent in
    17  favor of the lender or assignee in  an  amount  necessary  to  fund  all
    18  reverse  mortgage  loan  requirements  anticipated  over the next twelve
    19  months for loans then on the lender's books and  those  expected  to  be
    20  made  over the next twelve months or three million dollars, whichever is
    21  greater. The initial term of the letter of credit shall be at least  two
    22  years. A lender or assignee also shall maintain a minimum capital of ten
    23  million  dollars.  A lender may rely upon its parent company to meet the
    24  minimum capital requirements. The requirements for a  letter  of  credit
    25  shall  not  apply  to  loans  that are fully funded at consummation. The
    26  minimum capital requirements shall not apply  to  lenders  or  assignees
    27  that  sell  loans in the secondary market to a financially viable finan-
    28  cial institution, and the superintendent shall define  the  requirements
    29  of what constitutes a "financially viable financial institution prior to
    30  any secondary market sale".
    31    (b)  Every  authorized  lender  or  its  agent shall provide, with any
    32  solicitation for reverse cooperative apartment unit loan products mailed
    33  to a physical address within the state, supplemental consumer protection
    34  materials the content and form of which shall be specified by the super-
    35  intendent or his or her designee.
    36    (c) Every authorized lender shall provide each applicant or  potential
    37  applicant  for  a reverse cooperative apartment unit loan with the tele-
    38  phone number and internet website address provided by the department for
    39  the purposes of acquiring reverse cooperative apartment unit loan  coun-
    40  seling.
    41    (d)  The  superintendent  is  authorized  to promulgate such rules and
    42  regulations  as  he  or  she  shall  deem  necessary  to  implement  the
    43  provisions of this subdivision.
    44    7. For reverse cooperative apartment unit loans, authorized lender and
    45  their agents shall:
    46    (a)  provide  a monthly account statement, and for all borrowers whose
    47  maintenance fees, special assessments mortgage insurance payments, home-
    48  owners insurance payments, or payments stemming from any other  property
    49  obligation or obligations are administered by the authorized lender, and
    50  where  these  payments  are  derived  from the proceeds of the loan, the
    51  authorized lender shall provide on the borrower's account statement  the
    52  current  balance  remaining in the borrower's line of credit or lifetime
    53  expectancy set aside, the projected annual  property  charges  for  that
    54  year, and a notice which reads in at least fourteen point type:
    55    "YOUR  MAINTENANCE  FEES  AND  SPECIAL ASSESSMENTS ARE CURRENTLY BEING
    56  PAID BY THE PROCEEDS OF THIS LOAN. THE FUNDS THAT HAVE  BEEN  SET  ASIDE
        S. 760                              6
 
     1  ARE  EXPECTED  TO  BE  EXHAUSTED  AFTER THE MAINTENANCE FEES AND SPECIAL
     2  ASSESSMENT PAYMENTS  OF  (SPECIFY  EXPECTED  MONTH  AND  YEAR).  IF  THE
     3  PROCEEDS  OF  THIS  LOAN  CANNOT  PAY  THE  MAINTENANCE FEES AND SPECIAL
     4  ASSESSMENTS,  YOU  MUST PAY THESE OBLIGATIONS OR YOUR COOP SHARES MAY BE
     5  LOST TO FORECLOSURE. PLEASE  NOTE  THAT  MAINTENANCE  FEES  AND  SPECIAL
     6  ASSESSMENTS  CAN  VARY  SO YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR
     7  CHANGES."
     8    (b) by telephone and first class mail, inform and provide notice to  a
     9  borrower  when  his or her home equity line of credit or life expectancy
    10  set aside is depleted to twenty percent  or  less  of  its  value.  Such
    11  notice  shall  inform the borrower of his or her obligations relating to
    12  such real property including, but not limited  to,  mortgage  insurance,
    13  homeowners  insurance  and  real  property taxes previously paid by such
    14  line of credit or life expectancy set aside, and that  such  obligations
    15  must  continue  to  be  paid when the home equity line of credit or life
    16  expectancy set aside is depleted. Such notice shall use plain  language,
    17  written in a clear and coherent manner using words with common and every
    18  day  meanings,  appropriately  divided  and  captioned  by  its  various
    19  sections. If the lender or its agent is unable to contact  the  borrower
    20  by  telephone, notice must be sent to the third-party contact if author-
    21  ized by the borrower.
