Skip to Content

Translate | Disclaimer

                             LAWS OF NEW YORK, 2009
 
                                  CHAPTER 507
 
   AN  ACT  to  amend  the  real  property actions and proceedings law, the
     uniform commercial code, the civil practice law and rules, the banking
     law and chapter 472 of the laws of 2008  amending  the  real  property
     actions  and  proceedings  law  and other laws relating to foreclosure
     actions on home mortgage loans, in relation to home mortgage loans; to
     amend the penal law, in relation to the crime of mortgage  fraud;  and
     to  amend  the  real  property law, in relation to distressed property
     consultants; and providing for the repeal of certain  provisions  upon
     expiration thereof
 
   Became  a  law  December  15,  2009,  with the approval of the Governor.
     Passed on message of necessity pursuant to Article III, section 14 of
     the Constitution by a majority vote, three-fifths being present.
 
     The  People of the State of New York, represented in Senate and Assem-
   bly, do enact as follows:
 
     Section 1. Section 1303 of the real property actions  and  proceedings
   law,  as  amended by chapter 472 of the laws of 2008, is amended to read
   as follows:
 
   § 1303. Foreclosures; required notices. 1. The foreclosing party in  a
   mortgage foreclosure action, [which involves] involving residential real
   property  [consisting  of  owner-occupied  one-to-four-family dwellings]
   shall provide notice to [the mortgagor]:

     (a) any mortgagor if the action relates to an  owner-occupied  one-to-
   four family dwelling; and

     (b) any tenant of a dwelling unit in accordance with the provisions of
   this  section [with regard to information and assistance about the fore-
   closure process].

     2. The notice to any mortgagor required by paragraph (a)  of  subdivi-
   sion  one  of  this  section  shall  be  delivered  with the summons and
   complaint [to  commence  a  foreclosure  action].    [TheSuch  notice
   [required  by  this  section]  shall be in bold, fourteen-point type and
   shall be printed on colored paper that is other than the  color  of  the
   summons  and  complaint,  and  the title of the notice shall be in bold,
   twenty-point type. The notice shall be on its own page.

     3. The notice to any mortgagor required by paragraph (a)  of  subdivi-
   sion one of this section shall appear as follows:

                      Help for Homeowners in Foreclosure

     New  York  State  Law  requires that we send you this notice about the
   foreclosure process. Please read it carefully.

   Summons and Complaint
     You are in danger of losing your home. If you fail to respond to the
   summons  and  complaint  in  this  foreclosure action, you may lose your
   home. Please read the summons and complaint carefully. You should imme-
   diately contact an attorney or your local legal aid office to obtain
   advice on how to protect yourself.

   Sources of Information and Assistance
 
     The State encourages you to become  informed  about  your  options  in
   foreclosure. In addition to seeking assistance from an attorney or legal
   aid  office,  there are government agencies and non-profit organizations
   that you may contact for information about possible  options,  including
   trying to work with your lender during this process.

     To  locate  an  entity  near  you, you may call the toll-free helpline
   maintained by the New York State Banking Department  at  [_____________]
   (enter  number)  or  visit the Department's website at [_______________]
   (enter web address).

   Foreclosure rescue scams
     Be careful of people who approach you with offers to "save" your home.
   There are individuals who watch for notices of  foreclosure  actions  in
   order  to  unfairly  profit  from  a homeowner's distress. You should be
   extremely careful about any such promises and any suggestions  that  you
   pay  them a fee or sign over your deed. State law requires anyone offer-
   ing such services for profit  to  enter  into  a  contract  which  fully
   describes  the services they will perform and fees they will charge, and
   which prohibits them from taking any money  from  you  until  they  have
   completed all such promised services.

     4.  The  notice to any tenant required by paragraph (b) of subdivision
   one of this section shall be delivered within ten days of the service of
   the summons and complaint.  Such notice shall be in bold, fourteen-point
   type and shall be printed on colored paper that is other than the  color
   of  the  summons  and complaint, and the title of the notice shall be in
   bold, twenty-point type. The notice shall be on its own page. For build-
   ings with fewer than five dwelling units, the notice shall be  delivered
   to  the  tenant,  by  certified  mail,  return receipt requested, and by
   first-class mail to the tenant's address at the property if the identity
   of the tenant is known to the plaintiff, and by first-class mail  deliv-
   ered  to  "occupant"  if  the identity of the tenant is not known to the
   plaintiff. For buildings with five or more  dwelling  units,  a  legible
   copy  of  the notice shall be posted on the outside of each entrance and
   exit of the building.

     5. The notice required by paragraph (b) of  subdivision  one  of  this
   section shall appear as follows:

                 Notice to Tenants of Buildings in Foreclosure

   New  York State Law requires that we provide you this notice about the
   foreclosure process. Please read it carefully.

     The dwelling where your apartment is located is the subject of a fore-
   closure proceeding. If you have a lease, are not the owner of the  resi-
   dence,  and  the  lease requires payment of rent that at the time it was
   entered into was not substantially less than the fair  market  rent  for
   the property, you may be entitled to remain in occupancy for the remain-
   der of your lease term. If you do not have a lease, you will be entitled
   to  remain in your home until ninety days after any person or entity who
   acquires title to the property provides you with a notice as required by
   section 1305 of the Real  Property  Actions  and  Proceedings  Law.  The
   notice  shall  provide information regarding the name and address of the
   new owner and your rights to remain in your home. These  rights  are  in
   addition to any others you may have if you are a subsidized tenant under
   federal,  state  or  local  law  or  if you are a tenant subject to rent
   control, rent stabilization or a federal statutory scheme.

     If you need further information, please call the New York State  Bank-
   ing  Department's  toll-free helpline at 1-877-BANK-NYS (1-877-226-5697)
   or visit the Department's website at http://www.banking.state.ny.us.

     6. The banking department shall prescribe the telephone number and web
   address to be included in [the] either notice.

     [57.  The banking department shall post on its website or otherwise
   make readily available the name and contact  information  of  government
   agencies or non-profit organizations that may be contacted by mortgagors
   for  information  about the foreclosure process, including maintaining a
   toll-free helpline to  disseminate  the  information  required  by  this
   section.

     §  1-a.  Subdivisions  1, 2 and 5 of section 1304 of the real property
   actions and proceedings law, as added by chapter  472  of  the  laws  of
   2008, are amended to read as follows:

     1. Notwithstanding any other provision of law, with regard to a [high-
   cost]  home loan[, as such term is defined in section six-l of the bank-
   ing law, a subprime home loan or a non-traditional home loan], at  least
   ninety  days  before  a  lender, an assignee or a mortgage loan servicer
   commences legal action against the borrower, including mortgage foreclo-
   sure, [the] such lender, assignee or mortgage loan servicer  shall  give
   notice  to  the  borrower  in  at  least fourteen-point type which shall
   include the following:

             "YOU COULD LOSE YOUR HOME. PLEASE READ THE FOLLOWING
                               NOTICE CAREFULLY"

     "As of ___, your home loan is ___ days  in  default.  Under  New  York
   State  Law,  we  are required to send you this notice to inform you that
   you are at risk of losing your home. You can cure this default by making
   the payment of _____ dollars by ____.

     If you are experiencing financial difficulty,  you  should  know  that
   there  are  several options available to you that may help you keep your
   home.  Attached to this notice is a list of government approved  housing
   counseling  agencies  in  your  area which provide free or very low-cost
   counseling. You should consider contacting one of these  agencies  imme-
   diately.  These agencies specialize in helping homeowners who are facing
   financial difficulty. Housing counselors can help you assess your finan-
   cial condition and work with us to explore the possibility of  modifying
   your  loan, establishing an easier payment plan for you, or even working
   out a period of loan forbearance. If you wish, you may also  contact  us
   directly at __________ and ask to discuss possible options.

     While  we cannot assure that a mutually agreeable resolution is possi-
   ble, we encourage you to take immediate steps to try to achieve a resol-
   ution.  The longer you wait, the fewer options you may have.

     If this matter is not resolved within  90  days  from  the  date  this
   notice  was  mailed, we may commence legal action against you (or sooner
   if you cease to live in the dwelling as your primary residence.)

