A05627 Summary:

SPONSORWeinstein (MS)
COSPNSRMosley, Jaffee, Abbate, Colton, Cymbrowitz, Galef, Zebrowski, Joyner, Ortiz, Glick, Dinowitz, Carroll, D'Urso, Steck, Hyndman, Vanel, Richardson, Aubry, Weprin, Seawright, Abinanti, Wallace, Cahill, Burke, Taylor
MLTSPNSRCook, Englebright, Nolan, Simon, Thiele
Add 280-d, RP L
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.
Go to top    

A05627 Actions:

02/14/2019referred to judiciary
01/08/2020referred to judiciary
Go to top

A05627 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
SPONSOR: Weinstein (MS)
  TITLE OF BILL: 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   PURPOSE OF BILL: This bill will regulate certain activities of lenders when defaults take place on reverse mortgages issued in New York State under HUD's home equity conversion mortgage for seniors program.   SUMMARY OF PROVISIONS OF BILL: Section 1: Lenders must now notify the Department of Financial Services when engaging in foreclosure proceedings against a borrower, and must also provide proof to the department that HUD has granted prior approval to accelerate the loan, proof of the default and notice to the borrower, and any other information required by the department. The Department of Financial Services must then provide notice of the foreclosure directly to the borrower, and must also provide information regarding the borrow- er's rights and legal service organizations available to assist the borrower during the foreclosure process. Lenders will also be required to engage in loss mitigation, as specified by the Department of Financial Services, before foreclosing. This section also prevents lenders from making advance payments on mort- gage insurance or tax liabilities. Lenders will only be entitled to pay those moneys which are currently in arrears. The new requirements will be conditions precedent to bringing a foreclo- sure action against an HUD reverse mortgage. The provisions will be enforceable by providing treble damages and attorney's fees to prevail- ing plaintiffs. Section 2: The act will take effect one hundred and twenty days after it becomes law, but the Department of Financial Services is authorized to immediately take any actions necessary to ensure the law's implementa- tion.   EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: Under current law, lenders are not required to notify DFS, and DFS is not required to inform seniors of services available to help them in the event of a default. Lenders are also currently allowed to make advance payments on obligations associated with these reverse mortgages.   JUSTIFICATION: Reverse mortgages are complicated and expensive financial products. Many seniors do not understand how they work or what their true long- term costs are. Exacerbating this problem are unscrupulous lenders who market reverse mortgages as public services or government-sponsored products. Inadequate regulation of this industry resulted in a sharp uptick in defaults in 2016, as more seniors fell into foreclosure on these products, losing not only their homes, but also their most signif- icant financial assets. Foreclosures in the reverse mortgage industry have taken place against seniors for making payments mere cents short of their tax, homeowners insurance, or mortgage insurance bills. Lenders eager to tap the equity in these homes are sometimes aggressive to foreclose and see a return on their investment. Seniors can be better protected by providing for stricter regulation of the foreclosure process. Currently, lenders are not required to notify the Department of Finan- cial Services in the event of a default, and DFS does not regularly provide information to seniors in reverse mortgage default scenarios that can help seniors to keep their homes. This bill will change that by requiring a notification to DFS, and by requiring DFS to help seniors get in touch with a legal services organization to help them manage the process. Lenders sometimes also make large advance payments on obligations tied to reverse mortgages in the event of a default. Then, to resolve the default, lenders will demand that the advance payments be paid back, resulting in massive financial liabilities to seniors that they may not have the cash on hand to satisfy in order to become current on their mortgage payments and cure a default. This new section would allow lend- ers to make payments only on obligations that are currently in arrears.   LEGISLATIVE HISTORY: 2017-18: A.5821/S.4452 - A.Cal/S.Judi   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: To be determined.   EFFECTIVE DATE: 120th day after it shall have become a law.
Go to top

A05627 Text:

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    February 14, 2019
        Introduced  by  M.  of  A.  WEINSTEIN,  MOSLEY,  JAFFEE, ABBATE, COLTON,
          ABINANTI,  WALLACE,  CAHILL, BURKE, TAYLOR -- Multi-Sponsored by -- M.
          of A. COOK,  ENGLEBRIGHT,  NOLAN,  SIMON,  THIELE  --  read  once  and
          referred to the Committee on Judiciary
        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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 5627                             2
     1  any  such  information  relating  to  the loans and the mortgagor as the
     2  department shall determine to be necessary. Upon receipt of such  infor-
     3  mation,  the department shall provide notice of and information relating
     4  to  the foreclosure to the mortgagor. Such notice shall include a notice
     5  of the mortgagor's rights in the foreclosure process and contact  infor-
     6  mation  for  legal service organizations which may be able to assist the
     7  mortgagor with the mortgage default and/or foreclosure.
     8    3. No reverse mortgage loan commitment shall be issued by  an  author-
     9  ized  lender  unless such commitment provides in writing notice that the
    10  department will be provided notice of any default  or  foreclosure  upon
    11  the loan so as to provide assistance to the mortgagor.
    12    4.  No  authorized  lender shall make an advance payment for any obli-
    13  gation arising from mortgaged real property. Furthermore, in the event a
    14  mortgagor defaults upon the payment of mortgage insurance premium, home-
    15  owners insurance premium or real property tax related to  the  mortgaged
    16  property, the authorized lender may only pay those premiums and/or taxes
    17  which are in arrears.
    18    5.  The department shall issue regulations which shall require mortga-
    19  gees  to  engage in mandatory loss mitigation procedures to be specified
    20  by the department. These loss mitigation procedures  shall  comply  with
    21  any  restrictions on loss mitigation issued by the federal Department of
    22  Housing and Urban Development for reverse mortgages and shall be updated
    23  when necessary to ensure compliance with federal rules.   The  mortgagee
    24  shall  provide  information to the department about loans receiving such
    25  loss mitigation assistance.  This includes maintaining loan level,  loss
    26  mitigation data and providing the department with the following informa-
    27  tion for loans associated with a repayment plan:
    28    (a) monthly surplus income;
    29    (b) term of repayment plan;
    30    (c) amount of monthly repayment plan payment;
    31    (d) due date of next monthly payment;
    32    (e) when a mortgagor experiences a hardship; and
    33    (f) reason for hardship.
    34    6.  Any person who has been injured by reason of any violation of this
    35  section may bring an action in his or her own name to recover treble his
    36  or her actual damages, plus the prevailing plaintiff's reasonable attor-
    37  ney's fees.
    38    7. The requirements of this section shall be conditions  precedent  to
    39  commencing an action to foreclose upon a home equity conversion mortgage
    40  which  is  subject  to  the  provisions  of this section, and failure to
    41  comply therewith shall be a complete defense to a foreclosure action.
    42    § 2. This act shall take effect on the one hundred twentieth day after
    43  it shall have become a law; provided, however, that effective immediate-
    44  ly, any actions necessary for the implementation  of  this  act  on  its
    45  effective  date are authorized and directed to be completed on or before
    46  such date.
Go to top