    22    (c) Each authorized lender shall, by telephone and first  class  mail,
    23  inform and provide notice to a borrower when his or her home equity line
    24  of  credit  or  life expectancy set aside is depleted. Such notice shall
    25  inform the borrower of his or her obligations relating  to  the  cooper-
    26  ative  apartment unit including, but not limited to, mortgage insurance,
    27  homeowners insurance and real property taxes, and that the  home  equity
    28  line  of  credit  or  life expectancy set aside will no longer pay these
    29  obligations. Such notice shall use plain language, written  in  a  clear
    30  and  coherent  manner  using  words  with common and every day meanings,
    31  appropriately divided and captioned by its various sections.
    32    8. In the event that an authorized lender determines a reverse cooper-
    33  ative apartment unit loan to be in default on the basis that the cooper-
    34  ative apartment is no longer the primary residence of or occupied by the
    35  borrower, if during the verification of the borrower's primary residence
    36  and/or occupancy no responses  are  received  in  response  to  mailings
    37  relating thereto, such lender shall cause a telephone call to be made to
    38  the  borrower,  or  if  the borrower is unreachable by telephone, to the
    39  third-party contact if designated, and an in person visit to be made  to
    40  the  borrower  at  the  cooperative  apartment  to  be made prior to the
    41  commencement of any proceeding to enforce the lender's rights under  the
    42  note.  During  such  visit,  the  authorized  lender  or its agent shall
    43  provide clear information as to who they are, that the visit pertains to
    44  the reverse cooperative apartment unit loan, the  reason  for  the  home
    45  visit,  and  the  telephone  number to call for further information. The
    46  authorized lender must wait at least thirty days following  such  visit,
    47  in  addition  to any additional time or notice requirements specified by
    48  any other provision of law, before initiating a  foreclosure  action  on
    49  the  basis that the cooperative apartment is no longer the primary resi-
    50  dence of the borrower. If the borrower contacts  the  authorized  lender
    51  and provides proof of residence or occupancy after such visit but before
    52  the  commencement  of  a proceeding to enforce the lender's rights under
    53  the note, the authorized lender shall be  barred  from  initiating  such
    54  action.    Furthermore, no authorized lender shall charge a borrower any
    55  fee for any such visit and inspection. This prohibition on  the  imposi-
    56  tion  of  fees  shall  include  any and all inspections conducted by the
        S. 760                              7
 
     1  authorized lender to verify the status of the reverse cooperative apart-
     2  ment unit loan, or any suspected or actual default condition.
     3    9.  Notwithstanding any inconsistent provision of law, the priority of
     4  the lien of a reverse cooperative apartment  unit  loan,  including  the
     5  lien  for  all  principal,  interest,  fees,  costs,  and  other charges
     6  assessed in connection with the reverse loan, shall date from the filing
     7  of a UCC-1 notice for the loan irrespective of the date of  any  advance
     8  of reverse loan proceeds or the date by which an authorized lender shall
     9  be  entitled to accrued but unpaid interest, fees, costs or other charg-
    10  es.
    11    10. Nothing in this section shall be construed  to  limit,  impair  or
    12  otherwise  affect the priority, under applicable law, of any other mort-
    13  gage, deed of trust, encumbrance or lien which was filed  prior  to  the
    14  effective date of this section.
    15    11.  The sale or transfer of the interest in the cooperative apartment
    16  unit securing the reverse cooperative apartment unit loan  to  a  person
    17  other  than an original borrower or borrowers shall result in the termi-
    18  nation of the reverse loan.
    19    12. Any person who has been injured by reason of any violation of this
    20  section or any violation of the rules and regulations of the  department
    21  relating  to  the  reverse  cooperative  apartment unit loan program may
    22  bring an action in his or her own name to  recover  treble  his  or  her
    23  actual  damages,  plus  the prevailing plaintiff's reasonable attorneys'
    24  fees.
