Establishes the New York state mortgage settlement fund to consist of monies obtained by the state as a result of settlement with mortgage servicers to be used to compensate eligible homeowners who have been injured by foreclosure abuses; provides that homeowners eligible to receive compensation as a result of such settlement may elect certain bases for calculating such compensation; provides that eligible homeowners may request treble damages.
TITLE OF BILL: An act to amend the state finance law, in relation to establishing the New York state mortgage settlement fund
PURPOSE: To authorize the New York State Comptroller to establish a special fund to be known as the New York state mortgage settlement fund.
JUSTIFICATION: In the fall of 2008 New York State and the entire country was reeling from an onslaught of residential foreclosures which from the beginning of 2007 to early 2012 saw roughly four million families lose their homes to foreclosure. The devastating toll this epidemic took on the country left families shaken and America's financial system on the brink of collapse. The foreclosure situation was further exacerbated by evidenced emerging that the foreclosure process was possibly corrupted by careless recordkeeping, cut corners and potential fraud, typified by high-profile cases of "robo-signing" - cases in which foreclosures took place based on forged or unreviewed documents.
These series of events led to state attorneys general from across the country bringing mortgage lenders to the negotiating table to address all of the concerns raised from the process and, amongst other things, how affected homeowners can receive restitution. It is estimated that families lost upward of $7,000 dollars due to foreclosure. In addition, foreclosures caused widespread displacement and housing instability, financial insecurity and economic hardship, including damaged credit ratings, reductions in net worth, severe imbalances in Debt vs. Assets for individuals, personal and family stress, and in some cases ill health. New York State was disproportionately affected by this epidemic.
The goal of this legislation is to provide alternative methods of distribution to effected homeowners from state settlement recovery. Nominal amounts of recovery fall short of bringing homeowners to as close to a position as they were in before the devastating lending and foreclosure practices were implemented by lending institutions. Homeowners need real restitution in order to help set their lives back in order.
SUMMARY OF PROVISIONS:
Subsection 5. Under this legislation Homebuyers may elect to receive:
(a) the full amount of the down payment paid on his or her qualifying residential real property, in addition to the amount of all monthly mortgage associated with such property, up to and including the later of the date of the foreclosure action or discovery of the wrong;
(b) twenty percent of the original appraised value of the qualifying residential real property;
(c) if the eligible homeowner has been foreclosed upon and is no longer residing in the qualifying residential real property, the full amount of a down payment on new residential real property;
(d) if the eligible homeowner has been foreclosed upon and is no longer residing in the qualifying residential real property and has not chosen to purchase new residential real property, up to six months of rental payments;
Subsection 6. In addition to the compensation authorized by subdivision five of this section, the commissioner of the division of housing and community renewal shall determine, upon request by an eligible homeowner and after evaluating the facts surrounding a participating mortgage servicer's handling of the mortgage on the qualifying residential real property of the requesting homeowner, if such homeowner is also entitled to receive treble damages in an amount not to exceed three times the amount elected by such homeowner pursuant to subdivision five of this section, as a result of the egregious nature of such mortgage servicer's conduct.
LEGISLATIVE HISTORY: New Bill.
