Predatory Lending Bill

CHAPTER!
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LAWS OF 20 JJK
SENATE BILL ASSEMBV{ BILL _
STATE OF NEW YORK
8143-·-A
IN SENATE
May 2, 2008
Introduced by Sens. FARLEY, PADAVAN, MALTESE, BONACIC, ROBACH, CONNOR,

FLANAGAN, LARKIN, LAVALLE, LEIBELL, MORAHAN, RATH" SALAND, TRUNZO,
VOLKER (at request of the Governor) -- read twice and ordered
printed, and when printed to be committed to the Committee on Judici-
ary committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the real property actions and proceedings law, the civil
practice law and rules, the banking law and the general obligations
law, in relation to home mortgage loans; to amend the penal law and
the criminal procedure law, in relation to creating new crimes relat-
ing to mortgage fraud; and to amend the real property law, in relation
to distressed property consulting contracts
DATE RECEIVED BY GOVERNOR:

jDL 1 ~ [nilB
ACTION MUST BE TAKEN BY:

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DATE GOVERNOR'S ACTION TAKEN:

AUG 05 2008
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SENATE VOTE ~y .JL N HOME RULE MESSAGE _ Y_ N
DATE ~(~J /08

ASSEMBLY VOTE I'll y Q N
DATE rJ..D) 0l3/0Z

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Page 1 of2
S8143-A FARLEY Same as A 10817-A_ Towns

06123/08 S8143-A Assembly Vote Yes: 140No : 0
06123/08 S8143-A Senate Vote Aye: 61 Nay: 0
Go to Top of Page
06/23/08 S8143-A Assembly Vote Yes: 140 No: 0
Yes Abbate Yes Alessi Yes Alfano Yes Amedore
ER Arroyo Yes Aubry Yes Bacalles Yes Ball
Yes Barclay Yes Barra Yes Benedetto Yes Benjamin
Yes Bing Yes Boyland Yes Boyle Yes Bradley
Yes Brennan Yes Brodsky Yes Brook-Krasny Yes Burling
Yes Butler Yes Cahill Yes Calhoun Yes Camara
Yes Canestrari Yes Carrozza ER Christense:n Yes Clark
Yes Cole Yes Colton Yes Conte Yes Cook
Yes Crouch Yes Cusick Yes Cymbrowitz Yes DelMonte
Yes Destito Yes Diaz L Yes Diaz R Yes Dinowitz
Yes Duprey Yes Eddington Yes Englebright Yes Errigo
Yes Espaillat Yes Farrell Yes Fields Yes Finch
Yes Fitzpatrick Yes Gabryszak Yes Galef ER Gantt
Yes Gianaris Yes Giglio Yes Glick Yes Gordon
Yes Gottfried Yes Greene Yes Gunther A Yes Hawley
Yes Hayes Yes Heastie Yes Hevesi Yes Hikind
Yes Hooper Yes Hoyt Yes Hyer-Spencer Yes Jacobs
Yes Jaffee Yes Jeffries Yes John Yes Kavanagh
Yes Kellner ER Kirwan Yes Kolb Yes Koon
ER Lafayette Yes Lancman Yes Latimer Yes Lavine
Yes Lentol Yes Lifton Yes Lopez P Yes Lopez V
Yes Lupardo Yes Magee Yes Magnarelli Yes Maisel
Yes Markey Yes Mayersohn ER McDonald Yes McDonough
Yes McEneny Yes McKevitt Yes Miller Yes Millman
Yes Molinaro Yes Morelle ER Nolan Yes Oaks
Yes O'Donnell Yes O'Mara Yes Ortiz Yes Parment
Yes Paulin Yes Peoples Yes Peralta Yes Perry
Yes Pheffer Yes Powell Yes Pretlow Yes Quinn
Yes Rabbitt Yes Raia Yes Ramos Yes Reilich
Yes Reilly ER RiveraJ Yes Rivera N Yes Rivera P
Yes Robinson Yes Rosenthal Yes Saladino Yes Sayvirard
Yes Scarborough Yes Schimel Yes Schimminger Yes Schroeder
Yes Scozzafava Yes Seminerio Yes Spano Yes Stirpe
Yes Sweeney Yes Tedisco Yes Thiele Yes Titone
Yes Titus Yes Tobacco Yes Towns Yes Townsend
Yes Walker Yes Weinstein Yes Weisenberg Yes Weprin
Yes Wright Yes Young Yes Zebrowski K Yes Mr. Speaker
Go to Top of Page
06123/08 S8143-A Senate Vote Aye: 61 Nay: 0
Aye Adams Aye Alesi Aye Aubertine Aye Bonacic
Aye Breslin Aye Bruno Aye Connor Aye DeFrancisco
AyeDiaz Aye Dilan Aye Duane Aye Farley
Aye Flanagan Aye Fuschillo Aye Golden Aye Gonzalez
http://nyslrs.state.ny.uslNYSLBDC l/bstfrme.cgi
oooon3 7/2412008
Page 2 of2
Aye Griffo Aye Hannon A Hassell-

yeThompson Aye Huntley
Aye Johnson C Aye Johnson 0 Aye Klein Aye Krueger
Abs Kruger Aye Lanza Aye Larkin Aye LaValle
Aye Leibell Aye Libous Aye Little Aye Maltese
Aye Marcellino Aye Maziarz Aye Montgome:ry Aye Morahan
Aye Nozzolio Aye Onorato Aye Oppenheimer AyePadavan
Aye Parker Aye Perkins AyeRath Aye Robach
Aye Sabini Aye Saland Aye Sampson Aye Savino
Aye Schneiderman Aye Serrano Aye Seward Aye Skelos
Aye Smith Aye Stachowski Aye Stavisky Aye Stewart-Cousins
Aye Thompson Aye Trunzo Aye Valesky Aye Volker
Aye Winner Aye Young
http://nyslrs.state.ny.us/NYSLBDCl/bstfrme.cgi 7/24/2008
SENATOR FARLEY Fax:518-455-2271 Jul 31 2008 20:28 P. 01
THE SENATE
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COMM1'I'J'EE AS51:;;NMENTS: HUGH T. FARLEY (~IS) 7(.2·1733
...GING .13Ar-:J;S l5ENATOR. 44TH DI~TRICT
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fUDlaARY· jl.UL:ES
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July 31 , 2008
Kristin Rosenstein
Legislative Secretary's Office
Executive Chamber
State Capitol -- Room 225
Albany, NY 12224
Dear Ms. Rosenstein:
Thank you for the opportunity to comment on a bill I sponsored. Govemor's Program
Bill S.8143-A, which is before the Govemorfor his consideration.
n
Last year, an interagency task force (HAL was established to address the problem of
mortgage foreclosures and abusive lending practices. Like other states, New York has
experienced a significant increase in mortgage defaults and foreclosures (although
statistics indicate that the problem has been less ~ievere in New York than in many
other parts of the country). The Senate Banks Committee, which I chair, invited the
Superintendent of Banks to appear before a special committee meeting on December
13, 2007 to update the Committee on sUbprime foreclosure problems and the activities
of the Task Force. At that meeting, the Superintendent confirmed that legislation was
being developed to address these problems.
As part of the HALT Task Force's mission, the Governor's Office and the Banking
Department developed a Governors Program Bill to address the problem of mortgage
foreclosures and abusive sUbprime lending practic€~s. This bill was submitted to the
Legislature in the Spring of 2008, and the Senat.~ Banks Committee held a public
hearing on this legislation on; May 12th. The challenge was to enact meaningful
legislation that would prevent abuses and help struglgling homeowners without harming
all consumers by inadvertently driving up the cost of credit or limiting the availability of
legitimate credit. We also had to recognize the limits placed on the states by federal
preemption of state banking laws.
Extensive negotiations were h~ld between the Governor's Office, the Senate and the
Assembly on this proposal, reSUlting in the passa~le of this amended bill. I applaud
Governor Paterson for making this legIslation a priority. His commitment helped the
parties to reach a consensus and advance this legislation.
D
000005
___________ SENATOR FARLEY Fax:518-455-2271 J Lli 31 2008 20: 28 P.02
July 31, 2008

Page 2
There are three main aspects to bill S.8143-A.
1) The bill promotes effo~ to encourage lendlers and borrowers to reach a

mutually agreeable resolution to avoid foreclosure on subprime, high-cost and
9f
non-traditional mortgages (most the increase in forec:tosures has been attributable to
sUbprime loans). This bill requi$s lenders to send a notice at least 90 days before
initiating foreclosure action. The jnotice· urges borrowe:rs to work with their lender or a
housing counseling agency to address their situation. (I should note that, earlier this
year, the Legislature and the Governor agreed to pr10vide $25 million in funding for
subprime foreclosure prevention services, primarily counseling and legal assistance.)
Bill S.8143-A also provides for "rrandatOl)' settlement conferences" during the judicial
foreclosure process. This will prqvide an opportunity for borrowers and lenders to try to
reach a solution that avoids foreciosure.
!
2) The bill establishes new istandards and protections for subprime loans that will
be made in the future. For example, these loans must have escrow accounts, may not
have prepayment penalties, may not have "teaser" rates of less than six months in
duration, and may not provide for negative amortiza1lion. Especially important is the
requirement that the lender ensure that the borrower has a reasonable ability to repay
the loan, and take steps to verify the borrower's income and asset information;
3) The bill targets fraud~lent practices by creating the crime of "residential

mortgage fraud." This will help; prosecutors crack down on a wide variety of illegal
activities which have contributedI to many mortgage foreclosures. Bill S.8143-A also
establishes contractual require~ents and consumE~r protections to try to prevent
foreclosure rescue scams, in wh.ich persons promise to help homeowners but instead
simply take their money and fail fp provide any. meaningfUl services.
These measures will provide a~sistance to struggling homeowners and shOUld help
prevent problems in the future. iThis bill was a priori1ty of Governor Paterson, and was
a'so a priority of the Senate Banks Committee and I trust that the Governor will sign bill
j
S.8143·A into law. Best regards;
Cordially,
/~r~I. Hugh 'f. Farley

Sen atl:lr
HTF:PE
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NEW YORK STATE SENATE

INTRODUCER'S MEMORANDUM IN SUPPORT
submitted in accordance with Senate Rule VI. Sec 1
BILL NUMBER: S8143A
SPONSOR: FARLEY
TITLE OF BILL: An act to amend the real property actions and

proceedings law, the civil practice law and rules, the banking law and
the general obligations law, in relation to home rrrortgage loans; to
amend the penal law and the criminal procedure lavv, in relation to
creating new crimes relating to mortgage fraud; and to amend the real
property law, in relation to distressed property consulting contracts
This bill seeks to address the mortgage foreclosure crisis

I?1J:RJ?Q$li::
in the state by: (1) providing additional protections and foreclosure
prevention opportunities for homeowners at risk of losing their homes;
(2) strengthening the Banking Law to prevent similar crises from occur-
ring in the future; (3) establishing standards for lenders and mortgage
brokers to prevent borrowers from being placed into unaffordable home
loans; (4) registering and regulating mortgage loan servicers to enhance
loan servicing standards in the state; and (5) defining the crime of
residential mortgage fraud and establishing strict criminal penalties to
deter those who may engage in such activity.
SUMMARY OF PROVISIONS: Section 1 of the bill amends Real Property

Actions and Proceedings Law ("RPAPL") § 1303 to provide a clear and
concise notice detailing instructions and potential options for those
homeowners against whom foreclosure proceedings are being commenced.
Section 2 of the bill adds a new Real Property Actions and Proceedings
Law ("RPAPL") § 1304 to require lenders and mortgage loan servicers to
send a notice to borrowers who took out a subprimE~ or nontraditional
loan between January 1, 2003 and September 1. 2008, at least 90 days
before they may commence legal action against the borrower. The notice
would provide the names and telephone numbers of housing counseling
agencies approved by the United States Department of Housing and Urban
Development ("HUD") or designated by the Division of Housing and Commu-
nity Renewal ("DHCR") and serving the borrower's area.
Section 3 of the bill adds a new CPLR Rule 3408 to require a court, in a
residential foreclosure action involving a subprinle or a non-traditional
home loan made between January 1, 2003 and September 1, 2008, to sched-
ule a settlement conference within 60 days of when the proof of service
of the complaint is filed with the county clerk's office. The plaintiff,
or a representative with authority to settle the matter, must appear at
the conference. The court may allow the plaintiff's representative to
appear via phone or video-conference. If the homeowner appears and is
not represented by counsel, he or she would be deemed to have made a
motion to proceed as a "poor person" under CPLR § 1101, and the judge
may relieve the defendant of certain procedural court requirements and
appoint counsel under CPLR § 1102(a).
Section 3-a of the bill allows those homeowners against whom a foreclo-
0000D7
sure action has already been commenced to also participate in a settle-

ment conference. Sections 4 and 4-a of the bill make certain conforming
changes to Banking Law § 6-1.
Section 5 of the bill adds a new Banking Law § 6-rn which- (1) defines
the term "subprime home loan": (2) provides consumer protections and
minimum underwriting standards for such loans; and (3) establishes an
enforcement mechanism for these provisions, and remedies for violations.
The bill allows the Superintendent of Banks ("Superintendent") to adjust
the. definition of subprime home loan under certain circumstances In
addition, this provision of the bill provides an opportunity to cure a
violation to those lenders who, while acting in good faith, violate
Banking Law § 6-m. The Attorney General or the Superintendent may
enforce the provisions of the new Banking Law § 6--m, and a borrower may
raise the violation of this section as a defense to foreclosure
Section 6 of the bill adds a new Banking Law § 590-b to establish

certain responsibilities for lenders and mortgage brokers. In partic-
ular, this section of the bill establishes: (1) a duty of care for mort-
gage brokers in soliciting, placing, processing and arranging home
loans; and (2) standards for lenders and mortgage brokers in their deal-
ings with appraisers. Section 6 of the bill further establishes remedies
for violations of these provisions, and allows thE" Attorney General or
Superintendent to enforce the provisions of Banking Law § 590-b.
Sections 7 through 16 of the bill amend the Banking Law to require mort-
gage loan servicers to register with the Superintendent before engaging
in the business of mortgage loan servicing in the state. These sections
of the bill further empower the Banking Board to promulgate regulations
and require mortgage loan servicers to comply with the regulations.
These provisions of the bill would also permit the Superintendent to
inspect the books and records of registered mortgage loan servicers.
Section 17 of the bill amends RPAPL § 1302 to extend its application to

subprime home loans. Plaintiffs in a legal action brought under Article
13 of the RPAPL will be required to make an affirmative allegation that
at the time the proceeding is commenced the plaintiff is the owner and
the holder of the mortgage and note, or has been delegated the authority
to institute a mortgage foreclosure action by the owner and holder of
the mortgage and the note. In addition, plaintiffs in foreclosure
actions involving subprime loans will be required to make an affirmative
allegation of compliance with Banking Law § 6-m and RPAPL § 1304. This
section of the bill further provides that a violation Banking Law § 6-m
or RPAPL §1304 will be a defense to a subprime foreclosure action.
Section 18 of the bill amends General Obligations Law § 5-501 (3) (b) to
make a technical amendment related to Banking Law § 6-1 and 6-m.
Section 19 of the bill adds a new Article 187 to the Penal Law to define
the crime of residential mortgage fraud.
Section 20 of the bill amends Criminal Procedure Law § 700.5(8) (b) to

add residential mortgage fraud in the first, second, third and fourth
degrees as predicate crimes in the crimes of enterprise corruption.
Section 21 of the bill amends Penal Law § 460.10(1) (a) to add violations
of the mortgage fraud statute to the predicate crimes of money launder-
ing.
Sections 22 through 25 of the bill amend various sections of the Banking
http://nyslrs.state.ny.us/NYSLBDC 1/bstfrrne.cgi 000008 6/25/2008

Law that allow the Superintendent to refuse a license or registration to

a person for having committed certain named felonies to add residential
mortgage fraud to the named felonies
Section 26 of the bill adds a new Real Property Law § 265-b to prevent
certain foreclosure rescue scams by prohibiting "distressed property
consultants" from performing services without a written and fully
executed consulting contract with the homeowner; and from charging or
accepting payment for consulting services before completion of services.
In addition, the new Real Property Law § 265-b requires these consult-
ants to provide the homeowner with an opportunity to review a contract
before signing it, and requires that the contract be in the language
that was used in discussions between the consultant and the homeowner,
and contain a notice of the homeowner's right to cancel the contract.
Section 27 of the bill contains a severability clause.
Section 28 of the bill provides for the effective date of various

provisions of the bill.
EXISTIN.G__ l,AW RPAPL §§ 1303 and 1320 require that a notice be sent to
the borrower when legal action is commenced. There is no present
requirement that borrowers receive any notice prior to the commencement
of a foreclosure action, nor any requirement for an early settlement
conference in such actions.
If a litigant wishes to be considered for "poor person" status, the
litigant must make a motion under CPLR § 1101. If the court determines
that the litigant is a poor person, then the court will waive certain
procedural requirements for the borrower, and may, in its discretion,
appoint counsel under CPLR § 1102(a).
While New York does have an Antipredatory Lending Law, Banking Law §
6-1, very few subprime home loans actually receive protections under
this law.
At present, an ability to pay standard has not been established in the
state for subprime home loans that are not protected under Banking Law §
6-1. This standard, however, is part of strong underwriting criteria
considered by many lenders.
Mortgage brokers do not at present have a duty of care towards borrow-
ers. In addition, the State does not register or regulate any mortgage
loan servicers. Furthermore, there is no defined crime of "residential
mortgage fraud" and prosecutors must typically rely on the larceny and
scheme to defraud statutes to prosecute such case~;. Lastly, while the
state recently enacted the Home Equity Theft Prevention Act, that law
did not cover distressed property consultants that often prey on home-
owners at risk of foreclosure.
STATEMENT IN SUPPORT: New York State faces a mortgage crisis of

immense magnitude Many families have lost their homes and entire neigh-
borhoods have been devastated. In 2007, there were more than 52,000
foreclosure filings in the state - an increase of 10% from 2006 and 55%
from 2005. These statistics, especially in light of inaction by the
federal government, make clear the need for state action on this issue.
This bill attempts to address the mortgage foreclosure crisis in two
ways. First, this bill provides assistance to homeowners currently at
risk of losing their homes by providing additional protections and fore-
closure prevention opportunities for such homeownE~rs Second, this bill
establishes further protections in the law to mitigate the possibility
of similar crises in the future.
1. Elements of legislation targeted to help homeowners currently at risk
of foreclosure
000009
A.Pre-Foreclosure Notice According to industry experts, a majority of

distressed homeowners do not attempt to contact their lender prior to
the commencement of foreclosure proceedings. While there are a myriad of
reasons for this, it is undisputed that this lack of communication often
leads to needless foreclosure proceedings in case~; where a foreclosure
alternative might otherwise have been possible. This legislation seeks
to bridge that communication gap in order to facilitate a resolution
that avoids foreclosure.
In particular, this bill would require lenders and mortgage loan servi-
cers to provide a pre-foreclosure notice to borro~lers with subprime
loans at least 90 days before a legal action may be commenced against
the borrower. The notice would advise the borrower of HUD-approved and
DHCR designated housing counseling services available in the borrower's
area. The additional period of time in many cases would allow borrowers
to work on a resolution without fear of imminent loss of their homes.
This proposal recognizes that avoiding foreclosure is a better outcome
than a quick foreclosure. However, if the borrower is unable to reach
resolution with the lender in the prescribed time, the lender will have
the opportunity to pursue legal action against the borrower.
B.Early Settlement Conference While reaching resolution during the pre-
foreclosure time period is indeed preferred, that will not always occur
As a result, this bill provides that if an action is commenced, the
homeowner will receive a second opportunity to reach resolution with the
lender early in the foreclosure process, without delaying the continua-
tion of the action.
In particular, this bill would require a court in a residential foreclo-
sure action to schedule a mandatory settlement conference within 60 days
of when the plaintiff files a proof of service of the complaint with the
county clerk. The plaintiff, or its representative with authority to
settle the matter, must appear at that conference. The court may allow
an appearance by phone or video- conference for the plaintiff's repre-
sentative. If the homeowner appears and does not have an attorney, he or
she will be deemed to have made a motion to proceed as a "poor person"
under CPLR § 1101 and the court may, in its discretion, waive certain
procedural requirements and even appoint counsel to the homeowner under
CPLR § 1102(a). Under the bill, the mandatory settlement conference
would also be available for certain homeowners who are already in fore-
closure when this act takes effect.
C.Affirmative Allegation of Ownership Because of the practice of bundl-
ing and selling mortgages as investment products, often it is difficult
to determine who owns the mortgage and note In addition, mortgage loan
servicers frequently change over time. To maintain the integrity of New
York's standing requirements, it is critically important to ensure that
those who initiate a foreclosure action actually have standing to do so.
Therefore, this bill would require the plaintiff in a foreclosure action
to make an affirmative allegation that it is the holder of the note and
mortgage, or has been given the authority to commence the action by the
holder of the note and mortgage. In addition, this bill would also
require a plaintiff in a subprime foreclosure action to make an affirma-
tive allegation of compliance with the new Banking Law § 6-rn, as well
as the new RPAPL § 1304.
D. Rescue Scams Distressed homeowners are not only at risk of losing
their homes, but of also being scammed by those who operate fraudulent
rescue scams. Indeed, as homeowners become more desperate to keep their
homes, they also become more prone to being swindled. This bill enacts
tough measures to help prevent distressed homeowners from falling prey
to rescue scams.
In particular, this provision of the bill would target foreclosure
rescue scams operated by "consultants" who seek to take advantage of
homeowners in default. These consultants take upfront payments from
http://nyslrs.state.ny.us/NYSLBDC 1/bstfnne. cgi

000010 6/25/2008
consumers In exchange for false promises that they will negotiate with
the lender on the borrower's behalf or take other action that will
prevent foreclosure. In fact, they often perform no such services or do
anything more than, for example, advise the lender to file for bankrupt-
cy.
This bill would prohibit a "distressed property consultant" from
performing services without a written and fully executed consulting
contract, and prohibit the consultant from charging for or accepting
payment for consulting services before completing all services. The bill
would further require that a consultant provide the homeowner with an
opportunity to review the contract before signing it, that the contract
be in the language that was used in discussions between the consultant
and the homeowner, and that the contract contain a notice of the home-
owner's right to cancel the contract. Establishing these standards will
help ensure that legitimate consultants remain in business, while
protecting homeowners from those fraudsters who might have other~lise
been successful in preying on them.
II. Elements of the bill targeted to prevent similar future crises
A.New Banking Law §6-m The scope of the current New York State Anti-pre-
datory lending law is extremely narrow. Indeed, only a handful of loans
fall within its protections each year. With property values soaring in
the recent past and predatory lending practices ever-evolving, the
current Anti-predatory Lending Law does not provide adequate protections
for homeowners.
This bill would add a new Banking Law § 6-m to establish standards and
limitations for lenders and brokers making "subprime horne loans." Bank-
ing Law § 6-m defines the term "subprime horne loan" as a horne loan in
which he fully indexed annual percentage rate exceeds by more than .75
percentage points for a first lien loan, or by more than 175 percentage
points for a subordinate lien loan, the average conunitment rate for
loans in the northeast region with a comparable duration to the duration
of such home loan, as published by the Federal Home Loan Mortgage Corpo-
ration ("Freddie Mac") in its weekly Primary Mortgage Market Survey
("PMMS"). This definition of subprime home loan would target the new
protections to specific loans, while not intruding into the prime
market.
This bill applies certain standards and prohibitions to "subprime home
loans" including; (a) no prepayment penalties, (b) no abusive yield
spread premiums; (c) no option adjustable rate mortgages where one or
more options causes the principal balance to increase; (d) no loan flip-
ping; and (e) no negative amortization. The bill would also require the
escrow of taxes and insurance and the timely disclosure taxes and insur-
ance payments
This section of the bill would also establish an "ability to pay'.
standard for making and arranging all subprime home loans. Under the
bill, lenders would have to make a reasonable and Eood faith determi-
nation of the borrower's ability to repay the loan, including the prin-
cipal, interest, taxes, insurance, assessments, points and fees, based
upon the borrower's income, employment status and other financial
resources. The borrower's ability to pay would be verified based on tax
returns, payroll receipts or other third-party income verification.
The Attorney General and the Superintendent would be permitted to
enforce the provisions of this statute and homeownE,rs would be permitted
to raise a violation of Banking Law § 6-m as a defense to foreclosure.
B Standards for Mortgage Brokers One of the major causes for the current
mortgage crisis is that borrowers were placed into loans they could not
afford. While many lenders adhered to strong under~lriting standards,
other lenders did not. Unscrupulous lenders and brokers sometimes placed
borrowers into loans that were more costly than loans the borrowers
would have otherwise qualified for.
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This bill would also establish a general duty of care for mortgage
brokers with regard to all home loans. For example, this bill would
require brokers to: (1) act in the borrower's interest; (2) act with
reasonable care, skill and diligence; (3) act with good faith and fair
dealing; (4) not accept, give, or charge any undisclosed compensation;
(5) disclose all material facts known to the broker that might reason-
ably affect the borrower's rights, and interests; and (6) diligently
work to present a range of loan products for which the borrower likely
qualifies and which are appropriate for the borrower's circumstances.
The ability to pay standard along with the mortgage broker duty of care
would help prevent borrowers from being steered into home loans they
cannot afford.
C.Registration of Servicers Mortgage loan servicer:s perform administra-
tive functions for the owner of the mortgage and the note, such as
collecting checks and crediting payment. Even thoucJh mortgage loan
servicers perform a central function in the mortgaqe industry, they are
not at present regulated by the state. This bill would require mortqaqe
loan servicers to be reqistered with the Superintendent in order to
enqaqe in the business of mortgaqe loan servicinq. The bill would
further require mortgage loan servicers to engaqe in the business of
servicinq mortqaqe loans in conformity with the rules and requlations
promulqated by the Banking Board.
D Mortgage Fraud There currently is no separate Penal Law provision
expressly prohibitinq residential mortqage fraud, and thus prosecutors
must bring such cases under different theories, such as scheme to
defraud and larceny. This bill therefore seeks to simplify such prose-
cutions by explicitly defining and criminalizinq the act of residential
mortqaqe fraud.
In particular, the bill would define residential mortqaqe fraud as
conduct in which a person, knowinqly and with intent to defraud, amonq
other things, presents, or causes to be presented a written statement
that the person knows contains materially false information, or
conceals, for the purpose of misleadinq, facts that are material. Under
the bill, the maqnitude of the fraud may be agqregated and stiffer
penalties may be sought by prosecutors. In addition, while under the
scheme to defraud theory the most a person may be charqed with is a
Class E felony, this bill would allow a person quilty of residential
mortqage fraud in excess of Sl million to be charged with a Class B
felony. However, the bill provides that a person does not commit mort-
qaqe fraud when he or she is actinq to obtain a residential mortqage
loan and intends to occupy residential property, althouqh criminal
liability is not precluded for a person actinq as an accessory to an
individual or entity committinq a crime under Penal Law Article 187.
B'lJI)C;E~J:Ml?:r,.J:C;ATIONS: This bill would not have a siqnificant impact on

state finances.
EFFECTIVE DATE: This bill would take effect immediately, unless

otherwise provided under section 28 of the bill.
000012
http://nyslrs.state.ny.us/NYSLBDC 1/bstfrme. cgi 6/25/2008
--~--~----------------~
DIVISION OF THE BUDGET BILL MEMORANDUM
Session Year 2008
SENATE: ASSEMBLY:
No. 8143-A No.
Primary Sponsor: Senator Farley
Law: Real Property Actions and Sections: Various

Proceedings; Civil Practice Law and
Rules; Banking; General Obligations;
Penal; Criminal Procedure; Real
Property
Division of the Budget recommendation on the above bill
VETO: NO OBJECTION:
1. Subject and Purpose:
This bill amends various State laws in order to reduce the incidence of residential mortgage
foreclosure upon homes financed with "sub-prime" mortgages or "high cost" home loans. The
bill addresses current and prospective residential mOirtgage foreclosure issues that these
financial products present by enhancing consumer protections afforded to existing "sub-prime"
or "high cost" home loan borrowers and by enhancin~1 existing regulations and legal sanctions
that will govern the origination, structure and operation of these kinds of loans.
2. Summary of Provisions:
Sections 1 through 2 of the bill amends Real Property Actions and Proceedings Law and Civil
Practice Law and Rules to require plain language in a foreclosure summons stating that the
homeowner is at risk of losing their home and to require sub-prime and high cost lenders to
provide 90 days written advance notice of a foreclosure action.
Sections 3 through 3a of the bill amend Real Property Actions and Proceedings Law and Civil
Practice Law and Rules to require settlement conferences between borrowers and lenders as
part of the legal foreclosure process.
Sections 4 and 4a amend Banking Law to provide additional consumer protections for "high-
cost" home loans borrowers including prohibitions of prepayment penalties or mandatory
financing of other services (such as insurance or credit monitoring) that the lender may offer to
the borrower.
Section 5 adds a new Section 6-m to the Banking Law to define the term "subprime home
loan", establishes minimum underwriting standards to determine a consumer's "ability to pay"
for a "sub-prime" mortgage and establishes additionall consumer protections associated with
subprime loans.
Validation: Document 10: 52721553-14

Laura l. Anglin. Director of the Budget
By Todd l. Scheuermann
Date: 713012008 5:20:00 PM
/000013
Section 6 adds a new Section 590-b to the Banking Law to delineate the legal responsibilities
of mortgage brokers to serve and protect the interests of borrowers and making lenders liable
for damages to borrowers should the lender violate these provisions.
Sections 7 through 16 amend the Banking Law to newly regulate the provision of mortgage
loan servicing within the State, including a requirememt that mortgage servicers register with
the Banking Superintendent prior to commencing operations in the State and provide their
accounting records to the Superintendent for examination.
Section 17 amends Real Property Actions and Proceedings Law (RPAPL) to require that
plaintiffs in sub-prime foreclosure affirm to the borrower that the plaintiff either owns the
mortgage loan in question or has been authorized to act on the lender's behalf.
Section 18 amends General Obligations Law to comport with the bill's amendments to the
Banking law that prohibit pre-payment penalties on "high-cost" or "subprime" mortgage loans.
Sections 19 through 21 amend Penal Law and Criminal Procedure Law (CPL) to establish five
degrees of the crime of residential mortgage fraud - the first four of which are felony offenses
and the last of which is a misdemeanor offense. These sections also add the first four degrees
of residential mortgage fraud to the Criminal Procedure Law (CPL) to the predicate crimes of
enterprise corruption and to the Penal Law to the pre!dicate crimes of money laundering.
Sections 22 through 25 amend various sections of the Banking Law to authorize the
Superintendent to refuse a license or registration for any person convicted of felony residential
mortgage fraud.
Section 26 adds a new Section 265-b to the Real Property Law to establish various consumer
protections and mandatory disclosures regarding services that may be provided by "distressed
property consultants".
Section 27 contains a severability clause to ensure that should a court invalidate any portion of
the bill, such a ruling would not impair or invalidate unrelated provisions.
Section 28 establishes effective dates for various provisions of the bill.
3. Legislative History:
This bill is identical to Governor's Program Bill #44.
4. Arguments in Support:
By providing for advance foreclosure notifications, settlement conferences, and increased

regulation of mortgage lenders and brokers, the bill will provide immediate assistance to
homeowners with subprime mortgages who are at risk of foreclosure. By requiring mortgage
brokers and lenders to comply with minimum "ability to pay" underwriting lending criteria,
establishing legal standards for mortgage brokering activities, creating the crime of residential
mortgage fraud and regulating the activities of "distressed property consultants," the bill
protects future homeowners from the heightened financial risks associated with subprime
mortgages.

Laura L Anglin, Director of the Budget
By Todd L Scheuermann
Date: 7/3012008 5:20:00 PM
U00014-
5. Arguments in Opposition:
None known.
6. Other State Agencies Interested:
The Banking Department supports this bill. The Division of Housing and Community Renewal
does not object to the bill.
7. Other Interested Groups:
The New York Banking Association does not oppose this bill.
8. Budget Implications:
If enacted, certain provisions of this bill will require the Banking Department to register and
regulate mortgage loan servicers and therefore increase the Department's administrative
workload. However, Banking Department staff anticipates that the increased workload
associated with this bill will be accommodated within existing resources.
9. Recommendation:
No objection. This bill provides additional legal and procedural mechanisms to assist in
addressing legal, financial and consumer issues associated with the operation of "subprime"
and "high cost" mortgages at no additional cost to the State. Further, the provisions of this bill
will act to complement the enacted SFY 2008-09 Budget that appropriated $25 million to fund
subprime mortgage foreclosure prevention services for homeowners in New York State.
Therefore, the Division of the Budget recommends approval of this bill.

laura LAnglin. Director of the Budget
By Todd LScheuermann
Date: 7/3D12008 5:20:00 PM
STATE OF NEW YORK
DEPARTMENT OF STATE
ONE COMMERCE PLAZA
DAVID A. PATERSON 99 WASHINGTON AVENUE LORRAINE A. CORTES-VAZQUEZ
GOVERNOR ALBANY, NY 12231-0001 SECRETARY OF STATE
MEMORANDUM
July 31, 2008
TO: Honorable Terryl Brown Clemons, Esq.

Acting Counsel to the Governor
FROM: Matthew W. Tebo, Esq.

Legislative Counsel
SUBJECT: S.8143-A (Senator Farley)

Recommendation:· Approval
You requested our comments and recommendation on the above-referenced bill that
amends various sections of law to address the mortgage foreclosure crisis in New York State. As a
member of the Halt Abusive Lending Transactions (hereinafter "HALT") Task Force the Department of
State (hereinafter "Department") supports the proposed legislation.
In addition to its work as a member of the HALT Task Force, the Department actively
investigates complaints relating to predatory activity by real estate brokers and salespersons and other
regulated licensees. One fraudulent scheme commonly utilized by unscrupulous brokers and
salespersons is the 'foreclosure rescue scam." In this scenario, a licensee approaches a homeowner in
default on hislher mortgage and promises to save the home. These scams typically result in the loss of
the home, by either foreclosure or transfer to a third party for substantially less than fair market value,
and a financial windfall to the licensee. This bill endeavors to prevent this type of activity.
The bill further proposes to add a new section 265-b to the Real Property Law. This new
section will protect homeowners by requiring a written contract from 'distressed property consultants'
who solicit the homeowner with respect to a distressed home loan or the potential loss of a home due to
nonpayment of taxes. In the Department's experience, victims of foreclosure rescue scams are not
routinely provided with a clear description of the services offered. By requiring that a contract be issued
in the homeowner's native language, the bill will help to ensure that this protection is afforded to all
homeowners.
Based upon the foregoing, the Department of State recommends approval of this bill.
MWT/WC/mel
Cc: Amanda Hiller, Esq.
Susan L. Watson, Esq.
WWW.DOS.STATE.NY.US E-MAIL: INFO@DOS.STATE.NY.US
000016
NYBA
New York Bankers Association
99 Park Avenue
New York, NY 10016-1502
July 29, 2008 212.297.1699 Fax 212.297.1658
email msmith@nyha.com
The Honorable Terryl Brown Clemons
Acting General Counsel to the Governor Michael P. Smith
Executive Chamber President
State Capitol
Albany, NY 12224
RE: 5.8143-A (Farley)/A.10817-A(Towns) AN ACT to amend the

real property actions and proceedings law, the civil practice law and rules, the
banking law and the general obligations law, in relation to home mortgage
loans; to amend the penal law and the criminal procedure law, in relation to
creating new crimes relating to mortgage fraud; and to amend the real
property law, in relation to distressed property consulting contracts
Dear Ms. Brown Clemons:
The New York Bankers Association (NYBA) thanks you for the opportunity to provide
comments regarding this legislation that would establish additional requirements for
mortgage lending in New York. Our membership is committed to the eradication of
predatory lending, and has consistently supported strong legislation and regulation
which would establish meaningful and workable national standards across all
elements of the subprime market. We note that since S.8143-A (Farley)/A.10817-
A(Towns) was passed by the New York State Leglislature in June 2008, the Federal
Reserve Board has approved a final rule which establishes new federal standards
for home mortgage lending. However, we respect the State Legislature's desire to
intervene in the absence of federal action.
NYBA opposed the initial version of this legislation, as well as a proposal to institute
a one-year foreclosure moratorium, both of which initiatives, we believe, could have
severely undermined New Yorkers' access to and cost of credit. Although we still
have concerns about the unintended consequences of some of the provisions in the
final version of S.8143-A (Farley)/A.10817-A(Towns), we believe that, as finally
passed by the New York Assembly and Senate, the legislation is substantially
improved from the original proposal. Our Association is comprised of the community,
regional and money center commercial and savings banks doing business in New
York State, whose aggregate assets exceed $9 trillion and which have more than
300,000 New York employees.
Throughout the legislative process, NYBA consistently set forth several key
elements that we believed any final legislation should embrace: (i) uniform standards
000017
July 29, 2008
Page 2
for the mortgage brokerage, lending and undl3rwriting process; (ii) the prime
mortgage market, which has been an engine of thE~ national economy, should not be
targeted for further regulation, especially since the banking and thrift organizations
which serve this market are already heavily regulated; (iii) the subprime market,
which plays an important and meaningful role for many New Yorkers in achieving the
American dream of home ownership, should not be effectively eradicated.
Additionally, we urged that any final legislation not erect additional unnecessary
barriers to the mortgage origination and credit process which will impede the ability
of banks and thrifts to meet the credit needs of the communities they serve,
including the important low- and moderate-income segments. Because the final
legislation - although still overbroad and overly burdensome in some areas - has
taken meaningful steps towards these objectives, we have lifted our opposition to
this legislation. Our remaining thoughts and conCE~rns are set forth below:
Although the thresholds in the legislation remain lower than we think are appropriate,
the "measuring stick" has been changed from a comparison to comparable Treasury
yields, to a comparison to the average commitment rate for loans in the northeast
region with a comparable duration, as published by Freddie Mac in its weekly
Primary Mortgage Market Survey (175 basis points above the Freddie Mac
standard for first loans, and 375 basis points above for subordinate loans.) We
believe that this is a far more accurate measure of actual mortgage rates, and
should help limit - - although regrettably, not eliminate - the number of prime loans
that inadvertently and inaccurately fall into the new "subprime" loan category created
by the legislation. The superintendent has also been given authority to raise the
thresholds to maintain parity with national banks or should the current standards
have a negative impact on the availability of mortgage loans in New York. This
authority further enhances the superintendent's broad existing powers under New
York's "wild card" law to take action when necessary to maintain parity between
state and federally chartered institutions. VVe think this is a very important tool to
help maintain the vibrancy of the State charter as well as the mortgage lending
market in New York.
Importantly, the final legislation does not include a one-year moratorium, which we
believe could have had a disastrous impact on New York's housing market and
distressed homeowners, as well as on the health and vitality of our State's local
communities. Rather, the legislation requires a 90-day pre-foreclosure notice for all
high cost loans as well as for all subprime and non-traditional (option adjustable and
interest only) loans made between January 1, 2003 and September 1, 2008. The
legislation also requires a mandatory settlement conference for high cost, subprime
and non-traditional loans made between January 1" 2003 and September 1, 2008. It
is unclear that the new requirements will, as intended, encourage borrowers to
000018
July 29, 2008
Page 3
participate in workout discussions, and reduce the number of New Yorkers who lose
their homes to foreclosure. We fear that new procedures, particularly the mandatory
settlement conferences, may create a further backlog in the State's court system,
and extend unnecessarily a foreclosure process, which already is the longest in the
nation. However, we have pledged to work cooperatively with the Office of Court
Administration on the development of appropriatE~ guidelines, which we hope will
ensure that such conferences will not be repeatedly adjourned if borrowers fail to
appear or appear without appropriate financial information, in order that the laudable
goals of these provisions are achieved.
We continue to believe that a statutory "ability to repay" requirement provides an

invitation to "second guess" lenders' decisions and thereby adds an unnecessary
level of liability risk which may diminish credit availability and increase the cost of
credit to consumers. Nevertheless, because, in the final legislation, this requirement
does not apply to prime loans, as it did in the original proposal and, because the final
legislation allows for the use of reasonable commercially recognized underwriting
standards and methodologies, we believe this aspect of the legislation is much
improved.
Similarly, because enforcement has been left with the superintendent of banks and
the attorney general, and because the final legislation contains neither a right of
rescission, a private right of action, nor a right to collect consequential damages - as
the original proposal did - we believe the potential negative impact on the availability
of mortgage credit in New York as a result of this legislation, has been significantly
ameliorated. At the same time, because borrowers may still assert any violation of
the law as a defense to foreclosure in an action brought by a lender or an assignee,
consumers rights' are more than adequately protected.
Importantly, because the newly established crime of mortgage fraud does not
exempt the borrower, as the original proposal did, the legislation should be an
effective and comprehensive tool in the fight agailnst predatory lending and illegal
borrowing practices.
Despite the many improvements in this legislation, we remain concerned that the
provisions banning prepayment penalties for all high cost and subprime loans -
though well intended - will have unintended negative consequences for many
borrowers. Currently, New York law only allows a prepayment penalty to be
assessed if such prepayment takes place within the first year of the mortgage term.
Despite this short period of enforceability, agreeing to this option, nevertheless,
provides many borrowers with the opportunity to receive an overall lower interest
rate than would otherwise be available to them.. By eliminating this option, many
000019
July 29, 2008
Page 4
borrowers - who would never actually have been penalized by the inclusion of this
provision in their mortgage terms - will now face higher interest charges than would
otherwise have been necessary.
We also are concerned that the implementation dates for many of the legislation's
provisions will create significant operational challenges for many financial
institutions. We respectfully request, therefore, that consideration be given to
extending those implementation dates that are currently set for September 1, 2008
until at least January 1, 2009.
Once again, we appreciate the opportunity to comment on this legislation .
.. .
'
''--
000020
. " .. .. ~
'.:;"'~ ~ .. ". ~. -
Oe
IIII1 NEW YORK STATE BA.R ASSOCIATION
NYSEA One Elk Street, Albany, New York 12207 • 518.4633200 • www.nysba.org
BERNICE K. LEBER
PresIdent, New York State Bar Association
Arent Fox LLP