     If you need further information, please call the New York State  Bank-
   ing  Department's  toll-free helpline at 1-877-BANK-NYS (1-877-226-5697)
   or visit the Department's website at http://www.banking.state.ny.us"

     2. Such notice shall be sent by [the] such lender, assignee  or  mort-
   gage  loan servicer to the borrower, by registered or certified mail and
   also by first-class mail to the last known address of the borrower,  and
   if  different, to the residence [which] that is the subject of the mort-
   gage.  Such notice shall be sent by the  lender,  assignee  or  mortgage
   loan  servicer  in a separate envelope from any other mailing or notice.
   Notice is considered given as of the date it is mailed. The notice shall
   contain a list of at least five [United States department of housing and
   urban development approved housing counseling agencies, or other]  hous-
   ing  counseling  agencies  as  designated by the division of housing and
   community renewal, that serve the region where the borrower resides. The
   list shall include the counseling agencies'  last  known  addresses  and
   telephone  numbers.  The banking department [and/or] and the division of
   housing and community renewal shall make available on  their  respective
   websites  a  listing,  by  region,  of  such agencies [which the].   The
   lender, assignee or mortgage loan servicer [mayshall  use  either  of
   these lists to meet the requirements of this section.

     5.  (a) ["Annual percentage rate" means the annual percentage rate for
   the loan calculated according to the provisions of the Federal Truth-in-
   Lending Act (15 U.S.C. § 1601, et seq.), and the regulations promulgated
   thereunder by the federal reserve board (as said act and regulations are
   amended from time to time).

     (b)] "Home loan" means a [home] loan,  including  an  open-end  credit
   plan, other than a reverse mortgage transaction, in which:

     (i)  [The  principal  amount of the loan at origination did not exceed
   the conforming loan size that was in existence at  the  time  of  origi-
   nation  for a comparable dwelling as established by the federal national
   mortgage association;

     (ii)] The borrower is a natural person;

     [(iii)] (ii) The debt  is  incurred  by  the  borrower  primarily  for
   personal, family, or household purposes;

     [(iv)(iii)  The  loan  is secured by a mortgage or deed of trust on
   real estate [upon which there is located or there is  to  be  located  a
   structure  or  structures intended principally for occupancy of from one
   to four families which is or will be occupied by  the  borrower  as  the
   borrower's  principal  dwelling] improved by a one to four family dwell-
   ing, or a condominium  unit,  in  either  case,  used  or  occupied,  or
   intended  to  be used or occupied wholly or partly, as the home or resi-
   dence of one or more persons and which is or will  be  occupied  by  the
   borrower as the borrower's principal dwelling; and

     [(v)] (iv) The property is located in this state.

     [(c)  "Subprime  home  loan" for the purposes of this section, means a
   home loan consummated between January  first,  two  thousand  three  and
   September  first,  two  thousand  eight  in  which the terms of the loan
   exceed the threshold as defined in paragraph (d) of this subdivision.  A
   subprime  home  loan  excludes  a  transaction  to  finance  the initial
   construction of a dwelling, a temporary or "bridge" loan with a term  of
   twelve  months  or less, such as a loan to purchase a new dwelling where
   the borrower plans to sell a current dwelling within twelve months, or a
   home equity line of credit.
     (d) "Threshold" means, for a first  lien  mortgage  loan,  the  annual
   percentage  rate  of  the  home  loan at consummation of the transaction
   exceeds three percentage points over the yield  on  treasury  securities
   having  comparable  periods of maturity to the loan maturity measured as
   of the fifteenth day of the month in which the loan was consummated;  or
   for  a subordinate mortgage lien, the annual percentage rate of the home
   loan at consummation of the transaction equals or exceeds five  percent-
   age points over the yield on treasury securities having comparable peri-
   ods  of maturity on the fifteenth day of the month in which the loan was
   consummated; as determined by the following rules: if the terms  of  the
   home  loan  offer  any  initial  or  introductory period, and the annual
   percentage rate is less than that which will apply after the end of such
   initial or introductory period, then the  annual  percentage  rate  that
   shall  be  taken  into account for purposes of this section shall be the
   rate which applies after the initial or introductory period.

     (e) "Non-traditional home loan" shall mean a payment option adjustable
   rate mortgage or an  interest  only  loan  consummated  between  January
   first, two thousand three and September first, two thousand eight.

     (f)  For purposes of determining the threshold, the banking department
   shall publish on its website a listing of constant maturity  yields  for
   U.S. Treasury securities for each month between January first, two thou-
   sand  three and September first, two thousand eight, as published in the
   Federal Reserve Statistical Release on selected interest rates, commonly
   referred to as the H.15 release, in the  following  maturities,  to  the
   extent  available  in such release: six month, one year, two year, three
   year, five year, seven year, ten year, thirty year.

     (g)] (b) "Lender" means a mortgage banker as defined in paragraph  (f)
   of  subdivision one of section five hundred ninety of the banking law or
   an exempt organization as defined in paragraph (e) of subdivision one of
   section five hundred ninety of the banking law.

     § 2. Section 9-611 of the uniform commercial code is amended by adding
   a new subsection (f) to read as follows:

     (f) Additional pre-disposition notice for cooperative interests.

     (1) In addition to such other notification as may be required pursuant
   to subsection (b) of this section and section 9-613 of this  article,  a
   secured  party  whose  collateral  consists of a residential cooperative
   interest used by the debtor and whose security interest in such  collat-
   eral  secures  an  obligation  incurred  in connection with financing or
   refinancing of the acquisition of  such  cooperative  interest  and  who
   proposes  to  dispose of such collateral after a default with respect to
   such obligation, shall send to the debtor, not  less  than  ninety  days
   prior  to  the  date  of the disposition of the cooperative interest, an
   additional pre-disposition notice as provided herein.

     (2) The notice required by this subsection shall  be  in  bold,  four-
   teen-point type and shall be printed on colored paper that is other than
   the  color of the notice required by subsection (b) of this section, and
   the title of the notice shall be in bold, twenty-point type. The  notice
   shall be on its own page.

     (3) The notice required by this subsection shall appear as follows:

                  Help for Homeowners at Risk of Foreclosure

   New  York State Law requires that we send you this information about the
   foreclosure process.  Please read it carefully.

   Notice
     You are in danger of losing your home. You  are  in  default  of  your
   obligations  under  the  loan secured by your rights to your cooperative
   apartment. It is important that you take action, if you  wish  to  avoid
   losing your home.

   Sources of Information and Assistance
     The  State  encourages  you  to become informed about your options, by
   seeking assistance from an attorney, a legal aid office, or a government
   agency or non-profit organization that provides counseling with  respect
   to home foreclosures.

     To  locate  a  housing  counselor near you, you may call the toll-free
   helpline  maintained  by  the  New  York  State  Banking  Department  at
                       (enter  number)  or  visit  the Department's website
   at                (enter web address).

   One of these persons or organizations may be able to help you, including
   trying to work with your lender to modify  the  loan  to  make  it  more
   affordable.

   Foreclosure rescue scams
   
     Be careful of people who approach you with offers to "save" your home.
   There  are  individuals  who watch for notices of foreclosure actions or
   collateral  sales  in  order  to  unfairly  profit  from  a  homeowner's
   distress.  You  should  be extremely careful about any such promises and
   any suggestions that you pay them a fee or sign any papers that transfer
   rights  of  any  kind  to your cooperative apartment. State law requires
   anyone offering such services for profit to enter into a contract  which
   fully  describes  the  services  they  will  perform  and fees they will
   charge, and which prohibits them from taking any money  from  you  until
   they have completed all such promised services.

     (4)  The  banking  department shall prescribe the telephone number and
   web address to be included in the notice.

     (5) The banking department shall post on its website or otherwise make
   readily available the name and contact information of  government  agen-
   cies  or  non-profit organizations that may be contacted for information
   about the foreclosure process, including maintaining a  toll-free  help-
   line to  disseminate the information required by this subsection.

     §  3.  The opening paragraph of subsection (a) of section 9-620 of the
   uniform commercial code, as added by chapter 84 of the laws of 2001,  is
   amended and a new subsection (h) is added to read as follows:

     Except  as otherwise provided in [subsection] subsections (g) and (h),
   a secured party may accept collateral in full or partial satisfaction of
   the obligation it secures only if:

     (h) Special provisions for  cooperative  interests.  A  secured  party
   whose  collateral consists of a residential cooperative interest used by
   the debtor and whose security interest in  such  collateral  secures  an
   obligation  incurred  in connection with financing or refinancing of the
   acquisition of such cooperative interest and who chooses to accept  that
   cooperative interest in full satisfaction of the debtor's obligation may
   do so.

     (1)  If  the  secured  party  sends a proposal to take the cooperative
   interest in full satisfaction of the debtor's obligation,  the  proposal
   shall  be  accompanied  by a notice in the form and manner prescribed in
   subsection (f) of section 9-611 of  this  subpart,  unless  the  secured
   party  has  previously sent the debtor such notice. A debtor consents to
   an acceptance of a cooperative interest  in  full  satisfaction  of  the
   obligation  it  secures  only  if  the debtor agrees to the terms of the
   proposal in a record authenticated after default.