    25    13. Compliance with the provisions of this section shall be conditions
    26  precedent to commencing an action to foreclose upon  a  reverse  cooper-
    27  ative  apartment  unit  loan  which is subject to the provisions of this
    28  section, and the failure to comply therewith shall be a complete defense
    29  to such action.
    30    § 2. Subsection (f) of section 9-611 of the uniform commercial code is
    31  amended by adding a new paragraph 1-a to read as follows:
    32    (1-a) Notwithstanding any other provision of law,  with  regard  to  a
    33  reverse cooperative apartment unit loan, at least forty-five days before
    34  a  secured  party,  as  defined under Section 9-102(a)(73), or its agent
    35  takes any steps to dispose of its collateral, as provided for in Section
    36  9-610, the secured party or its agent shall give notice to the borrower,
    37  and separate notice to the borrower's designated third-party if one  has
    38  been  designated  in at least fourteen-point type except for the heading
    39  which shall be in at least sixteen-point type. The notice shall  include
    40  the following:
    41       YOU COULD LOSE YOUR COOPERATIVE APARTMENT UNIT TO FORECLOSURE.
    42                 PLEASE READ THE FOLLOWING NOTICE CAREFULLY.
    43  Date
    44  Borrower's address
    45  Loan Number:
    46  Property Address:
    47  Dear Borrower(s) {or heirs of Debtor?}:
    48  As  of  ___________,  your reverse cooperative apartment unit loan is in
    49  default. Under New York State Law, we are  required  to  send  you  this
    50  notice to inform you that you may be at risk of losing your home.
    51  Your  reverse  loan is in default because you have not complied with the
    52  following conditions of your loan:
    53  _____ You are not occupying your  cooperative  apartment  unit  as  your
    54  primary residence
    55  _____ You did not submit the required annual certificate of occupancy
    56  _____ The named borrower on the reverse loan has died
        S. 760                              8
 
     1  _____ You did not pay maintenance on your unit to the cooperative corpo-
     2  ration,  and  {servicer}  paid your maintenance for you on the following
     3  date(s)  in  the  following   amount(s):________________________________
     4  ____________________________________
     5  _____ You did not make required repairs to your unit
     6  If  the claim is based on your failure to pay maintenance to the cooper-
     7  ative corporation, you can cure this default by making  the  payment  of
     8  $____________  for  the  advances we made towards these payments on your
     9  behalf.
    10  You have the right to dispute the claims listed above by contacting  us,
    11  by  calling  ___________ or sending a letter to __________________. This
    12  may include proof of payments made for water  and  sewer  charges  or  a
    13  current declaration page from your insurance company, or any other proof
    14  to dispute the servicer's claim.
    15  OPTIONS  MAY  BE  AVAILABLE  FOR YOU TO CURE YOUR DEFAULT. SOME OF THESE
    16  OPTIONS ARE LISTED BELOW.  YOU  MAY  CONTACT  {SERVICER}  AT  {TOLL-FREE
    17  NUMBER} TO DISCUSS YOUR OPTIONS.
    18  If  you  are  in default for failure to pay maintenance, you may qualify
    19  for a re-payment plan to cure the default balance owed.
    20  Attached to this notice is a list of New  York  approved  housing  coun-
    21  seling agencies and legal services in your area which provide free coun-
    22  seling.   A   statewide   listing   by   county  is  also  available  at
    23  http://www.dfs.ny.gov/consumer/mortg  nys  np  counseling  agencies.htm.
    24  You  may also call your local Department of Aging for a referral or call
    25  311 if you live in New York City.
    26  Qualified free help is available; watch out for companies or people  who
    27  charge a fee for these services.
    28  You  may  also  contact  {SERVICER}  directly  at  __________ and ask to
    29  discuss all possible options to allow  you  to  cure  your  default  and
    30  prevent  the  foreclosure  of  your  home. While we cannot ensure that a
    31  resolution is possible, we encourage you to take immediate steps to  try
    32  to achieve a resolution.  The longer you wait, the fewer options you may
    33  have.