1675 Broadway
New York, NY 10019
2121484·3930
FAX 2121484·3990
leberb@arentfox.com
June 26,2008
Honorable David A. Paterson

Governor
Executive Chamber
The· Capitol
Albany, New York
Re: S8143-A1AI0817-A
Dear Governor Paterson:
I write with regard to S8143-AlA10817-A, Governor's ProgtamBill.# 44~ which seeks to

amend certain statutes with respect to residential mortgage foreclosures.
With 74,000 members, the New York State Bar Association ~s the largest voluntary state
bar association in the country. The State Bar promotes the interests of the legal
profession as well as the public, and to that end, serves as a respected resource for state
and federal policymakers. With its twenty-four Sections and fifty-eight Committees, the
State Bar and its members cover virtually every area of the law. Notably, over many
decades, this Association has produced thoughtful commentary and views on existing
law, pending legislation and policy issues in the hope that the Governor, the Legislature
as well as state agencies and public benefit corporations may be better informed and in
so doing, may further serve the public interest. To these ends, I submit two memoranda,
from the Real Property Law Section (RPLS) and the President's Committee on Access to
Justice (PCAJ), regarding the above-referenced legislation.
I commend you and the Legislature for your efforts to address issues relating to the "sub-
prime mortgage crisis." As pointed out by the RPLS's memoranda, "[i]t is clear that this
bill is needed to address an unprecedented crisis of primary home foreclosures,
destabilization of entire neighborhoods, physical displacement of families and the "-
imposition of immediate and unsustainable burdens on essential services like shelters,
schools, food pantries and other social and governmental agencies."
000021
...
-~~
0"
IIIII NEW YORK STATE BAR ASSOCIATION
NYSBA One Elk Street, Albany, New York 12207 • 518.463.3200 • www.nysba.org
Memorandum in Support
PRESIDENT'S COMMITT~E ON ACCESS TO JUSTICE

Access to Justice #1 June 26, 2008
S.8143-A By: Senator Farley

A. 10817-A By: M. of A. Towns
Senate Committee: Judiciary
Assembly Committee: Banks
Effective Date: Immediately
AN ACT to amend the real property actions and proceedings law, the civil practice law
and rules, the banking law, the general obligations law and the real property law, in
.relation to home mortgage loans; and to amend the penal law and the criminal law, in
~relation to creating new crimes relating to mortgage fraud
LA W AND SECTIONS REFERRED TO: adds section 1304 and amends section 1302
.of the real property actions and proceedings law; adds section 3408 of the civil practice
law and ~les; amends sections 6-1, 590, 78, 592, 592-a mId 599-c and adds sections 590-
b and 595-b of the banking law; amends section 5-501 of the general obligations law;
adds article 187, sections 187.00-187.30 and amends section 460.10 of the penal law;
amends section 700.05 of the criminal procedure law; and adds section 265-b of the real
property law
THE PRESIDENT'S COMMITTEE ON ACCESS TO JUSTICE

SUPPORTS TillS LEGISLATION
Position of the President's Committee on Access to Justice on the

Mandatory Conference Provision of the Governor's Program Bill #44 on
Foreclosures S.8143-AA.I0~:17-A
The Governor's Program Bill #44 on Foreclosures ("the Bill") is needed to address
an unprecedented crisis of primary home foreclosures, destabilization of entire
neighborhoods, physical displacement of families, an~ the imposition of immedi<\.te and
unsustainable burdens on essential services lil<:e shelters, schools, food pantries and other
social and governmental agencies. The President's Committee on Access to Justice
("PCAJ") submits that a critically necessary component of the Bill is the provision for
mandatory settlement conferences.
"
Opinions expressed are those of the Section/Committee preparing this memorandum/report and do not
represent those of the New York State Bar Association unless and until they have been adopted by its
House of Delegates or Executive Committee.
000022
.~
We agree with Chief Administrative Judge Ann Pfau that
there is no question that an early conference that brings both

parties to court, identifies the issues, and coordinates access to
the growing array of services and resourcles being made
available to homeowners would significantly assist the courts
in disposing of these cases more expeditiously and effectively.
However, questions have been raised as to whether mandatory settlement conferences are
feasible. They are.
1. It is unfortunate that the Bill does not provide funding for assignment of
counsel for indigent homeowners. Nevertheless, the foreclosure crisis is leading to a
growing number of lawyers, pro bono and those associatled with legal services programs,
being trained in this area·ofthe law, and the mandatory conferencing provisions of the
Bill will not increase the number of lawyers needed until 2009.
(a) Based upon a modification suggested by Judge Pfau to expedite the

time frame in which the settlement conference would be held (a modification which the
PCAl supports), it is probable that, at best, settlement conferences would not begin until
December, 2008. The Bill is effective 30 days after it is lenacted, and the settlement
conference provision would apply to foreclosure actions filed after that date. The first
settlement conference would not begin until at least 90 days after the Bill becomes law.
If the Bill is passed by the end of this legislative session, settlement conferences would
begin no sooner than October, and probably not until December (if a notice provision is
passed as well);
(b) The lack of staff legal services lawyers and trained pro bono private
lawyers to represent homeowners in subprime foreclosum cases is being addressed. New
York allocated $25 million in this year's budget to fund legal services and housing
counseling agencies to help homeowners with subprime loans, the loans causing today's
crisis. This funding is scheduled to be dispersed by the end of the summer. Other
funding sources have also allowed legal services program and counseling agencies to hire
new advocates. Pro bono panels are developing across the state and are quickly training
private lawyers to respond to the growing need. The expectation is that resources will
increase further in time.
(c) Homeowners could be represented in settlement conferences through

a combination of these resources. Housing counselors could be used as a direct resource
to homeowners in preparation for the settlement conference. They could be stationed in
court houses, as advocates for victims of domestic violence are currently stationed in
many parts of the stale, or be available to the courts for referral of cases at or prior to the
conference. Housing counselors are specially trained to triage cases, to identify
residential homeowners versus investors, and to negotiate with lenders. They play an
000023
instrumental role in working up budgets with homeowners to evaluate whether the home
would be affordable if the loan was reformed with reasonable terms.
Already counselors are working effectively with legal services lawyers and refer viable
cases. Pro bono and privately trained attorneys could also work with housing counselors
who could assist them in making sure that reasonable and fair settlements are reached.
2. As a practical matter, the court system should be able to accommodate

settlement conferences by 2009.
(a) In her testimony Judge Pfau stated that "requiring expedited court
conferences in every residential foreclosure in all 62 counties would impose a significant
burden on the court system that we are not equipped to handle on short notice." The
peAJ does not treat this concern lightly. However, Federal Reserve data shows that in
October, 2007, 67% of the pending sub-prime foreclosures were venued in only 5
counties (Suffolk, Queens, Kings, Nassau and Bronx). Only 16 counties each had more
than 100 pending sub-prime foreclosures, and these accounted for 90% of the statewide
sub-prime foreclosure total. In addition to NYC and Long Island, these higher-volume
counties are in the lower Hudson Valley, the Capital District, and Erie, Monroe and
Onondaga Counties. In short, the problem for the court system is a limited and focused
one.
(b) It is the peAl's understanding that OCA already is planning for

settlement conferences in NYC, Suffolk County, and one upstate county, whether or not
the Bill becomes law. Whatever model that is created for the court system in these high-
volume geographical areas presumably can be easily replicated elsewhere. And, as noted
above, the court system will not have to adapt "on short notice," but rather by 2009.
(c) In counties with a limited number of residential foreclosures, where

generally one or two judges are assigned to the civil docket, no special systems will need
to be established to permit the conferences. The volume of qualifying cases will be
small, and DCA can simply provide the one or two judges and the court clerks with
informational materials on the resources available to assist defendants, such as legal
services staff attorneys, pro bono attorneys and housing counselors. Even if the resources
are spotty the volumes will be so low that the judges themselves will have the ability and
knowledge of local housing conditions to broker good settlements in the small number of
cases that will qualify.
3. While there could be logistical and practical problems for lenders and loan
servicers to be required to appear in person at the conferences, Judge Pfau has suggested
that they could attend via teleconference, a suggestion that the PCAl supports.
4. There is no reason to assume that the settlement process would unduly prolong
the foreclosure process. Indeed, in cases in which the defendant has no valid defense or it
is apparent at the time of the conference that the defendant cannot afford to keep the
000024
~ -, .
home, the lender would be free to proceed as normal. In cases in which the conference
results in a settlement, the foreclosure process would end, far sooner than it would have
otherwise.
Beyond all of this, however, the PCAl strongly believes that in a foreclosure crisis
allegedly caused in large part by fraudulently inflated appraisals and other schemes, there
should be no rush to judgments.
5. Given what is at stake in foreclosure cases, the PCAl believes that the
settlement conference process would result in greater aCCiess to justice. The home is
generally a low or moderate income family's greatest financial asset, and it is the
determination of so much more in one's life. It provides stability for a family, designates
the school that children will attend, and homeownership builds communities. The loss of .
a home is shattering, and homeowners should be provided with the best opportunities to
avoid losing their homes. Bringing the real parties together in a court mediated
resolution process to find a rational, mutually beneficial solution achieves justice, and it
makes sense.
Based on the foregoing, the President's Committee on Access to Justice SUPPORTS this
legislation.
Committee Co-Chairs: Hon. George H. Lowe and Michael E. Getnick *
* Mr. Getnick abstained from voting when the Committee approved this memorandum.
000025
e .
IIII1 NEW YORK ST A TE BAR ASSOCIA TION
NYSBA One Elk Street, Albany, New York 12207 • 518.463.3200 • www.nysba.org
Memorandum in Support
IF AMENDED TO DELETE THE REQUIREMENT

FOR MANDATORY SETTLEMENT CONFERENCES,
TO CHANGE THE DEFINITION OF NON-CONVENTIONAL
HOME LOAN AND TO ADD A SUNSET PROVISION
THIS MEMORANDUM REFLECTS SOLELY THE VIEWS OF THE REAL

PROPERTY LAW SECTION AND NOT THE NEW YORK STATE BAR
ASSOCIATION AND HAS NOT BEEN APPROVEO BY THE EXECUTIVE
COMMITTEE OR THE HOUSE OF DELEGATES.
RPLS #25 June 26, 2008
S. ~143-A By: Senator Farley

A.I0817-A By: M. of A. Towns
Senate Committee: Judiciary ..
Assembly CommiUiee: Banks
Effective Date: Immediately
AN ACT to amend the real property actions and proceedings law, the civil practice law
and roles, the banking law, the general obligations law and the real property law, in
relation to home mortgage loans; and to amend the penal law and the criminal law, in
relation to creating new crimes relating to mortgage fraud
LAW AND SECTIONS REFERRED TO: adds section 1304 and amends section 1302
of the real property actions and proceedings law; adds section 3408 of the civil practice
law and roles; amends sections 6-1, 590,78,592, 592-a and 599-c and adds sections 590-
band 595-b of the banking law; amends section 5-501 of the general obligations law;
adds article 187, sections 187.00-187.30 and amends sectllon 460.10 of the penal law;
amends section 700.05 of the criminal procedure law; and adds section 265-b of the real
property law '
THE REAL PROPERTY LAW SECTION SUPPORTS TillS LEGISLATION IF

AMENDED TO DELETE THE REQUIREMENT FOR MANDATORY
SETTLEMENT CONFERENCES, TO CHANGE THE DEFINITION OF NON-
CONVENTIONAL HOME LOAN AND TO ADD A SUNSET PROVISION
,
"
Opinions expressed are those of the Section/Committee preparing this memorandum/report and do not
represent those of the New York State Bar Association unless and until they have been adopted by its
House of Delegates or Executive Committee.
00002G~
I. Assisting Homeowners Currently At Risk of Foreclosure
This bill seeks to address the mortgage foreclosure crisis in New York State by
(a) requiring an additional notice to be given to borrowers under high-

cost home loans and non-conventional home loans, by the lender or mortgage
loan servicer, at least 60 days before commencing legal action. The notice must
include a list of government approved housing counseling agencies which the
borrower may contact. If the borrower is experiencing financial difficulty but is
willing to work out a mutually agreeable resolution, the borrower may notify the
lender or servicer and, if such notice is given within 30 days of the borrower's
receipt of the notice from the lender or servicer, a foreclosure action may not be
initiated for 60 days.
(b) requiring a mandatory settlement conference in residential

foreclosure actions, to be held within 60 days afte:r the defendant must answer or
move. The plaintiff, or a representative with authority to settle the matter, must
appear at the conference.
(c) requiring that any complaint served in a proceeding relating to a

high-cost home loan or a non-conventional· loan must contain an affirmative
allegation that the plaintiff is the owner and holde:r of the mortgage and note or
has been delegated the authority to institute a mortgage foreclosure action.
(d) targeting persons who operate fraudulent rescue scams by

imposing restrictions and prohibitions on "distressed property consultants."
Lenders and loan servicers argue that they already send out several notices before
commencing legal action. The pre-foreclosure notice requirement should not then
impose a material burden on lenders and servicers and by directing borrowers to
counseling agencies, the pre-foreclosure notice may help both the borrower and the
lender to reach an early resolution.
New York courts are already looking at judicial conferences as a way of reducing the
backlog of pending foreclosure actions. However, although she believes such
conferences would be very helpful and would like to find a way to make them work,
Chief Administrative Judge Ann Pfau has testified that the courts do not have the
resources to hold early settlement conferences and it is unrealistic to expect that
borrowers will be able to obtain adequate legal representation. Moreover, settlement of a
foreclosure action at a conference requires an accurate financial picture of the borrower
and, for a conference to be productive, prior to any such conference, the lender and
servicer must receive and review appropriate financial information regarding the
borrower, ~.g. tax returns, proof of employment and financial statements. In addition,
lenders and loan servicers will have logistical and practical problems with appearing in
ooorr21
person. Finally, there is a legitimate concern that the court may continue, adjourn or
otherwise enlarge the time for conferences. For these reasons, the Real Property Law
Section is strongly in favor of voluntary, consensual conferences and expects that the pre-
foreclosure notice requirement will lead to the involvement of counseling agencies which
will in turn lead to conferences without judicial involvement. Accordingly, the Real
Property Law Section proposes that the bill be amended to delete the requirement for
mandatory settlement conferences.
II. Mitigating the Possibility of Similar Crises in the Future

This bill also seeks to prevent similar crises from occurring in the future by
(a) establishing certain requirements applicable to high-cost home

loans and non-conventional home loans. These requirements prohibit call
provisions (except for borrower's failure to abide by material terms), balloon
payments earlier than 15 years, negative amortization, increases in the interest
rate after default, modification or deferral fees, loan flipping (making a home loan
which refinances an existing home loan when the new loan "does not have a
tangible net benefit to the borrower"), lending without verification of the
borrower's reasonable repayment ability, lending without counseling disclosure,
points and fees if lender is refinancing its own home loan, and prepayment
penalties. These requirements also mandate that the lender collect monthly
escrows of taxes and insurance and disclose tax and insurance payments.
(b) providing that a borrower's claims and defenses may be asserted

against an assignee of the loan.
(c) requiring with respect to all home loans that no lender or mortgage
broker shall make or arrange a home loan without first making a reasonable and
good faith detennination that the borrower has a reasonable ability to pay.
(d) requiring registration and regulation of mortgage loan servicers to

enhance loan servicing standards, defining the crime of residential mortgage fraud
and establishing criminal penalties to deter those who may engage in such
activity.
The bill expands the reach of the restrictions and prohibitions beyond "high-cost home
loans" to include a broader range of loans, "non-conventional home loans." The Real
Property Law Section is particularly concerned by the large number of loans which might
be considered "non-conventional" since the bill defines a non-conventional home Joan as
a home loan in which the annual percentage rate at consummation exceeds by more than
three percentage points for a first-lien loan, or by more than five percentage points for a
subordinate-lien loan, the yield on treasury securities having a comparable maturity to the
loan maturity. By expanding the reach to an additional category of loans, this bill may
cause an additional class of borrowers and prospective home owners to lose their access
to credit as lenders curtail or even cease lending to this category of borrowers. Moreover,
'--------------+01JOO~2i;i-8-------
.. ... ~
the imposition of assignee liability is likely to result in slecondary market investors

refusing to purchase non-conventional home loans, further impairing or even destroying
lending for this category of borrowers.
It is clear that this bill is needed to address an unprecedented crisis of primary home
foreclosures, destabilization of entire neighborhoods, physical displacement of families
and the imposition of immediate and unsustainable burdens on essential services like
shelters, schools, food pantries and other social and governmental agencies.
At the same time, the Real Property Law Section recognizes the need to avoid impairing
lending in the longer term and to assure the availability of credit where appropriate and
the ability of mortgage lenders to provide affordably priced mortgage loans to qualified
home buyers.
For these .reasons, the Real Property Law Section proposes that this part of the bill be
amended to (i) change the definition of "non-conventional home loan" to use four
percentage points over treasuries for a first lien and six percentage points over treasuries
for a subordinate lien, and (ill include a sunset provision" requiring the legislature to re-
examine the need for these restrictions and prohibitions after the crisis has passed. The
Section proposes a two-year period after which non-conventional home loans would
cease to be covered.
The Real Property Law Section of the New York State Bar Association has reviewed this
proposed legislation, has appointed a special task force to study this legislation, has
received and reviewed the recommendation of said task force and supports the passage of
this legislation if amended as described.
.Based on the foregoing, the Real Property Law Section SUPPORTS this legislation IF
AMENDED TO DELETE THE REQUIREMENT FOR MANDATORY
SETTLEMENT CONFERENCES, TO CHANGE THE DEFINTION OF NON·
CONVENTIONAL HOME LOAN AND TO ADD A SUNSET PROVISION.
Section Chair: Peter V. Coffey, Esq.

Memorandum prepared by: Steven M. Alden, Esq.
{iOOD2£J
STATE OF NEW YORK
BANKING DEPARTMENT
One State Street
NEW YORK, NY 10004-1417
BANKING DEPARTMENT
MEMORANDUM OF BILL
BEFORE THE GOVERNOR
FOR EXECUTIVE ACTION
Senate Assembly Introduced by

S.8143 Senator Farley
Statutes Involved: Amends the Real Property Actions and

Proceedings Law, the Civil Practice Law and Rules, the Banking Law, the General
Obligations Law, the Penal Law, the Criminal Procedure Law and the Real Property
Law
Recommendation: Strongly Support
Effective Date: This bill would take effect immediately, unless

otherwise provided under section 28 of the bill.
Summary of Provisions: Section 1 of the bill amends Real Property Actions

n
and Proceedings Law (nRPAPL ) § 1303 to require a party commencing a mortgage
foreclosure proceeding involving residential real proplsrty to provide notice in a specified
form describing suggested actions and potential options for those homeowners against
whom foreclosure proceedings are being commenced.
Section 2 of the bill adds a new RPAPL § 1304 to require lenders and mortgage loan
servicers to send a notice to borrowers who took out a high cost home loan, or took out
a subprime or nontraditional loan between January 1, 2003 and September 1, 2008, at
least 90 days before commencing legal action against the borrower. The notice would
provide the names and telephone numbers of housing counseling agencies approved
by the United States Department of Housing and Urban
Development ("HUD") or designated by the Division of Housing and Community
Renewal ("DHCRn) and serving the borrower's area.
U00030
Section 3 of the bill adds a new CPLR Rule 3408 to require a court, in a residential
foreclosure action involving a high cost, subprime or a non-traditional home loan made
between January 1, 2003 and September 1, 2008, to schedule a settlement conference
within 60 days of when the proof of service of the complaint is filed with the county
clerk's office. The plaintiff, or a representative with authority to settle the matter, must
appear at
the conference. The court may allow the plaintiff's representative to appear via phone or
video-conference. If the homeowner appears and is not represented by counsel, he or
she would be deemed to have made a motion to proc:eed as a "poor person" under
CPLR § 1101, and the judge may relieve the defendant of certain procedural court
requirements and appoint counsel under CPLR § 11 02(a).
Section 3-a of the bill allows those homeowners against whom a foreclosure action on a
subprime or high cost home loan has already been commenced to also request and
obtain a settlement conference. Sections 4 and 4-a of the bill make certain changes to
Banking Law § 6-1 to conform the consumer protections for high cost home loans to
those established by the bill for subprime home loans.
Section 5 of the bill adds a new Banking Law § 6-rn which- (1) defines the term
"subprime home loan": (2) provides consumer protections and minimum underwriting
standards for such loans; and (3) establishes an enforcement mechanism for these
provisions, and remedies for violations. The bill allows the Superintendent of Banks
("Superintendent") to adjust the definition of subprimei home loan under certain
circumstances. In addition, this provision of the bill provides an opportunity to cure a
violation to those lenders who, while acting in good faith, violate Banking Law § 6-m.
The Attorney General or the Superintendent may enforce the provisions of the new
Banking Law § 6-m, and a borrower may raise the violation of this section as a defense
to foreclosure.
Section 6 of the bill adds a new Banking Law § 590-b to establish certain responsibilities
for lenders and mortgage brokers. In particular, this section of the bill establishes: (1) a
duty of care for mortgage brokers in soliciting, placing, processing and arranging home
loans; and (2) standards for lenders and mortgage brokers in their dealings with
appraisers. Section 6 of the bill further establishes remedies for violations of these
provisions, and allows the Attorney General or Superintendent to enforce the provisions
of Banking Law § 590-b.
Sections 7 through 16 of the bill amend the Banking L.aw to require mortgage loan
servicers to register with the Superintendent before engaging in the business of
mortgage loan servicing in the state. These sections of the bill further empower the
Banking Board and, where specified, the Superintendent to promulgate regulations and
require mortgage loan servicers to comply with the regulations. These provisions of the
bill would also permit the Superintendent to examine the books and records of
registered mortgage loan servicers.
Section 17 of the bill amends RPAPL § 1302 to extend its application to subprime loans.
Plaintiffs in a legal action brought under Article 13 of the RPAPL will be required to
000031
make an affirmative allegation that at the time the proceeding is commenced the plaintiff
is the owner and the holder of the mortgage and note, or has been delegated the
authority to institute a mortgage foreclosure action by the owner and holder of the
mortgage and the note. In addition, plaintiffs in foreclosure actions involving subprime
loans will be required to make an affirmative allegation of compliance with Banking Law
§ 6-m and RPAPL § 1304. This section of the bill further provides that a violation
Banking Law § 6-m or RPAPL §1304 will be a defense to a subprime foreclosure action.
Section 18 of the bill amends General Obligations Law § 5-501 (3)(b) to make a
technical amendment related to Banking Law § 6-1 and 6-m.
Section 19 of the bill adds a new Article 187 to the Penal Law to establish and define
the crime of residential mortgage fraud.
Section 20 of the bill amends Criminal Procedure Law § 700.5(8)(b) to add residential
mortgage fraud in the first, second, third and fourth degrees as predicate crimes in the
crimes of enterprise corruption.
Section 21 of the bill amends Penal Law § 460.10(1 )(a) to add violations of the
mortgage fraud statute to the predicate crimes of money laundering.
Sections 22 through 25 of the bill amend various sections of the Banking Law that allow
the Superintendent to refuse a license or registration to a person for having committed
certain named felonies to add residential mortgage fraud to the named felonies
Section 26 of the bill adds a new Real Property Law § 265-b to prevent certain
foreclosure rescue scams by prohibiting "distressed property consultants" from
performing services without a written and fully executed consulting contract with the
homeowner; and from charging or accepting payment for consulting services before
completion of services. In addition, the new Real Property Law § 265-b requires these
consultants to provide the homeowner with an opportunity to review a contract
before signing it, and requires that the contract be in the language that was used in
discussions between the consultant and the homeowner, and contain a notice of the
homeowner's right to cancel the contract.
Section 27 of the bill contains a severability clause.
Section 28 of the bill provides for the effective date of various provisions of the bill.
Comments: Both New York State and the nation as a whole face an
unprecedented mortgage foreclosure crisis. Statistics for New York bear witness to this
phenomenon. In 2007 there were 57,000 foreclosure filings affecting almost 39,000
homes, representing a 10% increase in foreclosure filings from the previous year and a
55% increase over two years. Importantly, the rate of 'foreclosures continues to
increase, with results for the first quarter of 2008 showing a 14% increase over the prior
quarter.
000032
S.8143 embodies a two-pronged strategy aimed at both the present and the future. First
it focuses on existing homeowners facing foreclosure. The proposed changes affect real
property and other laws that are especially appropriate for action at the state level.
Specifically, since many borrowers have no personal contact with their lender during the
foreclosure process, the bill requires that the lender send a pre-foreclosure notice, with
the names of housing counselors, 90 days prior to the initiation of foreclosure
proceedings on a high cost, subprime or non-traditional home loan. As an additional
safeguard, the bill creates another opportunity for a rE3solution through a mandatory
settlement conference; the court must hold a settlement conference within 60 days of
the answer date.
Unfortunately, the current environment provides an unprecedented opportunity for those

who prey on the most vulnerable members of our society who are desperately seeking
to protect their most valuable asset. "Rescue scams" are an outgrowth of equity scams
which are already prohibited by New York law. In response to this growing problem, the
bill would prohibit upfront fees and require a written contract for services from so-called
"distressed property consultants."
S.8143 also takes several important steps toward preventing future crises. In addition to
expanding the scope of consumer protections in Section 6-1 of the Banking Law, which
is New York's predatory lending statute, this bill would add a new Banking Law § 6-m to
establish standards and limitations for lenders and brokers making "subprime home
loans." Banking Law § 6-m defines the term "subprime home loan" as a home loan in
which the fully indexed annual percentage rate exceeds by more than 1.75 percentage
points for a first lien loan, or by more than 3.75 percentage points for a subordinate lien
loan, the average commitment rate for loans in the northeast region with a comparable
duration to the duration of such home loan, as published by the Federal Home Loan
Mortgage Corporation ("Freddie Mac") in its weekly Primary Mortgage Market Survey
('PMMS'l This provision furthers the goal of striking an appropriate balance between
consumer protection and the availability of affordable credit.
This bill applies certain standards and prohibitions to "'subprime home loans" including:
(a) no prepayment penalties, (b) no abusive yield spread premiums; (c) no option
adjustable rate mortgages where one or more options causes the principal balance to
increase; and (d) no loan flipping. The bill would also require the escrow of taxes and
insurance and the timely disclosure of taxes and insurance payments. This section of
the bill would also establish an "ability to pay' standard for making and arranging all
subprime home loans.
S.8143 would also establish a statutory duty of care for mortgage brokers with regard to
all home loans. For example, this bill would require brokers to: (1) act in the borrower's
interest; (2) act with reasonable care, skill and diligence; (3) act in good faith and with
fair dealing; (4) not accept, give, or charge any undisclosed compensation; (5) disclose
all material facts known to the broker that might reasonably affect the borrower's rights,
and interests; and (6) diligently work to present a rangre of loan products for which the
borrower likely qualifies and which are appropriate for the borrower's circumstances.
uooo_
Mortgage loan servicers perform administrative functions for the owner of the mortgage
and the note, such as collecting checks and crediting payment. Even though mortgage
loan servicers perform a central function in the mortgage industry, they are not at
present regulated by the State. This bill would require mortgage loan servicers to be
registered with the Superintendent in order to engage in the business of mortgage loan
servicing.
There currently is no separate Penal Law provision expressly prohibiting residential

mortgage fraud, and thus prosecutors must bring such cases under different theories,
such as scheme to defraud and larceny. S.8143 seeks to simplify such prosecutions by
explicitly defining and criminalizing the act of residential mortgage fraud. In particular,
the bill would define residential mortgage fraud as conduct in which a person, knowingly
and with intent to defraud, among other things, presents or causes to be presented a
written statement to be used in connection with soliciiting or making a mortgage loan
that the person knows contains materially false information or conceals, for the purpose
of misleading, facts that are material. Under the bill, the proceeds of the fraud may be
aggregated and stiffer penalties may be sought by prosecutors. In addition, while under
the scheme to defraud theory the most a person may be charged with is a Class E
felony, this bill would allow a person guilty of residential mortgage fraud in excess of $1
million to be charged with a Class B felony.
It must be noted, however, that while the intent of the mortgage fraud provisions is
clear, certain drafting errors must be addressed in order to make the statute fully
effective. Specifically, it is our opinion that the definition of "person" in Section 19 and
may be read to effectively nullify that Section. This shortcoming must be addressed as
soon as possible.
This bill is a comprehensive piece of legislation designed to avoid unnecessary

foreclosures as well as the need to set permanent safeguards to prevent future crises.
The Banking Department strongly recommends its approval.
5
119 Ave ~ NY 12210
Phono 518-462.683·1 ~ Fax 518.46:26687
July 29, 2008
Legislative Secretary
Executive Chamber
NYS Capitol
Albany, NY 12224
Re: Letter in Support of A.10817-A/S.8143-A
Dear Legislative Secretary:
On behalf of the Empire Justice Center, Iwrite in full support of Assembly 10817-
A\Senate 8143-A. This strong piece of legislation will help Ikeep thousands of New York
homeowners from losing their homes to foreclosure, as well as insure that New York
homeowners are protected from many of the worst lending abuses in the subpr ime industry that
lead to the current crisis. We urge Governor Paterson to si!gn this legislation immediately.
I. A.10817-AlS.8143-A will help New York Avoid Preventable Foreclosures
A. 90 day pre-foreclosure notice

The legislation includes severa I provisions that will prevent foreclosures in New York
State. We support the addition of section 1304 to the Real Property Actions and Proceedings
Law (RPAPL) to require a notice be sent to hom eowners nillety days prior to the initiation of the
lawsuit. This notice will provide homeowners with critical information early on in the process
including contact information for the lender or mortgage servicer, as well as direct contact
information for non-profit counseling agencies and the New York State Banking Department.
There is no question that homeowners have a greater chance of negotiating a work-out solution
through the assistance of a professionally trained counselor. Some lenders have created
specialized units with direct phone lines for counselors and advocates, not otherwise available
to homeowners.
One of the greatest obstacles has been educating hom eowners about free services
housing counseling services in t heir communities. For the past five years, we have been part of
the HomeSave Coalition in the Capital District, a group made up mostly of four non-profit
housing counseling age ncies from Schenectady, Albany, and Rensselaer. It has been a
continuing challenge for us to develop marketing and advertising strategies, given our limited
budgets. The ninety-day notice is ideal in that it will give borrowers who most need the
information, the contact information for non-profit organizations which can best assist
them.
B. Settlement conferences
Albany + f'(or;lle:ster +VVhite Plains + Island
000035
Mandatory settlement conferences, provided through the amending to Rule 3408 of the
Civil Practice Law and Rules (CPLR) will provide homeowners a fair shake in the foreclosure
process. Foreclosure lawyers in New York acknowledge that the vast majority of foreclosures
end in a default judgment against the hom eowner. For a myriad of reasons, including a gene ral
lack of understanding regarding what it means to have to file an answer in a legal proceeding
and a lack of affordable legal resources for consumers, homeowners are not defending
foreclosure lawsuits. The in-person settlement conference will afford homeowners an
opportunity that they can understand easily, to appear before the court and defend their home.
For pending foreclosures, the opportunity to request a settlement conference should be
extended to include borrowers with "non-traditional" hom e loans.
Judges and court personnel will play an integral role in insuring homeowners who can
afford their homes do not lose them because they were given an unfair loan. Voluntary lender
programs are not working. Though lenders proclaim they don't want to take peoples' homes,
loss mitigation servicers don't match this theory. Perverse financial incentives exist for both
mortgage servicers and for their lawyers to foreclose, rather than to work with borrowers. Court
supervision is necessary to make decision makers within the lending institutions come
to the table and develop workable solutions that will keep homeowners in their homes.
For borrowers who have no chance of affording their ho me, the mandatory settlement
conference can actually hasten the foreclosure process so that lenders can proceed more
quickly to a resolution. The settlement conference process will be beneficial for both parties.
The Office of Court Administration is already in the process of instituting their pilot
project based on the settlement conference model in the bill in Queens. OCA is working with
consumer advocates, as well as with lenders' attorneys, to develop a com prehensive system
that will ensure that the settlements are conducted in a meaningful way. The prospect of
mandatory settlement conferences is causing legal services organizations, as well as pro bono
panels across the state to ramp up their services for homeowners. Combined with the ninety
day notice and the early referrals to housing counselors and legal advocates, I am confident that
more homeowners will get the assistance early on in the process, which is what they need to
save their hom es.
Both the 90 day notice and the sett/em ent conference provisions are perfect
complements to the $25 million in funding that the State allocated in its 2008 budget to fortify
non-profit housing counseling ag endes and legal services organ izations to provide direct
assistance to homeowners with subprime loans.
C. Averment of standing
We also support the amendment to section 1302 ofthe Real Property Actions and
Proceedings Law to ensure that the plaintiffs in foreclosure actions are the actual and real
owners and holders of the notes. There has been significant news coverage regarding
foreclosing parties actually lacking standing to file lawsuits. This provision is important to
enable homeowners to identify the entity that owns their loan as well. It is unclear whether the
language is sufficient to reach that end when a plaintiff is allowed to aver they have been
delegated the authority. It would be helpful to clarify this provision to require the plaintiff be the
owner and holder of the loan.
II. The Bill Provides Additional Necessary Protections for Borrowers
Provisions in the bill regarding mortgage servicers. including the requirement that they
be registered with the Banking Department and giving the Banking Department authority
promulgate regulations and oversee these com panies will help ensure that homeowners are
treated fairly. With the surge of subprime lending came an increase in abusive mortgage
2
000036
servicing practices, including the failure to properly apply payments, problems with escrow
accounting and poor cu stomer service. Often a homeowner's troubles with their loan are
coupled with troubles with their mortgage loan servicing. We encourage the Governor and the
State to follow-through with strong oversight of this industry.
We also support the addition of section 265-b to the Real Property Law (RPL).
Regulation of "distressed property consultants" also is a much needed provision and will prevent
many homeowners from losing savings to unscrupulous players trying to profit off of the growing
foreclosure crisis, savings that could be better spent helping to cure mortgage arrears. Many
consultants give unrealistic expectations and provide no greater, and often far worse, service
than is provided by the housing counseling agenci es that the State will be funding to provide
free services to homeowners. The regu lations are very reasonable and make sense. We
support the provisions set forth to amend the Real Property Law to regulate "distressed property
consultants."
III. Regulations for Prospective Lending Practices Will Prevent Abusive Lending
A. Limitations and prohibitions for "high-cost" and "subprime" home loans

Empire Justice strongly supports the prohibitions on "high-cost" home loans added in the
bill, and the limitations and prohibitions set forth for "subprime" home loans in S.8143-
AIA.1 0817-A. These provisions will get rid of some of the worst abusive lending practic es that
lead to the current subprime mortgage lending crisis in New York State.
One of the most important of these provisions is the mandate that lenders make loans
that borrowers can afford, a simple, straight-forward concept that was abused more than any
other lending practice, in the subprime boom. A borrower's ability to repay needs to be judged
realistically, honestly and for the foreseeable future of the loan. It is not difficult to verify a
borrower's income. When assessing the affordability of loans with adjustable rate mortgages,
the lender should be looking at whether the borrower will be able to afford the monthly payment
once the initial fixed rate ends and the payment readjusts. We support the definition of "fUlly
indexed rate" and suggest that it be further clarified to ensure that lenders take into account
market variables such as an unchara cteristically low index that may exist at a given point in
time.
The other limitations and prohibitions set forth in Sections 4 and 5 of the bill applying to
will go a long way to protecting homeowners. We support all of these provisions including
prohibiting loans that negatively amortize, limiting advanced payments, no financing of credit
insurance and other products that have been historically abused as a way to increase profits, no
prepayment penalties and the mandatory disclosure of and inclusion of a tax and insurance
escrow into the monthly payment. We encourage lenders to initiate this practice sooner than
the effective date of July 1, 2010 as set forth in the bill. It would be helpful for all prohibitions for
"high-cost" home loans to be explicitly extended to "subplrime loans" including restrictions on
balloon payments and home improvement contracts, limitations on points and fees financed up
front in the loan, and the statutory notice language to be sent to homeowners being sold
subprime loans.
We'd like to note that significant abusive lending practices that are not explicitly
prohibited in the bill still exist. Lenders should be prohibited from steering borrowers intornore
expensive loans than their credit warrants. In addition, yield spread premiums should be·
prohibited outright in "high-cost," "subprime," and "non-traditional," home loans. While yield
spread premiums may be a tool in the prime lending world for borrowers to negotiate terms, in
the subprime world they are a nefarious and almost uniformly abused product to push
homeowners into higher cost loans. Homeowners have 110 understanding what "YSP" on their
(;OOD31·
loan document means. We also have never seen a loan in which a yield spread premium was
paid in which a borrower didn't also pa y a separate fee to the broker out of the loan procee ds.
B. Covered loans
We support the definition of "subprime" home loan at 175 basis points over the prime
rate for first lien loans. This threshold will ensure that the prime market will not be affected by
these new regulations. We recommend these limitations and prohibitions be extended to cover
the full gamut of abusive lending products including payment option adjustable rate mortgages
that will not fall within the definition. We also encourage the extension of these prohibitions to
cover home equity lines of credit (HELOC's).
C. Mortgage brokers and appraisals

We support the addition of section 590-b to the Banking Law to regulate mortgage
brokers. These regulations are long overdu e and will ensure that mortgage brokers truly are
putting the interest of their customers before their own interest. These basic standards will
foster good competition in the marketplace allow honest brokers to thrive. Provisions prohibiting
lenders and mortgage brokers from unduly influencing the appraisal process are also necessary
and supported by us. These provisions will hopefully prevent the practice most notably seen in
upstate communities of inflated house appraisals that have left many New Yorkers "upside
down" in their homes, owing more than the value of their homes.
D. Remedies
Regarding remedies, we believe the bill falls short in providing adequate remedies for
homeowners. We support provisions that allow the borrower to raise defensive claims in
foreclosure against the current holder of the loan. It is critical that the legislation has provided
this remedy for homeowners. These provisions also will hold Wall Street accountable for their
role in underwriting and securitizing these loans and will ultimately foster greater self-policing of
the lending process by the mortgage lending industry.
However, statutory damages should be included f or violations of the law for all loans.
Actual damages are difficult to prove and may not provide borrowers with real relief. The right
to rescind the loan should be explicitly extended to homeowners with subprime loans for
violations of the act. Rescission is a powerful too that allows homeowners a real opportunity to
negotiate a reasonable loan modification with the current holder of their loan.
IV. Conclusion
Thank you very much for the opportunity to comment on this critical piece of legislation.
We commend the legislature and the Governor's office for their hard work in reaching this
historical agreement. While we have identified a number of areas we would like to see
strengthened over the course of the coming year, Empire Justice remains strongly supportive of
A.10817-NS.8143-A and we encourage the Governor to sign the bill into law.
Sincerely,
Kristin Brown Lilley

Director of Legislative Advocacy
Kirsten E. Keefe
Senior Staff Attorney
4
cc: Honorable Terryl Brown Clemons
Executive Chamber
Albany, New York 12224
000039
I:mpirf J:ic~ (~nt~r'"
Making the law work for all New Yorker~
Albany + Rochester + White Plains + Long Island
July 28, 2008
Governor David A. Paterson

Executive Chamber
State Capitol
Albany, NY 12224
On behalf of the staff and clients of Empire Justice Center, I want to thank you for
making the subprime mortgage lending and foreclosure crisis a priority this legislative
session. Once enacted, your Program Bill #44 (S.8l43/A.I 0817) will go a long way to
help thousands of New York homeowners preserve their homeownership.
Most notably, the substantive provisions requiring a notice to be sent to

homeowners referring them to non-profit agencies win prevent many foreclosures from
ever being filed, and the mandatory settlement conference and other provisions
strengthening the foreclosure process will give homeowners a greater chance of avoiding
the ultimate loss of their homes. Additionally, this legislation's regulations for subprime
lending add much-needed consumer protections and will prevent the worst lending
abuses from reoccurring in the future. Once the legislation becomes law, New York will
have one of the strongest statutes passed by any state in this country since the foreclosure
crisis began.
We greatly appreciate the time and work you and your staff devoted to this
landmark legislation. It was a pleasure to work with Laura Lefebvre, Charlotte
Hitchcock, Gaurav Vasisht, Cassie Prugh, as well as members of the Banking
Department. As advocates, we also truly appreciated being asked for our input as the
legislation was developed and negotiated.
~ you agmn for your _ng 1~:::~Omffii~e~t..~? ~ues.
AnneEri~~
President and CEO
119 Washington Avenue, Albany, NY 12210
r
-~-1-~--::
~ . '"
~p~ho:n~e518.462.6831 + Fax 518.462.6687
www.empirejustice.Org
State of New York Mortgage Agency
New York State Housing Finance Agency
New York State Affordable Housing Corporation
By Email tolegislative.secretary@chamber.state.ny.us
To: Terryl Brown Clemons

From: Joy F. Willig c:~

Senior Vice Pre~ident and Counsel
Date: August 1, 2008
Re: S.8143 / A1081?

