Padavan's Home Foreclosure Prevention & Relief Bill OK'd

The legislation will include provisions and legal steps to clarify and eliminate questionable foreclosure actions and tactics that have arisen during the current subprime mortgage crisis, Padavan said. As the devastating subprime mortgage lending crisis and home foreclosures show no sign of abating, New York state's threatened homeowners at least can get some help from comprehensive legislation passed during the recent session in Albany. The new laws will help at-risk homeowners overcome impending foreclosure.

The bipartisan legislation, sponsored by Senator Frank Padavan in the senate in 2007 provides a set of initiatives that will prevent a future increase in foreclosures throughout New York state. Governor David Paterson agreed to the package of bills and promised to sign them into law.

"This comprehensive legislation will provide much needed relief and help at-risk homeowners facing a foreclosure on their home," Padavan said. "The legislation is reflective of the strong commitment at all levels of state government to providing the necessary legislative initiatives and tools to help halt the rise of home foreclosures in all reaches of our state. I applaud Governor Paterson, Senator Bruno and Speaker Silver for their intensive efforts."

Padavan (R- C, Bellerose) explained that the legislation not only focused on helping homeowners today but also takes significant steps in preventing a future rise in the number of home foreclosures throughout the state.

Under the legislation, lenders must send out a pre-foreclosure notice to a mortgage borrower at least three months before any foreclosure begins. The lender also must send with the notice a list of state-approved housing counselors available in their area. This will allow at-risk homeowners to find help and take any action they need before any foreclosure proceedings have begun.

The legislation also requires that there must be a mandatory settlement conference for foreclosure proceedings involving homeowners with certain subprime loans. Additionally, the legislation will include provisions and legal steps to clarify and eliminate questionable foreclosure actions and tactics that have arisen during the current subprime mortgage crisis, Padavan said.

Padavan further explained that in order to prevent another rise in home foreclosures in the future, the legislation includes a number of provisions strengthening state law in order to protect mortgage borrowers and homeowners. These legislative initiatives include: A "duty of care" provision that will require mortgage lenders to act in a borrower's and homeowner's best interest; increased criminal penalties for mortgage fraud, and stronger state oversight and transparency of mortgage services throughout New York state.

"This legislation gives lenders and homeowners a mechanism to avoid foreclosures while instituting new and stronger state oversight and standards governing subprime loans in New York state," Padavan said. "At the end of the day, this comprehensive legislation will make New York the leader in the fight to end the rise of foreclosures.

"With New York being the first state in the nation to act on comprehensive legislation addressing the foreclosure crisis, it's time for Congress to follow our lead and provide federal assistance to homeowners facing foreclosure."

In a statement issued at the end of the legislative session, Silver said, "The legislation clearly defines a subprime home loan and sets standards for lenders issuing them, as well as mandating that all businesses servicing loans be registered with the state.

"The subprime measure also establishes the crime of residential mortgage fraud to prevent against further dishonest lending that has threatened the homes of thousands of New Yorkers."