    34  If  you  have not taken any actions to resolve this matter within ninety
    35  days from the date this notice was mailed, we will  have  the  right  to
    36  take your cooperative shares from you.
    37  If  you need further information, please call the New York State Depart-
    38  ment of Financial Services' toll-free helpline at 877-226-5697 or  visit
    39  the Department's website at http://www.dfs.ny.gov.
    40  IMPORTANT: You have the right to remain in your unit until you receive a
    41  court  order  telling you to leave the property. If a foreclosure action
    42  is filed against you in court, you still have the right to remain in the
    43  unit until a court orders you to leave. You legally remain the owner  of
    44  your  cooperative  shares  and  are  responsible  for the unit until the
    45  shares are transferred to a new owner through  a  sale.  However,  there
    46  will  be  no court proceeding before the shares are transferred to a new
    47  owner. After the shares are transferred, the new owner may begin a court
    48  proceeding to evict you from the unit.
    49  This notice is not an eviction notice.
    50    § 3. The civil practice law and rules is amended by adding a new  rule
    51  3410 to read as follows:
    52    Rule 3410. Face-to-face meeting for foreclosure of reverse cooperative
    53  apartment  unit loans. (a) For purposes of this rule, default shall only
    54  include a borrower's breach of an obligation under the reverse  mortgage
    55  cooperative  loan agreement, and shall not include death of the borrower
    56  or the borrower's permanent vacating of the cooperative unit.
        S. 760                              9
 
     1    (b) In any action recovery involving  a  borrower's  default  under  a
     2  reverse  cooperative apartment unit loan, as defined in paragraph (a) of
     3  subdivision one of section six-o of the banking law,  the  lender  shall
     4  file  a petition with the supreme court of the county in which the coop-
     5  erative apartment is located stating that the loan is in default and the
     6  reason  for  the  default.  The  petition must be served on the borrower
     7  pursuant to section three hundred eight of this chapter. Within ten days
     8  of the date of service of the notice to  the  borrower,  the  petitioner
     9  must  file  a  specialized  request  for  judicial intervention with the
    10  clerk. Within sixty days of receipt of the notice or on  such  adjourned
    11  date as has been agreed to by the parties, the court shall hold a manda-
    12  tory  settlement  conference  for  the  purpose  of  holding  settlement
    13  discussions pertaining to the relative rights  and  obligations  of  the
    14  parties under the loan documents, including, but not limited to:
    15    1.  determining  whether  the  parties  can reach a mutually agreeable
    16  resolution to help the borrower avoid  losing  his  or  her  cooperative
    17  apartment  unit,  and evaluating the potential for a resolution or other
    18  workout options may be agreed; or
    19    2. whatever other purposes the court deems appropriate.
    20    (c) At any meeting held pursuant to this  rule,  the  lender  and  the
    21  borrower  shall  appear in person or by counsel, and each party's repre-
    22  sentative at the meeting shall be fully authorized  to  dispose  of  the
    23  matter.  If  the  borrower is appearing without counsel, the court shall
    24  inform the borrower of the nature of the action and his  or  her  rights
    25  and  responsibilities.  Where  appropriate,  the  court  may  permit the
    26  borrower or a representative of the borrower or the defendant to  attend
    27  the settlement conference telephonically or by video-conference.
    28    (d) Upon the filing of the notice of default with the court, the court
    29  shall  send  either a copy of the notice or the borrower's name, address
    30  and telephone number (if available) to a housing  counseling  agency  or
    31  agencies  on  a  list  designated  by  the department for the geographic
    32  region in which the borrower resides. Such information shall be used  by
    33  the designated housing counseling agency or agencies exclusively for the
    34  purpose  of making the borrower aware of housing counseling and foreclo-
    35  sure prevention services and options available to them.
    36    (e) The court shall promptly send a notice to parties advising them of
    37  the time and place of the meeting, the purpose of the  meeting  and  the
    38  requirements  of  this rule. The notice shall be in a form prescribed by
    39  the court, and shall advise the parties of the documents that they shall
    40  bring to the meeting.