Recommendation: No comment
The New York State Housing Finance Agency· ("HFA") and the State of New York
Mortgage Agency ("SONYMA") have no comment with. respect to the above referenced bill.
8.8143 relates to new regulations of certain types of home mortgage loans that would not impact
HFA or SONYMA mortgages.
If you wish to discuss this bill, or if we can otherwise assist you, please feel free to
contact me at (212) 688-4000, ext. 350.
cc: Joseph Palozzola, Esq.

Alejandro Valella, Esq.
Remy Bernardo, Jr., Esq.
\\HFAI\SYS\USERS\LEGAL\BL\LEGIS 200S\LEGIS COMMEN1\OS0731IBP.SSI43 RESPONSE MEMO.DOC
641 Lexington Avenue, New York, NY 10022· (212) 688-4000 • www.nyhomes.org
U0004l ....,:,
THE CITY OF NEW YORK
OFFICE OF THE ~YOR
NEW YORK, N. Y. 10007
July 31, 2008
S.8143-A - by Senator Farley
AN ACT to amend. the real property actions and proceedings

law, the civil practice law and rules, the banking law
and the general obligations law, in relation to home
mortgage loans; to amend the penal law and the
criminal procedure law, in relation to creating new
crimes relating to mortgage fraud; and to amend the
real property law, in relation to distressed property
consulting contracts
APPROVAL RECOMMENDED
Hon. David Paterson

Governor of the State of New York
Executive Chamber
The above-referenced bill is now before you for executive action.
The City of New York strongly supports this legislation and its primary goal of addressing the
mortgage foreclosure crisis in New York State. This bill, which heavily impacts City residents, represents
the most comprehensive and meaningful approach yet taken to address the subprime mortgage and
foreclosure crisis.
The legislation addresses the crisis with a bold, two- pronged approach: providing curative relief
to homeowners in danger of losing their homes through forec:losure and adopting preventative measures
that bar the unsound lending practices that precipitated the cris1is.
In 2007 alone, New York City's approximately 18,000 foreclosure actions accounted for more
than half the state's filings. l According to a 2007 report to the United States Conference of Mayors and
the Council for the New American City, the New York metropolitan region stands to suffer more than $10
billion in losses relating to the mortgage crisis, taking into account losses from employment, taxes,
spending and property values. 2
1 http://cityroom.blogs.nytimes.com/2008/02/11/subprime-crisis-festers-in-new-york/
2 The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas by Global Insight for the U.S. Conference of Mayors and the Council for the New
American City, November, 2007
000042
Hon. David Paterson S.8143-A
July 31, 2008
Page 2
Curative measures in this bill address the mortgage foreclosure crisis in New York by establishing
foreclosure prevention opportunities for homeowners at risk of losing their homes by mandating the
holding of settlement conferences to give the parties an opportunity to renegotiate the terms of the loan
rather than simply foreclose on the property. This provision will have a dramatic impact on establishing a
greater balance of power between consumer and lender in the negotiations of a workout arrangement on
problematic loans.
Preventative measures in the legislation include the foHowing key provisions that are designed to
prevent future abuses in the system:
• Strengthening the Banking Law by expanding it to cover the newly defined subprime mortgages.
• Establishing tougher standards that lenders and mortgage brokers must follow to prevent
borrowers from being placed into unaffordable home loans.
• Requiring the registration and regulation of mortgage servicers to improve mortgage service
standards in the state.
The bill the Legislature has enacted provides basic, reasonable and essential consumer protections to
prevent lenders and brokers from taking advantage of borrowers eager to realize the American dream of
homeownership, and existing homeowners who simply want to undertake repairs and renovations.
This bill provides borrowers with greater protections when making the most significant purchase of
their lives: their homes.
Accordingly, it is urged that this bill be approved.
Very truly yours,
MICHAEL R. BLOOMBERG, Mayor
By: Michelle L. Goldstein

Director
000043
NYPIRG
,
NEW YORK
PUBLIC INTEREST
RESEARCH GROUP
VIA FAX & EMAIL
Terryl Brown Clemons, Esq.

Council to the Governor
State Capitol, Second Floor
Albany, New York
Re: S.8143-AJA.I0817, foreclosure prevention legislation
Dear Ms. Brown Clemons:
The New York Public Interest Research Group (NYPIRG supports this legislation as an
essential tool in combating the foreclosure epidemic that is ravaging neighborhoods across the state
and forcing families out of their homes and into uncertain circumstances. We applaud the role that
the Governor, legislative leaders and staff have played in making this legislation a reality and endorse
its enactment.
In the late 1990s, consumer, housing, legal services, senior and civic groups started sounding
warnings about a crisis in our communities, of predatory lenders taking advantage of credulous and
vulnerable homeowners. While some of the financial predators were shady fly-by-night brokers,
some of the best-known names in the financial services industry had a role in this first wave of
predatory lending.
What was clear was that federal and state regulators were either ignorant of the realities of the
marketplace or willing to overlook the frenzy of predatory practices that were already taking its toll.
Federal and state regulators reacted slowly, insufficiently and in many cases not at all. .In 2002, after
a two-year campaign led by groups, including NYPIRG, under the banner New Yorkers for
Responsible Lending (NYRL), the state enacted an anti predatory lending law, Banking Law Article
6-1. While the law was a good start, it could not reach to businesses regulated outside of New York
and it could not keep pace with the new, complex mortgage products, including those with adjustable
rates. As the economy continued to worsen and these new mortgages increasingly hit their "reset"
dates, homeowners began to find themselves in distress and pressured by all sides.
Ironically many of these homeowners helped keep the economy alive after the 9-11 attacks by
tapping the mushrooming equity in their homes to make improvements, payoff credit card debt, pay
medical bills and purchase automobiles. Now the house of cards that enriched lenders and Wall
Street has all come crashing down on them.
107 WASHINGTON AVENUE, 2 ND FLOOR· ALBANY, NEW YORK 12210-2270 • 518-436-0876 • FAX 518-432-6178
OFFICES IN: ALBANY, BINGHAMTON, CORTLAND, LONG ISLAND, NEW PALTZ, NEW YORK CITY, OSWEGO, PURCHASE & SYRACUSE
RECYCLED PAPER
Recent data show that more than 3,500 homes went into default in May. 1 More than 800
auction notices were sent in the same month? Hardest hit areas are on Long Island, New York City,
Albany and Monroe Counties. But no area is immune, as even Long Island's wealthy East End is
seeing $20 million homes being foreclosed. 3
This legislation should make a huge difference in the lives of those New Yorkers who have
managed to hang on. The legislation would amend the Real Property Actions and Proceedings Law,
the Banking Law, Civil Practice Law and Rules, General Obligations and Real Property Laws to
provide procedural and substantive rights to homeowners of 1-4 unit residential dwellings to stave off
foreclosure. The legislation would be require lenders to provide 90 days' notice prior to initiating
foreclosure and include a list of approved, certified independent mortgage counselors. This
requirement will ensure that the foreclosure counseling funds made available through the budget are
well spent. When a homeowner does end up in a foreclosure proceeding, they will have an
opportunity to get counseling and legal services assistance to reform their loan and a mandatory
conference will be scheduled to determine if a workout can be arranged.
A number of the most egregious practices would be outlawed for subprime loans, paralleling
the protections afforded for high cost loans. Included among the banned mortgage provisions are
negative amortization (loans that add to the principal going forward); financing of insurance and
other products or services through the mortgage; prepayment penalties; and yield-spread premiums
(excessive broker compensation based on selling a higher interest loan). Covered loans, made on July
1,2010 and beyond, would be required to escrow taxes and insurance in most instances.
For the first time, lenders and mortgage brokers in New York would be required to arrange
subprime loans only when they "reasonably and in good faith" believe at the time of the loan that the
borrower has the ability to repay the loan based on objective circumstances. This will do away with
some of the most blatant and fraudulent types of loan practices wherein lenders and brokers set
borrowers up for foreclosure before the ink had dried on the mortgage.
Moreover, brokers will be required to operate within an enforceable code of conduct,

including acting in the borrower's interests; using reasonable skill and diligence; and acting in good
faith and with fair dealing.
Mortgage service companies would be regulated and registered for the first time and subject
to fines to be prescribed by the Banking Board.
Finally, the Penal Law would be amended to include several new felony-level crimes for
residential mortgage fraud.
While we believe this legislation would have been significantly stronger if it included a
private right of action and more tools for homeowners to proactively and preemptively free
themselves from predatory loans before they are on the brink of foreclosure. However, this
legislation in conjunction with the availability of funding for legal services providers and housing
counselors represents a strong lifeline to those homeowners in distress or teetering on default and the
communities in which they live.
1 See RealtyTrac data at http://www.bizjournals.com/buffalo/stories/2008/06/16/daily4.html.

2Id.
3 See http://blogs.wsj.com/developments/2008/06/26/195-million-hamptons-mansion~in-foreclosure/.
2
ooa045~~
NYPIRG enthusiastically supports this legislation and commends the Governor for his work
in making this legislation a reality.
Sincerely,
Russ Haven, Esq.

Legislative Counsel
3
oonoto
NEDAP Neighborhood Economic Development Advocacy Project
•
73 Spring Street, Suite 506, New York, NY 10012
Tel: (212) 680-5100 Fax: (212) 680-5104
www.nedap.org
July 28, 2008
Honorable Terryl Brown Clemons

Executive Chamber
RE: S8143-A
NEDAP strongly supports the above-referenced bill and recommends that Governor Paterson
sign the bill into law.
Dear Ms. Brown:
New York State is in the middle of an unprecedented foreclosure crisis spurred in large part from
abusive practices in the subprime lending industry. This crisis is having a devastating effect on
lower and middle income homeowriers, and on the economy of the state as a whole. According to a
. report released by the Pew Charitable Trusts, one out of every 32 New York State homeowners is
projected to face foreclosure in the next two years. In addition to the grave threat that the explosion
in subprime foreclosures poses to homeowners and communities in New York, the combined state
and local tax base could lose $65 billion.
S8143~A will help to reduce foreclosures by prohibiting abusive practices in the subprime market
·going forward, and by changing the foreclosure process to increase opportunities for the resolution
of eases.
A. The Governor's proposed bill contains two key new procedural approaches which could
help to significantly reduce foreclosures in New York State.
Mandatory Settlement Conference
. We strongly support the provision amending the CPLR to require mandatory settlement conferences
in foreclosure actions. .
For many years, the New York State courts have been a virtual foreclosure mill, with lenders putting
in pro forma papers and proceeding to foreclosure unopposed. Under the current system, the vast
majority of homeowners in foreclosure actions in New York State do not have any chance to go
before a judge, or to be heard by the courts in any manner.
We believe, based on years of experience working in the courts and from discussions with the courts,
that the number ofborrowers defaulting in foreclosure actions far exceeds 90%. Unlike the
summons in a landlord-tenant action, which calls on the tenant to come to court on a date certain, a
U00041
foreclosure summons does not cite a court date. Instead, it advises the borrower to answer. Most
borrowers, without the resources to hire counsel, have no idea how to answer in a Supreme Court
proceeding. Once they fail to answer, they have defaulted, and they are not served with any
subsequent court papers.
As a result, many of the foreclosure cases that could be sensibly resolved early instead proceed
through the foreclosure process. As the cases proceed. fees accrue and they become more and more
difficult to resolve. The provision in the Governor's program bill mandating an early settlement
conference would change the dynamic of the foreclosure process by helping push the resolution of
those cases where settlement is in the best interests of both parties.
Court supervision would increase the likelihood that servicers would agree to affordable loan
modifications, where feasible. Generally, the securitization structure has given servicers a
disincentive to work with borrowers and seek sustainable loan modifications. It costs servicers
money to complete a loan modification (as cited in Inside B & C Lending), while servicers receive
numerous fees for foreclosures. Servicers therefore resist modifications and push foreclosures, even
though in most instances modification would be in the best interests of investors.
Given the magnitude of the foreclosure problem in New York State, the industry cannot credibly
claim that it is a bad idea to bring the parties before the court in an attempt to mediate a rational
resolution. This is a common sense provision that will help prevent foreclosures.
90 Day Pre-Foreclosure Notice
The provision that would require lenders to send a notice to borrowers 90 days before filing a
foreclosure action also makes clear sense as a matter of public policy. It would direct borrowers to a
non-profit loan counselor early on in the process, and would give the parties a formal 90-day
window to work on a resolution prior to the filing of a foreclosure action. Currently, the only notice
sent out that advises borrowers about non-profit assistance is served at the time a foreclosure action .
is filed~ By this time, attorneys fees have accrued, and it is more difficult for the borrower to enter
into a loan modification with the servicer. The 90-day pre-foreclosure notice will help ensure that
more borrowers receive non-profit assistance in negotiating with servicers prior to the initiation of a
foreclosure action. This will help to prevent foreclosures, and will reduce the number of foreclosure
actions that are filed, preserving court resources.
B. The Governor's proposed bill contains vital provisions that would curb abusive lending
practices in the subprime market. However, certain provisions of the bill should be
strengthened inthe future to better protect New York homeowners and prevent abuses.
It has become quite obvious throughout the country that the subprime market cannot police itself,
and that strong protections are needed to curb abusive lending practices. A number of states have
recently passed comprehensive responsible lending laws. The laws in Colorado, Illinois, Minnesota,
Maryland, and Ohio apply most of their protections to all home loans. The laws in North Carolina,
Connecticut, and Maine apply a threshold for coverage ofsubprime loans that is similar to the
threshold in S8143;.A. In addition, the Federal Reserve Board recently approved regulations that
contain a threshold for coverage that is even broader than the threshold in S8143-A.
Thresholds
We support the defined threshold for coverage in S8143-A of 175 basis points over the prime rate.
This threshold will help prevent abusive lending practices in much of the subprime market. 88143-
000048
A falls short, however, by failing to include the definition of "non-traditional" mortgages in the
threshold language. Non-traditional mortgages, such as Payment Option ARMs and Interest-Only
Mortgages include some of the biggest payment shocks in the market. These products are highly
confusing to borrowers, and have been widely misused by unscrupulous lenders and brokers to
mislead lower income borrowers into loans that they can ill afford.
Many Payment Option ARMs would not fall under the existing threshold in S8143-A, because the
initial teaser rates are so low. It is critical that non-traditional loans be covered because there is so
much abuse in that market, and because the non-traditional market is enonnous--- for example,
beginning later this year, the dollar value of re-sets for Payment Option ARMs will dwarf the value
of re-sets for subprime ARMs. In New York State alone in 2007, there were well over $2 billion in
originations of non~traditionalloans. Leaving out coverage of non-traditional loans creates a gap in
the law.
Weare also concerned that Home Equity Lines of Credit ("HELOCs") are specifically exempted
from all of the borrower protections involving subprime loans; As a result, unscrupulous lenders can
structure higher cost refinance loans as HELOCs, and circumvent the protections of the law. Many
lenders have been disguising "piggyback" second mortgages as HELOCs to avoid existing lending
laws, and these piggyback loans would not be covered under S8143-A. Several states such as North
Carolina have included language in their laws which exempt legitimate HELOCs from coverage, but
ensure that de facto mortgages disguised as HELOCs are covered by the law. We highly
recommend that the Governor and the legislature consider such an approach in the future.
Limitations and Prohibited Practices
S8143-A contains strong limitations and prohibitions, including the provisions requiring all lenders
to make affordable loans; and the prohibitions for subprime loans against loan flipping and
prepayment penalties.
We are concerned, however, that the prohibition against "abusive" yield spread premiums-(YSPs)
does not go far enough in preventing one of the most abusive practices in-the subprime market. The
language iIi S8143-A merely provides for disclosures, which we believe win not address the
fundamental problem with YSPs: that they provide a financial incentive to brokers to steer
borrowers into unaffordable loans. The original version of Governor Paterson's program bill banned
all YSPs for covered loans, which we strongly believe is the correct approach.
S8l43-A conspicuously lacks any kind of prohibition against steering, or inducing a borrower into a
higher cost loan than she otherwise would qualify for. Steering has been particularly pernicious
where borrowers are steered to higher cost loans due to their race. Numerous studies, including a
prominent one by Freddie Mac, have showed that a significant percentage of subprime borrowers
should have qualified for lower cost, prime loans. A study by Senator Schumer found a significant
correlation between steering and race. The Governor and legislature should consider addressing this
issue in any future lending legislation.
S8143-A contains a much-needed provision requiring brokers to act in a borrower's interest, and to
act in good faith and with fair dealing. The provision should also require brokers to make a
"reasonable inquiry" into a borrower's financial circumstances, so a broker cannot make an end run
around his responsibilities by willfully closing his eyes to a borrower's existing circumstances.
The provisions inS8l43-A prohibiting lenders and brokers from influencing or attempting to
influence the result of an appraisal will help to reduce appraisal fraud, which has been central to
otl0049
property flipping schemes downstate and abusive refmancing schemes upstate--- and which has led
many homeowners to owe far more on their mortgage than their property is actually worth.
Remedies
S8143-A does not provide for statutory damages for violations pertaining to subprime home loans.
This is a deftnite shortcoming ofthe proposed law, as actual damages can be difftcult to prove, and
statutory damages are critical in providing a deterrent against bad practices. We strongly
recommend that the Governor and legislature consider adding statutory damages for violations of the
act in the future.
S8143-A strikes a fair balance on assignee liability by giving homeowners recourse against the
current holder of their loan when they are in foreclosure. Without this assignee liability provision,
homeowners would be deprived of their right to defend against foreclosure. The securitization
process has helped strip borrowers of the ability to raise defenses in foreclosure when there were
illegalities in the origination. When borrowers raise defenses, the trusts typically claim that they
have no responsibility for any abuses at origination-and borrowers are left defenseless. The
homeowner's only legal recourse is against the originator of the loan, which has no ability to stop the
foreclosure. Many of the originators have gone bankrupt.
Furthermore, weak assignee liability would reinforce a lack of accountability by the secondary
market. This lack of accountability has allowed Wall Street investment banks to purchase
unsustainable and irresponsible loans without any concern for their viability or legality. This lack of
accountability has created huge proftts for Wall Street at the expense of homeowners, and ultimately,
investors. We strongly support the balanced approach to assignee liability taken in S8143-A.
Servicer Licensing
The servicing industry has been largely unregulated on the state or federa1level, and, as a result,
many servicers have widely gouged borrowers, and have contributed to the rash of foreclosures
through aggressive collection tactics. The provisions ofS8143-A which would require servicers to
be licensed with the Banking Department is a good ftrst step toward reining in abusive servicers.
We would recommend that in the future, the Governor and legislature consider adding a specifIc
requirement that the Banking Superintendent promulgate regulations related to unfair and deceptive
servicing practices.
Conclusion
In general, S8143-A will provide an excellent framework for responsible lending going forward, and
help ensure that New York homeowners get a fair shake in the foreclosure process. We urge
Governor Paterson to protect New York homeowners and communities by signing this legislation
into law.
LI ~'
Sarah Ludwig ~
Co-Director
000050
NEW YORKERS FOR
RESPONSIBLE LENDING
July 29,2008

Executive Chamber
RE: S8143-A
NYRL strongly supports the above-referenced bill and recommends that Governor
Paterson sign the bill into law.
Dear Ms. Brown:
New Yorkers for Responsible Lending (NYRL) is a statewide coalition of 141 non-profit
organizations that work to promote fair and affordable financial services for all New Yorkers.
Our groups have seen firsthand the devastating impact that the current explosion in
foreclosures has had on individuals and communities throughout the state.
S8143-A will help to reduce foreclosures by prohibiting abusive practices in the subprime
market going forward, and by changing the foreclosure process to increase opportunities for
the resolution of cases.
Procedural provisions
We strongly support the provision amending the CPLR to require mandatory settlement
conferences in foreclosure actions. This provision will change the dynamic of the foreclosure
process by helping push the resolution of those cases where settlement is in the best interests
of both parties. Given the magnitude of the foreclosure problem in New York State, the
industry cannot credibly claim that it is a bad idea to bring the parties before the court in an
attempt to mediate a rational resolution. This is a common sense provision that will help
prevent foreclosures.
The provision that will require lenders to send a notice to borrowers 90 days before filing a
foreclosure action also makes Clear sense as a matter of public policy. It would direct
borrowers to a non-profit loan counselor early on in the process, and would give the parties a
formal 90-day window to work on a resolution prior to the filing of a foreclosure action.
Currently, the only notice sent out that advises borrowers about non-profit assistance is served
at the time a foreclosure action is filed. By this time, attorneys fees have accrued, and it is
more difficult for the borrower to enter into a loan modification with the servicer. The 90-day
pre-foreclosure notice will help ensure that more borrowers receive non-profit assistance in
negotiating with servicers prior to the initiation of a foreclosure action. This will help to
prevent foreclosures, and will reduce the number of foreclosure actions that are filed,
preserving court resources.
000051
Prohibitions on Abusive Practices
We strongly support the defined threshold for coverage in S8143-A of 175 basis points over
the prime rate. This threshold will help prevent abusive lending practices in much ofthe
subprime market. The threshold could be strengthened, however, by including "non-
traditional" mortgages. Non-traditional mortgages, such as Payment Option ARMs and
Interest-Only Mortgages include some of the biggest payment shocks in the market. These
products are highly confusing to borrowers, and have been widely misused by unscrupulous
lenders and brokers to mislead lower income borrowers into loans that they can ill afford.
Many Payment Option ARMs would not fall under the existing threshold in S8143-A,
because the initial teaser rates are so low. It is critical that non-traditional loans be covered
because there is so much abuse in that market, and because the non-traditional market is
enormous--- for example, beginning later this year, the dollar value of re-sets for Payment
Option ARMs will dwarf the value ofre-sets for subprime ARMs. In New York State alone in
2007, there were well over $2 billion in originations of non-traditional loans. The omission of
non-traditional loans in the threshold creates a potential gap in the law.
We are also concerned that Home Equity Lines of Credit ("HELOCs") are specifically
exempted from all of the borrower protections involving subprime loans. As a result,
unscrupulous lenders can structure higher cost refinance loans as HELOCs, and circumvent
the protections of the law. Many lenders have been disguising "piggyback" second mortgages
as HELOCs to avoid existing lending laws, and these piggyback loans would not be covered
under S8143-A. Several states such as North Carolina have included language in their laws
which exempt legitimate HELOCs from coverage, but ensure that de facto mortgages
disguised as HELOCs are covered by the law. We highly recommend that the Governor and
the legislature consider such an approach in the future.
S8143-A contains strong limitations and prohibitions, including the provisions requiring all
lenders to make affordable loans; and the prohibitions for subprime loans against loan flipping
and prepayment penalties.
We are concerned, however, that the provision on yield spread premiums (YSPs) does not go
far enough in preventing one of the most abusive practices in the subprime market. The
language in S8143-A, which essentially provides for disclosures, will not address the
fundamental problem with YSPs: that they provide a financial incentive to brokers to steer
borrowers into unaffordable loans. The original version of Governor Paterson's program bill
banned all YSPs for covered loans, which we strongly believe is the correct approach.
S8143-A also lacks a prohibition against lender steering, or inducing a borrower into a higher
cost loan than she otherwise would qualify for. Steering has been particularly pernicious
where borrowers are steered to higher cost loans due to their race. Numerous studies,
including a prominent one by Freddie Mac, have showed that a significant percentage of
subprime borrowers should have qualified for lower cost, prime loans. A study by Senator
Schumer found a significant correlation between steering and race. The Governor and
legislature should consider addressing this issue in any future lending legislation.
000052
S8143-A contains a much-needed provision requiring brokers to act in a borrower's interest,
and to act in good faith and with fair dealing, which we strongly support.
Remedies
S8143-A does not provide for statutory damages for violations pertaining to subprime home
loans. This is a definite shortcoming of the proposed law, as actual damages can be difficult to
prove, and statutory damages are critical in providing a deterrent against bad practices. We
strongly recommend that the Governor and legislature consider adding statutory damages for
violations of the act in the future.
S8143-A strikes a fair balance on assignee liability by giving homeowners recourse against
the current holder of their loan when they are in foreclosure. Without this assignee liability
provision, homeowners would be deprived of their right to defend against foreclosure. The
securitization process has helped strip borrowers of the ability to raise defenses in foreclosure
when there were illegalities in the origination. When borrowers raise defenses, the trusts
typically claim that they have no responsibility for any abuses at origination-and borrowers
are left defenseless. The homeowner's only legal recourse is against the originator ofthe loan,
which has no ability to stop the foreclosure. In fact, many of the originators have gone
bankrupt. The balanced approach borrowers will have the ability to defend themselves when
they have been targeted for abusive and illegal lending practices.
Conclusion
S8143-A will prevent subprime lending abuses going forward, and will help ensure that New
York homeowners get a fair shake in the foreclosure process. We urge Governor Paterson to
sign this legislation into law.
Sincerely,
New Yorkers for Responsible Lending
###
New Yorkers for Responsible Lending (NYRL) is a state-wide coalition established in 2000 to promote access to fair and
affordable financial services and the preservation of assets for all New Yorkers and their communities. NYRL is committed
to fighting predatory practices in the financial services industry through policy reform, education and outreach, research and
direct services. NYRL's 141 members represent community financial institutions, community-based organizations,
affordable housing and first-time homebuyer groups, advocates for seniors, legal services organizations, and community
reinvestment, fair lending, and consumer advocacy groups.
OOtJ053
,.-1"04'.. -- ... ~ r '.~
COMPTROLLER OF THE CITY OF NEW YORK
1 CENTRE: STREET
NEW YORK, NY 10007·2341
(212) 669-3500
WILLIAM C .. THOMPSON, JR.

COMPTROLLER
June 16, 2008

. .. - '-
. ~
The Honorable David A. Paterson
Governor I
State Capitol
Albany, NY 12224
I write to applaud your recent introduction of Program Bill No. 44 (A.I0817/S.8143) addressing
the escalating .I?0rtgage fo.reclosure crisis in New York State.
10:... .••
Your efforts ~~. parti'ctlarly timely as our. City grappl~s \Vi~'1l tt~ubling spike in property
foreclosures imO a' corresponding risk of fraudulent title transfers: .' Indeed, my. office;s
Mortgage Foreclosure Prevention Helpline continues to respond to an unprecedented number of
inquiries and I therefore urge you to consider expanding the scope of your bill to address several
issues.
First, a cornmon practice has developed in the mortgage industry whereby homebuyers are
routinely encouraged to use an attorney recommended by the lender. Aside from raising
potential conflict-of-interest issues for the attorney, this practice undercuts a valuable safeguard
for home buyers. Specifically, buyers forgo the advice and expertise of an
attorney who is
committed soleiy to representtng'theirinterests and the''''possible detection -of· attempted fraud·
before any damage is done. To correct this state of affairs, my office recommends the following
measure:
• Create an affirmative duty for state-licensed participants in a real estate transaction (e.g.,
real estate agents, mortgage brokers, lenders, appraisers, attorneys, etc.) to report
suspected fraud. This duty would be similar to federal mandates requiring banks to
report.certain suspicious activity trans~ctions.
-Se~ond, my staff has be~n ad~ised that, when a conveyance of real property occurs without the
issuance of a title msurance policy, an elevated risk of
fraud 'is present. I therefore propose
amending existing law to require any PartY ,ob~ining an ownership interest in real property to:
Made From 100% Recycled Paper
000054
·.........." ~. ".,- ,- .. - .. ------ .......... .. ~ ..
, - --
1. Provide proof to the county clerk or city register that title insurance has been obtained
for the subject property, or
2. File a notarized statement with the clerk or register identifying the reason(s) for not
obtaining title insurance. For cases in which title insurance was not obtained, the clerk
or register should be required to contact the last owner of record to confirm the reported
conveyance and minimize the possibility of fraud.
Finally, while not directly related to foreclosures, we have identified certain fraudulent activities
in the mortgage process that should be addressed in the fmal bill.
~~~ ;~. ;....:..~. 'iJ!! 1'" .......... ~- ,r .~;---: ;~::.. __ ~ _-..' --:;;. ...-o:-~.'~~. ~C!" ~.- ~ ~- :::P~ ~ ;; -::'~~: _. ~'--~~
. Currently, anyone can obtain' a copy of a homeowner's signature. This is because county clerks
and city registers are required to enter into the public record most real estate deeds and
mortgage documents. Within New York City, these docUments are electronically imaged and
made publicly available online through the Automated City Register Information System.
These scanned records include crystal clear images of homeowners' original pen-and-ink
. signatures, which could make it easier for identity thieves to forge or misappropriate
homeowners' signatures. At present, the ElectronicSignatures and Records Act does not allow
the use of a more secure "electronic" signature on real estate transactions, including real
property conveyances. Therefore, I believe the Electronic Signatures and Records Act should
be amended to allow, within a properly controlled environment, the submission of real estate
conveyances and related documents with electronic, rather than pen-and-ink, signatures.
On behalf of all City residents, please accept my gratitude for your efforts in this area. My staff
and I remain available to assist you regarding this important issue.
Very truly yours,
c: The Honorable Hugh T. Farley,

Chairman, New York State Senate Committee on Banks
The Honorable Darryl C. Towns,

Chainnan, New York State Assembly Committee on Banks
Made From 100% Recycled Paper
000055
AARP New York T 1-866-227-7442
One Commerce Plaza F 518-434-6949
Suite 706 www.aarp.org/ny
Albany, NY 12260
July 28, 2008

Executive Chamber
Dear Ms. Brown:
RE: S8143-A (Farley)
AARP strongly supports the above bill and recommends that Governor Paterson sign the bill into
law.
According to Governor Paterson, there were more than 52,000 foreclosures filed in New York State in
2007, amounting to approximately 1,000 foreclosures filed per week. In just the first quarter of2008,
that number jumped to approximately 1,100 foreclosures per week.
When a person of any age loses his or her home, it is a devastating event. For an older person, a
foreclosure can mean losing a retirement nest egg as well as a lifetime of family memories without the
ability to ever recover. Over 80 percent of people age 65 and older are homeowners. Borrowers age 65+
were found to be three times more likely to hold a subprime mortgage than borrowers less than 35 years
of age. As widely reported, the foreclosures crisis has hit the subprime market place the hardest.
The above referenced legislation, introduced by the Governor and negotiated with the Legislature, offers
sound policy to address New York State's foreclosure crisis. The bill will not dry up credit for those
seeking loans and builds upon New York's anti-predatory lending statue that was passed in 2002.
Governor Paterson's legislation approaches the foreclosure crisis in two fundamental ways: by providing
assistance to homeowners currently at risk of losing their home and including provisions to keep this
crisis from happening again.
The legislation accomplishes these goals by requiring lenders to send pre-foreclosure notices to
borrowers at least 90 days before foreclosure proceedings begin, requiring mandatory settlement
conferences for foreclosure proceedings, and providing foreclosure rescue scam consumer protections.
Mortgage servicers would be required to be registered. Mortgage brokers would be required to act in a
borrower's interest. Lenders would be required to verify a borrower's ability to repay a loan. The
legislation also makes mortgage fraud a crime
AARP urges Governor Paterson to protect New Yorkers from losing their homes to foreclosure now and
in the future by signing this legislation into law.
Sincerely,
~Ib>~
Lois Aronstein
State Director, AARP New York
Erik D. Olsen, President
William D. Novelli, Chief Executive Officer
000056
JUL-23-2008 17:31 DC 37 ALBANY OFC 518 436 1066 P.003
American Federation of State, County &. Municipal Employees, AFL-CIO

125 BARCLAY STREET" NEW YORK. NY 10007-2179
Telephone: 212815-1000
LILLIAN ROBERTS
Executive Director July 22, 2008
VERONICA MONTGOMERy.cOSiA
President
CLIFFORD KOPPELMAN
Secretary
Honorable David Paterson
MAf MISBAH UODIN
Treasurer
GovemorofNew York
Executive Chamber
State Capitol
VICe Presidents: Albany, NY 12224
Lwmlrd Allen
Colleen Carew-Rogers
Carmen Charles RE: Mortgage Foreclosures
Santos Crespo S.8143/Farley - A.I0817ffowns
Sirra Crippen
Michael L. DeMarco
Cuthbert B. Dickenson
Alfred Edwards
Charles Fanison
Claude Fort
Michael Hood District Council 37, AFSCME, AFt-CIO, r~presenting 125,000 memhers
Morris R. Johnson
David F. Moog supports this legislation.
Faye Moore
Eileen M. Muller This bill seeks to address the mortgage foreclosure crisis in the state by;
Walthene Primus
Darryl A. Ramsey (1) providing additional protections and foreclosure prevention opportunities for
Eddie Rodrigue:c:: homeowners at risk of losing their homes; (2) strengthening the Banking Law to
Jackie Rowe--Adams
Cleveland G. Terry prevent similar crises from occurring in thc future; (3) establishing standards for
John Townsend lenders and mortgage brokers to prevent borrowers from being placed into
James J. TUcciarelii unaffordable home loans; (4) registering and tebrulating mortgage IOaJ:1 servicers to
Esther (Sandy) Tucker
Shirley A. Williams enhance loan servicing standards in the statl;:; and (5) defining the crime of
residential mortgage fraud and establishing strict criminal penalties to deter those
Associate Director who may engage iI'I such activity.
Oliver Gray
On behalf of District Council 37. I respeclfully ~lrge you to approve this
vital piece of legislation which would protect homeowners from abtlSivc and
Retirees Associa6on deceptive practices.
Stuart Leibowitz
Sincerely,
~'1d '
_\ . 7d-v--v.J:..1.1
LilIim1 Roberts
Executive Director
ee; Terryl Brown Clemons

Charlotte Hitchcock
David Weinstein
TOTAL P.003
WESTERN NEW YORK LAW CENTER, INC.
237 Main Street, Suite 1130, Buffalo, New York 14203
Telephone: (716) 855-0203 Ext.I05 E-Mail: ddetrico@wnylc.com

Fax: (716) 270-4005
July 28, 2008
Ms. Clemons
Albany, New York
Re: Senate Bill S8143-A
Dear Ms. Clemons:
I am a Staff Attorney at the Western New York Law Center in Buffalo,

New York (WNYLC). We represent homeowners facing foreclosure that are
victims of predatory loans. The Western New York Law Center supports Senate
Bill S8143-A.
I had the honor to speak before the Senate in May in support of Senate
Bill S8143-A. I am particularly excited about the ninety day notice provisions for
homeowners prior to commencing foreclosures. Currently, homeowners, while
they realize they are in default, simply do not know when the foreclosure will
begin. This allows the homeowner to start negotiating to try to resolve the
delinquency prior to the beginning of a foreclosure which can result in additional
attorney fees and litigation costs. The mandatory settlement conference can be a
powerfUl forum to build on the earlier negotiations prior to foreclosure. It is
important to get the home owner involved in the process in order to work out a
resolution. Currently, most foreclosures result in default judgments.
The biggest challenge on how to implement S8143-A will involve the

mandatory settlement conference. It will be critical for the Courts to reach out to
Legal Service Agencies and the private bar in referring homeowners for counsel.
I am confident that S8143-A will help prOVide a much needed tool to inject the
homeowner back into the process in order to resolve the issues that led to the
foreclosure.
I would like to thank everyone in advance for the opportunity to comment

on this important piece of legislation.
Sincerely,
e:'-l:e~
Staff Attorney
A Grantee of the lOLA Fund of New York, Inc.
000058
WHITEMAN
Attorneys at Law
OSTERMAN
www.woh.com
EJ HANNA LLP
William Y. Crowell III
Partner
One Commerce plaza 518-487.7677 phone
Albany. New York I2260 wcro Wf.l!J9..1YQ!J· cC!-TrJ
5I8.487.7600 phone
5I8.487.7777 fax
July 31, 2008
Terryl Brown Clemons, Esq. BY FAX (518) 486-9652

Acting Counsel to the Governor AND REGULAR MAIL
State of New York
Executive Chamber
State Capitol
Albany, NY 12224
RE: S. 8143-A (Farley)
Dear Ms. Clemons:
This letter is submitted on behalf of our client, the Independent Bankers Association of New York State,
with respect to the subject bill which is currently awaiting executive action.
The community banks throughout New York State remain focused on the application of the thresholds
defining what constitutes a subprime home loan. The thresholds in this legislation could result in the
inclusion of prime mortgage loans within the parameters for subprime home loans. The net effect of this
would be to limit the availability of mortgage funding in an already volatile market. Community banks in
New York State were not involved in the creation of the current subprime crisis. Community banks will
not make subprime mortgages as defined in this bill.
Under this bill, the Banking Superintendent has the authority to raise thresholds. Our client would urge
that the administration maintain maximum flexibility with respect to thresholds to ensure that mortgage
financing remains available in New York State. The Superintendent needs to actively monitor the
threshold rates to insure no negative impacts. The Independent Bankers Association of New Yark State
would welcome the opportunity to have input on this issue.
The Banking Superintendent is a critical safety valve to ensure operation of a viable mortgage market in
New York State. We appreciate this opportunity to highlight this critical issue based on the thresholds
contained in this legislation.
Respectfully submitted,
JJ<.}!...t~__ 7 0 ~~ -e
WHITEMAN OSTERMAN & HANNA LLP
Legislative Counsel to the Independent Bankers Association of New York State
W:\11900\11942\Leg MemosIS8143-A.doc
STATE OF NEW YORK
8143--A
IN SENATE
May 2, 2008
Introduced by Sens. FARLEY, PADAVAN, MALTESE, BONACIC, ROBACH, CONNOR,

FLANAGAN, LARKIN, LAVALLE, LEIBELL, MORAHAN, RATH, SALAND, TRUNZO,
VOLKER (at request of the Governor) -- read twice and ordered
printed, and when printed to be committed to the Committee on Judici-
ary committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the real property actions and proceedings law, the civil
practice law and rules, the banking law and the general obligations
law, in relation to home mortgage loans; to amend the penal law and
the criminal procedure law, in relation to creating new crimes relat-
ing to mortgage fraud; and to amend the real property law, in relation
to distressed property consulting contracts
The People of the State of New Yor~L represented in Sepate and Assem-
l::>J.YLclC>E3I1a.Ct as follows:
1 Section 1. Section 1303 of the real property actions and proceedings

2 law, as added by chapter 308 of the laws of 2006 and subdivision 1 as
3 amended by chapter 154 of the laws of 2007, is amended to read as
4 follows:
5 § 1303. Foreclosures; required notices. 1. The foreclosing party in a
6 mortgage foreclosure action, which involves residential real property
7 consisting of owner-occupied one-to-four-family dwellings shall provide
8 notice to the mortgagor in accordance with the provisions of this
9 section with regard to information and assistance about the foreclosure
10 process.
11 2. The notice required by this section shall be delivered with the
12 summons and complaint to commence a foreclosure action. The notice
13 required by this section shall be in bold, fourteen-point type and shall
14 be printed on colored paper that is other than the color of the summons
15 and complaint, and the title of the notice shall be in bold, twenty-
16 point type. The notice shall be on its own page.
17 3. The notice required by this section shall appear as follows:
18 Help for Homeowners in Foreclosure
19 New York State Law requires that we send you this notice about the
20 foreclosure process. Please read it carefully.
EXPLANATION--Matter in :i,talics (underscored) is new; matter in brackets

[-] is old law to be omitted.
L8012060-09-8
http://nyslrs.state.ny.us/NYSLBDC 1Ibstfrrne. cgi 6/25/2008

----
S. 8143--A 2
1 [Ho:cLgage fo:ceclosu:ce is a complex p:cocess. SOlLIe people may app:coach

2 YOtt about: "saving" YOtt:c hmne. YOtt should be exL:celnel1' ca:ceful abOttt: any
3 such promises.]
4 ~"ll]lUIlons __~nd ComQlaint
5 'You arei,ll.c:l~ll.g§:r 9f:l9 Si I19Y9 Ur:l:19Ill§·I:J:"Y<:>:1l:E"Ci,i:lt(). :r§$P9Ilc:lt9tl:1§
6$l1IllIll911.$Cill.c:l991np:lCi,iI1t i I1 this foreclosllre act,i9I11 Y911 IllCiY 10El§ Y911:r
7 home ._ Pleas.e read the SUmnt0ns anc! comQ],.aint_caref1.!..liY..-.-You should imme:::-
8 c:l,i,Cit§:lY99IltCi9tCiIlCitt9:rIl§YOr:Y911r:l99Cil 1§9Ci:l aid office to obtain
9 advic§ on h9W to protect-yours§J,.L
10E;OllrCeElO:J:" I Il:J:"9r:IllCit,i,911. CiIlc!.A,ssistCiIlc§
11 The State encourages you to become informed about your options in
12 foreclosure. ['i'here] In addi tion.to seel{,inSL~$istange froIll an a.ttornev
13 9r::l§l9Ci:lCi,ic:l 9ff,i9§,tl:1§r:§ are government agencies[, legal aid ent:it:ies]
14 and [~] non-profit organizations that you may contact for informa-
15 tion about [foreclosu:ce while 1'ou are working] P9Els,il::>:l§l9Pt,i9I1$,.,iI1clllc:l-
16ingtr:yiIlgt9WOr:l{, with your lender during this process.
17 To locate an entity near you, you may call the toll-free helpline
18 maintained by the New York State Banking Department at
19 (enter number) or visit the Department's website at
20 (enter web address) .
21 [~hoe St:at:e does not: guarant:ee t:he advice of "\:hoese agencies.]
22 Foreclosure rescue scams
23 13§l9Ci:r§lfl1:lg:J:"P§l9P:l§l'll:19CiQP:r9Ci9l:1Y9tl.W,i,th9:J:":E"§lr:S t9 "$CiV§" Y9llr:l:19Ill§'
24 There . .are individuals wh<::>_ wat9l:1for n9.tices of foreclosure_ actions in
25 order to unfairly Qrofit f:rom a homeowner's distress., You should be
2 6§l:xtr:§lIll§lly ca:r§lftll .Cil::>glltCiI1Y$tlc:h . p:r9Ill,iEle$CiI1c:lCiI1Y$1l99§$t,i9I1$tl:1CitY911
27 Qay them a fee .9r siq~ over Y9ur de§d~ State law requires anyone offer-
28 ,ill.q such servic:es for pr:gfit to enter ill.t9CiC:911.t:rCi9t'lrVl:1,i9l:1:J:"1l:l:ly
29 describes . the services they wiJ,L Qerf<;>rm anct fees they will charge--L and
30 which Qrohibi ts them fr:om _1:.Cil{,~~P,Y-money from Y9u un t i l they have
31 99IllPJ,§lt§lc! Cil:l...$1l9l:1P:rgIlliEl§lc:l S§l:rYi.C:§l$.
32 4. The banking department shall prescribe the telephone number and web
33 address to be included in the notice.
34 5. The banking department shall post on its website or otherwise make
35 readily available the name and contact information of government agen-
36 cies or non-profit organizations that may be contacted for information
37 about the foreclosure process, including maintaining a toll-free help-
38 line to disseminate the information required by this section.
39 § 2. The real property actions and proceedings law is amended by
40 adding a new section 1304 to read as follows:
41 §:l~04.:R§gll,ir:§c!p:r,i9r:ngtic:§ls.1 N9t'lrVithEltCiIld,ill.q .CiIlY 9tl:1§lrp:rgy,i$ion
42 of law,- wi th r§gard to_~.higl:1:::-<::9$t hOIll§lloan ,_Cis such term is d§fined in
43 section six-l 9ft}:l§l::>CiIlkinq:lCi'lrVL a Elll1::>p:r.iIll§lh9Ill§l.QCiIlQ:rCill.9Il:::-trac!.i:::-
44 tional.~home -.lQan, at least I1:L.Ilety d~s be:J:"9re~§lJ.lder or a mortqag§
45 10Cin seryicerc:ommenQ.§$_..l.§gCl,l _ acti9n_~agaiI1.S;_t the borrower ,.ill..91uding
46 Ill9:rtqCiq§:J:"9r:§<::1.9Stlr:§lLtl:1e l.§Ilc:ler or:Ill9rtqCi9§19Cill. servicer shall g,iy§
47 notice ~ the borrow§r in .. a t_leCi...$t fourt.§§n Qoil1.t ~...l'l:hic:h shall.
48 include th§:f"Qllowil1.g:
49 ".¥OU GQULD LOSE _'YOUR !tOME. PJ..I1:.A,SE ~AJ:) THEf9r.LOWING:
50 NO':I'IGE.CAREFUI.r.y "
51 "As of ,YQurl:19II1§lloanis dCiYs in default. Under New York
52 ~1:.Cl,t§l r.Ci'lrV, we Ci:r§l:r:eglli:rE:l.c! to S§lll.c:lyoU thi,s.not:L.9_Elto infor:...IllY9U that
53 YQll a:r§ Citrisl{, 9f:losil1.gyour hoIlle·XouCCiI'lc:ure th,is defCiultl::>Y making
54 the QCiYIllentc:>_f dQl.1~:r$__PY
55 .!.L-'Y911 are ~:XQerien<::,iI'lg---.:E"illCill.c:,ialdif:J:":Lcul tYL_YOU should_ k...!lg'lrV.. __1::1'!Cl, t
56 there are S§ly§:rCil QPtiQnsCiYCi:i.1Cil::>1§t9 Y9tlt}:latIllCiyhelpYQukeePYQur:
http://nyslrs.state.ny.us/NYSLBDC 1/bstfrme.cgi 6/25/2008

s. 8143--A 3
1 h9l'llEL bt:t:Ci9!1E3cl to th:Ls notice is a list o:Eg9Y§I:'11111§Ilt:CiPP:r9YE3clh9tlS:L119

2 counseling ..Cige119i§§... in your area which provide free or very low-cost
3 c::9tl.111?§1,:L11g.. , Y9tl s.h9tll,clc::911l?i.cl§:rc::911.t:Cic::t::L119911§ 9:f t:hE3I?§ Ci9E3119i.E3..1? imme-
4 diately. These agencies_~p§q:LCiJ.j,:z:§:LIl.h§l,£:Lng.homeowners w ho are facing
5 f ina11c:LCi! cl:L:f:f:LC::tlJ t:y.II9tl~:L119c::9tlIl$§!19:r$c::Ci11h§!lpy9tl . . CiSlSl§$SlY9tlI:' :f:L11Ci11....
6 9:LCi:!,C::911cl:Lt:i9nCiIlclW9:r]{.W:Lt:htll?t:oE3:.x:pJ,OI:'§. thep9ss:Ll:::>:Llit:Y9:f 111.9cl:L:fy:L11g
7 yc::mr loan, establishing an eas_:L.§:r payment plan for youL.Q:r.§Y.E!!L~9rkil}g
8 9tlt:CiPE3:r:LOcl. 9:fJ,9aIl:f9:rl:>§Ci:rCiIlC::E3· . I:f . . Y9tl ... W:L$h,YOtlrnCiya:!,1?9 contact us
9 directly at and ask to discuss £9.$..~:Ll:::>J,E3OPtion~
10 WhileWE3C::CiI1l"l9tCi$l?tl:r§t:hat:CirntlttlCiJ,:!,YCig:reE3<3.l:::>JE3I:'§lSlO!tlt:i011i$ P9$$:L ....
11 l:::>J§,W§§IlC::9tlI:'Ci9§Y9tlt:9t:Cik§l. illlIllE3cliat§$t:§P$t:9t:J:'Yto.ac::hi§lve....Ci r§ls 0 1-
12 utioll .. ~helonger you wait~h§!.:fewer 9£t:ions you may have.
13 If this matter i s Il9t resolved within 90 clCiYS from the date this
14 notice was mailed1.~§..may commence legal actiQIlagainst you (or sooner
15i:fY9tlC§lCi$§l . . t9 . !:LY§:L11t:h§clW'eJ,:!':L119al?. yOtlI:'p:rirnCiJ:'YI:'esicl§l}c::§l . )
16 I:f Y9tlIl§l§cl:ftl:rt:h§l:r:LIlf9rl'llCitiOIl1P!§las§lc::Ci!J,th§lNE3W' "Y9I:']{.$t:Cit:§l Bank-
17 ing Depart:Ill§lIlt' s toll-free helpJ..:L11§.<3.t 1-877-BANK-NYS (1.... ~7:z . . ~2E5 .... ;;E5211
1 8 9:rY:Ls:Ltt:h§l P§PCi:rt:rn§Ilt:'sWE3l:::> si t:§l .at:ht:t:p:. /IWW~.l:::>Ci11k:L11g.I?t:Cit:§l·IlY·tl.I?"
19 ~tlc::h.notice shall be sent . .l:::>v t:he lender or mortgage J..9CiIl . $§!I:'Y:Lger
2 Ot:9thel:::>9:r:ro~E3:r.1 l:::>V . . I:'E3g:L s t:§:r§cl9I:' c::§:rt::L:fi§lcl . rnCi:L 1 Ci11cl a J, s 9l:>y:f:L:r$t:.... c::J..CiI?$
21 mailt:oth§llCiI?t: known addresso:f th§ll:::>O:rI:'9W§l:rLCi11cl:Lfcli:f:f§lI:'§l11t,t:9t:h§l
22 resicl§!.I1ce which is the subject oft:h§mortgage. Notice is considered
23 9:LYE311Ci$9:Et:h§lclCit:§:Lt::LSrnCi:LlE3cl,~h§11ot::LC::§$hCiUC::911tCi:L11CiJ·:L1?t:9:fCit:
24 least:. five United States departme11.t:._9.:E_ housing and urban development
25 Cipproved housing counselil}g agencies, or other housing C9.tl11Sl.§lJ,j,!}SL.a9E3Jl=
2 6c::L§lI? . Cil?clE!I?:L9IlCit:§cll:::>Vt:h§cliyil?:L9119:Eh9tlsi119 and C::9lUlUtl11it:V:r§l11E3W'Cil . 1
27 that "'§E!~YE!_t:;he region where the borrower resides. The list shall include
28 t:h§C::9tlIlI?§li Il9Ci9§11c:::L§I?'. :!,Ci$t:]{.I19WIlCiclcl:r§S$§l$Ci11clt:§l:!,E3ph911E311tllUl:::>§I:'$,... ~hE3
29 banking cl§pCirtmentand/or the division of..h9tl$i.I19 and community renewal
30 shall make available a list::LIlgLby region, of such agenc:L§$ .. WhicILt:l'1,§
31 lender or rn9r1:.9Ci9§ 19Ci11 servicer rnCiVtl$§t:()rn§§t: th§I:'§qtl i :r§rnE311 ts 9:E
32 this section.
33 3.l'h§11:L11E!t:VclCiYP§:r:LOcl $P§c:::L:f:LE3cl in the notice contained in subdivi-
34 sion onE!.9:f.t:h:L.Sl section shall not apply, or shall cease to_.Cl.P~...:L:f
35 the borrower.hCi§. .:f.:Ll§..<:L an application for the adjustment of debts of the
36 b9rI:'9W'§l:r or an order for relief from the PCiVIllE311t9fclE!l:::>t:$, or if the
37 bor£9.W§l:' .119. long§:r occupies the residence as the borrower' $ ..princiPCl._l
38 clW§J..J..:L11g.
39 4. The notice and the ninety day period required by subdivision one of
40 this.. l:l§c::1:.:i.9n....!1§!§..ci_ onJ.y_be _2rovided once in a twelve month 2eriod to the
41 samE! b9rrower in connection with the same loan.
4 2~ . .J Ci) .~'N1.ntlal. j:>ercel}.t:..a<J.E=_:r.<3.t:§!"rn§Ci11.l:l ..1:.!l§__.annual....PE!:rc::.ent:..Cl.ge ra te for
43 t:h§J9anc::.aJ.C::tllCi1:.§dCiC::C::9:rcl:i.ngt:9t:h§p:r9yi$:LOl}$9:f"t:l'1,§:E'§cl§rCil Tru thin -
44 Lending Act (15 u.s.c. § 1601, et seg.L and the regulations-p.I:'Q..l'lltl!9.at:§!cl
45 thereunder by the federal reserve board @s said act and regulationsaI:'§
46 amended from t::Lrn§j:9t::LrnE31.
47 1l:>L "Home loan" means a home loan, including an open -end cre..ci.i.t: plCin 1
48 9th§rt:hCiIla:rE!YE3:rSE3rn9I:'t:9Ci9E3 traIlsCict:i.9I1Jil}W'hich:
49 Jj~~he~incipal amount of the loan at origination did not exce§cl the
50 conforming loan size that was in existence...a.t:. the ... tirn.E!. 9.:f 9rigin.Cit::L0I1
51 for a C::9IllPCiI:'<3.l:::>1E3clWE3J,li11gasE!$t:<3.l:::>li$h§cll:::>Vt:hE3:E§cl§l:rCilnationalrn9rt-
52 gCige association;
53 (:L:L) 'l'h§l:::>9:r:r9W§I:'i$Cin.at:tl:rCilp§:r$9l};
54 Jii:Ll 'l'h.§debt:._ is.:Lncurred.l:>v. the borrower primarily for p§I:'.$onCiL
55 family, or household 2uI:'.20ses;
http://nyslrs.state.ny.usINYSLBDCI/bstfrrne.cgi 6/25/2008
S. 8143--A 4
1 (:LY1'J.'hEl J..C>?lI1:L$,sEl91.lr:Elc::f:t::>ya I!t9r:1:.9?l9El 9r deed of trust 9I1r:eaJ..estate

2 upon which there i s located or there is to be located a s_truc_ture_ or
3 $1:.r:1.l91:.1.lr:ElS:LI11:.ElI1c::fEl<fPr::LI19:LP?lJ..J..y :f'9r:oC:C:1.lP?lI1c:Y9:f' .:f'r:QI!t . c>nEl 1:.9:f9ur::f?lI!t:L-
4 lies u whic:h__-.i§_or _ ~ill be()9c:upi§<f~y_1:.he J:>9rrO~§l=' asthe.borrower 's
5 P.r::LI1c::LP?lJ. <f~El].J...:LI1g; ?lI1cl.
6 (yL'I'hElPr:9PElr:tyi$J..9C:?l1:.Elcl. in this state.
7 l.c:) "Subprime home 19an" for the_purposes of this section, mea,ns a
8 h()I!tElJ..9?lI1C:9I191.lIllIllCl,1:.ecl.J?Eltw§Eln.:r?lI11.la.I:Y:fAr:$1:., two 1:.h91.1,sCl,I1cl. 1:.hr:ElEl aI1cl.
9 September fir:~_1:.~thousan<::L.---.E!i-gl1.~n wh:Lch thE! terIlllL of_the].oan
1 Oe~C:ElElc::fthElthr:El,sh9]'cl.?l,scl.El fiIlElcl. .inpa,r:a,9r:a,P:h. . (cl.19:fth:L,s.s1l1:>cl.:Ly:L$:L9Il' A
11$1l1:>pr::LIllElh9IllEl loan .El:x:c:J.1.l dg$ a. tr:a,ns?lc:tion 1:.0 :f':LIla.I1C:El the initial
12 construction of a_dwell:L~~_tempor:aI:Yor: "bridge" loan with a term. of
13 t~ElJ..YElI!tQI1tl:1$.9r:J..El,s$,$uc:l:1Cl-,s.a,J..C>?lI11:.9purc:l:1?l$ea,nEl~c::fwElll:LI19 where
14 the borrower plans to sell ac:urrent dwell.ing withini:welvEl_.months, or a
15 h9Ill§Elgl,l,:L"t·yJ.:i,I1Elc>f . 9r:§cl.ii:.
16 (<fl "Threshold" IllElCl-I1S, for a:f:Lr:,s1:.J..:LElIlIll9r:1:.9a,9§!J..9a,I1,the ?lI1Il1.l?l1
17 percentage ._.rate 9:f. the:home.J,oan at consummat:i._~:fn_ the_ transaction
18 e2Cc:§!§!cl..s1:.hr:El§ p§!r9§I11:.a,9§ P9:Ln1:.,sgy§!r:.theyiElJ..cl.9Il1:.rElas1.lI:Y$El91.lr:it:LEl$
19 having c::omparable periods ()f ma1:.1.lrity _1:.0 the loan maturi1:.Y- measured as
2 0 9:f1:.11El:fU'1:.§!ElI11:.hcl.Cl,Y9:f' 1:.h§!11l9I11:.h ,:LIl ~hic:ll . . 1:.h§!J..Qa,Il~a,Sc::9Il$1.lD1Illa,1:.§!cl..;9r:
2 1:f9r:a,$1l1:>Qr:<f:LIlCl-1:.§!Ill9r:1:.9Cl,9§!J..:L§!n,1:.11§! ...a,I1Il1.lCl,J.. . per:C:§!I11:.?lgElr:a,1:.eo:f"1:.h§! home
22 loan at consummation of_1:.he transacti9n egl,l,als or exceeds five percent-
2 3 ?l9§!P9:Ln1:.,s9y§!r:th§!yi§J..cl.OIl . 1:.r:§!a,S1.lI:Y$§!C:1.lr::L1:.:L§!,s... ha,Y:LIlgC::9IllpCl,r:<3..bJ..§!P§!r::L ....
24 ods of maturity on the fift§!enth day of th~ month in which the loan was
25 consummated;_ as determined bY.-1:.he following rules: if_ the terms of the
26 h9Ill§!J..9a,IlQ:f':f§!r:a.Ilyin:L1:.iaJ.. Or:LI11:.r:9cl.l.lc:1:.9I:Y P§!r::L9c::f,a,Ilcl. the Cl-IlIl1.laJ,
27 percentage rate is less tl~~n tha1:._which.._will apply after the end of such
2 8 i I1 :L1:.:La,l 9r: :LIl1:.r:9cl.1.lc:1:.9I:Y P§!r::L9cl., 1:.h§!Il..the. ?lIlI11.1Cl,J.. . . P§!r:C:§!Il1:.a,g§!r:Cl-1:.§! that
29 shall. be taken into account for pUl:poses of this section _shall be 1:.he
30 rate whic:h applies after thE! initial or iIl..trodu91:.9IT-period.
31 (§!1"N9Il tr:a,c::f:L1:.i.9I1a.J, h9IllEl . J.9Cl-I1." $ha..l.l IllElCl-Il.?l Pa.YIll§!Il1:. C>P1:.:L9Il Cl-<fj.1.l,s1:.<3..bJ..§!
32 rate mortga.9E!.-...Q:r_~__ interEl.s..L....()~()a..n cOllsummated between J:a,nuaI:Y
3 3 :f':LJ:'$1:.,1:.~9t:hQ1.l$a.Ild .1:.hJ:'ElEl . a.Ilcl.SE!P1:.ElIDl:::>El:rKirs1:.,1:.~()th91.l.sCl,Il<f§!ig1:l1:..
34 (f) For pur:poses of de1:....§rmining the threshold,_1:.he bankJ-illL----ciElpartIllent
35 shall Publish_ on i1:.s website_a._list:LIl~n90nsta.Iltmat'l!ritY_Y:Leldsj"or
36 lJ.$... 'I':r§!a.sl.lI:Y$§!C:1.lr:L1:.:L§!S f 9r:§!Cl,chIll()Il1:.:h:t::>§!t:.WElElIlJ:a,n1.la.I:Y . K:Lr:st,t~9 . thQ1.l-
37 sand _three ._and September firs1:.L twou1:.housan<f_ eight:.l~ublished i~h§!
38 E'§!cl.ElJ:'a.lR.§!$ElrYElSta..1:.AstiCCl,lR.§!J,eCl-s§!gIl. .s§!J,Elc:t:.ed:LIl1:.§!re$t:.J:'ates,C::9D1Ill9nJ,y
3 9 referrect~na...s-----.1:.h§!_---.lL..1";; relea,~iIl_i:he fQllowi Ilq matur:i ties, to _tlle
40 extent avaiJ,.?l.ble _:LIl_ such r:e1 eCl,§§! : sixlllonthL .one YEl~1:W9..---YE!a,~i:hree
41 y§a,r:,:f:LYElYElar:,$ElvElIlYElar,1:.Eln yeCl,r,.th:Lr:1:YYEla,:r.
42 19.1 "Lender"u_meaIl..s_c:l.._mortgagE! bank~r:a..s defined ill paragraph JKL9K
43 s1.ll::>cl.:Lyisi9IlQIle9:f',sElc1:.iQI1fiYElh.uIlcl.:r§!cl.n:LIl§!tY9fth§! pa.I1:kinglaw9r: an
44 exempt organization_a..s_ defi.ned_:LIl paragraph J.E:!L..Q:f subdiyisioll one _of
45 sectioI'l.fivehundrElQ nin§!1:.Y- of t!l~ baI1:k.i...I'l.9-nJ.a...\'L__
46 § 3. The civil practice law and rules is amended by adding a new rule
47 3408 to read as follows:
48 Rule :3408.l1a.I1da..1:.9r:y$§!1:.tl§!Illent C9I1 f El reI19§! inJ:'esidEln1:.ial foreclosure
49 c:l..9tions 'nJ&IIl anyr.§!sidem.!:iaJ,:f'orEl9J,9SUI:§! acti()Il inv().l,viIl-9a high -cos 1:.
50 h()me 19an ...<::0I1$UDlIlla t~dJ)Elt_WElElIllJa.Il1.lCl,rY f:Lr§h two .. i:h()1.!sanq _.:t:hree _ and
51 S§!p1:ElIllPElr :f'ir,s1:., two thousand eigh1:., .. oras1.ll::>pr::Lllle ()r: nontrad:L tional
52 l:l.()Ille J..9aIl,a..s. th().s§! terllls are definEld uncl.Elr $E!cti9Il thi.r:teenh'l!Il<fre<f
53 four of the real prop§!rtyactioIl,san<fpr:oCe§!<f:LIl9S lCl-~ , .. :LIl . whic:hthe
54 defeI1c::fant i.s~..-J:'E!sident:.9L:th.§_pr9PE!r::1:.Y_",§1.!PjEl9LtQ_--.f()r:ecl(),sure, __ the
55 court; shaLl. _h()].d.<:l..--.IIlCl,ndatoryC::QIlfElreIlce.wtihi_Iln.s:L:X:1:.Y-Qa.Y.s..._a..t"i:§J:_--.:1:.h§! datEl
56 when pro9:f' of service is filed with the C:Ol.lIltyc:J..§!r:k,Qr OI1SUc::h
S. 8143--A 5
1aclj.C.>'ll:rI'lE3cl cla.1:.E3 a.El ha.l:l.. PE3E3I'l a.g:rE3E3cl 1:.9.PY1:.1"lE3 Pa.:r1:.i.E3l:lL f9:r 1:.1"lE3 P'lll:'PC.>El.E3 of
2 holding settlement discussions pertaini-I'lSl- to the relative righ1:.~_ar!S:!
3 9PJ.i.ga.1:.ic'>I'lsC.>:f:1:.1"lE3pa.:r1:.:LE3l:l'llI'lclE3:r1::.1"lE3Il\C.>:r1:.ga.gE3].C.>a.I'lcl9C:'llInE3I'l1:.ElL:Lrlc:l'llclirlgl
4 b~1:.I'l<:>1::._J..i.lll:i. ted t9 dete:rrnl-rli.-.rlg'i1"let1"l§:r1:.1"lE3_pa.:r1:.i.E3.El. c:a.rl!-"E3ac1"lclIlrU1:.ually
5ag:rE3E3a.l:>1§!rE3ElC.>1'll1:.i.C.>rl1:.C.>11§!J.P1:.1"lE3clE3:f:E3rlcla.I'l1:.a.yC.>i.cl . . J.C.>l:li.rlg . . 11i.l:l . 9:r11E3:r...11ClInE3 ,
6 an cl .E3ya.J.'lla.1:.i.rlg .1:.:h§!. pC.>1:.E3I'ltial . fC.>:ra. . . :rE3l:lC.>J.'ll ti9rli.rlW'11i.c::hpa.YJllE3rlt:l:lc:l:1E3cl'llles
7 or amounts may be modified or other workout options mEY PE3 a.g:r.§!.I;!cl 1:.C.>1
8 a.I'lcl:f:9:r'i:ha.1:.E3YE3:r . . C.>1:.l1E3:rPU:rP0l:lE3S1:.l1E3C:eJ'll:rt:cl§!eInl:l<iPP:rC.>p:ri.a.t§!.
9 (b) At the initial. c:onference held pursuant to th:L~ml:l§_c:t:L9rll <il!Y
10 <:I.§!:f:E3rlcl<irlt C::'ll:r:rE3I'l1:.].y <iPP§<irirlg p:r9l:lE3IEll1a.llpElclElElIl\E3cl tg :ha.V§.Il\a.clEl a.
11 In9t::LeJr1 to P:r9C::ElElcla.Ela.PC.>9:rP§rS9I"l"LlI'lcl§!:rS§!c::t:L9rlElJ.ElYE3Ill1'llIlcl:rE3cleJI'lEl of
12 th:i.$ chapter. The court shall_det:E3:rmine.whether such permission shal..J.QE3
13 g:r<iI"lt:El<:l.P'll!-"El"Lla.Ilt.t:9El1:.a.rld.a.:rd.l:lset::f:C.>:r1:.1"l.. iI"l §Elc::1:.ieJIlEllElYElrll1'llrl<:l.:rEld. one of
14 this chapter. If the court.. _ClPp_oiIl.ts defendant counsel pursuant to subdi-
15 vi.§:LeJIl(a.19:f:§§c:t:L9I'lEllE3YElI'l ... l:1"LlIld.:rE3d. t:W'9 of this c::l1a.pt.El:rJ it shall
16 a.d.j9'llrI'l the C:9Il:f:E3:r§nC:Elt.C.>a.<:I.a.t:ElC::El:rt:a.i.I"l:f:C.>:r a.PPE3<iranC:El.of c0'llnsEll and
17 settlement discus;.§:L9!lS. pursuant to subdivision (a). ()f tl:1:i,.s;$§c:t:LC.>rl_1 ap_d.
18 o1:.l1erW'i§E3l:l1"la.J-l P:r9C:E3E3<:1.W':L1:.1"l1::.1"lElC::9!l:f:E3:rElrlC::§!.·
19 (c) At any_ uc::Ql!ference held pursuant to this sec:ti.C.>rl/_. tl1§_P.1a.:i.rlti.:f.t"
20s1"l<ill<iPPEl<i:r:LI'l PEl:r~9I'l9!-"Py.c:.9'llI"ls;§!lJ <i!l<:l.:L:f:<ippe<i:riI'lgPYC:9"LlrlS§!J.l such
21 counsel Elha.J.lp§!:f:'llJ.J.Y<il11:.119:r:L:ZE3d.1:.9d.:LElP9l:l§!C.>:f:tl1§!c::a.se. The. <:I.§!fElndant
22 shall appear in person or bY_9c'>.1,!I'ls;el. If the defendant is appearing Pl:'9
2 3 $E3,t:11§!C::Q"Ll:rts;l1aJ-l<id.Y:L§El1:.1"lE3d.E3:f:E3rld.a.Ilt:C.>:f:t:11§!rl<it.u:r§!C.>:f:1:.1"lEla.c:1:.:L9rl<iIld.
24 his or her rights and responsibilities ..a.§.._.<i. defendant. Where appropri-
25 atEl.L1:.he court may permit a representative of t1"lE3.plaintiff to attend
2 6tl1El §Elt.1:.1ElIn§!Ilt:C:9Il:f§!:r§!rlC::§! t:§!1§!P119rl:LC:<iJ.J.Y O.:r PY yid.El9:-.C::ClIl:f:§!:rE3IlC::E3.·
27 § 3-a. For any foreclosure action on a residential mortgage loan l in
28 which the action was initiated prior to September 1 1 2008 but where the
29 final order of judgment has not yet been issued, the court shall request
30 each plaintiff to identify whether the loan in foreclosure is a subprime
31 home loan as defined in section 1304 of the real property actions and
32 proceedings law or is a high-cost home loan as defined in section 6-1 of
33 the banking law.
34 If the loan is a subprime home loan or high-cost home loan, the court
35 shall notify the defendant that if he or she is a resident of such prop-
36 erty, he or she may request a settlement conference.
37 If the defendant requests a conference, the court shall hold such
38 conference as soon as practicable for the purpose of holding settlement
39 discussions pertaining to the rights and obligations of the parties
40 under the mortgage loan documents, including but not limited to, deter-
41 mining whether the parties can reach a mutually agreeable resolution to
42 help the defendant avoid losing his or her home, and evaluating the
43 potential for a resolution in which payment schedules or amounts may be
44 modified or other workout options may be agreed to, and for whatever
45 other purposes the court deems appropriate.
46 At any conference held pursuant to this section, the plaintiff shall
47 appear in person or by counsel, and if appearing by counsel, such coun-
48 sel shall be fully authorized to dispose of the case. The defendant
49 shall appear in person or by counsel. If the defendant is appearing pro
50 se, the court shall advise the defendant of the nature of the action and
51 his or her rights and responsibilities as a defendant. Where appropri-
52 ate, the court may permit a representative of the plaintiff to attend
53 the settlement conference telephonically or by video-conference.
54 § 4. Paragraphs (c), (h) and (j) of subdivision 2 of section 6-1 of
55 the banking law, as added by chapter 626 of the laws of 2002, are
http://nyslrs.state.ny.us/NYSLBDCI/bstfrme.cgi 6/25/2008
S. 8143--A 6
1 amended and five new paragraphs (r), (s), (t), (u) and (v) are added to
2 read as follows:
3 (c) No negative amortization. No high-cost home loan may contain a
4 payment schedule with regular periodic payments that cause the principal
5 balance to increase. 1\1,9C3.IliS:C::9IlSicl§!.I:'Elclto have :sucll a sClledule i f
61:llepC>.I:'.I:'C>W§!.I:'i-139,iYElIltllEl c>p1:,iC>Il.t:9 lllGi]CEl .I:'§!gllJ..C3.J:,"PEl:r:,ic>cli c:: PGiyI!lElIlt:131:l:lCi1:
7 cause the--Brincipalj:)alanc~t~increaseLeven i f the---.por--.I:'0wer . is_also
8g,iy§!n1:1l§!9Pt:,i9Il1:C>l1lCi]{.§!:r: e 9 ul Gi.I:'.pe :r:,i9<:l,iCPCi.Yl1l§!Il1:131:11C3.1:.cl9Ilc>1:CCill$§!1:ll§l
9 princ:i..pal_ balanc~_to~ncrei!~,----'J'hi~_p-CiJ::~rapl:L shall---.!1o tp]Cohibi t nega-
10 1:,iY§!Ci.11l9:r:1:,i?=C3.1::L9IlCi.S:C3..I:'El1311l 1:9:f"a. t,ElIllP9.I:'Ci..I:'Y forbearanceS:C>llgl11:PYGi
11 pc>rroweJ:,".
12 (h) No financing of insurance or~tl1Elr products sold in connection
13w,it,h t,he19an. No high-cost home loan shall finance, directly or indi-
14 rectly, any credit life, credit disability, credit unemployment, or
15 credit property insurance, or any other life or health insurance premi-
16 ums, or any payments directly or indirectly for any debt cancellation or
17 suspension agreement or contract, [except that insurance] gI:"-anY-Broduc1:
18 or [3 Elry,iCElt,l:lCi.t:,i13 Il9t:IlElceSsa l:'Y9:r: .I:'§!1C3.t§lcltc>t:11§l11,i911=C913t:1l9Ill§!19a.Il
19 such as auto--.<=:lub -1!lembershi..plL_or_ credi"L_.I:'.§port_moni torin~,_---.put--.Ilot
20i.IlCl,llcl,iIl9 fees PC3. i cl to the J.ElIlcl§!.I:', P.I:'9]{.§!.I:', 9.I:'CJ..9$,iIl9Gig§!Ilt:,:f"§!§l13
21.I:'§!J..Ci1:§!cl1:c>t,11§!.I:'§!C9.I:'ci,ing9:f" them9rtgC3.g§!, titleinsllraIlC§! or other
22 settlement fees. InsurancE! premiums or debt cancellation or suspension
23 fees calculated and paid on a monthly basis shall not be considered
24 financed.
25 (j) No refinancing of special mortgages. No lender or mortgage broker
26 making 9:r::: Ci.I:'.I:'~Il9,il1g a high-cost home loan may refinance an existing home
27 loan that is a special mortgage originated, subsidized or guaranteed by
28 or through a state, tribal or local government, or nonprofit organiza-
29 tion, which either bears a below-market interest rate at the time of
30 origination, or has nonstandard payment terms beneficial to the borrow-
31 er, such as payments that vary with income, are limited to a percentage
32 of income, or where no payments are required under specified conditions,
33 and where, as a result of the refinancing, the borrower will lose one or
34 more of the benefits of the special mortgage, unless the lender is
35 provided prior to loan closing documentation by a HUD [certified]
36 CiPP.I:'9Y§!cl housing counselor or the lender who originally made the special
37 mortgage that a borrower has received home loan counseling in which the
38 advantages and disadvantages of the refinancing has been received.
39 ftl N9.- prepayI!lent_-Benal t.i.§!~_,__~--prepGl.yIIlen t:_ penal tie:Lor_fees:---phall_bE!
40 charge,e:Lor collected_on~-.-l:ligh -CC>s t_home-.J,oCiIl-,-- A-preRaJ'I!len t~nalty~_Il~
41 l:l.i.911=C9:st,1l9Ill§!19C3.Il:sl1GilJ.b§!uIlElnfor:c::§!Gl.l::>J.§!.
42 J~_..E<=>----.?busi ve_v-eld_:Spl:,"gad_p.I:'emi um~JIl...Gl.rra~ing ~ .-high -cos t hom§!
43 J..C>C3.Il,t:1l§!IllC>.I:'tgCi.9§!P.I:'9]{.§!:r:$hC3.l1,Git:t,11E§!t:.i.IllEl ofC3.ppl,iCCiti9IlJcli.$clgse
44 the_ exacL~ouni~Il<:Lmej::l1c:>dology_of_ total_c::om-pensa tion...t:hat --.t:he brok§!.I:'
45 wi1:L...!"ecei V§!... ~uch~Ill.ouIl...t_Ill...Gl.Y l::>§LP~icLas_di:r;§!ct__ ...99Illperll3..a tioIl_froIIL _t.1lEl
46 1 §!l1cl§!r:, dire c t C9IllP§!Il:SGit:,iC>Ilfr:OIllt,11§!P9.I:'.I:'9W§!.I:',C>.I:'C3.C::9Illl::>,iIla.1:i.C>IlOftl1§!
47 i:,wo-,-..1'he---p.:r:::ovisj,onlL of_t:.1li...§_p~.I:'.<3.g.I:'~h .-:shalLnoj:._:r:::estrict_ thE:!.... abj,li tY-_c>:f"
48 a borrower t911t,,iliz§!a.yi,eld s:preacl prElm:LllIlliIl9.I:'clert,90f:f"s§!t,anyup
49 front... cos t.:s..12Y.- acc§.'lting_ a.... l1igh§.I:'.i.I"!tergs t.xC!..t~"-_ILthe bor.I:'.ow§!r_c::l:loo:s~
50 1:...h.i.~_ 9P1:.i9n-,~I'ly_col1lP~n...§ati.()Il :f"r2111 t,h...§_lE§!}lcl§.r_whicl1....§!x<::§ed.E __ 1:.h.§!_§x..<3.c.t
51 amount 9ft9ta.lCOIllP§lIl:sa.t:iqn qWEld 1:0 t,l1ElP:r:0lcerIllllstPElCr:§!cli1:§!cito the
52 bqrJ:,"<:>wElJ:," 'J'hesllP_eJ:,"iIlteIldEll1t sl1al],pr§S:C::J:ipe_ t:..hS!f()~lll j:::l1Gi1:,$l!.Cl1 cii$c10-
53 $llr§!:shallt:Cilce.'J'hispJ:ovisiol1shallIl0t,r§!s1:ri.ctC3.l:>.I:'9lc§!.I:':f"r:oIllac::cept-
54 :in.9-C!..lesseI:"-amQunt:.
55 j1J_ Manda torr _es crQw_ mc:>K. j:::axEll:l_anci.i.n...§ur.<3.p.c§.._No ..lJ.igh - cgs t.-h9me_loCi...n
56 $l1Gillb§ IllGicieCift:§!J:'J111yfirst, two thousand ten unless the l§!Ilci§!r
KblKlbVE Page 70f38
S. 8143--A 7
lI:'§!qtli,I:'§!$ and 99J..1,§!9t:s the IlI9Ilt:l'll,Y§!s;9I:'9t:" 9:f:PI:'9P§!I:'t:Yt:cPC§!s:CiIl<:il'lCiZCiI:'ci

2 insurance. With respect to a hi9h-cost home loan a borrower m~ waive L
3 escrow I:'§!qtli,I:'§!IlI§!Ilt:$ l:::>Y Il9t:i,fyi,Ilgt:l'l§! J..§!Ilci§!I:':LIlt:"I:'it:.l.IlgCi:f:t:§!I:'9Il§!Y§!CiI:'

4 t'£o~ __ 9-"-IlS;l.lmmaj:~S>~_uC>,t'ut:l'l~_l oa_n_,_. The provi sio~"'§_ _C>,t'_t:h.is;_par_~:r:CiPh_ElhaJ.l
5 Il9t:CiPpl,y t:9.. . <:l.:h:Lg:h=99s;t:l'l9Il1§!1,9<:l.Ilt::hCit:i,s: . . Ci$l,ll:l9I:'cl:L:rlCit§!J..:L§!Il when the
6 taxes CiIlcl:LI1$l.1I:'<:l.Il9§!CiI:'§!§!$9I:'9t:"§!clt:hI:'9l.1gl1. Ci:rl9t::h§!r:h9Il1§!J..9<:l.Il9I:'t:"l1.§!I:'§! t:h§!
7 borro.1'T"§!l=".- can demonEl.t:£ate~.reco:r:cl_of tt:'l:ely-e mOIl..I~h~_Qt'_.t:.imely_paYIllents of
8 tCi,l!:§!$ <:l.Ilcl.i:rlS:llI:'<:l.n9§!C>Il<:l..PI:'§!Y'i.91.1S: l1.9!ll§!J..9<:l.:rl.
9 J.lllMandatoI:'Y disclosure_c>'Lt:Ci,l!:~$_and---.J.nsurance-P.CiYIll§!Ilt:s;-"._-.l·li lli respect
1 Ot:9.<:l.. :hi.g:h=99s:t::h9Il1§)-9<:l.Il,.. . t:h§! ii.I:'$t:t:;.ilIl.§!<:l.l:::>9J:J:9t:"§I:'i$ . . i.:rl:l:OI:'IlI§cl of the
11 Cin.t:i9.l.P<:l.t:§<:i 0 r<:l.9t1.lCil P§!I:'.l.9<:ii9 I'<:l.YIlI§!n.t: i3,1llount.l.Il99n.n.§!9t:.l.on wi tha.
12fiJ:"El.t:=l,ien residential mo.!'t:g~loaIL fo.I:'..._..<:l.-_ specific ~ope:r:t:Yr.-j:he_J.ender
13 OI:'IlI9I:'tgCig§l:::>I:'9l{,§!I:'s::hAl),in.t'9:t'Il1.. . t:l1.eP9J:I:'9t:"§I:'t:l:lCit:CiIl additional amount
14 ~ill__ be due for taxes and insl.1J:"<:i..!1ce and_Ellall _ciisclos~_to_th~-.12.9rrow.§!.I:'
15 <:i..$S99IlCi$I:'§<:l.sOIl<:l.l:>lYI'9$$.l.PJ..§!tl1.§<:l.I'PI:'9,l!:.l.IlI<:lt:§ amount of the initial
16 P§I:'i9cli9P<:l.YIlI§Ilt:;:E"9I:'pI:'OpeI:'tY1:Ci,l!:§!$CiIlcll1.<:l.2:<:l.I:'<:iins;1.lraIl9§.
17 JY'1__ ~9__ teE.J'ler _...r:ates ,-__~c>'__:l§'Il<:ier__or__IlIor.t:g<:l.g~pI:'9k§L§jl_~J._make_C>,J:
1 8 CiI:'I:'<:l.Ilg§!CiPigl1.=99st:h9Il1§!1O.<:l.Il t:":h:LCl:ll1.<:l.$CiIl.l.I1:Lt.l.<:l.l C>I:'intr9cll.lc1:0I:'Y rate
19 t:"Je th~9uraj:j,q~_-.C>L_less __"t.han _~.i,x:_IlIOI1th~."-
20 § 4-a. Subparagraph (ii) of paragraph (1) of subdivision 2 of section
21 6-1 of the banking law, as added by chapter 626 of the laws of 2002, is
22 amended to read as follows:
23 (ii) A lender or mortgage broker shall not make or arrange a high-cost
24 home loan unless either the lender or mortgage broker has given the
25 following notice in writing to the borrower within three days after
26 determining that the loan is a high-cost home loan, but no less than ten
27 days before closing:
28 "CONSUMER CAUTION AND HOME OWNERSHIP COUNSELING NOTICE
29 If you obtain this loan, which pursuant to New York State Law is a
30 High-Cost Home Loan, the lender will have a mortgage on your home. You
31 could lose your home, and any money you have put into it, if you do not
32 meet your obligations under the loan.
33 You should shop around and compare loan rates and fees. Mortgage loan
34 rates and closing costs and fees vary based on many factors, including
35 your particular credit and financial circumstances, your earnings histo-
36 ry, the loan-to-value requested, and the type of property that will
37 secure your loan. The loan rate and fees could vary based on which lend-
38 er or mortgage broker you select. Higher rates and fees may be related
39 to the individual circumstances of a particular consumer's application.
40 You should consider consulting a qualified independent credit counse-
41 lor or other experienced financial adviser regarding the rate, fees, and
42 provisions of this mortgage loan before you proceed. The enclosed list
43 of counselors is provided by the New York State Banking Department.
44 You are not required to complete any loan agreement merely because you
45 have received these disclosures or have signed a loan application. If
46 you proceed with this mortgage loan, you should also remember that you
47 may face serious financial risks if you use this loan to payoff credit
48 card debts and other debts in connection with this transaction and then
49 sUbsequently incur significant new credit card charges or other debts.
50 If you continue to accumulate debt after this loan is closed and then
51 experience financial difficulties, you could lose your home and any
52 equity you have in it if you do not meet your mortgage loan obligations.
http://nyslrs.state.ny.usINYSLBDCl/bstfrme.cgi 6/2512008
S. 8143--A 8
1 [Property taxes and homeownez's insuzance aze yonr zesponsibility. Not

2 all lendezs provide escrow serwices for these payments. You shonld ask
3 yonr lender Mont these services.]
4 Your payments on existing debts contribute to your credit ratings. You
5 should not accept any advice to ignore your regular payments to your
6 existing creditors. [Accordingly, it is important that yon make regnlar
7 payments to your existing creditors.]"
8 § 5. The banking law is amended by adding a new section 6-m to read as
9 follows:
10 § Ei-::Ill,~t.l1:>Pl:>i.Ill§ home loans. 1. !)§:EiI1.tt:iOI'lS,'I.':h.§:f:9J.J.9W:LI'lgci§:E:LI1it::L()I'l§
11 CiPPJ.Y:E9:r: t::h.§Pt:z 1:-P9 se §c>:Et::h.:L S§§c:t::L9I1:
12 1CiL-"Annual.~rcenta~rat~'~_mea~~the . Ci..nnual percentage rate for the
13 loan C:CiJ.C:t:zJ.Cit:E':!ci Cic:::c:::o.:rci:LI1g tot:h.E':!P:r:9Y:LS:L()I'l§O:Et:11E':!FE':!ciE':!:r:CiJ.T:r:t:ztl1:-i,n-::
14 Lending Act (15 U.S.C. § 1601-L~..t:~g--1L and the regulations promulgateci
15 t:l1E':!.:rE':!.t:zI1ciE':!:r: l:>y t:h§ :E§ciE':!:t'CiJ...:rE':!§e:r:Y§ l::>9Ci:r:ci tCiI3.. SCi:Lci ac:t:.CiI'lci :r:E':!gt:zJ..Cit::L.9I'l13 CiJ:"§
16 CiIllE':!I'lciE':!ci:E:t'()Illt::LIllE':!t:9t:LIllE':!).
17 J1:>.L "Fully indexed rate"_me'§!l..s_:t:..h.§! index_.:r.i!te_ thatyould_have __m:>pJ-ie.ci
18 at:t:l1E':!t::LIllE':!O:f"t:11E':! c:::J.9Sl:LI'lgl1Cici .t:l1E':!iIli.t::L<:il:LI'lt:E':!:r:§st:.:r<:it:E':!l:>E':!eIlciE':!1:;§:r:Ill:LIlE':!ci
19 l:>Y.._ the _.<3.PPl...i ca t i on..Q:f".j:;he_ sam~..J..I1teresj::~<:ite . formulaL.Ji.9l='_exampl.E:!..L an.
2 OiI1t:E':!:r:E':!I3t:rCit:e.i.I1ciE':!:x:pJ.t:z§().:t' . IlliIlt:z§CiIllCi:t'gi.I11..tl1<:it:<:iPPJ..tE':!§t:zI'lciE':!:t't:l1E':!t:E':!:r:Ills
21 ():Et.11E':!J.9CiIlci9CltlIll§I'lt:§1:;9 Slt.l1:>SlE':!qu, en t: i I'ltE':!:r:E':!I3t: rate <:icijt:zSltIllE':!I1t.s, cii13:r:e-
22 gardin~_an.Y_.Jim..itations oI'l._the_amoun1:;. by which~the interest rate m~
23 c:l1CiIlgE':! <:it: <:iI1Y9I1E':! t:.i.IllE':!·
24 (c) A "Subprime home loan". meCins_~home loan in which the fully
25 indexed annual percentage rateexceeds~ymore than one and three-quar-::
2 6t:E':!:r:I3P§J:"C:E':!I1t:Cig§ P9:LIlt:Sl;t;9:r:Ci:E:L:t'I3t:-::J.i.E':!I'lJ. C>.EtIl L OJ:"l:>YIll():t'E':! t:l1CiI1t:l1,r.:E':!E':! anci
27 three-quarters percentag§!...point:.~f.or...Esubordinate-lien loan, the aver-
28 Cig§c:9IllIll:Lt:IllE':!Ilt::t'Cit:E':!:E9rJ.9CiI1siI1..t:11E':!Il9 r t:h E':!ast:r:-E':!g:L9Ilwi, t:hCiC::9IllPCi.:r<3.l:>1E':!
29 duration to the duration of such homeJ-Q.Cl.nL~~LPub.Jished..--l:>Y...theFederal
30 Home..boan_Mortgage Co:rporation Jl1..§!.:r:.E:!.tn _"F..J:"gddiE:!..-_Mac"l_-.J,.!l.... i~_weekly
31J?:r::LIllCiI:Y}19:r:-t.gCig§}1(3.J:"k.E':!t:,st:z:r:-yey Jgl-1}1SJ <i§P9 st E':!cii·I1t::h.E':!WE':!E':!k.P:r:-i.9:r:t:9t:11E':!
32 week _when_.J::hELlender ....:r:..§!ceiyes_CL.Qomple.t.E:!ci_<3.Pplica tion--,...A.s;ub'prime home
33 J.9CinE':!xc:::11lciE':!s<:it:r:a,nSla,ct.:L9I1t:o;t;iI'la,nC::E':!t.11E':! init:ialcoIl,strllc::t.:L()Il of a
34 dwelling, a temporary or ..."l::>ridge--"_loan.with..1Lterm..o:E...J::wel~months or
35 less, such as ...§_loan j:;e>.._P1l..rc!l_asE:!...§_new_d.'l'l§J.J.i~ wherEL..theJ:>grrowE:!.:r_plans.
36 t:9 Sl§J.J.ei C::ll:r::r:E':!Ilt:ciW§J.li I1 gwi, thi,n t:W§J.YE':! IllC>I'lth§,c>.:r<:i 119IllE':!E':!qu,i, t:Y line
37 Qf- cre.cii t-"--
38 (:LJ The C::9IllPCi:r:<3.l:>J.E':! duration fo:r:-a110IlleJ.()CiIl Sll1<:iJ.J.l:>E':! determined (is
39 .:follows: for an adjustable o:r:-.Yar.tab].E:!....homE:!._J...Qanwith_C!..IL~ili...§~_rat§
40 tha.t:.. __:L~_fixed__:f".or_lesSl... ..t:l19-I1J:h:r:-E':!..§!"y..§!arSlL..t:he_E.reddie .l1ac_ s;.uSYE:Y_re...Slt:z.l t
41 :E9:r:-<:i9I1E':!-yE':! a :r: Cicijt:zSlt:<3.l:>le r<it: e Illort:gCigE':!L;t;O:r:<:in Ciciit:zSlt:<3.l:>J.E':! or variable
42 home_loan _ wli:h..i!I'l.....tI1:h..tiCtl..!:~E':! j::hCit:_is_:E..ixE:!ci_:f".o..!'_aj:;_l§asj::_t..ll:r:-.ee_yea:r:-.s_<
43 1:;!lE':!F:r:E':!cicii§}1CiC::.Slll:r:YE':!yr§sllJ.t:Eo.:ra ;t;iye-ye(i:r: l1Yl:>:r.tci <iciju$tal:>l§ rate
4 4 Illortgagei.- _for __ .§_..:Eix.§!.cf.. __ raj:;§.l1C>Ill"§!_J.OC!..l'l. wlih.i!_ te!1ll_ofi"Lfj::ee_!:l_y§ars_9l='
45 lessL--..t:l!E:!..Ereddie ~MaQ _§ur'ygY_l=E:!.Sl.lll.L0.x:. .E__ :ELft:eeIl::-..Y..E:!.ar_ti~E:!.cl.:r:-Cl..t:E':! _.!llort:-
46 gc:lgE':!, and for a fixed rate home loan with a term of more than fifteen
47 YE:!¥s..L_tl!E:!...F:r:-.e..cici.i..§!_~..c::--.s.J.l.:r:.v'§!Yl=E':!Sl1J..J. t: ..:EQ..r_c:l_..t:h.tl=t:Y-::.YE:!.CtI:_f:i.:x:..e..ci_r...§te_ m9l='1:.=
48 gCigE':!.Tl1est:zpe:rintE':!ndE':!IltmayprE':!scribE':!l:>yrE':!gulatiC>I1Cid:LffE':!J:"§ntcoIllpa-
4 9 :r:-.ablE:!...ciur..§j::,i.9n __§j::Ci..n..ciar..ci__Cl...s Il~C::E:!.s.I3Cl..J:Y_or _ c:lP-p.!:oP:r:La..t:E:!..t:Q ~ .!:_E:!..-fJ.E:!.c:::j:: __cl!an.9§~
50 ~~j::he_ t.e..J:"!1ls;. c:lI'lcLt:ypE:!..-s_ Q:E.lIlC>:r:-tga,gE':!S in_cJ.t:zcl§.ci ..iIl_tllE:!.E:r:-.e..cici.:i,S'!_}1(3.C .§g:r:yey.
51 (iiJNot:wit:hSlt(iI1cii.I1gthE':! cOznpa:r:Ctl:>lE':! ra.t:§§se1:;fo:r:t:.l1iIl thi,spCiragJ:'Ciph,
52 ClI1Q 11()t:.W:i. 't:l1s:t.<:inciin.g a_nyother law, i f the SUPE':!:r:iIlt:en<:l.§nt det:E':!rIllinest:ha.t
53 l:>Y st:a.1:;l.lt:e, rule or :r:E':!gulation,diffe:r:ent th:r:E':!shold$forciE':!1:;e:r:zn:LI1ing
54 underw:r:-:i,..t::h..n.g_...Slt..Cin..ci<:i.r...ci$_ XQ:r:". _ Sl1ll::>p:r:.i.IllE:!..-_J.O.c:lI'l~ _J:>"§!C.9In.E:!. __ a..PPJ.:Lc::@J& t.<)
55 nc:lti.9naJ.1Y__ 9..hc:i.:r:-t:E:!.:r:-ed __l '§!IlcitI1g .:i,.n§ t:iJ:t:zt::LQIlSl, Q.!:J:llE:!. p:r:-()yLs.te>..n_s_Q..f_ .t.h.t.s;
56sE':!c::tionl1aYE':!hCiciCinllnci1.l1ynegati,ve effect llPoI1 the (iY(iil<3.l:>il:Lt:y or
http://nyslrs.state.ny.us/NYSLBDC Ilbstfrme. cgi 6/25/2008

S. 8143--A 9
1 PI:",i.9§ 0 f ll19I:"t:9Ci9§t',i.I1CiIlc::,i.Il9,i.I1 thi s lSt:Cit:§Lt:l'lE!lSllP§I:",i.Ilt:§I1<:l§I1t: . . ll1CiYt'rC>ll1

2 time. to. time designate .suc!,!-<:>ther threshold rates as may be. neces sa!y~
3 Ci9l'l,i.§Y§PCiI:",i.t:YP§t:W§E!IllStl9l:lI1Cit:,i.9IlCiJ.ly .9l:l?LI:"t:E!J:"E!<:li,I1lSt:,i.t:llt:i QI1S.CiI1<:l PCiIll<.-
4 in~ organ:i..zat:lc~n~ mo:rJ<gCl9".-e]::>Cink~C1nd.mor~~brQkers .inthis s tCite ~
5 t:9CiJ.J.E!yiCit:E!$1l9l'lllIl<:l.1.lJ.YI1§9Cit::i..y§§t't'§c:t$. ~u,c:l:l<:l§t:§rrn,iI1Cit:i9I1$l:la]'J
6 PI:"QrnptJ.y p§p1.1l::>J.i$!1§clOIl t!1E!W§p$it:E! Ot't:l:lE!PCiIll<.i.I19<:lE!PCiI:"t:rnE!Ilt:.
7 ML---'.'Home loan" means a home~oanJncll.ldi~n open-eIlCLcredi:f::-plan,
8 Qth§J:" tl'lCiIl.ar§Y§J:'s§IIl9I:"t:9CigE!trCiIl1?Ci9ti,9I1,iIlWl'l:i..9l'l:
9 ill The principal amount oLt~loan does; noLexc:eed_t:he~onforming
10 loan size limit .t'9I:"Ci c:c>rnpaJ:'CllJJ.E! <:lWE!J.J.,iI19Cis §lSt:CllJJ.:i..1?l:l§<:lt'I:"Oll1-t:i..rnE! t:9
Ilt,i.rnE!PY-tI:1E!:fE!<:lE!I:"CiJ. IlCit:,i9I1CiJ.rnQJ:'1:9Ci9§CilSs9ciCi-ti,c>n;
12 J.ill The borrower is a natural person;
13 (i,i:i..J':r11.§<:l.E!P-t:i..1? :i..Ilc::uJ:'J:'E!<:lPY the bOI:":rower PI:"i,rnCiJ:'i.J.y for persC>I1Cilt
14 family, or household purposes;
15 (i,Yll'l:1E!].9Ci I1 i1?$E!C:tlI:"eclPy ci IIl9J:'t:9CigE!grd§E!<:l.gt' -tI:"ll1?t onreCil§s ta te
16 l.lPQIl which t:hE!:re is located or there is t() be located a structure or
17 structures.intended pri I1 cipally-for occupaI!9Y-offrom one . . t:9...four .. fami-
18 lies Wl:1ic:1:1 ,is or will be 9C:C1.lP:i..§cfPY1:l:1e POJ:'J:"oWE!rasthebQJ:'rQweJ:"'s
19 principal dwelling; and
20 (yl . ':rI:1E!PI:"9PE!J:'1:y,i1?J.C>C:Cit:E!<:l. in 1:l:1is$1:Cit:§·
21 (E!) "I,§I1cfE!I:""IIl§CiI1Sa,llIQI:"t:ga,gE!Pa,I1l{.§I:"Ci1?cfE!:fiI1E!<:l. in pa,ra,gra,pl:1 (:f) of
22 subdivtsion one of section five hundred ninety of th~chapter or an
23 E!:lCE!rnP1:0J:'9CiIl,i.?=Cit:,i.9I1a,s;<:l§t'i.I1E!cf,i.I1Pa,I:"Ci9I:"a,PI:1(E!}9t' $1.1lJcf,i.v,i.si,9n one of
24 sect:ion five hundred ninety of this chapter.
2 5 U " L . "Mortgage broker" means a mort..9Cige proker as defined in paraqraph
26 (g)gt' .... $1.1l::>cf,i.y,i.1?i,911 QI1E!Ot' 1?E!91:,i.9I1.t',i.Y§l:ltlI1cfI:"§<:lI1,i.I1E!t:Y 9 f th.:i.. s 9l:lCiPt:E!J:"
27 and~mortga.9E!-banker as defined in par.~aph--.1f) of subdivision one of
2 8 lSE!c::t:i9I1t',i.yeh.tlI1cfJ:'E!<:lIli.I'lE!1:YOt' t.1:1,i.1?c::h.CiPt.§I:"tWl:l§Il1?tlc::h.ll1QI:"1:ga,gE! pa,Ilk§r
29 §olici ts t.....-PJ:'()cesses, places or negotiates...9_ll1ortgC3,ge loan .for--.9t:hers.
3 0 2 _ . _ Limitatio!1.s .... and prohibited"'p!-"act:i..cE!s for subprime homeloans_._A
31$ll1:>pr:i..ll1E!h.9I1lE!].Qa,I1. .sh.a,UPE! .S1.1l::>jE!c:1:t:9t:h.E!t'9U9W,i.!1.9].,i.rn i t:Ci ti 9Ils;:
32 J&.No. calJ.--P!"Q..visions ~Cl~"'p!-"ime ho.rn...E!..loan mClY-c:on tain~.-P.I:"ovision
33 that PE!J:'IIli,1:lS the J.E!!1.<:lE!J:'t in itsS9].E!cf,i.lSC:J:'E!1:,i.9I1,1:Qa,9C:E!1E!J:'a,tet:l:1§
34 indebtedness......1'his .provisio:q....§hall, no.t:.....PI:"ohj"bit acceleration of the .loa:q
35 in ..9C>9.4...t'aitLdue to.the. bO:rrower '_$. ..£ailure....t:..Q---.Cil::>idE!-----.J:>L_ 1:hE! __.material
361:E!I:":m1?ot'th.E!J.9a!1..
37 J1:>L No negat ive am9rtig:atton ,._~. subprime .home 19an may--.c::ontain. ..E
3 8 pa,yrnE!Il1:$9h.§<:ltlJ.E!wi, 1:h.r§9tlJ.CirpeJ:':i..9<:l:i..C:Pa,yrn§Il1:st:h.a,t:9aUlSE!9J:':ma,y cause
39 t:he. princ~L.balanc...E!..-t:o increasE!...-....~oan_ is. cO:r'l.si<:ierE!Lt<:>......llavE!.....§uch...Ci
40 schedule_iL.i:.he bor.rower i~give.!L.thegpi:io.:r'l.--.1:9__make_r§gtllaI:"----Periodic
41 PCiYInE!nt:$ thatc:au1?E! the pr,i.Il9:i..pa,1. bCilaIlc:e1:9i.I1C:J:'E!a,lSE!tE!yE!I1,i.f1:l'lE!
42 l::>.orroweris...Ci.l,so. giyen. the option . t.C>...mak§~§gular _. periociicpaymeJ:lts.. that
43 cfQI19tc:atl$E!1:h.E!pr,i.I1c::ipCiJ.Pa,1a,nC::E!1:c>i.I'lC:J:'§CiS§. This pa,I:"agJ:'apl'l shall
44 noLprohibit....!!E!gative amort;izCiti9!La,s a . ..I:"E!sult.....e>:L.C1.teInE9-I:"~_% orbeaI:"-=
45 CinCe_...§2tlSLl:11:...PY_a,.....!::>.Qrrowe:r:...
46 (9)NQir'l9I:"E!a,lSE!ci,i.J:lteJ:'§1?t: J:'Ci1:E!. NQs1.1l::>pI:"iIllE!l'lQrne19Cir'lrnCiY contain a
47 PJ:'ovisio!L ....!'lhich._:increasE!s th§_.interest _ rate . _af1:er . ~faul t~.._Tht.s..
48 pr9yisigI1SI:1CilJ. n9tapP:lyt9 i Il teJ:'e$1:I:"a,1:E! cl'lCingE!s,i.n a variable rate
49 J.9an. ..Qj::herwise ..9c>nsisten..:Lwi1:!Lth§...J:>J:'ovisi9ns ...C>t'the..1-.oan ciC>9um§nt~L
50 proyideci. th~t..t:he. chaIl9E!in__t:l1.E!...iIlt:E!res1:_J:'Ci.1:E! .. is...Il91:..._ trigg.E!r§9.J:>y. the
51 event Q:fcie:fa,ul1: 9J:'t:I:1E!a,ccelerCi1:iQn Qf t:heincfE!btedness.
52 (ci.). L:L.rni 1:ati,OI1.. 0r'l acfvaIl.cE! .payrner'lts.... 1'!Q s1.1l::>p:ri.IIl_§ l:lQmE! lQCin may i,r'lc1,1.ld§
53 terms uI'ldE!r Wl:lich.:m9rE!1:l'laIltwQPE!ri,c>dic payrneI1t:s J:'§qtl:i,r§9 under the
54 loalL are_con$olid<;ite<:i_a,nd .. p<;iid __i!L adyanC:E!_ frQ!!L thE!..l.9C1.r'lP"!"Qceed1?
5 5 pJ:'ovided..1:.o ...t:h.E:!..):>orI:"ower .
S. 8143--A 10
1 (ElLN()III()cl.:i,:f":LC::Ci1:::L9Il ():rcl.E:lferral fees. A lender InCiY not c::l:lCi:rgEl a

2 borrower __ any fees to mocl.:L~renew, extend ,9-:r_ amend a subprime home
3 ],()CiI"l():r .1:9 cl.E:l:f"El:r CiIlYPCiYInElIl1::cl.llEl l lIlcl.§!:r 1::l:lEl te:rJ.n§l.9:f"CiSllP:r:i,InE:ll:le>InEl loan
4 if, after the-In()dification, rElI"l§!'\'1al, _ extension_9:r__ CiInendment, the loan. is
5 still a §l1.JJ::>P:r i InEl l:le>lllEl],9CiIl9:r, :L:f"n919IlgEl:rCi§l1.JJ::>P:r:LInE:ll:l()InEl19CiIl,:t:.l:lEl
6 CiI"lIlllCi],P§!:rC::§!I"l1:Cig§!:rCit§!l:lCi§lIle>1:l:>§!§!Il dec r: e C'isecl..l:>YC'it],§!Ci§ltt'\'1e>P§!rC::E:lIl1::Ci.g§!
7 points. For purposes of this paragraph~es_~l:lCl.llnotinclude interest
8 1:l:lCi1::L§l9tl:l§!:r'\'1:i,SE:l pCi.Ye:tl:>le .ancl. . C::e>Il S :L§lt:§!Il1:'\'1i1:l:l1:l:l§! P:r9y:i,§l:Le>I"l§l9:f"t11.El . 1 ()all
9 documents. This __ PCi:r~raph shall not prohibita lender from ql:lCirging
10 P():LIl1::§lCiIlcl.:f"§!esiIl c::e>IlIlElc::1::L9Il'\'1:L1:11.CiIlYCicl.cl.:LU9IlCi! p:re>C::§!Elcl.§lrE:lC::El:LYEl<:fl:>Y
11 the l:>e>:r:re>WEl:r . . iIlc()IlIl§!c::t::Le>Il'\'1it:11.1:11§!In9<:f:L:f":LC::Ci.1::i9IlL:r§!Il§!'\'1Ci.L§!:x:t:§!Il§l:L()Il9:r
12 amendment (over and above the current principal balance of the exi.§:t:.:LIlg
13 §l1.JJ::>P:r:i,In§!11.()In§!19CiIlJp:re>Y:Lcl.Elcl1::11.Ci.t:1:l:lepoiIl1:§lCiI"l<:f fees c::l:lCi:rgElcl on the
14 Ci.dditional sum must reflect the lender's typical point and fee struc::1::~:r§!
15:f"e>:r§l1.JJ::>pr:i,lllEll:le>lllEl],()CiIlS. 'I'l:l:i,§lPCi:rCi.g:rCi.Pl:l§ll:lCill n()1:: CiPP],y:i,:E 1:l:lEl e:X::L§l1:::LIlg
1 6§l1.JJ::>P:r:i,!nEll:le>!nEl!9aI1:LS iIlclefCi.llJ1:9:ri§ls:i,Xt:Y():r In():rElclCiY§lclElUIlqt.leIl1::Ci.Ilcl.
17 the modification L-rene'\'1'CiL E:lXt:ElIl§li()Il,ClIllEl_Ilcl.rnE:lIlt:():r_m<:fEl%e:r~_CiL:i.J?p art of a
1 8 '\'1'():r]{,:::::()ll1:P:re>C::E:lS§l.
19 (f) No oppressive mandato:ry arbitration clauses. No subprime home
2 0 !e>ClIlIllCiY.. l:>§! . §l1.JJ::>j E:lc:::t:.1::e> C'iIllC'iIl<:fC'i:t:.():I."Y . . Cirpi1::rC'i:t:.:i,9Ilc::1Ci.ll§l§! that is e>PP:r§!§l:::::
21 S:LY§!, llIl:f"Ci.,:i,:r, llIlC9Il§lc::,:i,e>Ile:tl:>],§!, or S1.JJ::>S1:CiIlt::LCil],y in cl.§!:r9gCi.t,:i,9Il9:Etl:lEl
22 ~ights of consumers.
23 (glNe>:EiI"lCiIlc:::i,Ilg9:E insurance or other P:r9cl.llc::t:S sold inC::()IlIlElction
24 with the loan. No subprime home loan shall financeL-di~ectly or indi-
25 rectly, any credit lifeL c:r-Elcl.:i,1:_ di§l3~!;>:Lli~ credit unemployment, or
2 6 c:::r§!<:f:i,1: p:re>PEl:r:t:.y :LIl§lll.:r.CiIlC::§!.I ():r CiIlY 91::l:l§!:r . 1:L:EEl 9:rll§!Ci],.1:l:l:LIl§l1l:rCi.Ilc::§! P:r§!Ilt:i,.-
27 ~s, or any payments directly or indirectly for any debt cancellation__-9-:I."
28 §l1l§lP§!Il~:L9IlCig:rEl§!InElIl1::9:rc::()Il1::rCic::tL9rCiIlYP:r9clllc::1:():r§lEl:rY,:i,c::§!1::l:lCi:t:.:i.§l not
29 necessa:ry _ or related to_1:~ElJl-9}llE!--.!()<:l!Lsuch as auto club _memberships or
30 credit report monitoring, but not including fees paid to the ],enderL
31 l:>:re>]{,§!:rL9:rc::],e>§l:LIlgCig§!Ilt,:EElEl§l . :rEl!Ci1:ed1:01:l:lEl:rElce>:rcl.:i,Ilg9:f"1::l:l§!Ine>:r:t:.gCige,
32 title insurance or othe:rsE!:t1:J__ElInen.:l:.- fees. Insurance premiums or_~debt
3 3 c::CiIlC::El1],Ci.1:,:i,0 Il.9:rSll§lP§!Il~ i ()Il:f"eEl§lC::Ci],C::ll],Ci1:§!<:fCi.Ilcl.pa:i,d . . ()Il a I119Il1:11.!Y basis
34 shall not be_c::ollsidered financed.
35 JhLNo. "loan flipping". No lender or mortgage broker making or arraIlg=
3 6,:i,Ilg as1.JJ::>p:r:i,InEl homeJ,e>C'ill mCi.Y ellgC'igEl ill t11.Ellln:Ei3.,:i,:ri3.c::1:9:rP:rCic:::t:.:i,C:El9:E
37 "loan flipping". "Loan flipping" is making_Cl.__ hO!!L_E! ),Oi3.ll_ _ :t:.9-__ a borrower
38 that refinances CiIl.e:x:i st::i,Ilg11.OIn§!J,0Ci.Il'\'111Elllt:l:l§!llEl'\'1],()CiIlcl.0§!§lll9:t:.l:laYEl . a
39 tangible net benef:h-1:_1::01:11§!borrower considering all of the cirC:llJ.ll:::::
40 stances, including t.l:lE!1:ElrIns Of!;>9ththe new and refinanced loans, thE!
4 lc:0§l1:9:EtheIlEl'\'1'!e>CiIl, . . C'in<:f the . l:>()r:re>'\'1er's.§l:L1:11Ci.1:iO Il .
42 J:LL NO:rE!:f":L.I1EIlc:::!,gg .of special mortgages. No lender making-__ i3._$ubprime
43 119J.ll§! 1.9clIlJ.llC'iy . ref:i,IlCi.Ilc:§!aIlexi1:'l1::LIlgh()J.llEl10Ci.IltllC'i1::is Ci..sPElc::LC'il Ill():r1:gCi.g§!
44 originated, subsidize<:f or _-9"1.laranteed by or through a statElL-_trtpEl or
45 local government, or nonp£ofit <>:rgCillization, which either bears a
46 below-market :LIl1:El:rElst:rC'it§! at tl:let:i,J.ll§!9:f"9rig,:i,I"l<:l:t:.iOIll orl:lCi§l nonstand-
47 ar.<:LpE-YIllEl_n1::_terms beneficial to the!:lO:r:rO'\'1§!:rL such as payments thatY<:l:I."Y
4 8 '\'1'ith:LIlco!ne I ... are . . 1tJ.ll:L1::El<:ft:0i3. .perqelltage 0 f . i ll qe>InEl,O:r'\'1'll§!:r§!llOPi3.YIn§!Il1::§l
49 Cl.:rE!:r.-E:!qt.l:L:red under specified. COI"lcl:i,1::i,oIlSlL . and where, as a result _0:1: __ the
50 refinancingJ __ J;l:lE! PO:r:r()'\'1'er_ will_lose OI!E!_O:r J.ll0:r§! ():f"_1::11..-E:!_benefi ts of thE!
51 §lPElq:i,<:l],IllortgagElJ 1.lIllesS1:11El!ElIldElr ispre>y:i,<:f§!cl.pri9r: to loancl.01:'l:LIlg
52 dogumeIl1:E_U_()IlPY a HUD CiPP:r()Y§cl 11. o 1.l sin g C01.lIl1:'l~],()r---<>:r_1:11.Ellen<:fEl:r_ '\'111.0
53 o:r:i,g:LIlallYIllCi.cl.§! tl:le sPElc::ii3.11110rtgCige thCi.ttll§!l:>e>:r:row§rhC'is received home
54 !9<:lIl counseling aboutt11.Eladvantages andcl.:i,j;Ci.clYCi.!l_tages of the:r-E!:f"inanc-
55 :i.I'lg,
http://nyslrs.state.ny.us/NYSLBDCl/bstfime.cgi 6/25/2008
S. 8143--A 11
1 (jlN9±§!l}4:Ll}g without 901.1l}.s§!1.ing4:L.sc::J.O$1.1:re and list of counselors. A

2 lender or mortgage broker must deliver, RJ.ace in the mail, fax or elg9=
3 1:.:r9ni c::a.J.1.Y1:.:ra.l}$lIl:L1:.tl1§! J'(>1. 1 0W:Lngl}01:.:Lc::§! :Ll}a.t 1.§!a.$ttW§!1.ve PO:Lnt .1:.YP§!
4 to the borrQwe.:r .. of_--.cL~ubprilll§!l1ome loan atj::h§!1:.imEL9f appJ.ication:
5 "You .sh91.11.490l}$:L4§l:':[:i.l}a.n9 i a.1. . C01.1l}$§!±:LI1,gPl:':LOl:' . t.Q§!:X:§9111:.:LD9 1.Qa.l}49911 ....
6 meI'lt.$.':I'h§!E;!I191.osed lis1:. O:fC::OllI'lS§!1.0:r$:L$p:r9V:L4§!4}:)y t.he . New Yo:rk,.. State
7 Banking Department." In the event --c.L. a telephone apPJ.ication,.1:..!l.§
8 4:Lsc::1.0S1.1:r§!slIlll$1:.be made :L1Il1Ileciia.1:.§!1.ya.:ft§!l:'rec::§:LE1:.9f t.hea.ppl:Lc::a.tiOI'l by
9 telephon.§. Such disclosure ..shall be on a seEa.raj::g...:form. In orderJ:Q
10 1.1t:L1.:Lz§!a.n§1§!c::t.:rOl}:L9J:;l:'a.n.s1Il:L$$:LOI'l,t.h§! lender or }:)l:'9k§!r must :f:L:r.st
11 obtain§!:Lt.he:r W:r:L1:.t§!l}9:r§!1.§!c::1:.l:'9l}:Lc::a.J.ly tl:'a.I'l$lIl:L t.t. e g pe :r1Il:L.ss:LOl}:f:rOlIl.. t.h §!
12 borrower. A. list of approved counselors L...a.Va..:i.1.able. from the New.¥ork
13 state }:)a.l}k,:LI'lg<:l.§!pa.:rt.Ill§!I'lt ,slla1.J.}:)§!p:r9y:Lcl§!d1:.9tl1§!}:)(>l:':rOW§:r}:)y.. . th§!1.§!l}4....
14 er or the mortgage..}:):r9ker at the time that this disclosure:i,.s_given.
15 (k,) No §!l}C::Oll:ra.g§Ill§!l}t. of cl§:fa.ll1.t..Il} ma.k:LDg9:ra.r:ra.ng:i,I'lg a.$1.1l:>pri Ill§!
1 6 h91I1§!±(>a.l}, . . a.lel}cl§!ro:r1Il9:r1:.ga.ge}:):rok,E?:rsha.1.1nQt. :r§!991Il1Il§!l}clO:r §!l}C::01.1 ra g e
1 7 default on an _§!:x:.:Ll?_tin£... loan or other debt prior_1:.9_and in connect:i,QI'l
18 w:Lt.1l1:.h§!c::J.O$il}gQ:rpla.l}D§!<:l.c::19$:Ll}g9:f1:.11§!$1.11?P:r:LIll§!h(>Illel0a.n that refi-
19 l}anc::es all or any portion of_s."llc::h existing loan or debt.
20 (.1..) :P:r911:L}:):Lt.§!4 pa.y:nt§!l}t..s tQ Ill(>l:'t.ga.g.§! }:)l:'9k,.§!r..s :rnlIla.l<.:Ll}g (>l:' a.r:ra.l}g:i,l}g a
21s1.1l:>p:r:L1Il§! homeJ.9a l},l}9 . 1. e l}ci§!:r9:rIllQ:r1:.ga.g§}:)l:'9k,§!l:'Slla.1 J.a.C::C::§!Pt.9l:'g:LY§!
22 any fee, kickback, thing of .y~lue, portion, split orp"ercentage of
2 3 c::ha.:rg§!$., 9t.ll§l:' tlla.l} as Pa.YIll§!l}t. 9:r g(>Q<:l.$.O:r:fa.9:i,1. i t.:L§!s tha.t. W§!:r§!a.91:.1.1a. l ....
f
24 J.y .:f.1l.:rl}ished or services that werea.c::tually performed. Suchp.a.YIllent
25 must be reasonably relatedt:Q the value of the gOQ9:§..or facilities. that
2 6 W.§!:r§!a.c::1:.11a.J.1.y :f1.1l:'l}:L..shE?4 Q:r ..$§!.:rV:Lc::§!$1:.ha.1:.W§!:r§! a.c::t:lla.1.1.y.P§!:r:f9:rIllE?9:..·
27 em) No prepayment penal ties on subprimghome loans. No prepa.YIILent
2 8 p§l}a.1.t::L§!$ Q:r :f§!§!$$1la.1J.}:)§ 911a.:rg§!9: 9:r c::(>J.1.E?c::1:.§!4 9l} a s1.1l:>P:r i lIl§! hQlIl§! 1.0an .
29 A prepaYIllE!n1:.penalty in a subprime.home loan shall be unen:forceable.
30 (n) No abusive . yield spread premiums. In .. a.:rranging a subpriIlle home
31 ],Qa.l}, the IllQl:'t.ga.g§ }:):rQk,§!:r$ha.J.J.,a.t.t.h§t.:LIll§!9:fa.PP].:i,c::a.1:.:i,9l},. disCJ.(>$§
32 the exact amount and methodologyKQ~ determining the total compensatiol}
3 3 tha tt.h§!}:):r(>k,§:rW:LJ.1.r§!9§:LY§!.J31.1c::ha.lIlQunt. .Illa.y . }:)§! .pa :Lcias4:Ll:'§91:. cQ:rnP§l}....
34 sation from the ..lender, direct compensatiol} .from the borrower.,_~-----..a.
35 combination ().L the two. The .p:rQyisions of this paragr.a.ph shall_I'l9t
3 6 l:'§!$1:.l:':Lc::t.t.ll§a.}:):Ll:L tY9:fa.}:)(>l:':r(>W§:r1:.9 . 1.1t.H iz§!a.yi§!1.d.sp:r§!a.<:l. p:r§Ill:i,1.1Ill in
37 order to offset_a.l}Y upfront costs by aC::9§Pt..:i...!!.sL.a higher int§:r§st rate.
38 If1:.h§! }:)o:r:rQW§!:rc::h9Q$§$t.his opti9l},a.l}YC::QIIlP§l}$a.tion from the lender
39 which exceeds the exact amount.Q:f total compensat:i...9l}ow§!c::i..~the .. 1::>:rc>ker
40 must beq:redi ted to the borrQwer. The superi!Lt.§!l}<:l.ent shall---p.:r§!$9:ribe _the
41 forlIltlla.t.$1.1ch disclosul:'E? shall take. Th:L.s.pa.ra.g:ra.phsl1a.±1. not.:r§!$t.:rict
42 a broker from accepting _a.. lesser amount.
43 (Q1Ma.D4a.t.(>:ry§!$9:rC>WQ:ft.a:x:§s: . a.l}<:l.:Ll}$11:ra.l}c::e, No .s1.11?prime home loa.n
44 shall be made after July first, twotpousand ten unl§!..5..5. the lel}4§!l:'
45 requires arl.4collects the . m<)l}1:.hly escrow ofp:roperty tax§!s . c:l.nd ha:z:a.:r<:l.
46 iIlS1.1:ra.l}c::e. With :r§!$P§!c::t.t.Qa., s1.1l::>p:r:L1Il§h9Ill§!1.9a.n,a.}:)9rrow§!r lIla.YWa.:Ly§
47 escrow requireIll§!nts by notifying the lender in_writing after 9l}E:!..------year
48 from consummation of the loan.':I'1l§!pr()visi(>l}.s9:fth:L.sparagra.phshal1
49 not __a.,p'pJ,y to a subpr:LIIl§! home loan that is a subordina.t.E! J.ien __"I'llen _the
50 taxes and iIlstg'ance are escl:'0wed througha.noth§!J::'.._flOme J...oa.n():r_w_!:l§!l:'e t.h§!
51 }:)Q:r:rQW§!l:' 9a.l} clelIlQl}.s tra t§!a.:r§!c::o:rd ():ftW§!lve IIlQll-1:h$ 9f t iIll§!1.Y paYIll§!l}ts of
52 taxes al}cl_:L.Il..£u~..a..IlC::E! on a.p:r§!y:i....o.1ll:l home loan.
53 (p)Ma.l}4a.to:rycl:LS:91.0S1.1:r§!9:f tax§!sa.l}4 ....il} s u:ra.l}gepaYIllents.. With r§! SP§!Ct
54 to a subp:rime home loan,t.he first ti1Il§ a borroweri$ info:rmeci _of __ t.he
55 cmt:i,cipated o:ractual peri o4:LC::__...Pa.YIILen t ClIllOul}1:...._jn__c::<mn§!c::t.:Lon wi -I:h_a.
5 6:f:L:r$ t.-1 i§!nl:'§!$:Lci§!ntia.1IllQ:rt.ga.,g§!1 oal}f9l:'a.$p§!c::ifi C pr(>perty, th§! ... 1.§!nder
http://nyslrs.state.ny.usINYSLBDCl/bstfrme.cgi 6/25/2008
KbTRIEVE Page 12 of38
S. 8143--A 12
1 orIlle>J:"t.gi3.gEi!l::>J:"9~Ei!J:"~lli3.]':I.i.I1:EOrJIlt.h.Ei!J::>9Z"'J:"Clwer t.h.Cit aI1 additional amount

2 will be due for taxes and insurance and ~hall disclose to the borrower
3 Ci::;I?C>9I1CiI?J:"Ei!i3.I?ClI1Cil:>J.YPe>::;::;ill:I.Ei!t.h.Ei!i3.PPJ:"c>:x:i.IIlCit.Ei!amollnt .0£ the initial
4 P§]:"j2 di ~--p"-a.yIllen1::~ f o£""PZ"'C>P-..Ei!..£t.y _t-<3.-:X:E:l~ _<3.I1(:Lh.~:::~~~_jns urance __
5 ('lINe> t.Ei!i3.I?Ei! r :J:'i3. t el?, No :I. Ei!I1q§!r 9J:"IIlC>J:".t.gi3.gEi!l::>J:"9~§J:"I?h.i3.],1 make or
6 i3.J:"J:"i3.11g§i3.I?lll>PZ"'i.IIl§ home 1C>i3.n . . whic::lllli3.:3<3.n initial or i.llt.r9qllc::.t.e>J:"Y rate
7 with a duration of less than§~:l{_months.
8 ~·A,t:1YPJ:"9Yi.I?i.911 i.lla.I?lll>PJ:"i Ill § . . . llC>IIl§J.9i3.11 t.l1<3. t yi9],i3.t.§l? s lll>qi.yision . two
9 of this section shaJ..J.. be _Z"'E:lllq§E§q_'I'9i..c:L_
10 4, .l'19i3.:J:'J:"a.Ilg§Ill§Ilt. 9:EC::§J:"tCii.I1~lll::>PEi.IllEi! loans. l-Ie>J.§nq§J:"9I:'Ill9:J:'t.gi3.g§
11 llI:'9kEi!.J:" SlI1a.1.1. IIli3.k§9I:' a.I:':J:'i3.I1ge a. Sllll::>pI:'iIII§ll9I1l§ 1.9i3.11 llI1],§~Slth.§ l.ender or
12 mortgage broker reasonablY__ E-llq_i.Il_gq9.c::L%aith believes at the time the
13 1.C>i3.I'li.1?C::9I1:311IllIlla.t§qt.I1a.:tC>1l§9J:"IIl9r§9:f'th.§l::>9J:"I:'9W§I:'~Jwhen considered
14 individually or collectiveIYL_hasth§l_abi1i.-:tY to repay the loan accord-
15 i.I1gt.9i.:t~:tEi!J:"'IIlSlCillqt9Pa.Ya.PP1.i.c::a.l::>:J,Ei!J:"§CiIestate:ta.xes Cillq hazard
16 i. n l?llJ:"i3.11C::§PI:'§IIli.llIllSl.I:f'CiI§!Ilcier c>r IllC>I:':tgCig§ . . l::>I:'9k§I:'IIl<3.ki.llg 9 r i3.I:'J:"<3.11g:i.ng.<3.
17 subprime home loan knows tha~~C>.-ne _9_~.-IIlor...Ei!..-hC>Ill...Ei!.-J,oans secuEed~_t.h.Ei!_~§Ill§
18 Z"'§al PI:'.e>P§J:":tY wi.U l::>§ IIli3.q§ c::C>nt:§IIlP9I:'a.llEi!e>1,l,s:I.y te> :tI1§,si3.IIl§ b9J:"J:"9W§J:" Wi:t11
19 the §ubprime home_J.oan beiM_Ill<3.Q§_ or_CiEE<3.-119"-§lQ_l::>Y that lender or mort~
20 llI:'9k§J:"Lt:hEi!+Ei!IlQ§I:'9J:"IIle>J:"t:ga.gEi!.. . ):)J:"0k§J:"IIlCiki.Ilge>J:"a.J:"J:"<3.11gi.Ilg the I?lll::>PJ:"i.IIl§
21 h.9mEl l0<3.n must ci9cument t.hElJ::>9J:"r9W§I:"::;a.l::>i.1.i.t.ytC>I:'epi3.Yt.I1Ei!C::9I1llJiI1Ei!ci
22 payments of all loans on the same_...I:'_~J._property ...
23 1
(Cil,A,],Ei!llQEi!I:'e>Z"'IIl9Z"'t.ga.gEi!pJ:"e>kEi!Z"",s i3.11a. YSli.,s9:f'i3.P9r:r:9WEi!I:",s Cil:>i.1.i.t.Y to
24 repay a subPEime hOIllE:!-_J..oaIl __a..Q(::(2I:"dinSL_j::9__ thel,oan j::§~s and to---Pa.Y
25 related real estate taxes and in~ur~cepremiums shall be based on a
26 9e>nsicieI:"a.t.i.9I1. of th§ Pe>I:'I:'9W§I:"S C::J:"§!Qi.t.h.il?t.e>J:Y,C::llI:'I:'§I1t.CiI1Q§!:X:P§!c::t.eq
27 income-L- current-.-C>bligation~L~ emp19yment_ stCi.:tll.~L_ and other ~inancia1
28 :r§::;e>1lI:'9§,s . 9t.hel:'t.h.a.Il thep9J:" r OW§l:"::;§!qLli.tYi.r1 t.h.Ei!r§a.J. PI:'c>P§!I:'t.y t l1a.t.
29 secures repayment of the subprime_l!ome loan--,
30 J~In determinin9"---Cl.._j:>c>.rrowe:t:"~abili ty to_:t:"~-Y a subprime home 10anL
31 t.h.§! 1§!I1QEi!:r 9J:" IIl9J:"t.gi3.gEi!l::>I:'9kEi!:r ,sI1i3. l .:I. t.a.]{Ei! :rEi!a.S91'lCil:>J.Ei! I?t.Ei!PI?J:9YEi!:ri.:f'Y the
32 accuracy and compJ.§t.en§.s s--C>.:f'_i.Il:f'e>rma.ti oIl--PI:'.c::>yi,deQ_l::>Y_c::>:t:"_on_behaJ..:Lof_t.h.§!
33 P9I:' r e>W§!:r ll~i.I1g t.i3.:X:Z"'Ei!1::11Z"'lls,paYI:'e>l1.I:'§c::§ip1::1? .,l::>a.I1~:J:'Ei!C::9:J:'QI?,J:"Ei!a.S9I1a.l::>1Ei!
34 al ternative methods ,_or reaso_l!..a.l::>-J.§!_J:I1irct~rtY"'yerifica_lion---,_
35 J~I!l.~§teJ:"'lllinillg---<3._ borJ:"e>weJ:".'- ~ _<3.l::>il ~t.Y_t.9_J:"§!P<3.Y_a slll>-PI"~me _hoIllEL_.:I.oan
36 a.C::C::9J:"cii.I1g t.9i.t.1?t.Ei!:J:'1ll1? Wh.§I1t.h.§ 1 e>a.I1 . . I1a. s a.I1aqj llSl t.<3.l::>1 §!:J:'a.t.§!:f'Ei!a.t.llJ:"Ei!, . . :tI1§!
37 lender or mortg~g§_broker §h~.:I.l_c::a.l,QllJ.<3.:tEi!~:thEi! __IIl9!l.t.l1~ymen t ---<3.IIlQun:t~e>J:"
38 PI:'i.llc::ipa.:I. and in teres tl::>Y ass:tlIlling (iJ t:llEi!+9a.I1PZ"'Qc::§!§!ciSlCi:J:'Ei!:f'1lIJ.y
39 disbursed on the date o.K~1:...he -..J..e>~l!.._c::L,,-~i,rl..9-LJ~L:i.l_th§l._J,<:>an_j..§_j;-,,-be ...I:'_~<3....id
40 in_§ub§tanti.alJ.Y_§qLl~LIll9I1thly-a.lllQI:'ti.~i.I1g __ pi3.YIIleI1j::§ __.9:f'__ P:J::i.I1gi.P~1_ _ and
41 interest 9Y§:J:'t.llEi!§I1t..i.:J:'Elt§rIllc>ftl1§1.9a.I11Wit.llI19paI199I1Pa.Yl!l§!I1t.,a.llci
42 1i.i.i.l_ thsLi.n te:J:'§~~I:'~j::~_9Y§!Ltll§_ §Ilti.I:'§_t.§lJ:"IIl_e>L .:tll§ _J,9a.Il~i.I?~a._:f'i.:x:§!ci_I:'a.1::§!
43 §qLla.J.t.9t.ll§:f'1,ll1.Yi.I1de:x:§ci :J:'i3.te..at. th§tiIlle 9:f':tll§19an c::191?i.I1g, . Wi:tl101,lt
44 QQI1~i.deri!l.9"-a.!l.Y__i ni.:ti.a.J. _ cii.~c:::e>ll!l.t.§ci_ J:"a. t.§!___
45 Jcil_1LJ,§nde]:"_C>~_IllQI:'_t:qa.g§J2J:"'()kEi!I:'.'-I?_i3._nalY_l?i.s_C>.:f'_a._PQI:']:"9.Vi§!J:"-'.§l_~j.J,j._ty_~C>.
46 J:"§Pa.Y a $lll::>p:J:'iIll§! llC>IIlEi!J.e>a.llIlli3.YlltUi.:::§J:"§a.l?gnCil:>1.Ei!c:gIllIllEi!I:'c::i,Ci1.ly:r:Ei!C::Qg...
47 I1i.~ed .1-l.!1ge r .Vi]:"i ti!l..9... ~t:...<3....I1.<i<3..l:"'-g~ _Cl..llq __IIlEi!t:1le>d01.e>gi.Ei!SL _i.!lc::l11cii.!lg__ ~llj::C>~<3....t:...§l.g
48 u Il dEi!:J:'WJ:"i.ti I1 gsYStEi!IllS I pI:'c>vid§lcl the standards CillcirnethQciOlggi.Ei!sc::omply
49 wi. th j::h~_ proyj..§j._e>l1.§__o.KJ;.hi-~~§!c::t.i.e>Il,
50 ;i ~~_rj..rn_e_1LoIll-§l1.e>i3.l'l._IIle> J:"t.gi3.gEi!13 ... $lla.1.1._i.llc::1.~q§!_i3._1.§lg§n.ci~gI1.j::9P of
-_. __
.. -
the
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51 rnQ:J:'t.gi3.g§l in t:WEi!1.YEi! ...point type statillg:thi3.t:thEi!IIle>r:tgagei,s a .s11l::>P.r,l,IllGl

52 llQIIl~1.C>~I1$llPj§lc::t :te> t.hi§ §ection.
53 E). The pJ:"c>yil?iqnSl QLthissection sha.l1applytq any p§rsQIl who in bad
54 fa:i.t.h....<3.t.tempt.~L:tQ_~y_oiet _t.h§.~<3.PPli.c::i3.t..iC>.I1 __C>.:f'._th:i.l?_s§.c:::t.i...C>I1. _py_.~a..!l.Y __ $~j:§!I:'.:
55 fug§L_:i.ncJ.llqi.l'l.gJ2.11.LllQL1.:i.IIl:i.t.Ei!g_t.C>.~P1.:i.tt.i.llg_QJ:"_g:i.Yj..fli!1g_<3.IlY_J,2E-!1 __t .I:'..a.Il.$ __
http://nyslrs.state.ny.usINYSLBDCllbstfrme.cgi 6/2512008
KblKlbVE Page 13 of38
s. 8143--A 13
1 action :int0:3§PCi.I:'Cit§PCi.I:'t:13fQ:r: tl1§PtlI:]?913§ Qf§YCicl.:iIlgtl1§ prOyis:ioIl13 of

2 ~his section.
3 7 - 1'.. l§I1cl.§r O:J:Ci$1.1l:>P:r::i,rn§I1ClIll§:l9CiI1tha,tLVlh§IlCiqt:::iI1gin gOOcl.fCi:it::l1,
4 ~Ci.i,kj:Q.--9-()IllJ2J.-Y wiJ:l1__tft~ P.I:'QY:i§:i<:>Il~<:>f_t::ht$_$ §q~~onL _$ha.L.L_I1<:>tJ::)_E!_cteemeg
5 1:.<:>ha,y§y:i,<:>Ja,1:.§cl. tI1A.. $13§qi:;:i,op·i.f",p.I:'i".I:'1:.9 ....1:.11§i.Il13t:i..1:.tl1:.:i..9P9f..CiIlya,C1:.i.9P
6 CiI1gp§:t:,,:r:§1:.l1.§P,,:r:.I:'<:>Vl§.I:':i..13P.I:'§jtlcl.:iq§g,tl1.§].§I1cl.§.I:'I1"1:.i.f:i§$tl1§ borrower
7 of the compliance failur~...Cl.l:>Pl:'..e>p~iate1='~st..:i~tl1::ionis made,. and.--!i.l1-ateve.I:'
8a,cl.jtl$tIll§Ilt::$1:.11a,ta,re I1§q§$$CiJ:Yaremade to. the loan to make the loan
9 .sat.t.~the regl,lirements _ of j:.h..:i§~ectj,g!l-"-
10 8. The CittO.I:'I1§yg§P§.I:'CiJ. or1:.l1.e$tlP§.I:':int::§I1cl.§ptIllCiY enforce the
11 P.I:'9y:i13:i.C'Il$C':J:tl1i13§l§9t:igI1-
12 9 _ Any~son found bY~.-Ci p.I:'E!£onderanc~_of _ _ the eyidep.ce to_have
13 Y:i."].Ci-t§dtl1:i$§l§c::-t:i.9Il§lI1CiJ.lpel:i.CiPJ.§t:<:> tl1§P".I:':r:Clw§J:C'fCi S1.1l:>P.I:':iIllel1C'IlI§
14 loan for actual damages.
15:lO.Aq<:>tl.I:'tIllCiYCil$9CiVlCi.I:'cl.J:.§a,$9I1CiPl§Cit::-t".I:'P§Y13':J:§§S1:.0 a pr§YCi:i..].:iIlg
1 6 P".I:'.I:'QVl§:r::iI1 <i:t:Cl:r:§qJ.g$tl.I:'§ ca9i:.:i.<:>Il·
17 ~_~l:>orrowe..J: maY_pE:Lg.I:'..ant:..E!..cL....~Ilitl!1..9j::ivE!..L declaratory and such other
18 §gl,l:itCiPJ.§.I:'§J,:i§:t:casi:.l1§q"tl.I:'tcl.§eIlls . . CiPP.I:'OP.I:':i.Cit:§iIlCiIl action to §I1:t:oz-ce
19 qQ..IlI£-l:Lance_}'lt.tlL.this sectj,on.
20 1..2- The .I:'§IlI§cl.:i§$P.I:'OYi.cl.§cl. :iPi:.h:i$$§qi:.i.9par§I1Clt. :i..I1t§Ilcl.§di:.o be the
21 §.xql tl$:iY§:r:§IlIecl.i.§$CiYa,iJ.CiP1§.. . te> CiPO.I:':r:9W§z-Q:f"Ci$1.1l:>P.I:'i.IlI§h.QIlI§loa,n.
22 :u...._In £l!'!Y.....action by a lender oras...s..ignee j::Q_enfor~.E....l-gCi!L~Ci:i..nst __ Ci
2 3 borrower:i,Ilci§:J:<itl1tIll():r:§th.caI1.$:i...x1:.yda,Y$g.I:':ifl:t:,,:r:§q:lO$tl:r:§1.. . a, 1::>QJ:J:'Qw§r
24 may assert as a defense, .Ci!!Y.-violation of this section_
25 14. The provisions of this section shall be severable, and if_any
2 6 Ph..I:'Ci:3§l. 9J.Citl:3.§1 :3.E!Pt:§I1q§.l. C'J: PJ:'()v:i.$.i,QP :i..:3 cl.§cJca:r:§g toP§ . :iIlVCiJ,:i..cl.l.. ()J::i..13
27 preemptedl::>Y.-federal_.Law or_.J:'~lation, the validity of _the ..J:'~Jllainde.l=' of
28 thi$$§9i:..i,C'IlSl1.a,UIlO1:;p§<iff§9t§cl.tl:1§.I:'§PY, If .CiIlY. PJ:<:>v:i..$:i..<:>Il of this
29 section is declared to be iIlCiPPli9..aPle to any_specific_cat§gQ.!YL~typ§L
30 Q£kind_Qf-----PO.~j::..sL.Cind-.:f"eesy i th 1='_E!§PE!.9i:._to_Cl. hO!II§Lloa!lL __th§._"'pr()yisions
31 of thi.$$§qt:i,oP$h.ca].]. Il"p§tl1.§le$$ . . 90ntiI1 u§ .t9CiPP:lYVl.itl1. :r:e$P§cttQca].].
32 QthE!.J: poinj:~.Ci,!}~:J:E!.es_
33 § 6. The banking law is amended by adding a new section 590-b to read
34 as follows:
35 §__ 5 9Q-=1::>... _Responsibilit:t§.$ :l j:ach..mQ..I:'~ClfLE!...J:>.J:'oker_$h.CilJ..L_:i!l.addi __
3 6ti.Qp tOt.ll§cftlti§$ . . . i.IlIP()$§cil:>Y9i:.h.§.rWi.$§capp]'i.cCiPl§p.r()v:i..s:i,OI1$ of state
37 anci__~edE!..r.Cil-_ _ law ,-_wi th _respect j:_~LCipy_tran...§l.Ci..9tio!h.....inclt1.t:!.~n_fL_Ci!lY....PrC19 __
3 8tiCe, ().I:'C0tl.I:'seo:f" .1::>tl$i Il§$$ :i.Il9()IlIl§9ti<:>nW':i..th.tll§t.I:'CiIl$Ciqt:i9IlJ :i..Ilwh.ich
39 the mortgCi.g§._~J:oker solici.t$L"'p'roce~sesLpJ,Ci9§IL__Q.I:'..__I"l..§g()ti.Cij:~§_ _ .Ci.._I1()IlI§
4 0 J.Q<3,.Il':'
41 (catcac::t:i..Ili:.ll§P9.r.r()W§J:'$:i I1 t§r§$tr
42 J1::>l_Ciqt_Vl.-:i..th _reasonab].§L$l<,:i..l1L_9.C!.J:..E!. anct dil:i,gen9E!.L
43 (91a,qtj·flgQOcl.fa,:i..tll . . . CiIlci\l1ii:.hfa,i.I:'ci§a,J..iIlg r
44 JciL..!1Q.t:....Ci.c::.c:.E!...P.1:._,- ~.'IT.E!.L_or_Qh.Cl.:r.9"E!...Ci..I1Y..!l.fl.di..§ cl 0 s§cf _ c01Il£E!..~a tj,Q!1-,_ di1=''§!ci:.1.Y
4 5 Q.r._~Ilt:!.i....:r'§!..9j:J,y-,_.thCi.t_-:i..Ilt1..I:'.E!.s_ _t.Q.~t_hE:LP~.!1§!.f:i..t of_j::he _m..e>.l='..1:.g.Ci.9"E!_ P.r.Ql<,§.r.L ~h§ th__
4 6 §.I:'ClJ:"n9tc:ha,rcaci:.§.I:':i..z;§cf<i$caIl§.xp§Ilci,ittl.r§IlIcadef()J:.tll§PQ.rJ:'()we.I:' r
47 J.§.L _C],§'Ci.r.:l,y_gi$<::J...().5..E!...j::Q.J:I1,§_PQ.I:'.I:'Q~E!..r.L_!LO_t. J...Ci te..I:'_ than _t:.hre~_ cf..CiY$_ Ci:t:.t§J:"
48 receipt ()fi:.hslO<iIlappJ,.iqcat:i..()Il , CiUIlIa,t§rialinfOJ:l:nCii:.iOIl as sp§ci:t:"i§cl.
4 9 l:>Y__ J:11E!__ $t1PE!..r.i _Ilt:.E!..Il.den t __tlJ..Ci.:Lrn:i.gl1:t:_.r.ea~C>..Il.ablY_E-..ffE!<:::t: _thE!._r_i,gh._t§.:l _t11-_t~..I:'-=
5 0 §§.t$,_QJ:' .:ClPtl:i....ty g%__t]:lE!_ PO .r..I:'QVl§.I:' .. _t_Q .:r:~C'§!:i.Y§ __ i:.hE! __bQ1='1='()~§.I:" $_ :i.Il:t:§Ilci§ci
51 pSIl§f:i t . . :f rClIlli:.h.§! . h.OIne 1 ()a,n, . i Il cludiIl gtota,1.90IllP§n$Cit:i..OIlthattb.ElprokElr
52 Vlo1l1drsceive :frOIll a,IlY of th.§ lOcan opti()Il$ i:.h.<itth.e l_e.!1dgr: or IlIortga,ge
53 brok§.I:' P:r:ssellts to . th§porrowe.r;and
54 in _di.L:i&~I"l..tJ..-y..Vl.Q.r..k_ _:t.o_'p'r~..s.§!.!}_:Lj::h.§ __ PQ.I:'.I:'..C>.~er__wj,J:.h__ .Cl__ ..I:'Ci1'1g§ __ ():f __ ,1.<:>Ci1'1
5 5 p..I:'C>.cl,t1.Q~~ _:f"or .:Vlh.:i..CJlt.h.~ _bg_.r.r.ol"l'§!1=' J. :i,l<,§J. Y_<Itl..CiJj...:fj.._e..s_.9-A.d_~hi ch_ <iJ:'E!._a,PP.I:'QP.I:':i.. ::
http://nys1rs.state.ny.us/NYSLBDC1lbstfrme.cgi 6/25/2008
S. 8143--A 14
1 i3.1::§1::()1:hel:::>()l:"l:"9v,r§l:"'f3§.xil;1::,i,Ilg c:il:"C:1lIIll;1:aIlC:§!S, based 9Il.,i,Ilforma1:;,i,on . known

2 l:::>YL-or obtained in good faith b~ the broker.
3 2 . N9],§Ilq,§!l:"9J:"xn9l:"t:gi3.g§l:::>l:"9k.§J:"f3I1i3.Ui xnpl:"9P§!l:"ly ,i,Ili:'J.tl§!IlC:§ .....()ri3.t:t:§!xnp1:
4 to~ iIllpf"...9PSlJ:":I.y influence 1:~e_si~YSl~QP.lll...Ei!_nt ,._l:"§!~tiIlC1.1- J:"§!~tlJ~_ 9.J:"_J:"§!'IT~El.-Vl_gf
5i3.J:"§!i3.:L§ll;t:i3.1::§i3.PPJ:"i3.,i,l;i3.+ .J:"e:Li3.t:,i,Ilgt:9 l:"§i3.+PJ:'9P§J:"t:yf3Elc:tlJ:",i,IlgCl.l:19xnEl:L()Cl.IlL
6 Pl:"()'IT,i,q,Elq,thi3.t: . . . ,i.1::l;I1i3.++Il()1::l:::>§!a Yi()JCi1::JOIlg(t:hil;Pl:"911,i.l:::>1.1::,i.OIl1::9:
7 lCi.) ask an appraiser to consider addi tional _~nfo..J:"maJ:ion_about a
8 l:::>9l:'l:'9v,rEll:"f3.PJ:',i,Ilc:Jpi3.1q,tol§H1.Ilg 9J:'.C1l:::>Otlt:C9xnPCl.l:'C1l:::>:L§!pl:'opeJ:'1:,i.Elf3;
9 il:::>L request _tha.t.... an .-CiPPJ:'Cii.f3-er.p.J:"Qy.i.cLe_Cidd,i.ti ona.1....:Lnfo.J:"ma1::.J.o_!L.<ibout_t:h...Ei!
1 0 l:::>Cl.§:,i,l; i:'9l:'i3.Yi3.+tlCl.t:,i,()Ili
11 tc:L J:'§!quElf3t: t:11i3.1: i3.Il Cl.PPJ:'i3.,i,l;§J:'C:9J:'J:'e c:1:Ji3. c t:tlCl.:L ElJ:'J:'9l:'f31.Ili3.'lTi3.1.tlCl.t:,i,9I1J
12 Jd) obtain multiple appraisals of a-'porrower '.E_principal dw...§!J,lingL- so
13 ],9Ilg aS1:l:J.§!:L§Ilq,ElJ:'gJ:' 111 9l:"t:gi3.g§ .l:::>l:'Ok.§:r:Cl.4l:1ElJ:'e§:1:9i3.P9J.Jc:y oi:',s§!:L§Ct:1.Ilg
14 the most~liab~El.-...CiPPraisal.Lrathe.J:"_th@ __th.E:!._appraisal that states_il:!..§
1 5 h,i,gI1Ell;1::Yi3.J.tlEli
16 (§) v,r1.1:111191.q,C:9mp§Il§:i3.1:,i,0I1KJ:'()xni3.I1 apPl:'i3.1.l;eJ:'f9J:'pl:"ElCl.c:11 of contract or
17 subf3-tandard perfor.xn.ance ..QJ_~§!'l:"Y.i...c:~1:l1.
18 C(1t:§l:"xn,i,I1Cl.1::§i3.l:'ElJ.i3.t:,i,9I1l;l:1Jp with an i3.PPl:"i3.,i,s§l:" for yiqlat,i,ons of
19 CiPPhcable sta te__~J:".j:edSlJ:'C1.L].E!'LQJ:'_~eac:I1E:!-f3- ...9L,§!.1::hi9C1_Lor'proj:es~ioIlal
20,s1:Cl.Ilq,Cil:"q,f3i and
21 (gl1:Ci]{,El .Cic:t:,i,9IlP§!l:"xnJ1:1:§q,()rl:"§qu"i.r§cipy.app,l,i,c:C1l:::>l.Elf31::i3.1::§ or (Elderal
22 statute, regtIlation, or agenqy_gt.lidance ....
23 3 .1»:rlY xn9l:"1:gi3.g§! l:::>l:"9k.§!J:'(OtlIlq,PYi3.Pl:"§p()Ilq,el:'i3.Ilc:§g(§yiq,ElIlC:El to hi3.ve
24 violated subdivision one of_~his_~eclionL_lLhal].be .1iable to the borrow=
25 er for actual damages.
26 4,..1»:rlY.1..ElIl<:l.§!J:'9l:" xn9l:'t::gi3.g§ Pl:'Ok. e l:" (9tl.I1<:i l:::>y i3. PJ:'§PQIl<:l.§:r:i3.Ilc:§! 9.(Ely,i.<:l.§!Ilc:§!
27 to have violated subdivision two of this sectionL_shal~ be_~iabl~to_the
28 P9l:"l:"9v,r§l:"(9l:"i3.c:1:tli3.1.q,i3.InCig§!s.
29 L_h,----.l:::>C>rrower maY..J::>§..-9"f'EIl1::El.-cLiIliunc:1::i-Y§!L_dec:J.E.J:".Ci.1::.<:>..J;YJ--.CiIl<:i.-.s.Jlch Q1::her
30 §!9U..i table relief as the court_ q.E:!.ems_.i3.~e>pJ::'j.<3.te in an_C1.ction_~Q..__enforc:§
3 lC:9xnP1.ii3.I1c:§v,rit::h1:I1A,sl;§c:1:,i.orl.
32 L_~_.--c:..C>l.lrt_In.<3.Y..also awar-.<:i..J:"§asonable...§l.J;J:9J:".neys '_.i'Sles ....1:9_.Ci..-p.l:'..§!.vai.1JIlg
33 borrowel:'in a f()r§clo.sure action.
34 '1....._ The_ attorney general or. _1:h_e__ .1:l~eri!lj:;~nden~_may__~forc:~_the
35 provisions_ ofth~ section.
36 8. The remedies Pl:'Oy1.cl,§<:i in this sec1:ion ar§ not intended to be the
37 exclusive. remedies available to_a_l:>Qrrower.
38 § 7. Paragraph (g) of subdivision 1 of section 590 of the banking law,
39 as amended by chapter 293 of the laws of 1987, is amended and two new
40 paragraphs (h) and (i) are added to read as follows:
41 (g) ~Registrant~ or ~mortgage broker~ shall mean a person or entity
42 registered pursuant to section five hundred ninety-one-a of this chapter
43 to engage in the business of soliciting, processing, placing or negoti-
44 ating mortgage loans for others, or offering to solicit, process, place
45 or negotiate mortgage loans for others[7]1.
46 (111"1'19l:'1:gi3.g§1.9i3.I1,s§J:'yiC:Ell:''' 9:t' "f3el:'Y1.g§l:'n shall mean a PEll:'f39Il or
4 7 en.1::J1:Y _..J:"Slg:i..1:l.~~.-?...cL Pl.:l:r:-f3-tl..~ll..t... .1::Q_f3-tll:::>_<:i,i.yJf3-1..QIl_tVl()_of _1::l1 i s l; E:!.c:..li2_!LJ:.Q_ §llgCl9"-§
48 iIl1:I1§!l:::>tlf3iIl§!ssgi:'f3§l:'Yic:ingxn9r1:gage 19<3.ns(()r pr()p§rtY1.9C:i3.teci j.Ilthis
49 ,s_t...§lj:;§!.-L
50 J1.L''S~..J:"YJc:,i.llg.lll_O..J:"...t:gC1gE:!- _l...9EIl.1:l "_~hAJ.L.xnE:!-i3..11 .J:".§!c:§!i,yi-.llg__ <3.!1Y_ §...c:l:1.§!q.tlJ.§q.
51 PEll:'i9cl,ic: Pi3.YIn§l1t:l;(l:'Qxn a 1::>9l:'J:'OtolElrpur,stli3.Ilt:: t9t:l:1Elt::§J:'xns g(any :moJ:'t:g(3.g~
5 2 :L ()9-1'1 Lj·I!9.l.1.1 cii,rlg <3,![t0!l!1t: ~ :£,o_r§ § C:J:' 0.wacc()tlIl1:§ 1.ln.<:iEl:r_.1:l§ c:tiO!l § 1...x-k. o"L 1:l1i ,s
53 chapt§r, title th.:re§!::- A of GiJ:'ti Cle nine Qf the J:'§e;tlpr9P§r1:Y 1:a.x law or
54 ,s§c:1:.i_o...!1_ .1::E!I1 __of __L2_ Q-"-§',_~._ _ 1§Q2. L_@A.. mCik.i..llg _t:I1"§!_pi3.YInell..1~ILt::Q_1:.h....§!'S>Fne:r __()f
5 51::11E:!-...l-..C>.i3..!LQJ:' _()_tlJ..§!l:'_third ...P.i3..J:"1::1....~§__oK pJ:'1..nc:i.pE.1__ C1Il<:l.j.....llj:;~.J::'Sl~1:: ...§l...!1.~:L§l.:lc:11 _,,--1:h~J:'
56 pi3.YIn§nt.f3 with rElS;peg1:totl1ei3.In0tlIlts;rec:§i,YEl<:l.KJ:'9xntl1§l:::>9rrQv,r§:r.i3.f3xnGiY
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S. 8143--A 15
1 i:hEi!i:Ei!:t'nl~ of the IIlC>J:"i:g<3.gEi! service lQCi.!l documents

pe J:"Ei!gtli.J:"Ei!<:fPtlJ:"S1.1Ci.!l1:i:c>
2 or servicin~contract~_Jn the case ofa home egtlity conversion mortqaqe
3 or J:"Ei!YEi!J:"seIllC>J:"1:gCi.gEi! as refElJ:"E:lncec:1 i!l~Ei!c::i:i.C>!l~j,,x:-hc>.f1:hi.sc::hCi.pi:E!J:"1
4 i!E!c::ti onsJewo_hl.:l!l~:IJ:"eci_e~gh1:Y~Ci.!l(::Lj:~~htl!l4J:"~~L~j.-iLhJev~Ci._Q%~~tlL~l:"-E!C!J: PJ:"C>P~~_:-
5i:y law or 24 CFR .3.?OQ.~, .=lE:lJ:"Yi.c::i.!lgi.rlc::J.l.l<:fE!~IIlCi.ki.!lgpaYIllE:ln1::si:c>i:hE:l
6 pc>rJ:"0wE!J:"'
7 § 8. Subdivisions 2, 3, 4 and 5 of section 590 of the banking law,
8 subdivisions 2, 3 and 5 as added by chapter 571 of the laws of 1986,
9 paragraph (b) of subdivision 2 and subdivision 4 as amended by chapter
10 293 of the laws of 1987, are amended to read as follows:
11 2. Necessity for license. (a) No person, partnership, association,
12 corporation or other entity shall engage in the business of making five
13 or more mortgage loans in anyone calendar year without first obtaining
14 a license from the superintendent in accordance with the licensing
15 procedure provided in this article and such regulations as may be
16 promulgated by the banking board or prescribed by the superintendent.
17 The licensing provisions of this subdivision shall not apply to any
18 exempt organization nor to any entity or entities which shall be
19 exempted in accordance with regulations promulgated by the banking board
20 hereunder.
21 (b) No person, partnership, association, corporation or other entity
22 shall engage in the business of soliciting, processing, placing or nego-
23 tiating a mortgage loan or offering to solicit, process, place or nego-
24 tiate a mortgage loan in this state without first being registered with
25 the superintendent as a mortgage broker in accordance with the registra-
26 tion procedure provided in this article and by such regulations as may
27 be promulgated by the banking board or prescribed by the superintendent.
28 The registration provisions of this subdivision shall not apply to any
29 exempt organization or mortgage banker. No real estate broker or sales-
30 man, as defined in section four hundred forty of the real property law,
31 shall be deemed to be engaged in the business of a mortgage broker if he
32 does not accept a fee, directly or indirectly, for services rendered in
33 connection with the solicitation, processing, placement or negotiation
34 of a mortgage loan. No attorney-at-law who solicits, processes, places
35 or negotiates a mortgage loan incidental to his legal practice shall be
36 deemed to be engaged in the business of a mortgage broker. The registra-
37 tion provisions of this subdivision shall not apply to any person or
38 entity which shall be exempted in accordance with regulations promulgat-
39 ed by the banking board hereunder.
40 iP:-_1L~!'!c>--PEi!J:"~C>!h_partnershj,PL __as ~c>c:::i.at:i,on L9~_l:"-Cl.-i:ion _QJ:"_ Qi:her._en i::i.1::Y
4 l.=lhCi.J.le!lgC!gEi! .... i,!l.1:hepl.l.=li!lE!§sC>.f S Ei!J:"yi,gi.!lgIllC>J:"1::gCi.gElJ.C>Ci.rl.=l.wi,th .:t"€l$PEi!C::1::1::c>
4 2Ci..I!Y_--P:r:::C>PE!J:".:t:y~_],.C>catecij,_ll.._th:i.~_~tCi..tE!~ wij:l1...9Jlj:;__ ~:i.rsi:_being_J:"~g,i.~_i:El:t"E!c:L~i..:t:h
43 1::hEi!~tlPElJ:"irl1:E:l!l<:iElrltCi.§Ci.IIlC>J:"1:ga,gelc>a!l$E!J:"yi,C::E!J:"i,!laccordance with the
44 J:"Ei!gi.§trat:i,...9_!l-.Rl:"-c>ce(:il.l.J:"E!--PJ:"c>y.i.deg._p.Y ~t:l':e.h_:r:::.Elgl.l 1Ci.tions_as_-.!t@.YJ2E!_PJ:".§!§c:r:-i..PE!<:f
45 l2Y _i:..hE!-_~t:lPE!:t":i.!l1::Ei!!lde!l1:_.~h_E!-_~t:lPE!J:" i.!l1:Ei!!ldel1 t maY~:r:::.Ei!.fl.:l~§_1:c>_. ~Ei!gj._~i:§J:" _Ci.__ IIl...9ri::-
46 gCi.gEi! loan servicer on the .=lCl..IllEi!gJ:"Qt1rl<:f.=l1:hCi.i:hEi!C>J:"s;}lE:lIllCi.Vpaftl sEl1::Q
47 :i,§su'§!"'...<:l-_l:"-§gi.i!1:J:"Ci..:t:.i....9l1__ce:t'.-i:..ifi..C::Ci.1::§ _1:9-Ci._ mo~J:9CI.-iLE!J:>J:"Qk§LPl.lJ:"§tl.~Ln__1:: __ to§t1P<:i.i..=-
48 yisiC>!l1:WQofsE!c::tion.fi,y§htl!lciJ:"El:<:inirlE!i:Y:-1::Wc>-Ci. of this article. The
49 E-§g:i.i!trCi..i::i.Q!l__ EJ:"C>Y is i_c>ns __QL . .:t:hj,§~ ~ E_t:1l::>div :i.~:i.C>!l __ §hEll _ _!lC>.i:_Ci.1:>1:>J.Y .t...9_ ~~n"y
50 eX~JD....pi:_Q:r:::gCi.!l:i,~Ci.1::i.C>!,lLlll9~_i:9"-~E!_pCi.!lkE!J:"--, _ _C>.l:"- __m_oLi:g~E! _pJ:"QkE!J:"_ QJ:". _arlY. P'§!J:"SlQ!l
51 or Ei!!l1::i.ty which shall be e,xE!IIlPt€lci in accordance ~ith rE!gu~?tiq!ls;
52 p,res_9J:'i-p_E!4py the S'llP.E!I'·i,I'ltgI'l4E!!lthE!J:"_E!t1I'l4E!J:" .i pJ:"ovi.ciE!4 that such exeIllpt
53 QJ:"gCi.I'li. z;ation L rU0J:'i:gagE!PCi.rlkerLIIlortgagEl: brok€lJ:" Lor ElxeIllpted person noti:-
54 f.i. es_ _i:..h_~ _Sl..uperi!l.:t:§I1g..E!!1.i:_i:hai : it_ j§. .ac_:t:i_Jlg_C!lLcLIIlQ£.:tg.CI.~_E!).. ClCi.!l § §!~y,iC:E!:r::: ... :i,!l
5 5i:h,i~_~§j:E_t§_ and_ C::QIIlPJ.:i,es_.Fi th_AJlY_J:"E!gl.1J.a U9..!l..CI.PPJ::i.c:~J,E!_tQ IIl_o_ri:ga,gE!. J.Q?!l
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S. 8143--A 16
If:lElI."yi,<:lElI."f:lJ PI."Cl!J1tl],gCit:Elc:l J:>ytl'lEl PCiI1]{i,I1g l:>()?I."c:lo r prElf:l9I."i,l:>Elcll::>YtI1El 13tlPElI."-

2 intendent with respect to mortgage loan servicers.
3 (c) A licensee [or] registrant ()I."II1()I."1::g?gelgaI113ElI."yi,<:lElI." may apply for
4 authority to open and maintain one or more branch offices.
5 (d) No person or entity engaged in the building and sale of residen-
6 tial real property, or a financing subsidiary thereof, shall be deemed
7 to be making a mortgage loan, as defined in paragraph (c) of subdivision
8 one of this section, or soliciting, processing, placing or negotiating a
9 mortgage loan, as defined in paragraph (d) of subdivision one of this
10 section, if and only if such person, entity or financing subsidiary
11 shall make, solicit, process, place or negotiate a mortgage loan with
12 respect to residential real property it has built through a licensee or
13 exempt organization which is acting as its agent in compliance with this
14 article and regulations promulgated hereunder.
15 3. [Banking board] R1,1],El13CiI1c:lI."ElgtIJ.Citi ClI1 f:l. In addition to such powers
16 as may otherwise be prescribed by this chapter, the banking board is
17 hereby authorized and empowered to promulgate ELuch~ule~~I1-c:l regulations
