Consumer Bill Of Rights and Final Regulation and Are Final Pieces Of Sweeping Legislation Signed By Governor Cuomo to Assist Homeowners Facing Foreclosure
Actions Combat Blight Created By Vacant and Abandoned Properties Across New York State
Governor Andrew M. Cuomo today announced the Department of Financial Services has published a Consumer Bill of Rights for New Yorkers facing foreclosure. Additionally, DFS has also finalized a regulation protecting communities from the blight of “zombie properties” by requiring banks and mortgage servicers to report and maintain vacant and abandoned properties.
Both actions follow legislation the Governor signed in June that curbs the threat "zombie properties" pose to communities by expediting foreclosure proceedings, improving the efficiency and integrity of the mandatory settlement conferences, and obligating banks and mortgage servicers to secure, protect and maintain vacant and abandoned properties before and during foreclosure proceedings.
“These reforms help ensure New Yorkers at risk of foreclosure know their rights, that banks and mortgage servicers are held to their obligations, and that neighborhoods across the state are protected from the blight of zombie properties, which threaten property values, as well as public safety,” Governor Cuomo said. “These steps will help protect the quality of life in our communities and preserve the American Dream in New York.”
Superintendent of Financial Services Maria T. Vullo said, “DFS is proud to put this vital legislation, signed by Governor Cuomo, into action with this final regulation and new Consumer Bill of Rights. Homeowners will now be armed with the information they need to better navigate the foreclosure process and entire communities will be provided assistance and protection with this final regulation in place.”
DFS is required to publish a Consumer Bill of Rights, provided below, no later than 60 days after the new law takes effect. The new law also requires the court overseeing a foreclosure proceeding to provide homeowners a copy of the Consumer Bill of Rights at the initial mandatory settlement conference.
Under the law, bank and mortgage servicers must complete an inspection of a property subject to delinquency within 90 days and must secure and maintain the property where the bank or servicer has a reasonable basis to believe that the property is vacant and abandoned. Banks and mortgage servicers are required to report all such vacant and abandoned properties to DFS and submit quarterly reports detailing their efforts to secure and maintain the properties and the status of any foreclosure proceedings. If DFS determines that a property that has been deemed vacant and abandoned is not being properly maintained by the relevant bank or mortgage servicer, the Superintendent will exercise her authority to hold the bank or mortgage servicer accountable. Violations are subject to a civil penalty of $500 per day per property.
The regulation is part of several provisions that will help address the scope of unoccupied and ill-maintained properties, which based on voluntary reporting is estimated to be over 6,000. Under the new law, reporting by banks and mortgage servicers is now mandatory, and the number of abandoned homes is anticipated to be even higher. The law also requires the creation of a zombie properties hotline to allow New Yorkers to report vacant or abandoned properties. New Yorkers can contact the Department of Financial Services hotline at (800) 342-3736 or online at www.dfs.ny.gov to report vacant or abandoned properties.
A copy of the Consumer Bill of Rights is Available here and below:
Residential Foreclosure Actions Consumer Bill of Rights
This Consumer Bill of Rights provides guidance to homeowners facing foreclosure in New York. A foreclosure is a lawsuit, and homeowners should seek assistance from an attorney or housing counselor in exploring potential legal defenses to the suit. Homeowners should also know their general rights and obligations highlighted below.
Throughout the Foreclosure Process
You have the right to stay in your home and the duty to maintain your property unless and until a court orders you to vacate. If you abandon your home, the plaintiff (bank or mortgage servicer) may be able to foreclose on your property through an expedited process in court. To prevent this outcome, stay in your home and carefully review and respond to documents you receive from the plaintiff or the court in your foreclosure case. A failure to respond or appear in court when required to do so could make it easier for the plaintiff to show that your property is vacant and abandoned, which could put you at risk of an expedited foreclosure.
You have a right to be represented by an attorneyandmay be eligible for free legal or housing counseling services. For free legal services available in your area, visit “Consumers, Mortgage and Foreclosure” on the New York State Department of Financial Services website at www.dfs.ny.gov.
You have a right to be free from harassment or foreclosure scams. Strongly consider consulting with an attorney or housing counselor, if available, before signing any papers. If you are the target of harassment or fraud, contact the New York State Department of Financial Services either online or by calling the Consumer Hotline at (800) 342-3736.
You have a right to avoid foreclosure if you repay your loan in full at any time prior to the sale of your home, or if you negotiate a settlement with the plaintiff.
Before a Foreclosure Action Begins in Court
You have a right to be notified at least 90 days before a foreclosure suitis filed informing you that you are in default and at risk of foreclosure.
You have the right to explore “loss mitigation” options that may allow you to keep your home and avoid litigation. The bank or mortgage servicer is required to help you understand your loss mitigation options.
If you have submitted a completed loss mitigation application, your bank or mortgage servicer must finish its review of your application before proceeding with the foreclosure suit.
Once a Foreclosure Action Begins
You have the right to receive a copy of the legal papers in the foreclosure lawsuit when it begins. This is known as “service” of the Summons and Complaint.
You must respond to the Summons and Complaint with an “Answer” within 20 days after you have been personally served, and within 30 days if served on you by other means. The Answer is your opportunity to state your defenses. You should consult with an attorney or housing counselor for help in this process.
You have a right to participate in all court proceedings related to your case, including the mandatory settlement conference, which is required by New York law. For information about the mandatory settlement conference, visit the “Mandatory Settlement Conference” section of the New York State Department of Financial Services website located at www.dfs.ny.gov.
You have an obligation to appear at all scheduled court appearances. If you fail to appear, you risk losing important rights, which could lead to the loss of the case and your home.
You have a right to request court permission to proceed without paying court costs.
At the Mandatory Settlement Conference
You have a right to an explanation of the nature of the foreclosure action against you.
Both parties have an obligation to bring all necessary documents to the settlement conference. For a general list of required documents, visit the “Mandatory Settlement Conference” section of the New York State Department of Financial Services website located at www.dfs.ny.gov.
Both parties must negotiate in “good faith”, which means honestly and fairly. If you fail to do so, you may lose the opportunity to pursue a court-supervised settlement. If the bank or mortgage servicer fails to do so, the court may impose similarly significant penalties. Negotiating in good faith does not require either party to settle.
If you previously failed to submit an Answer, you will be given an extra 30 days to do so at the settlement conference.
After Settlement Agreement or Fully Executed Loss Mitigation Agreement
Within 90 days of finalizing a settlement, the lis pendens designation on your property, which warns people that title to your property is in dispute, must be lifted.
You may be responsible for additional taxes if you reach a settlement that includes debt forgiveness. Seek advice from a tax professional about any resulting tax consequences.
After Judgment of Foreclosure & Sale
Upon a judgment of foreclosure and sale, the new owner can seek to evict you from the property.
If the home is resold for more than what you owe, you have a right to file an application with the court for the surplus funds, subject to certain deadlines. It is important to seek help from a legal service provider if you believe you are owed a surplus.
If the home is sold for less than what you owe, the lender may file an application for a judgment against you for the difference, known as a deficiency judgment. You may have the right to contest the amount of any deficiency judgment, including interest and penalties.
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