As a first-term senator, I was honored to be selected to chair the Senate Banking Committee; a post that is especially important given the ongoing mortgage foreclosure crisis that has wreaked havoc on communities throughout our state. Through my work on the committee and my interaction with countless constituents who have shared their stories with me, I have come to appreciate the aggressive action New York State has taken to combat the crisis as well as the serious challenges that remain.  

The comprehensive foreclosure protection laws we have enacted have been centered around protecting homeowners and stabilizing neighborhoods where home values have been in a free-fall since the housing bubble burst. The most significant foreclosure protection law, which we passed November 2009, is considered to be one of the strongest such laws in the entire country.

The provisions in this law— which I co-sponsored along with Senator Jeff Klein, the author of the bill—include:

• Safeguarding Distressed Homeowners: Requires that lenders and mortgage servicers provide a foreclosure notice to all distressed borrowers at least 90 days before any legal action may be commenced.

• Expansion of Mandatory Settlement Conference: Expands the number of borrowers who are eligible to receive the benefit of this settlement conference to holders of all types of home loans for a period of five years. Also requires litigants to negotiate in good faith to try to reach a mutually agreeable resolution.

• Protecting Distressed Homeowners from Rescue Scams: Precludes any licensees or registrants from accepting up-front fees in connection with performing the business of distressed property consulting. Additionally, this provides a mortgage broker with three days to disclose the exact amount and methodology of total compensation that the broker will receive.

• Protecting Neighborhoods and Tenants: Requires a plaintiff in a mortgage foreclosure action to maintain the property in compliance with certain sections of the NYS Building code or other local housing code. If property is occupied by a tenant, it must remain in safe and habitable condition.

In addition to helping individual homeowners, the legislation will help towns and communities with large numbers of foreclosures respond to declining neighborhoods because of the number of abandoned and vacant houses.  Under the law (S66007, Section 6), banks must now maintain properties they already own, also called Real Estate Owned Properties (REOs), as well as properties that enter a judgment of foreclosure and sale. Banks will carry that responsibility until ownership is transferred through the closing of a title in foreclosure, or other disposition, and the deed for the property has been recorded.

If a tenant currently occupies the property, the law mandates that banks must also keep the property in a safe and habitable condition. The municipality where the property is located, any tenant, board of managers of a condominium, or homeowners’ association may enforce the obligation in a court of law.

The latest of these foreclosure prevention events, held just two weeks ago, saw literally hundreds of homeowners who were given an opportunity to meet one-on-one with their lenders with the goal of reaching a loan modification and avoiding foreclosure.

But I have also learned about new challenges that are arising as the sheer volume of homes that are underwater overwhelms the system. That’s why we must continue to look at every avenue available to build upon the work we have done and help homeowners who are still in trouble. Doing so will allow us to move our state forward and protect the American Dream. 


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State Sen. Brian Foley, a Democrat representing parts of Suffolk County, chairs the Senate Banking Committee.