     (2) A debtor may propose to the secured party that it take the cooper-
   ative interest in full satisfaction of the obligation it secures.    The
   proposal  shall  be ineffective unless the secured party consents to the
   proposal in an authenticated record.

     § 4. The real property actions  and  proceedings  law  is  amended  by
   adding a new section 1305 to read as follows:

     §  1305.  Notice  to tenants. 1. Definitions. For the purposes of this
   section, the following definitions shall apply:

     (a) "Residential real property" shall mean real  property  located  in
   this state improved by any building or structure that is or may be used,
   in  whole  or  in part, as the home or residence of one or more persons,
   and shall include any building or structure used  for  both  residential
   and commercial purposes.

     (b)  "Successor  in  interest"  shall mean any person or entity who or
   which acquires title in a residential real property as  a  result  of  a
   judgment  of  foreclosure  and  sale,  or  other  disposition during the
   pendency of the foreclosure proceeding, or at any  time  thereafter  but
   prior  to  the expiration of the time period as provided for in subdivi-
   sion two of this section.

     (c) "Tenant" shall mean any person who at the time the notice required
   by  subdivision  four  of section thirteen hundred three of this article
   appears as a lessee on a lease of one or more dwelling units of a  resi-
   dential  real property that is subordinate to the mortgage on such resi-
   dential real property; or who at such time is a  party  to  an  oral  or
   implied rental agreement with the mortgagor and obligated to pay rent to
   the  mortgagor  or such mortgagor's representative, for the use or occu-
   pancy of one or more dwelling units of a residential real property.

     2. Notwithstanding any other provision of law, a tenant of a unit  not
   subject  to  rent  control or rent stabilization shall have the right to
   remain in occupancy of the unit of the subject residential real property
   where he or she resides on the date of mailing of the notice required by
   subdivision three of this section for the greater of: (a)  a  period  of
   ninety  days from the date of the mailing of such notice; or (b) for the
   remainder of the lease term; provided that if a  successor  in  interest
   who acquires title to such residential real property intends to occupy a
   single  unit as his or her primary residence and the unit is not subject
   to a federal or state statutory system of subsidy or  other  federal  or
   state  statutory  scheme, the successor may limit for one unit only, the
   tenant's right of occupancy to ninety days.   For  a  lease  to  qualify
   under this subdivision, the tenant under such lease may not be the owner
   of  the  residential  real  property,  and  such  lease must require the
   payment of rent for such unit that is not substantially  less  than  the
   fair  market rent for the unit, unless the unit is subject to federal or
   state statutory system of subsidy or other federal  or  state  statutory
   scheme.  A  tenant  under paragraph (a) or (b) of this subdivision shall
   continue such tenancy under the same terms and  conditions  as  were  in
   effect  at the time of entry of the judgment of foreclosure and sale, or
   if no such judgment was entered, upon the terms and conditions that were
   in effect at the time of the transfer of ownership of such property. For
   purposes of this section, "fair market rent" shall mean rent for a  unit
   of residential real property of similar size, location and condition.

     3.  Notwithstanding  any  other  provision of law, and consistent with
   subdivision two of this section, a successor in interest of  residential
   real property shall provide written notice to all tenants: (a) that they
   are  entitled  to remain in occupancy of such property for the remainder
   of the lease term, or a period of ninety days from the date  of  mailing
   of  such  notice, whichever is greater, on the same terms and conditions
   as were in effect at the time of entry of the  judgment  of  foreclosure
   and  sale, or if no such judgment was entered, upon the terms and condi-
   tions as were in effect at the time of transfer  of  ownership  of  such
   property;  and  (b) of the name and address of the new owner. Any person
   or entity who or which becomes a successor in interest after  the  issu-
   ance  of  the  ninety-day notice provided for in this subdivision, shall
   notify all tenants of its name and address and shall assume such  inter-
   est  subject  to  the  right  of  the  tenant  to maintain possession as
   provided in this subdivision.

     4. Acceptance of rental payments by any successor in interest on terms
   provided in subdivision three of this section shall not affect the right
   of the successor in interest to evict such tenant, as provided  by  law,
   upon the expiration of the time period as provided in subdivision two of
   this  section or earlier if the tenant does not pay rent pursuant to any
   lease or oral or implied rental agreement in effect at the time of issu-
   ance of the judgment of foreclosure, or if no such judgment was  issued,
   upon  the terms and conditions as were in effect at the time of transfer
   of ownership of such property.

     5.  The  rights  conferred  upon  a  tenant by subdivision two of this
   section shall be in addition to any other rights of such  tenant,  under
   law, including those rights conferred upon:  (a) any tenant not named in
   the foreclosure action; or (b) any tenant whose tenancy is subsidized by
   the  federal government, this state or any political subdivision of this
   state; or (c) any tenant whose tenancy is subject to rent control,  rent
   stabilization, or federal statutory schemes.

     §  5.  The  real  property  actions  and proceedings law is amended by
   adding a new section 1306 to read as follows:

     § 1306.  Filing with superintendent.   1.   Each lender,  assignee  or
   mortgage  loan  servicer  shall  file  with  the superintendent of banks
   (superintendent) within three business days of the mailing of the notice
   required by subdivision one of section thirteen  hundred  four  of  this
   article  or  subsection  (f)  of section 9-611 of the uniform commercial
   code the information  required  by  subdivision  two  of  this  section.
   Notwithstanding  any  other  provision  of  the laws of this state, this
   filing shall be made electronically as provided for in subdivision three
   of this section.  Any complaint served in a proceeding initiated  pursu-
   ant  to  this  article  shall  contain, as a condition precedent to such
   proceeding, an affirmative allegation that at the time the proceeding is
   commenced, the plaintiff  has  complied  with  the  provisions  of  this
   section.

     2.  Each  filing delivered to the superintendent shall be on such form
   as the superintendent shall prescribe, and shall include at  a  minimum,
   the  name, address, last known telephone number of the borrower, and the
   amount claimed as due and owing on the mortgage, and such other informa-
   tion as will enable the superintendent to ascertain the type of loan  at
   issue.   The superintendent may subsequently request such readily avail-
   able information as may be reasonably necessary to facilitate  a  review
   of  whether the borrower might benefit from counseling or other foreclo-
   sure prevention services.

     3. Within one hundred eighty days of the effective date of this subdi-
   vision, or such later time as  the  superintendent  may  determine,  the
   superintendent  shall develop with the assistance of the commissioner of
   the division of housing and community renewal,  an  electronic  database
   that shall be capable of receiving all filings required by this section.

     4.  The  information  provided  to the superintendent pursuant to this
   subdivision shall not be subject to article six of the  public  officers
   law or paragraphs (a), (c) and (d) of subdivision one or subdivision six
   of section ninety-four of the public officers law.  All such information
   shall  be  used  by  the  superintendent exclusively for the purposes of
   monitoring on a statewide basis the extent of foreclosure filings within
   this state, to perform an analysis of loan types which were the  subject
   of  a  pre-foreclosure  notice  and  directing  as appropriate available
   public and private foreclosure prevention  and  counseling  services  to
   borrowers  at risk of foreclosure. The superintendent may share informa-
   tion contained in the database with housing counseling  agencies  desig-
   nated  by  the division of housing and community renewal as well as with
   other state agencies with jurisdiction over housing, for the purpose  of
   coordinating or securing help for borrowers at risk of foreclosure.

     5.  The  superintendent  is hereby authorized to promulgate such rules
   and regulations as shall be necessary to implement the purposes of  this
   section.

     §  6.  The  real  property  actions  and proceedings law is amended by
   adding a new section 1307 to read as follows:

     §  1307.  Duty  to  maintain  foreclosed property. 1. A plaintiff in a
   mortgage foreclosure action who obtains a judgment  of  foreclosure  and
   sale  pursuant  to  section  thirteen hundred fifty-one of this article,
   involving residential real property,  as  defined  in  section  thirteen
   hundred  five  of  this article, that is vacant, or becomes vacant after
   the issuance of such judgment, or is  abandoned  by  the  mortgagor  but
   occupied  by a tenant, as defined under section thirteen hundred five of
   this article, shall maintain such property until such time as  ownership
   has  been  transferred  through  the closing of title in foreclosure, or
   other disposition,  and  the  deed  for  such  property  has  been  duly
   recorded;  provided,  however,  that  if  a municipality or governmental
   entity holds a mortgage subordinate to one  or  more  mortgages  on  the
   residential real property, the municipality or governmental entity shall
   not be subject to the requirements of this section.

     2.  Such  plaintiff  shall have the right to peaceably enter upon such
   property, or to cause others to peaceably enter upon  the  property  for
   the  limited purpose of inspections, repairs and maintenance as required
   by this section, or as otherwise ordered by  court;  provided,  however,
   that if the property is occupied by a tenant, at least seven days notice
   must  be  given to such tenant, unless emergency repairs are required in
   which case reasonable notice shall be provided to the tenant.

     3. The  municipality  in  which  such  residential  real  property  is
   located, any tenant lawfully in possession, and a board of managers of a
   condominium  in  which  the premises are located or a homeowners associ-
   ation if said premises are subject to the rules and regulations of  such
   an  association,  shall  have  the  right  to  enforce  the  obligations
   described in this section in any court of competent  jurisdiction  after
   at  least  seven  days notice to the plaintiff in the foreclosure action
   unless emergency repairs are required.   Any entity acting  pursuant  to
   this  subdivision shall have a cause of action in any court of competent
   jurisdiction against the plaintiff in the foreclosure action to  recover
   costs  incurred  as a result of maintaining the property.  The authority
   provided by this subdivision shall be in addition to, and shall  not  be
   deemed  to  diminish  or  reduce, any rights of the parties described in
   this section under existing law against the mortgagor of  such  property
   for failure to maintain such property.

     4.  In  the event the mortgagor of the property commences a proceeding
   in bankruptcy court prior  to  the  completion  of  the  public  auction
   ordered  in  the  judgment  of  sale, the duties created by this section
   shall be suspended during the pendency of the bankruptcy  proceeding  or
   until  such time as an order has been entered in that proceeding lifting
   or removing the automatic stay of the foreclosure sale.

     5. For the purposes of this section "maintain" shall mean keeping  the
   subject  property  in a manner that is consistent with the standards set
   forth in the New York property maintenance code chapter 3 sections  301,
   302  (excluding  302.2,  302.6  and 302.8), 304.1, 304.3, 304.7, 304.10,
   304.12, 304.13, 304.15, 304.16, 307.1,  and  308.1;  provided,  however,
   that  if  the  property is occupied by a tenant, then such property must
   also be maintained in a safe and habitable condition.

     6. A plaintiff shall be relieved of its responsibilities  to  maintain
   the  residential  real  property  that  is  the subject of a foreclosure
   action for the period that a receiver of such property is serving.

     7. Nothing contained in this section shall diminish  in  any  way  the
   obligations  pursuant  to any state or local law of the mortgagor of the
   property or a receiver of rents and profits appointed in  an  action  to
   foreclose  a  mortgage  to maintain the property prior to the closing of
   title pursuant to a foreclosure sale.

     8. This section shall not preempt, reduce or limit any rights or obli-
   gations  imposed  by any local laws with respect to property maintenance
   and the locality's ability to enforce those laws.

     § 7. Section 221 of the real property actions and proceedings law,  as
   added by chapter 312 of the laws of 1962, is amended to read as follows:

     §  221.  Compelling  delivery of possession of real property.  Where a
   judgment affecting the title to, or the possession, enjoyment or use of,
   real property allots to any person a distinct parcel of  real  property,
   or  contains a direction for the sale of real property, or confirms such
   an allotment or sale, it also may direct the delivery of the  possession
   of  the  property  to the person entitled thereto, subject to the rights
   and obligations set forth in section thirteen hundred five of this chap-
   ter.

     If a party, or his representative or successor, who is  bound  by  the
   judgment, withholds possession from the person thus declared to be enti-
   tled  thereto, the court, by order, in its discretion, besides punishing
   the disobedience as a contempt, may require  the  sheriff  to  put  that
   person  into possession.   Such an order shall be executed as if it were
   an execution for the delivery of the possession of the property.

     § 8. Subdivision 5 of section 713 of the  real  property  actions  and
   proceedings  law,  as  amended  by  chapter  642 of the laws of 1976, is
   amended to read as follows:

     5. [The] Subject to the rights and obligations set  forth  in  section
   thirteen  hundred  five  of  this chapter, the property has been sold in
   foreclosure and either the deed delivered pursuant to such  sale,  or  a
   copy  of  such deed, certified as provided in the civil practice law and
   rules, has been exhibited to him.

     § 9. Subdivision (a) of rule 3408 of the civil practice law and rules,
   as added by chapter 472 of the laws of 2008, is  amended  and  five  new
   subdivisions (d), (e), (f), (g) and (h) are added to read as follows:

     (a) In any residential foreclosure action involving a [high-cost] home
   loan  [consummated between January first, two thousand three and Septem-
   ber first, two thousand eight, or  a  subprime  or  nontraditional  home
   loan,  as those terms are defined under section thirteen hundred four of
   the real property actions and proceedings law] as such term  is  defined
   in  section  thirteen  hundred  four  of  the  real property actions and
   proceedings law, in which the defendant is a resident  of  the  property
   subject  to  foreclosure,  the  court  shall hold a mandatory conference
   within sixty days after the date when proof of service is filed with the
   county clerk, or on such adjourned date as has been  agreed  to  by  the
   parties, for the purpose of holding settlement discussions pertaining to
   the  relative  rights  and obligations of the parties under the mortgage
   loan documents, including, but not limited to  determining  whether  the
   parties  can reach a mutually agreeable resolution to help the defendant
   avoid losing his or her home, and evaluating the potential for a resol-
   ution in which payment schedules or amounts may be modified or other
   workout options may be agreed to, and for whatever  other  purposes  the
   court deems appropriate.

     (d)  Upon  the  filing  of  a request for judicial intervention in any
   action pursuant to this section, the court shall send either a  copy  of
   such  request  or the defendant's name, address and telephone number (if
   available) to a housing counseling agency or agencies on a  list  desig-
   nated  by the division of housing and community renewal for the judicial

   district in which the defendant resides. Such information shall be  used
   by  the designated housing counseling agency or agencies exclusively for
   the purpose of making the homeowner  aware  of  housing  counseling  and
   foreclosure prevention services and options available to them.

     (e) The court shall promptly send a notice to parties advising them of
   the  time  and  place  of  the settlement conference, the purpose of the
   conference and the requirements of this section.  The notice shall be in
   a form prescribed by the office of  court  administration,  or,  at  the
   discretion  of  the  office  of court administration, the administrative
   judge of the judicial district in which the action is pending, and shall
   advise the parties of the  documents  that  they  should  bring  to  the
   conference.  For  the  plaintiff, such documents should include, but are
   not limited to, the payment history, an itemization of the amounts need-
   ed to cure and pay off the loan, and  the  mortgage  and  note.  If  the
   plaintiff is not the owner of the mortgage and note, the plaintiff shall
   provide the name, address and telephone number of the legal owner of the
   mortgage  and  note.   For the defendant, such documents should include,
   but are not limited to, proof of current income such  as  the  two  most
   recent  pay  stubs,  most recent tax return and most recent property tax
   statements.

     (f) Both the plaintiff and defendant shall negotiate in good faith  to
   reach a mutually agreeable resolution, including a loan modification, if
   possible.

     (g)  The plaintiff must file a notice of discontinuance and vacatur of
   the lis pendens within one  hundred  fifty  days  after  any  settlement
   agreement or loan modification is fully executed.

     (h)  A party to a foreclosure action may not charge, impose, or other-
   wise require payment from the other party for any  cost,  including  but
   not  limited  to  attorneys' fees, for appearance at or participation in
   the settlement conference.

     § 10. Section 3-a of chapter 472 of the laws  of  2008,  amending  the
   real  property  actions  and  proceedings law and other laws relating to
   foreclosure actions on home  mortgage  loans,  is  amended  to  read  as
   follows:

     §  3-a.  For  any  foreclosure action on a [residential mortgage] home
   loan as defined by  section  1304  of  the  real  property  actions  and
   proceedings law, in which the action was initiated prior to September 1,
   2008  but  where  the final order of judgment has not [yet] been issued,
   the court shall request each plaintiff to identify whether the  loan  in
   foreclosure  is  a  subprime home loan as defined in section 1304 of the
   real property actions and proceedings law as in effect on the  effective
   date  of  this section or is a high-cost home loan as defined in section
   6-l of the banking law.

     If the loan is a subprime home loan  as  that  term  is  used  in  the
   preceding  paragraph or high-cost home loan, the court shall notify [the
   defendant] any defendant who is the borrower under the loan that  if  he
   or  she  is a resident of such property, he or she may request a settle-
   ment conference.

     For any foreclosure action on a home loan that is not a subprime  home
   loan  or a high-cost home loan (as those terms are used in the preceding
   paragraphs), in which the foreclosure action was initiated prior to  the
   date  that  such  foreclosure action became subject to the provisions of
   rule 3408 of the civil practice law and rules but where the final  order
   of  judgment  has  not been issued, the court shall notify the defendant
   who is a borrower under the home loan that if he or she is a resident of
   such property, he or she may request a settlement conference.
  
     If the defendant requests a conference,  the  court  shall  hold  such
   conference  as soon as practicable for the purpose of holding settlement
   discussions pertaining to the rights  and  obligations  of  the  parties
   under  the mortgage loan documents, including but not limited to, deter-
   mining  whether the parties can reach a mutually agreeable resolution to
   help the defendant avoid losing his or  her  home,  and  evaluating  the
   potential  for a resolution in which payment schedules or amounts may be
   modified or other workout options may be agreed  to,  and  for  whatever
   other purposes the court deems appropriate.

     At  any  conference held pursuant to this section, the plaintiff shall
   appear in person or by counsel, and if appearing by counsel, such  coun-
   sel  shall  be  fully  authorized  to dispose of the case. The defendant
   shall appear in person or by counsel. If the defendant is appearing  pro
   se, the court shall advise the defendant of the nature of the action and
   his  or  her rights and responsibilities as a defendant. Where appropri-
   ate, the court may permit a representative of the  plaintiff  to  attend
   the settlement conference telephonically or by video-conference.

     § 10-a. 1. The chief administrator of the courts shall, within 90 days
   of  the  enactment  of this chapter, promulgate such additional rules as
   may be necessary to ensure the just and expeditious  processing  of  all
   settlement  conferences  authorized  hereunder.  Such  court rules shall
   ensure, among other things, that each judge, judicial hearing officer or
   referee who is overseeing a settlement conference as authorized  herein,
   shall  have the necessary authority and power to fulfill the mandates of
   this act. This shall include, but not be limited to, ensuring that  each
   party fulfils its legal obligation to negotiate in good faith and seeing
   that  conferences  not  be unduly delayed or subject to willful dilatory
   tactics so that the rights of both parties may be adjudicated in a time-
   ly manner. Such rules may include granting additional authority to sanc-
   tion the egregious behavior of a counsel or party.

     2. The chief administrator of the courts  shall  submit  a  report  no
   later than the first of November of each year to the governor, temporary
   president  of  the senate, the speaker of the assembly, the chair of the
   senate judiciary committee, the chair of the senate banks committee, the
   chair of the senate housing committee, the chair of the assembly judici-
   ary committee, the chair of the assembly banks committee and  the  chair
   of  the  assembly housing committee on the adequacy and effectiveness of
   the settlement conferences authorized hereunder which shall include, but
   not be limited to the number of adjournments, defaults, discontinuances,
   dismissals, conferences held, and the  number  of  defendants  appearing
   with and without counsel.

     §  11.  Subdivision 1 of section 6-f of the banking law, as amended by
   chapter 1 of the laws of 1983, is amended to read as follows:

     1. Notwithstanding any inconsistent provision of this chapter  or  any
   other  law  of this state, the banking board is authorized to adopt such
   rules or regulations as shall permit  banks,  trust  companies,  foreign
   banking  corporations  licensed  to  maintain a branch or agency in this
   state, savings banks, savings and loan associations, credit  unions  and
   persons  and entities engaging in the business described in section five
   hundred ninety of [article twelve-d of] this chapter to make residential
   mortgage loans and cooperative apartment unit loans  which  provide  for
   (a)  periodic readjustments of the rate of interest charged for the loan
   or successive terms of the loan or (b) terms of loan which  are  shorter
   than  the  term of the mortgage or (c) repayment of the principal amount
   of the loan by regular payments which are not equal in amount throughout
   the term of the mortgage or (d) the lender thereof to receive a share in
   the future appreciation of the property serving as security for the loan
   under the circumstances set forth in the following sentence or  (e)  any
   combination  of  paragraphs  (a), (b) [and], (c) [above] and (d) of this
   subdivision,  subject  to  the  provisions  of  subdivision  two of this
   section. Where the lender or holder of a residential  mortgage  loan  or
   cooperative apartment unit loan enters into a written agreement with the
   borrower  under  which  the  lender  or  holder conditionally reduces an
   amount of principal of such loan in order to assist a borrower  at  risk
   of foreclosure to avoid such foreclosure, the lender or holder may enter
   into  a  written  agreement (a "shared appreciation agreement") with the
   borrower under which the lender shall be entitled to share in the appre-
   ciation of the market value of the real property or  cooperative  shares
   and  proprietary  lease securing such loan between the effective date of
   such reduction in principal amount until the date when the  property  is
   sold,  provided  that the amount the lender is entitled to receive under
   such shared appreciation agreement shall be the lesser of (i) the amount
   of such reduction in principal, plus interest on such  amount  from  the
   date of such reduction to the date of payment at the same rate of inter-
   est  as  applies  to  the  remaining principal amount of the residential
   mortgage loan, and (ii) fifty percent of the  amount  of  such  appreci-
   ation.  Such amounts shall be payable when the mortgagor sells the resi-
   dential real property or cooperative shares and proprietary  lease  that
   secure  the loan. Such shared appreciation agreement shall expressly and
   conspicuously bear a legend at the top of  the  agreement  in  at  least
   fourteen-point  type  which shall include the following: "In this agree-
   ment, you are giving away some of any future increase in value  of  your
   home.    Please  read  carefully." For purposes of this subdivision, the
   appreciation of the property shall be measured  as  the  difference,  if
   positive,  between  the gross sales proceeds (net of any reasonable real
   estate commission) of the sale of the property  and  the  value  of  the
   property at the time of the closing of the shared appreciation mortgage,
   as  determined by an appraisal by an independent New York state licensed
   real estate appraiser.   Recovery of such  reduction  in  the  principal
   amount shall not be deemed to be interest for any purpose of the laws of
   this state.

     Any  shared  appreciation  agreement shall be accompanied by a notice,
   which shall be on a separate page from the shared appreciation agreement
   and shall contain the following heading in  bold,  fourteen-point  type:
   "Important  disclosures  about  the  contract in which you agree to give
   away a part of any future increase in value of your  home.  Please  read
   carefully." The notice shall include the following disclosures:

     (1)  a  statement  that  the  lender  will be entitled to share in any
   appreciation of the market value of the mortgaged property  that  occurs
   between  the  time of the loan modification and the time the property is
   sold, up to the amount of  principal  forborne  plus  interest  on  such
   amount  at  the  applicable  rate  of interest on the mortgage but in no
   event more than fifty percent of the amount of  such  appreciation,  and
   providing  at  least  three examples of how such shared appreciation may
   affect the borrower at the time the borrower sells the mortgaged proper-
   ty, such examples to include (A) no appreciation in  the  value  of  the
   mortgaged  property, (B) appreciation of twenty percent and (C) appreci-
   ation of fifty percent;

     (2) a statement advising the borrower to seek  independent  counseling
   from  a  lawyer,  a  HUD-certified  mortgage  counselor or a tax advisor
   regarding (A) the trade-off between a current reduction in the  size  of
   the  mortgage, versus the promise to give up part of the future appreci-
   ation of the home,  and  (B)  the  tax  consequences  of  the  principal
   forgiveness  and  shared appreciation agreement, and providing a list of
   the names and contact information of five HUD-certified mortgage counse-
   lors  in the county where the mortgaged property is located or, if there
   are fewer than five such counselors in that county, the list may include
   counselors in one or more neighboring counties;

     (3) a statement on the potential effect  of  the  shared  appreciation
   agreement  on  any  future refinancing of the mortgage and the potential
   effect of any prepayment or refinancing of the mortgage on the  appreci-
   ation sharing agreement; and

     (4) such other disclosures as the banking board may require.

     §  12.  Paragraph  (e)  of subdivision 1 of section 6-1 of the banking
   law, as added by chapter 626 of the laws of 2002 and subparagraph (i) as
   amended by chapter 552 of the laws  of  2007,  is  amended  to  read  as
   follows:

     (e)  "Home  loan"  means  a  [home] loan, including an open-end credit
   plan, other than a reverse mortgage transaction or a loan made or  fully
   or  partially  guaranteed  by  the state of New York mortgage agency, in
   which:

     (i) The principal amount of the loan at origination  does  not  exceed
   the  conforming  loan size limit (including any applicable special limit
   for jumbo mortgages) for a comparable dwelling as established from  time
   to time by the federal national mortgage association;

     (ii) The borrower is a natural person;

     (iii)  The  debt  is  incurred by the borrower primarily for personal,
   family, or household purposes;

     (iv) The loan is secured by a mortgage or deed of trust on real estate
   [upon which there is located or there is to be located  a  structure  or
   structures  intended principally for occupancy of from one to four fami-
   lies which is or will be occupied by  the  borrower  as  the  borrower's
   principal  dwellingimproved by a one to four family dwelling, or by a
   condominium unit, or by any certificate of stock or  other  evidence  of
   ownership  in,  and a proprietary lease from, a corporation, partnership
   or other entity formed for the purpose of cooperative ownership of  real
   estate,  in either case used or occupied or intended to be used or occu-
   pied, wholly or partly, as the home or residence of one or more  persons
   and which is or will be occupied by the borrower as the borrower's prin-
   cipal dwelling; and

     (v) The property is located in this state.

     §  13.  Paragraphs  (r) and (s) of subdivision 2 of section 6-l of the
   banking law, as added by chapter 472 of the laws of 2008, are amended to
   read as follows:

     (r) No prepayment  penalties.  [NoNotwithstanding  paragraph  b  of
   subdivision  three  of  section 5-501 of the general obligations law, no
   prepayment penalties or fees shall be charged or collected  on  a  high-
   cost  home  loan. A prepayment penalty in a high-cost home loan shall be
   unenforceable.

     (s) No abusive yield spread premiums. In arranging  a  high-cost  home
   loan,  the  mortgage  broker  shall, [at the time of application] within
   three days after receipt of an application, disclose  the  exact  amount
   and methodology of total compensation that the broker will receive. Such
   amount  may  be  paid  as  direct  compensation  from the lender, direct
   compensation from the borrower, or a combination of the two if permitted
   by applicable law. The provisions of this paragraph shall  not  restrict
   the  ability of a borrower to utilize a yield spread premium in order to
   offset any up front costs by accepting a higher interest rate if permit-
   ted by applicable law. If the borrower chooses this option, any  compen-
   sation  from the lender [which] that exceeds the [exact] amount of total
   compensation owed to the broker must be credited to  the  borrower.  The
   superintendent shall prescribe the form that such disclosure shall take.
   This  provision  shall  not  restrict  a  broker from accepting a lesser
   amount of compensation.

     § 14. Paragraphs (b), (c) and (d) of subdivision  1,  paragraphs  (j),
   (l)  and  (n)  of  subdivision  2  and paragraph (c) of subdivision 4 of
   section 6-m of the banking law, as added by chapter 472 of the  laws  of
   2008, are amended to read as follows:

     (b)  "Fully indexed rate" means: (i) for an adjustable rate loan based
   on an index, the [index rate that would have applied at the time of  the
   closing had the initial interest rate been determined by the application
   of  the same interest rate formula, (for example, an interest rate index
   plus or minus a margin) that applies under the terms of the  loan  docu-
   ments  to subsequent interest rate adjustments, disregarding any limita-
   tions on the amount by which the interest rate may  change  at  any  one
   time] annual percentage rate calculated using the index rate on the loan
   on the date the lender provides the "good faith estimate" required under
   12  USC §2601 et seq.  plus the margin to be added to it after the expi-
   ration of any introductory period or periods; or (ii) for a  fixed  rate
   loan,  the annual percentage rate on the loan disregarding any introduc-
   tory rate or rates and any interest rate caps that limit how quickly the
   contractual interest rate may be reached  calculated  at  the  time  the
   lender issues its commitment.

     (c)  [A]  "Subprime  home  loan" means a home loan in which [the fully
   indexed annual percentage rate] the initial interest rate or the  fully-
   indexed  rate,  whichever is higher, exceeds by more than one and three-
   quarters percentage points for a first-lien loan, or by more than  three
   and  three-quarters  percentage  points for a subordinate-lien loan, the
   average commitment rate for loans in the northeast region with a  compa-
   rable  duration  to  the duration of such home loan, as published by the
   Federal Home Loan Mortgage Corporation (herein  "Freddie  Mac")  in  its
   weekly  Primary  Mortgage  Market  Survey (PMMS) [as] posted in the week
   prior to the week [when] in  which  the  lender  [receives  a  completed
   application. A] provides the "good faith estimate" required under 12 USC
   §2601  et  seq.  The term "subprime home loan" excludes a transaction to
   finance the initial construction of a  dwelling,  i.e.,  a  construction
   only  loan, a temporary or "bridge" loan with a term of twelve months or
   less, such as a loan to purchase a new dwelling where the borrower plans
   to sell a current dwelling within twelve months, or a home  equity  line
   of credit but shall include any loan, however structured, that thereaft-
   er is converted into a permanent loan.

     (i)  The  comparable  duration  for a home loan shall be determined as
   follows: for an adjustable or variable home loan with  an  initial  rate
   that  is  fixed for less than three years, the Freddie Mac survey result
   for a one-year adjustable rate mortgage; for an adjustable  or  variable
   home  loan  with an initial rate that is fixed for at least three years,
   the Freddie Mac survey result for a  five-year  hybrid  adjustable  rate
   mortgage;  for  a  fixed  rate home loan with a term of fifteen years or
   less, the Freddie Mac survey result for a fifteen-year fixed rate  mort-
   gage;  and  for  a fixed rate home loan with a term of more than fifteen
   years, the Freddie Mac survey result for a thirty-year fixed rate  mort-
   gage.  The superintendent may prescribe by regulation a different compa-
   rable duration standard as necessary or appropriate to  reflect  changes
   in the terms and types of mortgages included in the Freddie Mac survey.
  
     (ii) Notwithstanding the comparable rates set forth in this paragraph,
   and notwithstanding any other law, if the superintendent determines that
   by  statute,  rule  or  regulation, different thresholds for determining
   underwriting  standards  for  subprime  loans   become   applicable   to
   nationally  chartered  lending  institutions,  or the provisions of this
   section have had an unduly negative  effect  upon  the  availability  or
   price  of  mortgage financing in this state, the superintendent may from
   time to time designate such other threshold rates as may be necessary to
   achieve parity between such nationally chartered institutions and  bank-
   ing  organizations, mortgage banks and mortgage brokers in this state or
   to alleviate such unduly  negative  effects.  Such  determination  shall
   promptly be published on the website of the banking department.

     (d)  "Home  loan"  means  a  [home] loan, including an open-end credit
   plan, other than a reverse mortgage transaction or a loan made or  fully
   or  partially  guaranteed  by  the state of New York mortgage agency, in
   which:

     (i) The principal amount of the loan at origination  does  not  exceed
   the  conforming  loan size limit (including any applicable special limit
   for jumbo mortgages) for a comparable dwelling as established from  time
   to time by the federal national mortgage association;
     (ii) The borrower is a natural person;
     (iii)  The  debt  is  incurred by the borrower primarily for personal,
   family, or household purposes;
     (iv) The loan is secured by a mortgage or deed of trust on real estate
   [upon which there is located or there is to be located  a  structure  or
   structures  intended principally for occupancy of from one to four fami-
   lies which is or will be occupied by  the  borrower  as  the  borrower's
   principal  dwellingimproved by a one to four family dwelling, or by a
   condominium unit, or by any certificate of stock or  other  evidence  of
   ownership  in,  and a proprietary lease from, a corporation, partnership
   or other entity formed for the purpose of cooperative ownership of  real
   estate, in either case, used or occupied or intended to be used or occu-
   pied,  wholly or partly, as the home or residence of one or more persons
   and which is or will be occupied by the borrower as the borrower's prin-
   cipal dwelling; and
     (v) The property is located in this state.

     (j) No lending without [counseling disclosure and list of  counselors]
   providing  information  on  the  availability of counseling. A lender or
   mortgage broker must deliver, place in the mail, fax  or  electronically
   transmit  the  following  notice  in  at  least twelve point type to the
   borrower of a subprime home loan at  the  time  of  application:    "You
   should  consider financial counseling prior to executing loan documents.
   The enclosed list of counselors is provided by the New York State  Bank-
   ing  Department."  In  the event of a telephone application, the disclo-
   sures must be made immediately after receipt of the application by tele-
   phone. Such disclosure shall be on a separate form. In order to  utilize
   an  electronic  transmission,  the  lender  or  broker must first obtain
   either written or electronically transmitted permission from the borrow-
   er. A list of approved counselors, available from  the  New  York  state
   banking  department,  shall be provided to the borrower by the lender or
   the mortgage broker at the time that this disclosure is given.

     (l) Prohibited payments to mortgage bankers and brokers. In making  or
   arranging  a  subprime home loan, no lender, mortgage banker or mortgage
   broker shall accept or give any fee, kickback, thing of value,  portion,
   split  or  percentage  of  charges,  other  than as payment for goods or
   facilities that were actually furnished or services that  were  actually
   performed.  Such  payment must be reasonably related to the value of the
   goods or facilities that were actually furnished or services  that  were
   actually performed.

     (n)  No  abusive  yield  spread premiums. In arranging a subprime home
   loan, the mortgage broker shall, [at the  time  of  applicationwithin
   three  days  after  receipt of an application, disclose the exact amount
   and methodology for determining the total compensation that  the  broker
   will  receive.  Such  amount may be paid as direct compensation from the
   lender, direct compensation from the borrower, or a combination  of  the
   two  if  permitted  by  applicable law. The provisions of this paragraph
   shall not restrict the ability of a borrower to utilize a  yield  spread
   premium  in  order  to  offset  any  upfront costs by accepting a higher
   interest rate if permitted by applicable law. If  the  borrower  chooses
   this  option,  any compensation from the lender [which] that exceeds the
   exact amount of total compensation owed to the broker must  be  credited
   to  the  borrower. The superintendent shall prescribe the form that such
   disclosure shall take. This paragraph shall not restrict a  broker  from
   accepting a lesser amount of compensation.

     (c)  In determining a borrower's ability to repay a subprime home loan
   according to its terms when the loan has an adjustable rate feature, the
   lender or mortgage broker shall calculate the monthly payment amount for
   principal and interest by assuming  (i)  the  loan  proceeds  are  fully
   disbursed on the date of the loan closing, (ii) the loan is to be repaid
   in  substantially  equal  monthly  amortizing  payments of principal and
   interest over the entire term of the loan, with no balloon payment,  and
   (iii) the interest rate over the entire term of the loan is a fixed rate
   equal  to  the  higher of the initial interest rate or the fully indexed
   rate at the time of the loan closing, without  considering  any  initial
   discounted rate.

     §  15.  Subdivisions  3,  4,  5,  6, 7, 8, 9, 10, 11, 12, 13 and 14 of
   section 6-m of the banking law, as added by chapter 472 of the  laws  of
   2008, are amended to read as follows:

     3.  Certain loan provisions rendered void. Any provision in a subprime
   home loan that  violates  subdivision  two  of  this  section  shall  be
   rendered void.

     4.  [No  arrangement  of  certain subprime loans] Ability to repay. No
   lender or mortgage broker shall make or arrange  a  subprime  home  loan
   unless  the  lender  or  mortgage  broker  reasonably  and in good faith
   believes at the time [the loan is consummated] of the loan closing  that
   one  or  more  of the borrowers, when considered individually or collec-
   tively, has the ability to repay the loan according to its terms and  to
   pay  applicable  real  estate  taxes and hazard insurance premiums. If a
   lender or mortgage broker making or arranging a subprime home loan knows
   that one or more home loans secured by the same real  property  will  be
   made  contemporaneously to the same borrower with the subprime home loan
   being made or arranged by that lender or mortgage broker, the lender  or
   mortgage broker making or arranging the subprime home loan must document
   the  borrower's  ability  to repay the combined payments of all loans on
   the same real property.

     (a) A lender or mortgage broker's analysis of a borrower's ability  to
   repay  a  subprime  home  loan  according  to  the loan terms and to pay
   related real estate taxes and insurance premiums shall  be  based  on  a
   consideration  of  the  borrower's  credit history, current and expected
   income, current obligations,  employment  status,  and  other  financial
   resources  other  than  the  borrower's equity in the real property that
   secures repayment of the subprime home loan.
  
     (b) In determining a borrower's ability to repay a subprime home loan,
   the lender or mortgage broker shall take reasonable steps to verify  the
   accuracy and completeness of information provided by or on behalf of the
   borrower  using  tax returns, payroll receipts, bank records, reasonable
   alternative methods, or reasonable third-party verification.

     (c)  In determining a borrower's ability to repay a subprime home loan
   according to its terms when the loan has an adjustable rate feature, the
   lender or mortgage broker shall calculate the monthly payment amount for
   principal and interest by assuming  (i)  the  loan  proceeds  are  fully
   disbursed on the date of the loan closing, (ii) the loan is to be repaid
   in  substantially  equal  monthly  amortizing  payments of principal and
   interest over the entire term of the loan, with no balloon payment,  and
   (iii) the interest rate over the entire term of the loan is a fixed rate
   equal to the fully indexed rate at the time of the loan closing, without
   considering any initial discounted rate.

     (d)  A lender or mortgage broker's analysis of a borrower's ability to
   repay a subprime home loan may utilize  reasonable  commercially  recog-
   nized  underwriting  standards  and  methodologies,  including automated
   underwriting systems, provided the standards  and  methodologies  comply
   with the provisions of this section.

     5.  Required  legend.  Subprime  home  loan  mortgages shall include a
   legend on top of the mortgage in  twelve-point  type  stating  that  the
   mortgage is a subprime home loan subject to this section.

     6.  Evasion  of statutory requirements. The provisions of this section
   shall apply to any person who [in  bad  faith]  attempts  to  avoid  the
   application of this section by any subterfuge, including but not limited
   to,  splitting  or dividing any loan transaction into separate parts for
   the purpose of evading the provisions of this section.

     7. Good faith errors. A lender of a  subprime  home  loan  that,  when
   acting  in  good  faith,  fails  to  comply  with the provisions of this
   section, shall not be deemed to have violated this section if, prior  to
   the institution of any action and before the borrower is prejudiced, the
   lender  notifies  the  borrower  of  the compliance failure, appropriate
   restitution is made, and whatever adjustments  that  are  necessary  are
   made  to  the  loan  to  make  the loan satisfy the requirements of this
   section.

     8. Enforcement. The attorney general or the superintendent may enforce
   the provisions of this section.

     9. Damages. Any person found by a preponderance  of  the  evidence  to
   have violated this section shall be liable to the borrower of a subprime
   home loan for actual damages.

     10.  Attorneys fees. A court may also award reasonable attorneys' fees
   to a prevailing borrower in a foreclosure action.

     11. Equitable relief. A borrower may be granted injunctive, declarato-
   ry and such other equitable relief as the court deems appropriate in  an
   action to enforce compliance with this section.

     12.  Remedies not exclusive. The remedies provided in this section are
   not intended to be the exclusive remedies available to a borrower  of  a
   subprime home loan.

     13.  Defense  to foreclosure. In any action by a lender or assignee to
   enforce a loan against a borrower in default more than sixty days or  in
   foreclosure,  a  borrower may assert as a defense, any violation of this
   section.

     14. Severability. The provisions of this section shall  be  severable,
   and  if  any  phrase,  clause,  sentence, or provision is declared to be
   invalid, or is preempted by federal law or regulation, the  validity  of
   the  remainder  of  this  section  shall not be affected thereby. If any
   provision of this section is declared to be inapplicable to any specific
   category, type, or kind of points and fees with respect to a home  loan,
   the  provisions of this section shall nonetheless continue to apply with
   respect to all other points and fees.

     § 16. Paragraph (a) of subdivision 1 of section  590  of  the  banking
   law,  as added by chapter 571 of the laws of 1986, is amended to read as
   follows:

     (a) "Mortgage loan" shall mean a loan to a natural person made  prima-
   rily  for  personal,  family  or  household  use, [primarily] secured by
   either a mortgage or deed of trust  on  residential  real  property  [or
   certificates],  any  certificate of stock or other evidence of ownership
   [interests] in, and proprietary [leases] lease  from,  [corporations  or
   partnershipsa  corporation  or  partnership formed for the purpose of
   cooperative ownership of residential real property or, if determined  by
   the  banking board by regulation, shall include such a loan secured by a
   security interest on a manufactured home;

     § 17. Paragraphs (c) and (d) of subdivision 3 of section  590  of  the
   banking  law  are  relettered paragraphs (d) and (e) and a new paragraph
   (c) is added to read as follows:

     (c) Such rules and regulations under this article regarding the origi-
   nation, sale or servicing of manufactured home loans as may be necessary
   and appropriate for the protection of consumers;

     § 18. Paragraphs (b) and (b-1) of subdivision 2 of section 590 of  the
   banking  law,  paragraph  (b) as amended and paragraph (b-1) as added by
   chapter 472 of the laws of 2008, are amended to read as follows:

     (b) No person, partnership, association, corporation or  other  entity
   shall engage in the business of soliciting, processing, placing or nego-
   tiating  a mortgage loan or offering to solicit, process, place or nego-
   tiate a mortgage loan in this state without first being registered  with
   the superintendent as a mortgage broker in accordance with the registra-
   tion  procedure  provided in this article and by such regulations as may
   be promulgated by the banking board or prescribed by the superintendent.
   The registration provisions of this subdivision shall not apply  to  any
   exempt organization [or], mortgage banker or mortgage loan servicer.  No
   real estate broker or salesman, as defined in section four hundred forty
   of  the real property law, shall be deemed to be engaged in the business
   of a mortgage broker if he does not accept a fee, directly or  indirect-
   ly,  for services rendered in connection with the solicitation, process-
   ing, placement or negotiation of a mortgage loan. No attorney-at-law who
   solicits, processes, places or negotiates a mortgage loan incidental  to
   his  legal  practice  shall be deemed to be engaged in the business of a
   mortgage broker. The registration provisions of this  subdivision  shall
   not  apply to any person or entity which shall be exempted in accordance
   with regulations promulgated by the banking board hereunder.