    41    (f) Both the lender and the borrower shall negotiate in good faith  to
    42  reach  a  mutually  agreeable resolution, including but not limited to a
    43  re-payment agreement, or any other loss mitigation, if possible. Compli-
    44  ance with the obligation to negotiate in good  faith  pursuant  to  this
    45  rule  shall  be measured by the totality of the circumstances, including
    46  but not limited to the following factors:
    47    1. compliance with the requirements of this rule and applicable  regu-
    48  lations pertaining to the face-to-face meeting process;
    49    2. compliance with applicable lending and servicing laws, rules, regu-
    50  lations,  investor directives, and loss mitigation standards or options;
    51  and
    52    3. conduct consistent with  efforts  to  reach  a  mutually  agreeable
    53  resolution,  including  but not limited to, avoiding unreasonable delay,
    54  appearing at the meeting with authority to fully dispose of the  matter,
    55  avoiding  moving forward to take possession while loss mitigation appli-
        S. 760                             10
 
     1  cations and attempts are pending, and providing accurate information  to
     2  the department and all parties.
     3    Neither  of the parties' failure to make the offer or accept the offer
     4  made by the other party is sufficient to establish a failure to  negoti-
     5  ate in good faith.
     6    (g) Upon a finding by the court that the plaintiff failed to negotiate
     7  in good faith pursuant to subdivision (f) of this rule, the court shall,
     8  at  a  minimum, toll the accumulation and collection of interest, costs,
     9  and fees during any undue delay  caused  by  the  plaintiff,  and  where
    10  appropriate, the court may also impose one or more of the following:
    11    1.  compel  production  of any documents requested by the court or the
    12  court's designee during the settlement conference;
    13    2. impose a civil penalty payable to the state that is  sufficient  to
    14  deter  repetition  of the conduct and in an amount not to exceed twenty-
    15  five thousand dollars;
    16    3. the court may award actual damages, fees, including  attorney  fees
    17  and  expenses  to  the  defendant  as a result of plaintiff's failure to
    18  negotiate in good faith; or
    19    4. award any other relief that the court deems just and proper.
    20    (h) A party to a default action may not charge, impose,  or  otherwise
    21  require  payment  from  the  other party for any cost, including but not
    22  limited to attorneys' fees, for appearance at or  participation  in  the
    23  settlement conference process.
    24    (i) This rule shall not apply if:
    25    1.  the  borrower dies and there is no surviving borrower, unless: (i)
    26  the last surviving borrower's spouse, if any, is a resident of the prop-
    27  erty subject to foreclosure;  or  (ii)  the  last  surviving  borrower's
    28  successor  in interest who by bequest or through intestacy, owns, or has
    29  a claim to the ownership of the property subject to foreclosure, and who
    30  was a resident of such property at  the  time  of  death  of  such  last
    31  surviving  borrower;  or  the borrower does not reside in the unit after
    32  such non-occupancy by the borrower as verified by  the  lender  and  the
    33  lender  has  taken  action as   required by subdivision eight of section
    34  six-o of the banking law; or
    35    2. a repayment plan or other workout consistent  with  the  borrower's
    36  circumstances is entered into to bring the borrower's account current or
    37  otherwise cure the default thus making a meeting unnecessary.
    38    §  4. The superintendent of financial services shall convene a working
    39  group comprised of industry and consumer representatives  to  study  the
    40  availability  of  reverse  mortgage  counselors  within the state of New
    41  York, and assess their experience and availability to provide counseling
    42  in connection with non-government  insured  reverse  mortgages,  and  to
    43  address any other matters the superintendent deems necessary pursuant to
    44  this  act.    The  superintendent  shall report on its findings and make
    45  recommendations based upon such findings.
    46    § 5. This act shall take effect on the one hundred eightieth day after
    47  it shall have become a law.  Effective immediately, the addition, amend-
    48  ment and/or repeal of any rule or regulation necessary for the implemen-
    49  tation of this act on its effective date are authorized to be  made  and
    50  completed on or before such effective date.

S00760 LFIN:

 
NO LFIN

S00760 Chamber Video/Transcript: