New York State Banking Law Defenses to Foreclosure
October 16, 2008
Homebuyers face scammers who try to take you for a ride. This sort of predatory lending practice has become all too common in recent years. Homeowners end up unable to pay their mortgage and usually end up facing foreclosure. However, the State of New York has made amendments to existing legislation that punishes those that practice predatory lending.
The new legislation places restrictions on what are considered “high cost loans.” The law defines a high cost loan as one that exceeds certain boundaries, such as if the total “points and fee” exceeds 5% for a loan over $50,000 or 6% for a loan less than $50,000. The amended law now prohibits certain loan practices, such as lending money without considering the homeowner’s ability to pay, financing points and fees that exceed 3% of the total loan, giving kickbacks to mortgage brokers, and several others. There are to be no more balloon payments on loans of less than 15 years in duration and lenders are now required to provide a list of financial counselors to the borrower prior to the loan’s approval.
Certain elements have been added that provide assistance to homeowners facing foreclosure. Lenders are required to provide a written notice to the homeowner 90 days before any foreclosure proceedings can begin. This time is to allow the homeowner time to come up with a way of preventing the foreclosure and prevents the homeowner from being blindsided. The amendments also require a settlement conference, where all involved parties must meet within 60 days of the proof of service being filed with the courts. The lender or a representing attorney must appear with authority to dispose of the matter. In these situations, the court can appoint an attorney if the homeowner cannot afford one.
In response to the predatory lending practices of the past, the State of New York has taken steps to help homeowners defend themselves against foreclosure. If you find yourself facing foreclosure, contact me immediately to set up a time to talk about your options.
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