     (b-1) No person, partnership, association, corporation or other entity
   shall engage in the business of servicing mortgage loans with respect to
   any property located in this state without first being  registered  with
   the  superintendent  as  a mortgage loan servicer in accordance with the
   registration procedure provided by such regulations as may be prescribed
   by the superintendent. The superintendent may refuse to register a mort-
   gage loan servicer on the same grounds that he  or  she  may  refuse  to
   issue a registration certificate to a mortgage broker pursuant to subdi-
   vision  two  of  section five hundred ninety-two-a of this article.  The
   registration provisions of this  subdivision  shall  not  apply  to  any
   exempt  organization,  mortgage banker, or mortgage broker or any person
   or entity  which  shall  be  exempted  in  accordance  with  regulations
   prescribed  by  the  superintendent hereunder; provided that such exempt
   organization, mortgage banker, mortgage broker, or exempted person noti-
   fies the superintendent that it is acting as a mortgage loan servicer in
   this  state and complies with any regulation applicable to mortgage loan
   servicers, promulgated by the banking board or prescribed by the  super-
   intendent  with  respect to mortgage loan servicers.  The superintendent
   may require all registrations and notifications to be made  through  the
   Nationwide  Mortgage  Licensing  System  and Registry. An application to
   become a registered mortgage  loan  servicer  or  any  application  with
   respect  to  a  mortgage  loan servicer shall be accompanied by a fee as
   prescribed pursuant to section  eighteen-a  of  this  chapter.  Any  fee
   established pursuant to this subdivision may be collected by and include
   a processing fee charged by the Nationwide Mortgage Licensing System and
   Registry.  Any  such processing fees shall not be remitted to the super-
   intendent and shall not be deemed revenue pursuant to  this  chapter  or
   the state finance law.

     §  19.  Section  595-a  of  the banking law is amended by adding a new
   subdivision 5 to read as follows:

     5. No licensee or registrant engaging in any  activities  constituting
   the  business  of  a  distressed  property  consultant,  as described in
   section two hundred sixty-five-b of the real property law, shall  charge
   for  or  accept payment for real property consulting services as defined
   in such section before the full completion of such services.

     § 20. Section 187.00 of the penal law, as added by chapter 472 of  the
   laws of 2008, is amended to read as follows:

   § 187.00 Definitions.

     As used in this article:

     1.  "Person"  means any individual or entity [other than an individual
   who applies for a residential mortgage loan and intends to  occupy  such
   residential property which such mortgage secures unless such person acts
   as  an  accessory  to  an  individual  or entity in committing any crime
   defined in this article].

     2. "Residential mortgage loan" means a loan  or  agreement  to  extend
   credit,  including  the renewal [or], refinancing or modification of any
   such loan, made to a person, which loan is primarily secured by either a
   mortgage, deed of trust, or other lien upon any interest in  residential
   real property or any certificate of stock or other evidence of ownership
   in,  and  a  proprietary lease from, a corporation or partnership formed
   for the purpose of cooperative ownership of residential real property.

     3.   "Residential real property" means real  property  improved  by  a
   one-to-four family dwelling, or a residential unit in a building includ-
   ing units owned as condominiums or on a cooperative basis, used or occu-
   pied,  or intended to be used or occupied, wholly or partly, as the home
   or residence of one or more persons, but shall not refer  to  unimproved
   real property upon which such dwellings are to be constructed.

     4.    "Residential mortgage fraud" is committed by [any] a person who,
   knowingly and with intent to defraud, presents, causes to be  presented,
   or  prepares with knowledge or belief that it will be used in soliciting
   an applicant for [a residential mortgage loan], [or  in]  applying  for,
   [the] underwriting [of,] or closing [of] a residential mortgage loan, or
   [in  documents  filedfiling  with a county clerk of any county in the
   state arising out of and related to the closing of a  residential  mort-
   gage loan, any written statement which [he or she knows to]:

     (a)  [containcontains  materially  false information concerning any
   fact material thereto; or

     (b) [conceal] conceals, for the  purpose  of  misleading,  information
   concerning any fact material thereto.

     §  21. The penal law is amended by adding a new section 187.01 to read
   as follows:

   § 187.01 Limitation on prosecution.
     No individual who applies for a residential mortgage loan and  intends
   to occupy such residential property which such mortgage secures shall be
   held  liable  under  this article provided, however, any such individual
   who acts as an accessory to an individual or entity  in  committing  any
   crime  defined  in  this  article may be charged as an accessory to such
   crime.

     § 22. Subparagraphs (i) and (vii) of paragraph (e)  of  subdivision  1
   and paragraph (b) of subdivision 2 of section 265-b of the real property
   law, as added by chapter 472 of the laws of 2008, are amended to read as
   follows:

     (i) an attorney admitted to practice in the state of New York when the
   attorney is directly providing consulting services to a homeowner in the
   course of his or her regular legal practice;

     (vii)  a person licensed as a mortgage banker or registered as a mort-
   gage broker or registered as a mortgage  loan  servicer  as  defined  in
   article  twelve-D of the banking law, provided that no such person shall
   take any upfront fee in conjunction  with  activities  constituting  the
   business of a distressed property consultant;

     (b)  charging  for  or  accepting  any payment for consulting services
   before the full completion of all such services, including a payment  to
   be placed in escrow pending the completion of such services;

     § 23. Nothing in this act shall be construed as restricting any rights
   or  causes of action the parties to a mortgage, lease or other agreement
   concerning real property may otherwise have under New York law.

     § 24. Severability clause. If any clause, sentence, paragraph, section
   or part of this act shall be adjudged by any court of  competent  juris-
   diction to be invalid, such judgment shall not affect, impair or invali-
   date  the  remainder  thereof, but shall be confined in its operation to
   the clause,  sentence,  paragraph,  section  or  part  thereof  directly
   involved  in  the  controversy  in  which  such judgment shall have been
   rendered.

     § 25. This act shall take effect immediately; provided, however, that:
     a. Sections one, one-a, two and three of this act shall take effect on
   the thirtieth day after this act shall have become a law and shall apply
   to notices required on or  after  such  date;  provided,  however,  that
   section  one-a  of  this act shall expire and be deemed repealed 5 years
   after such effective date;

     b. Sections four, seven and eight of this act shall take effect on the
   thirtieth day after this act shall have become a law and shall apply  to
   actions  where  a judgment of foreclosure and sale is issued on or after
   such date;

     c. Section five of this act shall take  effect  on  the  sixtieth  day
   after  this  act  shall  have  become  a  law and shall apply to notices
   required by section 1304 of the real property  actions  and  proceedings
   law mailed on or after such date;

     d.  Section six of this act shall take effect on the one hundred twen-
   tieth day after it shall have become a law;

     e. Section nine of this act shall take  effect  on  the  sixtieth  day
   after  this act shall have become a law and shall apply to legal actions
   filed on or after such date; provided, however that  the  amendments  to
   subdivision (a) of rule 3408 of the civil practice law and rules made by
   such  section  shall  expire  and  be deemed repealed 5 years after such
   effective date;

     f.  Section fourteen of this act shall take effect on the sixtieth day
   after this act shall have become a law; and

     g. Section sixteen of this act shall take effect on the  sixtieth  day
   after this act shall have become a law.
 
   The Legislature of the STATE OF NEW YORK ss:

     Pursuant  to  the authority vested in us by section 70-b of the Public
   Officers Law, we hereby jointly certify that this slip copy of this
   session law was printed under our direction and, in accordance with such
   section, is entitled to be read into evidence.

 
      MALCOLM A. SMITH                                    SHELDON SILVER
   Temporary President of the Senate                Speaker of the Assembly

About DFS

Contact DFS

Reports & Publications

Licensing

Laws and Regs

Connect With DFS

DFS Facebook page

Follow NYDFS on Twitter