18 Cil3I1l?Y in the jtlc:lgElIllElI1 t ()f'tl1el:>?I1]{i,I1gPClCiI."clPEl consistent with the
19 purposes of this article, or_EPP~ClPI."~'!1::~__for the effective adminis-
20tI."Cl,ti,ClI1Cl:f:1::I1i,l?CiI:t:i.C:].El, including, but not limited to:
21 (a) Such rules and regulations in connection with the activities of
22 mortgage brokers, mortgage bankers, mortgagEl_loan servicers and exempt
23 organizations as may be necessary and appropriate for the protection of
24 consumers in this state;
25 (b) Such rules and regulations as may be necessary and appropriate to
26 define improper or fraudulent business practices in connection with the
27 activities of mortgage brokers, mortgage bankers, mortgage loan servi-
28 <:lElI:13 and exempt organizations in making mortgage loans;
29 (c) Such rules and regulations as may define the terms used in this
30 article and as may be necessary and appropriate to interpret and imple-
31 ment the provisions of this article; and
32 (d) Such rules and regulations as may be necessary for the enforcement
33 of this article.
34 The banking board is hereby authorized and empowered to make such
35 specific rulings, demands and findings as it may deem necessary for the
36 proper conduct of the mortgage lending industry.
37 4. Exemptions from provisions of article. No person shall be subject
38 to the licensure or registration provisions of this article if he or she
39 is employed by an exempt organization, a licensee or registrantJ o~__ ~
40 mortgage loan servicer to assist in the performance of the business
41 activities described in this article for the exempt organization, licen-
42 see or registrant, Cl.I."_Cl,-!'1()I."1::gC'!fL~].oaI1_l3E!I."yi.~E!J:"or is engaged in regu-
43 lated activities as an associate or affiliate of a registrant, a licen-
44 see-L~mortg~~ lO?I1~~rvi~~ or exempt organization which has filed an
45 undertaking of accountability with the superintendent.
46 No employee of an exempt organization shall be subject to the licen-
47 sure or registration provisions of this article due to such employee's
48 assisting in the performance of the business activities of a mortgage
49 banker that is controlled by the exempt organization or affiliated with
50 the exempt organization through common ownership or control.
51 5. Activities of mortgage brokers, mortgage bankersLIIlo:rtga.g§ loan
52 §l§!y_i9§~§ and exempt organizations. (a) Mortgage brokers may not make
53 mortgage loans in this state;
54 (b) Mortgage brokers shall solicit, process, place and negotiate mort-
55 gage loans [on±y] in conformity with the provisions of this [article
56 and] gl1CiPt:E!:rJ such rules and regulations as may be promulgated by the
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S. 8143--A 17
1 banking board or prescribed by the superintendent [pursuant t:o this

2 article] thereunder and all ~licable federal laws and the~ule~_a~q
3 J:'§gllJ-a.t:i,9Il$ P~C'InllJ.ga.t:§qt:'hE:u=§lllIlci§J:' ;
4 (c) Mortgage bankers and exempt organizations shall make mortgage
5 loans [=±y] in conformity with the provisions of this [article and]
6 c:'ha.P1::§l:', such rules and regulations as may be promulgated by the banking
7 board or prescribed by the superintendent [pursuant 1::0 this article]
8 t:'hEll:'§llIlci§J:' . . . a.Ilcia.J-J-a.PPJ.i,c:a.l::>J·§ federal 1 a wsa.Ilcit:'h§l:'llJ- El$ . . . a.IlciJ:'eg1,lJ-a.t:,i9Il$
9 prom~lgatedthereunder;
10 (d) 1:1C'l:'t:ga.gElJ-9a.Il$Ell:'y,iC::Ell:'$ $'ha.J.J-ElIlga.gEl in the business of $ Elry,iciIlg
11 InC'J:'t:ga.g§ loans ,iIlC:C'Il:!:()l:'In i i:y ..... ,it:'ht:'h§Pl:'Qy,i$,i9Il$Q:f 1::'h,i$c::'ha.Pt:Ell:'LSUC:'h
12 l:'ules. an<:L.J:'§gulations as. may be gomulgated by the banking J2().a..J:'9__or
13 Pl:'El$(:l:t~i,:t>§cl :t>v t'hEl.... $llP§J:',iIl1::ElIlcl§Iltt'hEll:'ElllIlci§J:'a.Ilc1a.J-J-a.ppl,ic:a.l::>le .:f§q§ral
14 laws and the rules and regulations promulga.te~ thereunci§J:'--.
15 (§l Nothing in this section shall be construed to limit any otherwise
16 applicable state or federal law or regulations.
17 § 9. The banking law is amended by adding a new section 595-b to read
18 as follows:
19 ~ 595-b B§gulation of mortg.a..g..E!.- loan servicers. 1._Esta.!2-J.,ishment__ 2f
2 OgJ:'911Ilci$ to i,InPC'$§a.:f:iIlElQJ:'PElIla.J-t:y. J:Ila.cicii,ti,9Il t9oSl11c::'h9th§J:'J:'1lJ.El$J
21 J:'§lgllJ.a.ti,9I1Sa.Ilcip()J,i,c::i,El$a.§thep<3,Illc,iIlg board Ina.V PJ:'()InllJ.ga.te or the
22 superintende~_I!la.Y..--Erescribeto effectuate the pUJ:'Poses__of this _a.rticJ..E!_L
23 t:'h§ $.llP§J:'i,Il1::§Ilcl§Il1:: §'ha.J-J- pr()Inll.J.ga..t:El J:'§gllJ.<:i.t,iC'.Il$ a.Ilci PC'.J.,ic:i, e$ gQYElJ:'Il,iIlg
24 the establishment o~roll~ds ~~imposea fine or penalty with respect-'l::Q
25 the activities of a mortgage loan servicer.
26 .? $.§lJ:'Yi,c::,iIlgpJ:'a.c::1::,ic:§§, .J:Ila.cici,i1: i 9Il1:9 §1lC::'h 0 1::'hElJ:'J:'lllEl$JJ:'§gll],a.1::,iQIls
27 and policies as the banki~ board may promulgate to effectuate the
28 Pll:rp9$El$ 9:f1::'hi,$<3,J:'t,ic::l§/1:'h§$llP§J:':LIltElIlci§Il1:Ill<3,V PJ:'§$C:J:',i:t>§ J:'§g1,lJ.<3,t:.i9Il§
29 which relate to: 1a.1 providing for disclosures to borrowers of_the_~asis
30 for __any_ interes,!::-_ rate _J:'E!.$.§ts; (b) requirements for the~Qvisio~ of
31 pa.Y=():f':f$t:a.1:ElIn§Il1:$La.IlciJc:) . . gC'y§rIli.Ilgt'hel1:: i In,iIlg of thEl qr§clit:i.Ilg of
32 p~en_'!::-~_IIla.9§L]::>'y_j:he ~orrQWE!J:'-'.
33 § 10. Section 596 of the banking law, as amended by chapter 571 of the
34 laws of 1986, is amended to read as follows:
35 § 596. Superintendent authorized to examine; expenses. For the purpose
36 of discovering violations of this article or securing information
37 lawfully required by him hereunder, the superintendent may at any time,
38 and as often as he or $'h§ may determine, either personally or by a
39 person duly designated by him, investigate the business and examine the
40 books, accounts, records, and files used therein of every licensee}
41 $E!J:'yi,C::E!J:' and registrant. For that purpose the superintendent and his or
42 'h.E!~ duly designated representative shall have free access to the offices
43 and places of business, books, accounts, papers, records, files, safes
44 and vaults of all such licensees,-servicE!~oSl and registrants. The super-
45 intendent and any person duly designated by him ~~~§J:' shall have
46 authority to require the attendance of and to examine under oath all
47 persons whose testimony he 9_J:'_.s;he may require relative to such business.
48 The expenses incurred in making any examination pursuant to this section
49 shall be assessed against and paid by the licensee-,-_~E!J:'y:i.C::E!l:' or regis-
50 trant so examined, except that traveling and subsistence expenses so
51 incurred shall be charged against and paid by licensees/s~I'viC!E!J:'s or
52 registrants in such proportions as the superintendent shall deem just
53 and reasonable, and such proportionate charges shall be added to the
54 assessment of the other expenses incurred upon each examination. Upon
55 written notice by the superintendent of the total amount of such assess-
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S. 8143--A 18
1 ment, the licensee, servicer or registrant shall become liable for and
2 shall pay such assessment to the superintendent.
3 In any hearing in which the bank examiner acting under authority of
4 this chapter is available for cross-examination, any official written
5 report, worksheet, other related papers, or duly certified copy thereof,
6 compiled, prepared, drafted, or otherwise made by said bank examiner,
7 after being duly authenticated by said examiner, may be admitted as
8 competent evidence upon the oath of said examiner that said worksheet,
9 investigative report, or other related documents were prepared as a
10 result of an examination of the books and records of a licenseeLl:3~.rYi.:
11 c:§.r or registrant or other person, conducted pursuant to the authority
12 of this chapter.
13 § 11. Section 597 of the banking law, as amended by chapter 571 of the
14 laws of 1986 and the opening paragraph as amended by chapter 499 of the
15 laws of 1995, is amended to read as ~ollows:
16 § 597. Books and records; reports. Each licensee,l:3~.rYi.c:~r, registrant
17 and exempt organization shall keep and use in its business such books,
18 accounts and records as will enable the superintendent to determine
19 whether such licensee, §~.rYic:er registrant or exempt organization is
J..
20 complying with the provisions of this article and with the rules and
21 regulations lawfully made by the superintendent and the banking board.
22 Every licensee, servicer, registrant and exempt organization shall
23 preserve such books, accounts, and records, for at least three years;
24 provided, however, that preservation by photographic reproduction there-
25 of or records in photographic form, including an optical disk storage
26 system and the use of electronic data processing equipment that provides
27 comparable records to those otherwise required and which are available
28 for examination upon request shall constitute compliance with the
29 requirements of this section.
30 Each licensee and registrant shall annually, on or before a date to be
31 determined by the superintendent, file a report with the superintendent
32 giving such information as the superintendent may require concerning the
33 business and operations during the preceding calendar year of such
34 licensee or registrant under authority of this article. Such report
35 shall be subscribed and affirmed as true by the licensee or registrant
36 under the penalties of perjury and shall be in the form prescribed by
37 the superintendent. In addition to annual reports, the superintendent
38 may require such additional regular or special reports as he may deem
39 necessary to the proper supervision of licensees and [registrant] .r...§!g:i.EJ:-
40 t~~~t~ under this article. Such additional reports shall be in the form
41 prescribed by the superintendent and shall be subscribed and affirmed as
42 true under the penalties of perjury.
43'l'h~l:3l.lp~.ri.Ili:~Ilcl~Ilt:IIlCiY:r:~quir~l:3~:r:yic:~.rs
to file annl.lCiJ. :r~p():r:ts or
44 9-t:ber__ requlCi.:r:_~C>.-~_-.13"'pec:i.Cl..:L_-..r~-p():ri:~_i-l'l-.c:J.1.lcl:LI"!SL~~-ports .wi th re~~c_"t...--.i:Q
45 IIlQ:r:i:9"~~~J.inqu~l'l-.c::i.~~_~ILcl-.f.Q~§c:.:L<:>-~1.l.r~EJ-,-_~1.lc:..h~~.p~.:r:.i:I:3-3l_h_all__ !2.~_~~ __tl'l.§!
46 form p:r:~s;q:ril::>ecl :by thesl.lp~J:'i.Ili:eIlcl~Ili: and shall be subscribed and
47 Cif%.irm~cl- EEJ_trl!-~J.1Llcl~:r:_th~ .P"'§!llCiJ.t::i._~_ .Q%_p§l:r:iu_:ry~
48 § 12. Subdivision 1 of section 598 of the banking law, as amended by
49 section 57 of part 0 of chapter 59 of the laws of 2006, is amended to
50 read as follows;
51 1. In addition to such penalties as may otherwise be applicable by
52 law, the superintendent may, after notice and hearing as provided else-
53 where in this article, require any entity, licensee, serv,ic:erJ regis-
54 trant or exempt organization found violating the provisions of this
55 article or the rules or regulations promulgated hereunder to pay to the
56 people of this state an additional penalty for each violation of the
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S. 8143--A 19
1 article or any regulation or policy promulgated hereunder a sum not to

2 exceed an amount as determined pursuant to section forty-four of this
3 chapter for each such violation.
4 § 13. SUbdivision 3 of section 599-b of the banking law, as amended by
5 chapter 553 of the laws of 2007, is amended to read as follows:
6 3. "Originating entity" means a person or entity licensed <:l,~ a mort-
7 gage banker or registered ~_Clc_ mortgage _brQker pursuant to article
8 twelve-D of this chapter.
11 10. All reports of examinations and investigations, correspondence and
12 memoranda concerning or arising out of such examination and investi-
13 gations, including any duly authenticated copy or copies thereof in the
14 possession of any banking organization, bank holding company or any
15 subsidiary thereof (as such terms "bank holding company" and "subsid-
16 iary" are defined in article three-A of this chapter), any corporation
17 or any other entity affiliated with a banking organization within the
18 meaning of subdivision six of this section and any non-banking subsid-
19 iary of a corporation or any other entity which is an affiliate of a
20 banking organization within the meaning of subdivision six-a of this
21 section, foreign banking corporation, licensed lender, licensed casher
22 of checks, licensed mortgage banker, registered mortgage broker,
23 licensed sales finance company, J:'§gi,§t§J:'§<:iI\l()J:'tg<:l,g§ l()(;iIlf:l§J:'Yi, <::§J:'l
24 licensed insurance premium finance agency, licensed transmitter of
25 money, licensed budget planner, or the department, shall be confidential
26 communications, shall not be subject to subpoena and shall not be made
27 public unless, in the judgment of the superintendent, the ends of
28 justice and the public advantage will be subserved by the publication
29 thereof, in which event the superintendent may publish or authorize the
30 publication of a copy of any such report or any part thereof in such
31 manner as may be deemed proper. For the purposes of this subdivision,
32 "reports of examinations and investigations, and any correspondence and
33 memoranda concerning or arising out of such examinations and investi-
34 gations", includes any such materials of a bank, insurance or securities
35 regulatory agency or any unit of the federal government or that of this
36 state any other state or that of any foreign government which are
37 considered confidential by such agency or unit and which are in the
38 possession of the department or which are otherwise confidential materi-
39 als that have been shared by the department with any such agency or unit
40 and are in the possession of such agency or unit.
41 § 15. Subdivisions 1, 2 and 5 of section 39 of the banking law, as
42 amended by chapter 553 of the laws of 2007, are amended to read as
43 follows:
44 1. To appear and explain an apparent violation. Whenever it shall
45 appear to the superintendent that any banking organization, bank holding
46 company, registered mortgage broker, licensed mortgage banker, J:'§gi,$~
47 _ter§Q-lD-_~1;g~~~_:l~~Il __ ~~J:'y.i~§J:'L authorized mortgage loan originator,
48 licensed lender, licensed casher of checks, licensed sales finance
49 company, licensed insurance premium finance agency, licensed transmitter
50 of money, licensed budget planner, out-of-state state bank that main-
51 tains a branch or branches or representative or other offices in this
52 state, or foreign banking corporation licensed by the superintendent to
53 do business or maintain a representative office in this state has
54 violated any law or regulation, he or she may, in his or her discretion,
55 issue an order describing such apparent violation and requiring such
56 banking organization, bank holding company, registered mortgage broker,
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S. 8143--A 20
1 licensed mortgage banker, authorized mortgage loan originator, licensed

2 lender, licensed casher of checks, licensed sales finance company,
4 money, licensed budget planner, out-of-state state bank that maintains a
5 branch or branches or representative or other offices in this state, or
6 foreign banking corporation to appear before him or her, at a time and
7 place fixed in said order, to present an explanation of such apparent
8 violation.
9 2. To discontinue unauthorized or unsafe and unsound practices. When-
10 ever it shall appear to the superintendent that any banking organiza-
11 tion, bank holding company, registered mortgage broker, licensed mort-
12 gage banker, registered mort::~§LJ-Qan ser"l1'ic§~1 authorized mortgage loan
13 originator, licensed lender, licensed casher of checks, licensed sales
14 finance company, licensed insurance premium finance agency, licensed
15 transmitter of money, licensed budget planner, out-of-state state bank
16 that maintains a branch or branches or representative or other offices
17 in this state, or foreign banking corporation licensed by the super-
18 intendent to do business in this state is conducting business in an
19 unauthorized or unsafe and unsound manner, he or she may, in his or her
20 discretion, issue an order directing the discontinuance of such unau-
21 thorized or unsafe and unsound practices, and fixing a time and place at
22 which such banking organization, bank holding company, registered mort-
23 gage broker, licensed mortgage banker,:t:E:lgi..s1::E:l:t:E:lciID.QJ::'1::g<igE:l l ClCln..sE:l:t:Yi.::-:
24 ce~ authorized mortgage loan originator, licensed lender, licensed
25 casher of checks, licensed sales finance company, licensed insurance
26 premium finance agency, licensed transmitter of money, licensed budget
27 planner, out-of-state state bank that maintains a branch or branches or
28 representative or other offices in this state, or foreign banking corpo-
29 ration may voluntarily appear before him or her to present any explana-
30 tion in defense of the practices directed in said order to be discontin-
31 ued.
32 5. To keep books and accounts as prescribed. Whenever it shall appear
33 to the superintendent that any banking organization, bank holding compa-
34 ny, registered mortgage broker [=J L licensed mortgage banker, regis ...
35 ter§d morj:~~_loan_serv~~e~,- authorized mortgage loan originator,
38 of money, licensed budget planner, agency or branch of a foreign banking
39 corporation licensed by the superintendent to do business in this state,
40 does not keep its books and accounts in such manner as to enable him or
41 her to readily ascertain its true condition, he or she may, in his or
42 her discretion, issue an order requiring such banking organization, bank
43 holding company, registered mortgage broker, licensed mortgage banker,
44 registered mor~_~oan._~§J::'y~gE:l~L authorized mortgage loan originator,
47 of money, licensed budget planner, or foreign banking corporation, or
48 the officers or agents thereof, or any of them, to open and keep such
49 books or accounts as he or she may, in his or her discretion, determine
50 and prescribe for the purpose of keeping accurate and convenient records
51 of its transactions and accounts.
52 § 16. Paragraph (a) of subdivision 1 of section 44 of the banking law,
53 as amended by chapter 553 of the laws of 2007, is amended to read as
54 follows:
55 (a) Without limiting any power granted to the superintendent under any
56 other provision of this chapter, the superintendent may, in a proceeding
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S. 8l43--A 21
1 after notice and a hearing, require any safe deposit company, licensed
2 lender, licensed casher of checks, licensed sales finance company,
4 money, licensed mortgage banker, registered mortgage broker, authorized
5 mortgage loan originator, J:'§g,ist.ElJ:'ElciIll():ri::g<:igEl],()<:l.Il,s§J::'yiC::ElJ:' or licensed
6 budget planner to pay to the people of this state a penalty for any
7 violation of this chapter, any regulation promulgated thereunder, any
8 final or temporary order issued pursuant to section thirty-nine of this
9 article, any condition imposed in writing by the superintendent or bank-
10 ing board in connection with the grant of any application or request, or
11 any written agreement entered into with the superintendent.
12 § 17. Section 1302 of the real property actions and proceedings law,
13 as added by chapter 626 of the laws of 2002, is amended to read as
14 follows:
15 § 1302. Foreclosure of high-cost horne loans <:iIlci1?1.1l::>pJ:',iIllEl home loans.
16 1. Any complaint served in a proceeding initiated pursuant to this arti-
17 cle relating to a high-cost horne loan Q±"_~ subp]:"~me~ome ],2~Il, as 1?-l.!~El
l8t.§:rIll1?<:iJ:'§ defined in section six-l <:l.Ilci,s,iJe....Ill of the banking law,r§,sp§c.:....
19 ti~~j,yL must contain an affirmative allegation[, which allegation !nust
20 be proven to the satisfaction of the c01:1rt before entry of judqment by
21 defa1:1lt or otherwise,] tha ta,i::mt.El§t.iIll§i::h.§]?J:'Qc:::§§ci,iIlg,j.,s Q()IllIll§IlC::§ci, the
22 plaintiff [mortgage banker or exelnpt orgaIlization] ~
23 (a,):i,,si::l1§QWI1§J:'<:l.Ilc:i}1Q],ci§J:'():fi::l1§,s1.1l::>j§Qt:IllQJ:'i::ga,g§a,Ilci IlQt§[ or .has
24 been delegated the authori.1::Y_to institute a mortgage foreclosure action
25 ~y the owner and holder of 1he s~iec~or~gage and note; and
26 (~J has complied with all of the provisions of section five hundred
27 ninety-fi ve-a 9f the banking_~aw and a,IlY rules and regulations promul ....
28 ga,t.ecit.l1§J:'ellIlci§J:'L section six-l ()r,s,iJe-Ill of the banking law,a,Ilci section
29 thi±"teerL.h.u...n...cired KQ1.J,J::' of --.!:l1-.l-...§...~]:"i:::i.c:::le.
30 2. It shall be a defense to an action to foreclose a mortgage for a
31 11,igl1.... Q9,si:: El9Ill§ loan or ,s1.1l::>PJ:',iIll§119Ill§lQaIl that the i::§J:'Ill13Q:.f the horne
32 loan [violates] N_j::he~c::.t:iQI'l-~~_1::l1§_lgnder~~Q1a,te any provision of
33 section six-lor SiJe....Ill of the banking law 9J:' SElQt.,iQIl thirteen hundred
34 iQl,lr of- j:]}~~ art-i...-c:J.e.
35 § 18. Paragraph b of subdivision 3 of section 5-501 of the general
36 obligations law, as amended by chapter 883 of the laws of 1980, is
37 amended to read as follows:
38 b. notwithstanding any other provision of law, the unpaid balance of
39 the loan or forbearance may be prepaid, in whole or in part, at any
40 time. If prepayment is made on or after one year from the date the loan
41 or forbearance is made, no penalty may be imposed. If prepayment is made
42 prior to such time, no penalty may be imposed unless provision therefor
43 is expressly made in the loan contract,pr9YiciElcit.11a,t.nQPElIl<:iltYIlla,y be
4 4 j..JllF..9sed . _:i.i_J=>f'Ql1~~:L~eA.-_J?Y_J3§!c::t.iQIl,smm Si2C.=-~_~ci si~=Ill_Qf _th~ -.&~n-.k~n...9'-m law.
45 In all cases, the right of prepayment shall be stated in the instrument
46 evidencing the loan or forbearance, provided, however, that the
47 provisions of this subdivision shall not apply to the extent such
48 provisions are inconsistent with any federal law or regulation.
49 § 19. The penal law is amended by adding a new article 187 to read as
50 follows:
51 ART ICr..E 187
52 .R,E: £; IDEmNTIAL. l1Qg'J:'~A,GE FRAUD
53 Section 187.00 Definitions.
5 4:L137_.P~_RE3J3~g§Ili::i<:i:L_IllO~t:.ga,g§!_ f:r~t:LcL in~ Jol1.§Lfifth _ct~]:"ee-,
55 J.m8-.7... JJ:L B§!,s~ci§!I'l.t~~~l_1!LOJ:'tg<ig§! _f~~t:Lci_-i-l1.-j:h§_%91.l±~h _ct~r_e5!-,.
56 187.1!5R.El,sicienti<:iJ.Illo:ri::gagElfJ:'<:illdintl1§!tl1iJ:'cl.cl.ElgJ:'ElEl.
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s. 8143--A 22
1 187, 20 :R.13~:i.ci13l1.t::i.al Illort:g?lg13 fraud in the ~El99ncl.ci13g:r1313.

2 187.2~_~esidenti~1_~9:r~~e fraud in the first degre~
3§187.00 P13:t;ini tions.
4 As _1,!SeciJ.R 5-]1J.~~~~:i,91.-13-=
51,. "1?l3:r Sg 11" Ill13?lI1. S ?ll1.y:i.l1.ci:i.V:i.cltl?l1. Cl:r13I1.t: i t:y, gt:I:1l3:rt:P.aI1..aI1:i.l1.cl:i.V:i.cltl.a.1,
6Wl:1 c).aPPJ. :i.13~J9:r.a:r13~:i.cl13I1.t::i..aJ.Ill9:rt:g.ag131. Cl.a11. . . . .ancl i l1.t:l3ncl. s t:g gC:C:tlPY such
7 residential property which_suc~_~o~~g~~~§curesunless such~rson acts
8 .as?l11. .aC:913~§Cl:ryt9 an individualo:trentitY:i.I1.C:ClIllIll:i.ttil1.g.arlyc::r:i.Ill13
9 defined in this article.
10 ~.nBEl::;:i.ci13rlt:ial~Cl:rt:g.ag13 loan nmeans ?l+g.arl Cl:r ?lg:r1313Ill13nt: to eJet:encl
11 c::r13cl.:i. t:,:i.I1.c::1.11cl:i.l1.gt:P13:rElI113W'?lJ. 9:r:rl3;f":i.n?ll1. c :i.rlg c>;f"?lnY~tl9P].,Cl?lIlLIll.aclElt:Cl ..?l
12 person, which loan is ~i-marily_ secured by either mortg..a.ge, deed. of
13 t::rll~t:Lg:rgt:l:113J:'.)·:i.13I1tlP911..a11.Ytl1.t:13:r13~t: :i.11.:r13 s :i.cl13rlt::i..a].,:r13.a l P:r9P§'J:'t:y or
14 certificate of stock or other §~~dence g:t:_gwnershi2_.in a cOI."Porationor
15 p.a:rt:I1.13:r~I:1:i.P;f"9:rIll13cl;f"9:rt::h13Ptl:rpC>Sl3g;f"c:ggP13:r.at::i.V139W'11.13:r§P:i.P . . Cl;f" :res i den-
16 ti?l1:r13?l1.P:r9P13:rt:y,
17 3. nResidenti?lJ._reaL2~...<:>p...l3~5-'y."_meaI'l~-.£eal-p:r9PertYJ.mprQyed_!>y_Cl... on~
1 8 t:9:-:;f"C>tl:r;f"?lIll:i.1.YclW'13J.l:i.l1.gL 9:r ?l:r13 ~iclent.:i.?l1..11I1.:i.t: i Il.aPu:i.1.ci:i.ng . irl9J.llcl.:i.I1g
19 uni ts owned as condominiums or on.?l.-9.Q.c>perati-Y§.J:2.asi~L u s§!c::Lor 9.ccupiedJ
20 or :i.Ilt13l1.cl13ci to betl~Elcl9J:'9C::9tlpi13ciLW'Pc>1.+.Yg:rP?l:rt:ly, ast.:h13pg~13g:r
21 :rEl~:i.cl.13I1.c::139;f"gn13 9:rIll9:r13pe:rsgIl~LPllt:~P.aJ.1.Il9t:J:'13;f"Elrt:Cltln:i.IllP:re>Y13ci:r13.al.
22 property upon which such dwellings. are to be constructed "
234-":R.13~:i.ci13I1.t::i..a1.Ille>:rt:g.ag13;f":r.atlci":i.~99IllIll:i.t.t.13clPY.aI1.YP13:r~9rlW'l:19L)crl9W':-:
24 ingly and with intent todefraud~2~esentsl causes to be presented, or
25 p:r;epares with knowledge or belief that:_i:t:_~:i.)~1..-be ll~ed in ~oltciting an
26 ?lPP1.:i.c:.arlt. f 9 r a:rEl::;:Lci13Ilt::i.?llIllClJ:'t:gCl,gEl l,c>?lnL 9J:':i.I1..app].,yiIlg;f"9J:'Lt:PEl
27 underwriting of, or closing of ~~.§!~idE!..n5-ia.1..mortgage loan, or in docu-
28 IllElIlt:~fi+l3dW':i.t.PCl,C:9lJ.I1.t:yc:113:r)cgf.anY90tll1.t.Y:i.nt.l:113~t.?lt:13?l:r:i.sil1.gCl1.lt:
29 of and related to the closiI1.9".9.L.?l._:r..esigen~iCl...J..mortgage loan, al!Y writ-
30 ten statement which he or she knows_t.Q.~
31 (.a1 c:oIl.t?l:i.I1Ill?lt:13:r:i..a],],y;f"?l1.s13iI1fc>:rIll.at::i.9I1.CClI1C::13:rn:i.I1g.?lrly;f".ac:t:Ill?l1:El:r:LCl,l,
32 thereto; or
33 CptC:9rlC::13?ll., ;f"e>:r1:I:1ElPtlI."P9SlEl9;f"Ill:i.sleCl,cii I1 g,tI1;f"9:rIll?lt::i.e>I1 c:e>rl9l3:rI1i I1g?lI1Y
34 fact material thereto.
35 £..187 _05 Residential mortgage fra'!cl...J..IL the. fifth degree___
36 l\.P13:r§ClI1:i.§@:i..l,t:yg;f":r13Sl:i.ci13nt::i..a].,Ill9:rt:g.agEl.;f":r?ltlci:i.I1t:Pl3 fifthci13g:rElEl
37 when he or she commi ts residential .IIlQ:rt:gageJ..:r_aud ..
38 Residential IllC>J:'1:g?lg13;f"J:'Cl,tlcl.in1:l:1El;f"ift:hcieg:r13Elis.ac:.l,?lsS A misdemea-
39 I1.0...I."____
40 §_1.~·L ..1Q. Resident:ial.Jll9rtg?lq§_:f.J:'?l..U.iL:i.!Lt:l:113_f_oll~5-1L.ci§gree-
41 l\.PEl:rSlgni-Sl@:i.J.t:yg:f":r13~:i.ci13I1t.:i..aJ
. . . Ill0J:'t.gCig13 :t::r?ltlcli·Ilt.pEi! :EourthclElgrEle
42 W'pen __:hl3__ or_~h..~_COltlIll:i..t.§. re s i den ti.?l.J.._IlI.9.:r..t..i@..9"E:!.f:rauci .E1nd_ :t::h..§reby ~ec13i-y§!~
43 PJ:'ClC:ElElciSlC>J:'.aI1yg1:PEl:rt"tlI1cl.::;:i.rl1::hElagg:r13gCit.13iI113:lCC::13ssgf" one thousand
4 4 c:i.C>lJ,~rs .
45 Res i..c:ienj:i.?l.J"...m..C>~.J:~Ei! ...:fra~<t_i!LtpE!..:t:ourj:l:1_ clE!9".ree J.~_?l_c::.J...Cl...s...s_]:_;f".E!1.gn.Y--"-
4 6§1,87,J5:R.13Sl:i.ciElrlt:i..a1.IllQJ:'t:g?lg13 :t:J:'atlci:i.nt.pEl 1:l:1:i.J:'clciElg:rElEl-
47 l\. __ pers2.!L_i§_.g1,!U.J:.Y---<'t"_ re~~cl.E!l1j::i,Cl,l_l1l.C>£..t~g,ELt".!'?ltl..<t..:i..1Ltl:1El_t:hi:r_ci_degreEl
48 W'P13Ilpe0J:' SlP13 C9IllIll:i.t:Sl r13 sidEll1. t :i..a1. IllQ:rt:ga g13. f :r a tlcl. ?ll1.ci t::h13r131:>Y receives
4 9 pro c:ee_ciSl_ 9L .aIlY_ Qt::h..§:r.._:E'..@..c:iJLil1._ th§ .J3...9.gJ:'.§!g..a~§_:i.rl.€l.:lCc:...l3'§§. QK_t:hre...l3__t.l:12.ll~..aI1cl
5 0 clCl:IJ,Cl,J:"§.-
51 B13Sl:i.ciElI1ti?llIll9:rtg?lgElf":r.atlcl:i.n1:l:1Elt:l:1:i.:rclcl.ElgrElEl:i.Slaqlassl)felqIly.
52 ~J~E-.2_Q_ B51~j.c:lE!Ilt!~l I 1l.o.:r.:!:.gEi9§! f~.a1l4in J:h§l§13c:"nci d_eg.J:'§!13~
53 A P13r~0I1:i.sgt1:i.lty Of :rElSlicl.13nti.alm"rtg?lge f"r.aud. :i.I1 tP13 Sl13q.o nd clElg:ree
5 4 W'.h.E!P_1J..!Lg:r_~PEL<::'9.Jll!ll.i-_t.§_ ..:r.l3§ :i.cient:...i..aJ.. .!!lg.J:'~g.agEl_KJ:'.?l..t:L<t....aIliL _therel:2Y- _ .J:'.§!ce.:i..Yes
5 5 p:r9.<::"E!..eds.Q.!'__~I1Y _9..fu~r_..f..1l.llds _iI1_:t:.:h..e_Egg.J:',§!9Cit13_..t.Il.. _e.JC_c§l§§_Cl.:f._:f.ift"y_ .tho_USCLn..ci
56 dollars.
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S. 8143--A 23
1 Res i cl.entialIll<:>:r:1:.gCig§!f::r:a.l.lcl.).!l the. s econdcl.§!g:r:§!§!,is;a. CJ.a.s;sC :E"§!l()!lY'

2 § 187.25 Residential mortga~raud in the first degree.
3 11, E§!:r:s;()!l,is;gl.l,il.tY9f::r:§!s,icl.§!ll1:..i,a.±Ill<D:r:1:.gCig§!f::r:Cil.lcl,i!l1:.I1§!f:,i:r:s;1:.cl§!g:r:§!§!
4 whELfL h§!~~_J>I1EL-..c::Ql1lIl1-.i,1:~_~lS!-~~d§!l1:.ia.l._Ill"-~Ci~EL~:r:Ci1.l.-<!E-ll.cl_j:l:L§:r:§Qy-_ :r:§'c-E:!_iY§!Sl
5 P:r:<:>c:§!§!cls; or a.llY <:> 1:.11§!:r: :E"l.l!lcls;iIl1:.I1§!a.gg:r:§!ga.1:.§!.i,!l§!JCC:§$S;()f:()!l§ IIL:i.Jl.:i.<:>!l
6 dollars.
7 ResidentiaJ,_mortg.<:l,g§L fraucL in_the :[irsj::__cl~~ee~Ci... class B ~eloI'lY..-
8 § 20. Paragraph (b) of subdivision 8 of section 700.05 of the criminal
9 procedure law, as separately amended by chapters 568 and 570 of the laws
10 of 2007, is amended to read as follows:
11 (b) Any of the following felonies: assault in the second degree as
12 defined in section 120.05 of the penal law, assault in the first degree
13 as defined in section 120.10 of the penal law, reckless endangerment in
