Requires banks to disclose any negative consequences of establishing an alternative payment schedule on a loan.
TITLE OF BILL: An act to amend the banking law, in relation to requiring banks to disclose any negative consequences an alternative loan payment schedule may have on credit scores
SUMMARY OF PROVISIONS: Amends section 129-a of the banking law to require the disclosure of negative consequences an alternative payment schedule, agreed to by a bank or trust company, would have on a customer's credit rating.
JUSTIFICATION: This legislation addresses the practice some banks use by which they arrange an alternative payment schedule with a customer and leave the customer with the impression that this arrangement will prevent the financial institution from hurting the customer's credit rating. When an alternative payment schedule is arranged, a bank may still report a customer as being late on their payments even though they have worked out a compromised alternative. Most customers are unaware of this and don't that the alternative payment schedule is really not helping them preserve their credit rating.
PRIOR LEGISLATIVE HISTORY: A.3240 of the 2012 legislative session.
FISCAL IMPLICATIONS: None to the state.
EFFECTIVE DATE: This act shall take effect in 90 days after it shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 7425 IN SENATE May 14, 2014 ___________Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to requiring banks to disclose any negative consequences an alternative loan payment sched- ule may have on credit scores THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The banking law is amended by adding a new section 129-a to read as follows: S 129-A. REQUIREMENT OF DISCLOSURE; ALTERNATIVE PAYMENT SCHEDULES. IN THE EVENT THAT ANY BANK OR TRUST COMPANY SHALL PERMIT A CUSTOMER TO ESTABLISH AN ALTERNATIVE PAYMENT SCHEDULE FOR AN EXISTING LOAN, THE BANK OR TRUST COMPANY SHALL PROVIDE WRITTEN DISCLOSURE OF ANY NEGATIVE CONSE- QUENCES SUCH ALTERNATIVE PAYMENT SCHEDULE MAY HAVE ON SUCH CUSTOMER'S CREDIT SCORE OR RATING. SUCH DISCLOSURE SHALL BE PROVIDED AT THE TIME A LOAN APPLICATION IS MADE, AT THE TIME A LOAN IS GRANTED AND AT THE TIME A CUSTOMER REQUESTS THAT AN ALTERNATIVE PAYMENT SCHEDULE BE ESTABLISHED FOR A LOAN, BUT PRIOR TO THE ACTUAL ESTABLISHMENT OF AN ALTERNATIVE PAYMENT SCHEDULE. S 2. This act shall take effect on the ninetieth day after it shall have become a law.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD04935-01-3