Plan To Overhaul State Foreclosure Laws

Posted on June 24, 2008
Filed Under Foreclosure Homes | Leave a Comment

After a five-day legislative session a plan emerged to overhaul New York State’s foreclosure laws. Governor Paterson and other leaders announced this. According to it (legislation being still in progress as on 20^th June 2008) the borrowers would have to be warned at least 90 days before the initiation of foreclosure proceedings. In the warning notice a list will have to be given of state approved counselors in that region.

Lenders will be legally enforced to make sincere efforts to find out if the applicant is in a position to repay the loan. This is against a rush of criticism that banks have been sanctioning mortgages to parties who clearly lacked the capability to repay the loan keeping in view their levels of income.

In another clause of the bill it will be expected of the lenders to meet the borrowers if the latter defaulted and was faced with imminent foreclosures.

What was expected, but the bill did not include was a provision by which moratorium would be imposed on all foreclosures across the state. This was something that had got the support of the Democrats in the Assembly and the Speaker, Sheldon Silver. But the banking lobby frustrated and opposed this move on putting foreclosures on hold.

Governor Paterson announced the agreement at a news conference in the presence of Speaker Silver and the leader of the majority Joseph L Bruno. In the previous week the trio had engaged in a lengthy but tense debate on proposed property tax cap. But this time the mood was more jovial with one gently throwing barbs at each other. There was an atmosphere of cordiality as they outlined the course of negotiations.

Paterson was upbeat in stating, “Albany has come through. We’re not only doing this for the homeowners. We also feel in the end it will help the lenders.” He added that there are more than 50,000 foreclosures in the state in the previous year. This year already 38,000 foreclosure postings have been noted.

The legislation has also kept its eyes on preventing a future foreclosure crisis. Customers will be protected from sub-prime loans. The latter has been largely blamed for the foreclosure mess of today. The bill includes a provision termed “duty of care” clause that will expect loan brokers to act in the interest of the borrowers and offer loans that are suitable for specific individuals taking into account the financial background of the loan applicant.

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