FISCAL IMPLICATIONS: Proceeds to the state to be determined by settlement agreement.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 6459 IN SENATE February 10, 2012 ___________Introduced by Sen. SMITH -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the state finance law, in relation to establishing the New York state mortgage settlement fund THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The state finance law is amended by adding a new section 97-1111 to read as follows: S 97-1111. NEW YORK STATE MORTGAGE SETTLEMENT FUND. 1. THERE IS HEREBY ESTABLISHED IN THE CUSTODY OF THE STATE COMPTROLLER A SPECIAL FUND TO BE KNOWN AS THE NEW YORK STATE MORTGAGE SETTLEMENT FUND. 2. SUCH FUND SHALL CONSIST OF ALL MONIES OBTAINED BY THE STATE AS A RESULT OF ANY AND ALL SETTLEMENTS NEGOTIATED WITH, BY OR ON BEHALF OF NEW YORK STATE WITH THE MORTGAGE SERVICERS, ANY OTHER MONEYS RECEIVED IN LIEU OF SUCH AGREEMENT, AND ALL OTHER MONEYS APPROPRIATED, CREDITED OR TRANSFERRED THERETO PURSUANT TO LAW. 3. MONIES IN THE NEW YORK STATE MORTGAGE SETTLEMENT FUND SHALL BE KEPT SEPARATE AND SHALL NOT BE COMMINGLED WITH ANY OTHER MONIES IN THE CUSTO- DY OR CONTROL OF THE STATE COMPTROLLER. 4. FOR PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: (A) "MASTER SETTLEMENT AGREEMENT" SHALL MEAN THE SETTLEMENT AGREEMENT AND RELATED DOCUMENTS ENTERED INTO IN THE YEAR TWO THOUSAND TWELVE BY THE STATE AND PARTICIPATING MORTGAGE SERVICERS. (B) "MORTGAGE SERVICER" SHALL HAVE THE SAME MEANING AS PARAGRAPH (H) OF SUBDIVISION ONE OF SECTION FIVE HUNDRED NINETY OF THE BANKING LAW. (C) "PARTICIPATING MORTGAGE SERVICER" SHALL MEAN EACH MORTGAGE SERVI- CER THAT ENTERED INTO THE MASTER SETTLEMENT AGREEMENT WITH THE STATE, INCLUDING ALLY/GMAC, BANK OF AMERICA, CITI, JPMORGAN CHASE AND WELLS FARGO. (D) "ELIGIBLE HOMEOWNER" SHALL MEAN ANY RESIDENT OF THIS STATE WHO CURRENTLY OWNS AND RESIDES OR DID OWN AND RESIDE IN QUALIFYING RESIDEN- TIAL REAL PROPERTY, WHO THE COMMISSIONER DETERMINES, PURSUANT TO THEEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14624-01-2 S. 6459 2
ELIGIBILITY RESTRICTIONS SET FORTH IN SUCH MASTER SETTLEMENT AGREEMENT, IS A HOMEOWNER CONTEMPLATED BY SUCH AGREEMENT. (E) "QUALIFYING RESIDENTIAL REAL PROPERTY" MEANS PROPERTY LOCATED IN THIS STATE THAT IS OR WAS SUBJECT TO A HOME LOAN SERVICED BY A PARTIC- IPATING MORTGAGE SERVICER AND (I) IS CURRENTLY OWNED AND OCCUPIED AS A PRIMARY RESIDENCE BY AN ELIGIBLE HOMEOWNER; OR (II) WAS OWNED AND OCCU- PIED AS A PRIMARY RESIDENCE BY AN ELIGIBLE HOMEOWNER BUT WAS FORECLOSED UPON BETWEEN JANUARY FIRST, TWO THOUSAND EIGHT AND DECEMBER THIRTY-FIRST, TWO THOUSAND ELEVEN. 5. SUBJECT TO THE TERMS AND CONDITIONS OF THE SETTLEMENT AGREEMENT, ALL MONIES IN THE FUND SHALL BE USED, WITHOUT APPROPRIATION THEREFOR, FOR THE SOLE PURPOSE OF DIRECTLY COMPENSATING ELIGIBLE HOMEOWNERS WHO HAVE BEEN INJURED BY FORECLOSURE ABUSES. AN ELIGIBLE HOMEOWNER MAY, SUBJECT TO FURTHER ELIGIBILITY REQUIREMENTS DESCRIBED IN THIS SUBDIVI- SION, ELECT TO RECEIVE COMPENSATION FOR INJURIES IN ONE OF THE FOLLOWING AMOUNTS: (A) THE FULL AMOUNT OF THE DOWN PAYMENT PAID ON HIS OR HER QUALIFYING RESIDENTIAL REAL PROPERTY, IN ADDITION TO THE AMOUNT OF ALL MONTHLY MORTGAGE ASSOCIATED WITH SUCH PROPERTY, UP TO AND INCLUDING THE LATER OF THE DATE OF THE FORECLOSURE ACTION OR DISCOVERY OF THE WRONG; (B) TWENTY PERCENT OF THE ORIGINAL APPRAISED VALUE OF THE QUALIFYING RESIDENTIAL REAL PROPERTY; (C) IF THE ELIGIBLE HOMEOWNER HAS BEEN FORECLOSED UPON AND IS NO LONG- ER RESIDING IN THE QUALIFYING RESIDENTIAL REAL PROPERTY, THE FULL AMOUNT OF A DOWN PAYMENT ON NEW RESIDENTIAL REAL PROPERTY; (D) IF THE ELIGIBLE HOMEOWNER HAS BEEN FORECLOSED UPON AND IS NO LONG- ER RESIDING IN THE QUALIFYING RESIDENTIAL REAL PROPERTY AND HAS NOT CHOSEN TO PURCHASE NEW RESIDENTIAL REAL PROPERTY, UP TO SIX MONTHS OF RENTAL PAYMENTS; 6. IN ADDITION TO THE COMPENSATION AUTHORIZED BY SUBDIVISION FIVE OF THIS SECTION, THE COMMISSIONER OF THE DIVISION OF HOUSING AND COMMUNITY RENEWAL SHALL DETERMINE, UPON REQUEST BY AN ELIGIBLE HOMEOWNER AND AFTER EVALUATING THE FACTS SURROUNDING A PARTICIPATING MORTGAGE SERVICER'S HANDLING OF THE MORTGAGE ON THE QUALIFYING RESIDENTIAL REAL PROPERTY OF THE REQUESTING HOMEOWNER, IF SUCH HOMEOWNER IS ALSO ENTITLED TO RECEIVE TREBLE DAMAGES IN AN AMOUNT NOT TO EXCEED THREE TIMES THE AMOUNT ELECTED BY SUCH HOMEOWNER PURSUANT TO SUBDIVISION FIVE OF THIS SECTION, AS A RESULT OF THE EGREGIOUS NATURE OF SUCH MORTGAGE SERVICER'S CONDUCT. 7. THE MONIES OF THE FUND SHALL BE PAID OUT ON THE AUDIT AND WARRANT OF THE COMPTROLLER ON VOUCHERS CERTIFIED OR APPROVED BY THE COMMISSIONER OF THE DIVISION OF HOUSING AND COMMUNITY RENEWAL OR BY AN OFFICER OR EMPLOYEE OF THE DIVISION OF HOUSING AND COMMUNITY RENEWAL DESIGNATED BY SUCH COMMISSIONER. S 2. This act shall take effect immediately.