Bills Proposed to Protect Reverse-Mortgage Borrowers
August 29, 2016
New York lawmakers are working to increase the protections put in place for reverse-mortgage borrowers in the foreclosure process, according to a recent report from the New York Post.
The report states that Assemblywoman Helene Weinstein (D-Brooklyn) and Senator Jeff Klein (D-Bronx/Westchester) have introduced bills whose purpose is to provide reverse-mortgage holders with the same protections as first-mortgage borrowers during a foreclosure.
“We need to extend the consumer protections that exist for homeowners facing foreclosure to this most vulnerable population,” Weinstein said in the report. “Sometimes they are getting foreclosed upon over small amounts … losing their home … the major asset they’ve worked all their lives for, because the law doesn’t protect them, and obviously lenders are taking advantage of them.”
In these bills, there are two key changes according to the report. The first of these changes is the requirement for a written notification, including a notice with contact information for free nonprofit foreclosure-prevention assistance, to the borrower 90 days before the lender files a foreclosure case. The second of the changes is to mandate a settlement conference for both the borrower and the lender in order to try to work out a deal under an appointed judge or court-appointed mediator.
The report also states that Weinstein doesn’t expect this particular legislature to be back in session before the end of the year, but she does say that she plans to push for the law as well as “plug the hole” when it does come to session next year.
Additionally, the report also states that in the last legislative session, Weinstein tried to include some new protections for reverse-mortgage holders as part of a package of foreclosure-related bills. This was reportedly halted though by other issues that took priority. The report states that this included fines of up to $25,000 for lenders who fail to negotiate in good faith at settlement conferences. The report states that those sanctions take effect in this December.
Source: DS News
New York Post (Lawmakers eye protections for reverse mortgage borrowers)
The New York Senate (S8177 full text)
New York State Assembly (A10745 full text)