By
Stephanie K. Mann, J.D.
New
York Governor Andrew M. Cuomo has announced that the Department of Financial
Services has published a Consumer
Bill of Rights for New Yorkers facing foreclosure. Additionally, the
Department has 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,” Cuomo said. “These
steps will help protect the quality of life in our communities and preserve the
American Dream in New York.”
The
Department is required to publish a Consumer Bill of Rights
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.
Inspection of properties. Under the law, 3 NYCRR 422,
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
vacant and abandoned properties to the Department, submit quarterly reports
detailing their efforts to secure and maintain the properties, and report on the
status of any foreclosure proceedings. If the Department determines that a
property that is vacant and abandoned is not being properly maintained by the
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.