14 the first degree as defined in section 120.25 of the penal law, promot-
15 ing a suicide attempt as defined in section 120.30 of the penal law,
16 criminally negligent homicide as defined in section 125.10 of the penal
17 law, manslaughter in the second degree as defined in section 125.15 of
18 the penal law, manslaughter in the first degree as defined in section
19 125.20 of the penal law, murder in the second degree as defined in
20 section 125.25 of the penal law, murder in the first degree as defined
21 in section 125.27 of the penal law, abortion in the second degree as
22 defined in section 125.40 of the penal law, abortion in the first degree
23 as defined in section 125.45 of the penal law, rape in the third degree
24 as defined in section 130.25 of the penal law, rape in the second degree
25 as defined in section 130.30 of the pena~ law, rape in the first degree
26 as defined in section 130.35 of the penal law, criminal sexual act in
27 the third degree as defined in section 130.40 of the penal law, criminal
28 sexual act in the second degree as defined in section 130.45 of the
29 penal law, criminal sexual act in the first degree as defined in section
30 130.50 of the penal law, sexual abuse in the first degree as defined in
31 section 130.65 of the penal law, unlawful imprisonment in the first
32 degree as defined in section 135.10 of the penal law, kidnapping in the
33 second degree as defined in section 135.20 of the penal law, kidnapping
34 in the first degree as defined in section 135.25 of the penal law, labor
35 trafficking as defined in section 135.35 of the penal law, custodial
36 interference in the first degree as defined in section 135.50 of the
37 penal law, coercion in the first degree as defined in section 135.65 of
38 the penal law, criminal trespass in the first degree as defined in
39 section 140.17 of the penal law, burglary in the third degree as defined
40 in section 140.20 of the penal law, burglary in the second degree as
41 defined in section 140.25 of the penal law, burglary in the first degree
42 as defined in section 140.30 of the penal law, criminal mischief in the
43 third degree as defined in section 145.05 of the penal law, criminal
44 mischief in the second degree as defined in section 145.10 of the penal
45 law, criminal mischief in the first degree as defined in section 145.12
46 of the penal law, criminal tampering in the first degree as defined in
47 section 145.20 of the penal law, arson in the fourth degree as defined
48 in section 150.05 of the penal law, arson in the third degree as defined
49 in section 150.10 of the penal law, arson in the second degree as
50 defined in section 150.15 of the penal law, arson in the first degree as
51 defined in section 150.20 of the penal law, grand larceny in the fourth
52 degree as defined in section 155.30 of the penal law, grand larceny in
53 the third degree as defined in section 155.35 of the penal law, grand
54 larceny in the second degree as defined in section 155.40 of the penal
55 law, grand larceny in the first degree as defined in section 155.42 of
56 the penal law, health care fraud in the fourth degree as defined in
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S. 8143--A 24
1 section 177.10 of the penal law, health care fraud in the third degree
2 as defined in section 177.15 of the penal law, health care fraud in the
3 second degree as defined in section 177.20 of the penal law, health care
4 fraud in the first degree as defined in section 177.25 of the penal law,
5 robbery in the third degree as defined in section 160.05 of the penal
6 law, robbery in the second degree as defined in section 160.10 of the
7 penal law, robbery in the first degree as defined in section 160.15 of
8 the penal law, unlawful use of secret scientific material as defined in
9 section 165.07 of the penal law, criminal possession of stolen property
10 in the fourth degree as defined in section 165.45 of the penal law,
11 criminal possession of stolen property in the third degree as defined in
12 section 165.50 of the penal law, criminal possession of stolen property
13 in the second degree as defined by section 165.52 of the penal law,
14 criminal possession of stolen property in the first degree as defined by
15 section 165.54 of the penal law, trademark counterfeiting in the second
16 degree as defined in section 165.72 of the penal law, trademark counter-
17 feiting in the first degree as defined in section 165.73 of the penal
18 law, forgery in the second degree as defined in section 170.10 of the
19 penal law, forgery in the first degree as defined in section 170.15 of
20 the penal law, criminal possession of a forged instrument in the second
21 degree as defined in section 170.25 of the penal law, criminal
22 possession of a forged instrument in the first degree as defined in
23 section 170.30 of the penal law, criminal possession of forgery devices
24 as defined in section 170.40 of the penal law, falsifying business
25 records in the first degree as defined in section 175.10 of the penal
26 law, tampering with public records in the first degree as defined in
27 section 175.25 of the penal law, offering a false instrument for filing
28 in the first degree as defined in section 175.35 of the penal law, issu-
29 ing a false certificate as defined in section 175.40 of the penal law,
30 criminal diversion of prescription medications and prescriptions in the
31 second degree as defined in section 178.20 of the penal law, criminal
32 diversion of prescription medications and prescriptions in the first
33 degree as defined in section 178.25 of the penal law, :r;'§!13:i..cl§!Ilt:i..CilIU<:>r:1:....
34 gage fraud in the fourth degre§!~1Ldefined in _secti~A_~~"L---1~__ ~~ll§
35 penal _ law resl-de~ tial-!Ilor~.§g§!__f~~_uA_.i-Il_th(iLj::hi~A_<iegree_~~_9.efinE!-cl_:i..Il
L
3 6l3§!q1::i..<:>Ill137,:l.~q:t"1:h§p§mCiJ.. J..Ci'\'/'I residential IUP:r;'1:gCig§ fraud in the

37 second degree as defined in_~§qtiqIl_1-87-'_2_~_~_1:h§_p§!nallaw L--re~:i..den_tiC!-l
3 8 IUqr:tg~g§fr:CI. tlei :lIlth§fir:$1: .eieg:r;eeCi$ei§:fi Il§1ei j-Il.S§1C tiPIl ]..87·:2? . . <:>:t"the
39 p§nal_~a~ escape in the second degree as defined in section 205.10 of
40 the penal law, escape in the first degree as defined in section 205.15
41 of the penal law, absconding from temporary release in the first degree
42 as defined in section 205.17 of the penal ~aw, promoting prison contra-
43 band in the first degree as defined in section 205.25 of the penal law,
44 hindering prosecution in the second degree as defined in section 205.60
45 of the penal law, hindering prosecution in the first degree as defined
46 in section 205.65 of the penal law, sex trafficking as defined in
47 section 230.34 of the penal law, criminal possession of a weapon in the
48 third degree as defined in subdivisions two, three and five of section
49 265.02 of the penal law, criminal possession of a weapon in the second
50 degree as defined in section 265.03 of the penal law, criminal
51 possession of a [dangerous] weapon in the first degree as defined In
52 section 265.04 of the penal law, manufacture, transport, disposition and
53 defacement of weapons and dangerous instruments and appliances defined
54 as felonies in subdivisions one, two, and three of section 265.10 of the
55 penal law, sections 265.11, 265.12 and 265.13 of the penal law, or
56 prohibited use of weapons as defined in subdivision two of section
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S. 8143--A 25
1 265.35 of the penal law, relating to firearms and other dangerous weap-
2 ons, or failure to disclose the origin of a recording in the first
3 degree as defined in section 275.40 of the penal law;
4 § 21. Paragraph (a) of subdivision 1 of section 460.10 of the penal
5 law, as amended by chapter 568 of the laws of 2007, is amended to read
6 as follows:
7 (a) Any of the felonies set forth in this chapter: sections 120.05,
8 120.10 and 120.11 relating to assault; sections 125.10 to 125.27 relat-
9 ing to homicide; sections 130.25, 130.30 and 130.35 relating to rape;
10 sections 135.20 and 135.25 relating to kidnapping; section 135.35 relat-
11 ing to labor trafficking; section 135.65 relating to coercion; sections
12 140.20, 140.25 and 140.30 relating to burglary; sections 145.05, 145.10
13 and 145.12 relating to criminal mischief; article one hundred fifty
14 relating to arson; sections 155.30, 155.35, 155.40 and 155.42 relating
15 to grand larceny; sections 177.10, 177.15, 177.20 and 177.25 relating to
16 health care fraud; article one hundred sixty relating to robbery;
17 sections 165.45, 165.50, 165.52 and 165.54 relating to criminal
18 possession of stolen property; sections 165.72 and 165.73 relating to
19 trademark counterfeiting; sections 170.10, 170.15, 170.25, 170.30,
20 170.40, 170.65 and 170.70 relating to forgery; sections 175.10, 175.25,
21 175.35, 175.40 and 210.40 relating to false statements; sections 176.15,
22 176.20, 176.25 and 176.30 relating to insurance fraud; sections 178.20
23 and 178.25 relating to criminal diversion of prescription medications
24 and prescriptions; sections 180.03, 180.08, 180.15, 180.25, 180.40,
25 180.45, 200.00, 200.03, 200.04, 200.10, 200.11, 200.12, 200.20, 200.22,
26 200.25, 200.27, 215.00, 215.05 and 215.19 relating to bribery; S§9:ti.9I'l$
27 1-Jl7. ~QL_187--JJ5J 187.20 and 187.25 relating to residential mortgage
28 :f)::i3.:tlci, sections 190.40 and 190.42 relating to criminal usury; section
29 190.65 relating to schemes to defraud; sections 205.60 and 205.65 relat-
30 ing to hindering prosecution; sections 210.10, 210.15, and 215.51 relat-
31 ing to perjury and contempt; section 215.40 relating to tampering with
32 physical evidence; sections 220.06, 220.09, 220.16,220.18,220.21,
33 220.31,220.34,220.39,220.41,220.43,220.46,220.55 and 220.60 relat-
34 ing to controlled substances; sections 225.10 and 225.20 relating to
35 gambling; sections 230.25, 230.30, and 230.32 relating to promoting
36 prostitution; section 230.34 relating to sex trafficking; sections
37 235.06, 235.07 and 235.21 relating to obscenity; section 263.10 relating
38 to promoting an obscene sexual performance by a child; sections 265.02,
39 265.03, 265.04, 265.11, 265.12, 265.13 and the provisions of section
40 265.10 which constitute a felony relating to firearms and other danger-
41 ous weapons; and sections 265.14 and 265.16 relating to criminal sale of
42 a firearm; and section 275.10, 275.20, 275.30, or 275.40 relating to
43 unauthorized recordings; and sections 470.05, 470.10, 470.15 and 470.20
44 relating to money laundering; or
45 § 22. Section 78 of the banking law, as added by chapter 321 of the
46 laws of 1992, is amended to read as follows:
47 § 78. Powers of the bureau. If the criminal investigations bureau has
48 a reasonable suspicion that a person or entity subject to the jurisdic-
49 tion of the department has, in connection with activities authorized by
50 this chapter, engaged in, or is engaging in an activity which is a
51 misdemeanor or felony under this chapter or under [articles] Cirticle one
52 hundred fifty-five, one hundred seventy, one hundred seventy-five, one
53 hundred seventy-six, one hundred eighty, one hundred eighty-five, one
54 t11JI1_d~§ci__ §j.~h:tY=$E!Y§!~,_ one hundred ninety, two hundred, two hundred ten
55 or four hundred seventy of the penal law, the superintendent may under-
56 take such investigation as is deemed necessary, and in the enforcement
http://nyslrs.state.ny.us/NYSLBDC 1/bstfrme.cgi 6/25/2008

I\.I: 1 Klb V b Page 26 of38
S. 8143--A 26
1 of this chapter, determine whether any such person or entity has

2 violated or is about to violate any of the above referenced laws or
3 articles. Provided, however, that the scope of authority set forth in
4 this section shall not be deemed to otherwise limit or impair the abili-
5 ty of the department to assist any other entity in an investigation
6 involving a violation of law.
9 2. The superintendent may refuse to issue a license pursuant to this
10 article if he or she shall find that the applicant, or any person who is
11 a director, officer, partner, agent, employee, substantial stockholder
12 of the applicant, consultant or person having a relationship with the
13 applicant similar to a consultant, (a) has been convicted of a crime
14 involving an activity which is a felony under this chapter or under
15 article one hundred fifty-five, one hundred seventy, one hundred seven-
16 ty-five, one hundred seventy-six, one hundred eighty, one hundred eight-
17 y-five, one __ hund~ed~eighk=-~§Y§Ih one hundred ninety, two hundred, two
18 hundred ten or four hundred seventy of the penal law or any comparable
19 felony under the laws of any other state or the United States, provided
20 that such crime would be a felony if committed and prosecuted under the
21 laws of this state or (b) has had a license or registration revoked by
22 the superintendent or (cl has been a director, partner, or substantial
23 stockholder of an entity which has had a license or registration revoked
24 by the superintendent or (d) has been an agent, employee or officer of
25 an entity, or a consultant to, or person having had a similar relation-
26 ship with, any entity which has had a license or registration revoked by
27 the superintendent where such person shall have been found by the super-
28 intendent to bear responsibility in connection with the revocation. The
29 term "substantial stockholder", as used in this subdivision, shall be
30 deemed to refer to a person owning or controlling directly or indirectly
31 ten per centum or more of the total outstanding stock of a corporation.
32 § 24. Subdivision 2 of section 592-a of the banking law, as amended by
34 2. The superintendent may refuse to issue a certificate pursuant to
35 this article if he or she shall find that the applicant, or any person
36 who is a director, officer, partner, agent, employee, substantial stock-
37 holder of the applicant, consultant or person having a relationship with
38 the applicant similar to a consultant, (a) has been convicted of a crime
39 involving an activity which is a felony under this chapter or under
40 article one hundred fifty-five, one hundred seventy, one hundred seven-
41 ty-five, one hundred seventy-six, one hundred eighty, one hundred eight-
42 y-five, Qpej'lundred_§ightY~§_~'lLenL one hundred ninety, two hundred, two
43 hundred ten or four hundred seventy of the penal law or any comparable
44 felony under the laws of any other state or the United States, provided
45 that such crime would be a felony if committed and prosecuted under the
46 laws of this state or (b) has had a license or registration revoked by
47 the superintendent or (c) has been a director, partner, or substantial
48 stockholder of an entity which has had a license or registration revoked
49 by the superintendent or (d) has been an agent, employee or officer of
50 an entity, or a consultant to, or person having had a similar relation-
51 ship with, any entity which has had a license or registration revoked by
52 the superintendent where such person shall have been found by the super-
53 intendent to bear responsibility in connection with the revocation. The
54 term "substantial stockholder", as used in this subdivision, shall be
55 deemed to refer to a person owning or contrOlling directly or indirectly
56 ten per centum or more of the total outstanding stock of a corporation.
http://nyslrs.state.ny.usINYSLBDCI/bstfrme.cgi 6125/2008
KtlKlbVE Page 27 of38
S. 8143--A 27
1 § 25. Paragraph (a) of subdivision of section 599-c of the banking

2 law, as amended by chapter 553 of the 1 ws of 2007, is amended to read
3 as follows:
4 (a) The superintendent may refuse to issue a certificate pursuant to
5 this article if he or she shall find that the applicant (i) has been
6 convicted of a crime involving an activity which is a felony under this
7 chapter or under article one hundred fifty-five, one hundred seventy,
8 one hundred seventy-five, one hundred seventy-six, one hundred eighty,
9 one hundred eighty-five, Q!leJJunc::ired §iqh1:;y-=-~~venr one hundred ninety,
10 two hundred, two hundred ten or four hunared seventy of the penal law or
11 any comparable felony under the laws of any other state or the Onited
12 States, provided that such crime would be a felony if committed and
13 prosecuted under the laws of this state, or (ii) has had an authori-
14 zation revoked by the superintendent or a regulatory person or entity of
15 another state that regulates persons engaging in mortgage loan originat-
16 ing, or (iii) has been a director, partner, or substantial stockholder
17 of an originating entity which has had a registration or license revoked
18 by the superintendent or a regulatory person or entity of another state
19 that regulates such originating entity, or (iv) has been an employee,
20 officer or agent of, or a consultant to, an originating entity which has
21 had a registration or license revoked by the superintendent or a regula-
22 tory person or entity of another state that regulates such originating
23 entity where such person shall have been found by the superintendent or
24 by such similar regulatory person or entity of another state to bear
25 responsibility in connection with such revocation.
26 § 26. The real property law is amended by adding a new section 265-b
27 to read as follows:
28 § ~Ei~-:I:>, Distz:essEag PI."9PEaI."1:Yc9Ils:ll],1:JlIlqc::9Il1:I."Cic::t:$,.. . ).. Definitions.
29 The followinq defini tions shal~apply ~C>..._this_section-.!.
30 J~L-"!tomeo~Il§I."-"_ meanS.Cl..._!LCl....~ur<3...l_J>.er~9Il_~ "..!:J...9__ J..fL the __!!lQI."t~_~:i..th
31z:§s:PEac::t: to a distressed . 11ome 19CiIl9:r-W119'i.s::i.IlgCiIlge:r-9:f" :L9s:iIlqCi:h91I1Ea
32 for _Il9I"lP.Cl.Yll'len~ of ta~es '-
33 CP)"<::9IlS:llJt::i.IlqC::9Ilt:I."Cic::t:"9:r- HC::9IltZ:Cic::t:"lll§CiIlS:CiIlCiqI."Ea§lIlEant between a
3 4 homeow.!ler__..Cl.nd .-Cl.._c!is:t::resse<:LPI."9P§%~..9...9nsul:t::CiIl.t::.... under__VLhicl'L1:h.EL con.!>..ul 1:.=
35 .Cl.I'lJ:...~ee.!>.._to p:r-QY':i.de _consultinq.~§I."Y:i.ces.....,.
36 (c::l n C:9IlS:lllti.Ilqs§I:Y:i.C::Eas: n ltl§CiIlS service$ pZ:9Yi.ci§c:i I:>Y a distressed
37 propex:.:t::Y.~consu],tant_ to ..-Cl...JJ9lll§9WIl.§!r tj1at _t..h.ELconsul:t::.Cl.nt_%_§P..£.§s:.§Il:t::~_w.:i...l.l
3 8 h§],P1:9CiChi.EaY§CiIlY o:[t:h.§f()1],9Wi.Ilq:
39 l:i.l_s tgp.L e!lioiIlL-.de1.C!.YL .Y.9Lc!.L _~~1:_Ci$ i Q§.L._£LnAt:l.1.,-_.!>..t:.Cl.Y-_ 9I:_ _P_O..$....1:P9Il§L _ .Cl.
4 a f_orec::l_9.!>..1l.:r-~_f i 1:l.!J9.L...Cl... .:f:..9re c:::I..QSlllI."§.§Ele.C>...I."_1!.:h§.:I.Q.Sl.§l_9%_ E_lJ._O_IIl.Ea..:f"QI:_ I'l_o.!1..p.Cl.Y-
41 ment of taxes;
42 (ii L_9l:21:Ci:i.!L fo%J:>.E!.Ci.I:anc::§.fr91I1_ E.!lY_::>"'E!I."Y:i..c::e.r:J_l::>en_e%J._ciCl.I."Y.QLIIIQ.x:tqa..9~§_9I."
43 reliefwitl1:r-Eas;p§c::tt:9thEapot§n.t:i.CiJ 1"S:S:'9f1:h§h91I1efoI:Il()n.PCiYlIl§!nt of
44 taxe§_,-
45 .li_:i..:LLCi.§l.§l.:i.st_ _t..hEa...hCl.IIl.E!9WI1§!I:_:t::9__ex.erc:::i..s;E!.Cl._~I.".:i.g!'Lt Cl.:L.I."§!i.I1.§lta_t_Ea.IIl§n.1::_9.£
4 6 simi lar:r:-j,qh1:pr9yigec:i....:Ln.th§1Il9I."1:qCiq§ . . q9C::1Jlll§nt:~o:r.Ciny . . +CiW 9 I." t9 I."§f:L-:
47 na~c.§!_..a_ distre§l§l§!<:L!,lOm§Ll."-CiIJi.
48 (iYL"l:2tCi:i.n.CiIlyext.§!Ils:L9Ilof tl1§pez:i9c:iw:i.:thinwhic::htheh0ltle9WIler ltIay
4 9 I.".§!.:i.~s_t..a_:t..Ea._QI."_Q1:h§I:"...:i..§l.§!. .x:.§!..§_~c>x:.Ea JJ:LSl.9.x: !:J...§!£ ..x:.:\.9..ll:t..::>...__~:i.j:!'L I:§!_~.Ea.c::t.t:Q.t.h.§!
50 p.I:()p.~I:1:.Y.i
51 (v) obtainCi waiver ofCin.Cic::c::§!.leI:Citi9n.c::.lcrlls;§!C::9Ilt.a:i.n.ediIl an.ypromis-
52 i?QIT.n.Qtca. Q~ c9ntrE,ct !>E!ctl~§!ci l:::>ya m9~t:g?lg.§! o_nCiP~<?perty iIlforeclo-
53 :;llre;
54 (~.i.1.Ci:;:;:i,.§lj:.. _'!:hE! J"!Qlll"§!9.!"1.J1e I." _1;Q_ Ql::>'tj3.j,p__<3.. _:I..QCiIJ. <? I:_ £Lc!.y'ang@.<:>.f_ .fJlnQ:;;
.1\..£-1K1t V Jj Page 28 of38
s. 8143--A 28
1 (Y.i.i1<i~~:l~i:i:l:l§lhC'Ill§lC'WI1§l,rj,n<iI1~W§lri.Iilg ()rJ::."§l~PQllc.:i.illg to a ~ll.ll\lll91lSl<i1lc.:i

2 complaint, or otherwise prov.ic.:i.iI1SLl-!lformation regarding the foreclosure
3 ClQlIIP:l.<i.iI1t:<iI1c.:iPJ::."9Cl§l~Sl;
4 Jy.i.ij.l_~y().ic.:i or__ <:l.EleJ,.i()J:::£,j:e_tl'l§l_ :i.lIIf>-<i:i,rm§lQ"t_()~ _ th~ h 0l1l§l()wn_er ~Sl_C~§lc!.i i:
5l:'§lSlllJ,i:i.I1g~J::'911ltl'l§lCl9.1l\lll§lI1Cl§lln§lI1t . . 9f<:l.f9J::'§lqlC>~tll:'§l . . PJ::."C'Cl§l§lci.iI1gc>,rt<iJCSl<iJ.§l;
6 or
7 (ix~ve the hoIlleowner ~--PJ:::C>R~rty~ro~L%_~rec::losu..£..§!_S'r
_~OsSl __%c>r _--I1.()I1,::
8 P<:l.YlII§llli:()~i:(3,:J{§l~.
9 Jc.:iL~"Distresse(L_home _ 10all'-'__ lIIeans_~'!-J!QIll§l 10arLJ::hat .i.Sl.- ill_danger of
10 1::>§l:illg:f:9l:'§lc:::J.C>~§lc:i1::>§lCl<itl~§ltl'l§ll'l9ID.§l9t<i'!l§lJ::."hi?-~()I1§lC>J::'I I10re ci§lf<il.lJ.t~ unq§lr
11 th§l lIIC>l:'i:gCig§li:l'l<it§lI1t:itJ.§l . . i:h§l1§lI1c:i§lrt9.:i C::C::§lJ.§l,r.:it§l~tllJ.p<iYJll§llli:Q~tl:l§l
12 mortgage and repossess the~§lJ::'tY1-0r a home loan where the lender has
13 q().Il\lll§lI1C::§lc.:i.:if()J::'§l9JC>Sll.lJ::'§l ..:iCl-t.i91l,E"'or . Ptll:'PQs§lS O~ -tll.i~ p.:iJ::'.:igI:'apl'l,.:i "home
14 loan" is a loan in which the debt is incurred by- theJ!om§lown~rimarily
15 f()J::'P§lJ::'~()I1.:iJ,f.:il1l.iJ.Y c>rll()l.l~§l1l9Jc:iPtll:'P() §l§l~J.... .:iI1c:ii:l'l§lJ.9(3,1l.i§ls§lCll.lI:'§lcl.1::>Y.:i
16 II19I:'i:g<ig§l or deed of-tI:'tl§ltgnp r op§l,ri:Vl.lpOnwlli Clll-tl:l§lJ::'§l.is).,9C::<it§lcl. OJ::'
17 there is to be located a structure or _~trl.lctures intended ~.incj.Rally
18 for OqC::tlP<illqY()~fJ::'()II19I1§li:ofotlL~<3,III.iJ..i§l~Wllicl:l.i~ ()I:'wi.JJ. be ()qqtlPi.eci
19 1::>Y the homeowner as _th~hoEleOwn§lJ:::~~--P-..l:'inQ..i.p(3,ldwelling.
20 (§lJ npiSl-tJ::'§l~~§lc:iPJ::."()P§lJ::'i:yq()J:'lSltl.li:<iI1tnOJ::."I'Cl()n~l.lJ,i:<illi:"l1l§l<iI1Sl<3.n i,ncl.i.Y.icl.::-
21 1.l<iJ.C>I:'.:iC::9l:'P()J::'.:it.iOll,P<3.J::'tn§lI:'sl:li.P ,.l.ilIli.-t§lcIl.i@i.l.ity qOl1lP<3.llY or other
22 business enti~_that,-_J=iirect.:l.Y__().l:'-j.nc!,iirectJ.Y.L-solici ts. or undertakes
23 §ll1lPJ.gYlIl§lni:t()PI:'9yici§lq9I1§l1.lJ.i:i.I1gs§lJ::'yi.q§l~.i:()al:l()zu§lQ'\Yll§lJ::." :for Q()zuP§lI1::-
24 sation or promise of compensation with respect to a distressed home loan
25 or a potential loss of the hom§l...Jor_no~a~I1J::.~f_taxes ....A consulj:allt
26 g9§ll:lI'lO-t.iI1q.ll.lcf§lt:h§l:f9.1.J.9Wi.I1g:
27 J.iLan attorney admitted_to_PJ:::actice_ in-,-tl:l§l....~-tj:lte.of New York;
28 C.i.il<ip§lI:'l:lC>I1 ()J::."§lI1t:i.-tY'\Y1l911 0 .1.cf$ . . ()L .i$c>W§lcl.<3.11 C'PJ.i.g<3.-ti.C>I1§l§lqtlJ::."§lgPY
29 ~_ lien~~~ property in foreclosuJ:Te while the perso!'L().!-'_ entity
30 performs services in connection_!'!:lJ:A_th...§l._obl;i.gj:l_tj..S'_!l.._or lien;
31 <i..ii1<il:>(3,J:'lk,-t:Z:-1.l$tc::()ZUP.:iJ:'lY ,PI:'i.Y<3. -t§lP<3.!l~eJ::."} bank 119J,ci.iI1g C9ZUP<3.I1Yl
32 sayin~ bank-L-_ sav.iI1.~_ and__loCiI1 __ <3.EES'.c::iat:i.onL_..t:hrift hold;i.Qg_ company-,
33 qr:§lcfi.ttlJ:'li.9I1()I:'i.llSltlJ::."(3,1lC::§lq91I1paI1Y ()J::."gani,z§lci under thel.:iws of-tl:l.is
34 §tate L another state or the United StatesL-g.l:'_j:l_~ubsid~or..<:i.~filiai:§l
35 9.L such entitY.. or a foreign beL!'!~:i.llg_q()r:Poratj,on_J,..ice!J..§ed j:)y __j:h§l ~upeJ::''::
36 .i I1t§lJ:'lg§lJ:'li:()fp.:iJ:'l'k.~C>I:'-th§l . . 9QzuptJ::."91J§ll:' . ():f:i:l:l§l.Cl.lI:'r§l1l9Y;
37 (i v ~ f ede~etJ... __P§lpart::men i:_~f.Ji()l.l§.i~_'!-!lc!_!l.l:'ba1L.Qe~elopmen t_£,ppl:'()Yiil~
38 l1l()J::."t:g<3.g§l§l(3,llcl.<3.I1Y~tll:>Sl.icii.<iJ:::.Y()ra:f:filia t§lgf such!u()I:'tgGig§l§l,. and GiI1Y
39 <3,.genJ::_ or emplQY§l§l--.9.%__tflese_perEC>I1_8.. _'lYl'l:i.J.§l_ en9.?l~c! _.i!'Ltl:l§l_ busin§lSlSl_c>X_Sll.lch
40 mortgagee;
41 (y) a jtlcigIll§ln.tCI:'§lc:ii.t9I:' ():fth.§lh()!u§lQ~nel:', if . . i:l:l§l jl.lcigzn§ln.t c::r§lcfi t9 r ' .l:l.
42 Q.l..aim_ aCCrl,:L§l.d b§l:f:or..§! tll.~_'lYJ:::i. -ttiil_n_A()-t.iC::§l_Qffg,J:'§lc::.J.Q"§ll.l:'~~Cil e _:lE_ .Sl_§lI1ti
43 (yi.1<it:i.i:1,§liI1$l.lr§lr<3.11tl:l9J::."iz§lcl.t()do1::>1.l~i.1l§~sin this si:ai:e} while
44 performingtj.j:l~ insuranCe_CiI1c.:i_§§lj:tJ..§l1I\§!'!t_E~y:i.c::.§~L
45 Jyj..jJ '!---P§~'§()B....l:i.g§l!,!~ed-.a--Sl__'!-_ZU()~j:g.9-..9".§l_1::>(3,!'!.k-Ea.l:'_Q.LJ::."§g.i.§..t:..er§lcl. _§~__~ _mol:'t.:-
46 g<3.g§lPJ::."Cl~§r()l:'l:'Eagi.Slt:§lJ::."Eacf§$§m():rtg.:ig§ loan servicer as defined in
47 (3,l:'tic]._§Lj:!'leJ..y§.::p_c>X_tl'l~P.9-..!ll'-j..Jl~ _!<3.'IY.;
48 (yii.iJ <3.PClJ:'lafidell0t:::-for::-profit org<3.llizati()n . . tl'lGit gff§ll:'S cou!'!Sleling
49 ()~_~'!-ciyice_tQ_]1.9_~§l()'\\7I1§!.l:'.Sl_~in _:f()J::."§!9]._Q~T..ll:'§l .. ()l:'_X()~I1 ... cl.§l:f.?l..!l..J...t:_"__()J::."
50 _(..i..~__(LP§ll:'~on]'..i.Cl§lI1Sl§!c.:i
__O_I".,J:'§lgi,Sli:§!J::'€!ci.i,I1_t:he_§.i:Clt:§l . t9 eJl~<3.gEa_ _:i.lL the
51 Pl:'<i9t:i.9§ of other Pl:'Of§SE;ionE; that the supel:'in.tencient.ofbaIlks has
52 c:!€!i:E:l:r.rn:i,I'lE:lci_~11.9_tl.J.ci!lotJJ§sul::ljecttot his~ec.tion.
53 (f1 nl?l:'()p§rtYI'$l:l<3.llzueaI'll:'eal . . pJ::."opertY located in .tl'l,isst.:it§ilIlprovec:!
54 1:>Y_£LC> n§l..-=-:t::..~-=-:f'() ur_ .f..E.1!l.ij.y_ 9...'\\7iill,_J....i.ng_llSl§lci ()J,'Q q qgpi,iil<:L_ __Ql:' __ ;i.!'l..t:.§l.Ilc!§lcf t9 ._ _1::>§
55 us§9__ C>.l:' o.c:.ClT..lP.iiil.9-...L_'lYl'l9!!Y9_I"._P'!-J::."t:J.Y, .. 9,EL _t:.l'1§l_l'l()1II§l Q:r_.l:'§l~:i.q§lI19§._()L9!l"§! __~J::."
http://nyslrs.state.ny.us/NYSLBDCllbstfrme.cgi 6/25/2008
Page 29 of38
S. 8143--A 29
1 I119:r:E:lPE:!:r:oSl9Il§l, ]:::l1.l1:$h9-J,J, I191: :r:E:!:f"E:!:r: 1:9U,IlflIllP:r:9YE:!el :r:E:!9-1, P:r:9PE:l:r:1:YU,P9 I1 Wl1:L<::h

2 such dwelJ,i~are to be constructed.
3 (gl":E3U,,!:!:L11.E:loSl$ci9-Y " $haJJIllE:!9-Ila.Ilyc::a.l E:!Ilel9-:r: elCiYE:!,'C<::E:lP1: .. 13tl11.ciayg:r:thE:!
4 :Qtll:>.lic -.h2l.i.cia...Y£_ a~~et _~9.:r:_th _.~l1. __ s E!c::1:_i_()Il.J;.1:'lE:lIl_ty=:f"2_tl.L __()~_ .. _thsL _gE:!.Il..E:l:r:a..1
5 C::QIl~1::r:tlq1:j,9nJa.w-
6 .2 .l?:r:911:Lpi 1:,i,ons . beli. $t:r: e oSloSlE:lelP:r:QPE:!:r:1:Y . . C::9Il~tlJ,1:Ci11.1::LoSl p:r:Qh:Lp:LtE:!elf:rQIll
7 doing the followi~
8 (a.tpE:!:r:~9:rIlli.J:'l.g<::9J:'l.oSltl+t:LIlg .....oSlEl:r:Yi.c::E:!oSlW:L1:h9tlt.CiW:r:j,1:t.E:lIl'~U,J l.y executed
9 .<::on,sul ting_ contrac1: with-_a....homeowner i..
10 Ct>) c::ha.:r:g:LIlg~Q:r:Q:r:9-<::C::E:lP1::L11.gP9-YIllE:l11.'1:~QJ:" . q9Il~tll.1::L11.g $E:l:ryiqE:ls.l:>E:l~Q:r:e
111:hE:l . . fu,l.l. . . c::QIllPJ,E:lt.:LgIlg~oSl tl<::hoSlE:l;z:-Y:LgE:loSlJ
12 JgL...t..akin~a.....29..wer of attorney from _GLhomeQl:'lne:r:..i..
13 Cell ...J:"El1:Ci:LIl:LIlga.Ilyg;z:-igil1.9-J, 1.9a.IlciQ<::tlIllE:!t'l1: 9:r: O1: h er C):r::Lg:LIl9-l dQ c 1.lntElnt
14 related to the distressed home 10anL_1::he_..E.:roperty_ or the_..J:>Qtential.loss
1 5 Q"f: . . tJ'lElh9IllE:!"f:Q:r:J:'l.9IlPa.YIllElI1tgf .. t:Ci,'CE:!oSl;.. . 9:r:
16 (E:!L:LIleluc::iIlgg:r:a.1:1:E:lntptj,Ilg.1:C)iI1eltl<::E:!...9-hQIllE:l91:'1IlE:!:r:1:C)..... E:!I11::E:l:r:a.c::c>n$tl l 1:::Lng
17 contract that doesllOt fully_ CCl.ntl2J.Y.l'!:L1::l"L_the_pf".QY:L§j.ons_gf _this _a..:r:j;.:Lcle ..
18 :3.. ,PioSl1::r:E:loSl~E:!cip:r:QPE:!;Z:-1:Y<::c)lloSltll.t:LI1gC::9ll1::r:a.cts - Ca.) 1I.el:LoSl1:::r:E:!$$E:lcIp:r:C)PEl;z:-1:Y
19 c::QnsultiIl9: contract ,sl.hall.:..
20 (:L1C::Q11.1:a.:LI1 ... t::hE:lE:!Il1:::L:r:E:!a.g:r:E:!E:!IllE:lI1t9ft::hE:!p9-J:"t:::LE:loSl;
21 (i:iL.I:>E:!p:rQyielE:!el inWJ:':L1::L11.g t.Qt.hE:lh9IllE:l()WI1er"f:9:rreview befC>J:'EloSl:igIl=
22 :Lj'!gL
23 (j,j,i1pE:!p:r:i.J:'l.t::E:!el ina.t:l.E:la.st1:WE:lJ,YE:lPQ.i,ll1:j:'YPE:l Cillelwr:Ltten . i Il 1:hE:!sGl.ID.El
24 lan~aqe that is used ~the homeownE:l:r: and was used in discussions
25 between the consultant and the homeowner to describe the consultant's
26 oSl§l;z:-Y:LC::§l$C)J:'t::C)llE:lg91::La.1:E:lt::h§l<::oIl1::r:a.c::t::;
27 JivL full-Y... disclose the exact nature of the distressed 'property
28 <::C>J:'l.oSlu,l.1::Lllg oSlE:!J:'Y:LC::E:!oSl.t:c)}::>E:lp:r:c>yj,gE:lci.l:>Y . . t:h§lg:L~t::r:E:l$$E:!cipJ::'QPE:!:r:1:Y<::QIls1.lJ1:a.nt::
29 or..a....l'J.Y()ne _wo:r:ki..!1..Q in as S9.9ia t i OILW:L th _the di s tresseci.........£J::.Q:Qerty__ consul t-
30 a.llJ;.i..
31 (yl~tl.J..J.Yeli.oSl <::.J.C)oSlE:l t::hE:! . . t9 t 9- l ..... a.IllC)tlIl ta.Ilel.. . t:E:!;z:-IlloSl9:f"c::C>IllPE:l11.oSla.t:: i gIl:f"C):r: .....$u<::h
32 consul ting se:r:Y:i,..9~si..
33 (yj,) <::Qn1:a.,i,n the J:'l.GiIllE:!,.I:>tl$:LllE:loSloSla..elci:r:E:!oSloSl9-I1el t§lJ.,E:lphQIlEl . . IltlIlll:?§l:r:9:t:tl1E:l
34 consultant and_thE!_oSl.:t;ree:Laddre§l§__ li-f differentl and_facsimile--!!umbeL2r
35 email addressof_th~_g:i.§1:re.sl.l?§!.~t..P:r:c>:QE:!..:r:..1:YcOIl~u,J,j;.9-..Ilt_wllerEl_c ommu,ll_i_caj:j.onl?
3 6 "f::r:QIllt::l1El .... l1C>IllElC)Wll§l:r: . . IllGiy.I:>§lgEl+ iYE!J:'E:!ci;
37 iyii.l.J:>~ __ga.j;ecL ancL..E.erso!1a.:I--.1.Y signed ··P..Y__ the_homeowner and j;he
38 dist;z:-essed P:r:QPEl:r:1:Y consultant Gilld..I:>ew:!,tIlE:!oSll?E:!cia.Il<ia.c::lcllQW.J.ElcigE:!<i pya.
3 9 ~E:!~_York_.l!Q1:.9-..J:"Y...p.1.1bl:Lc ;__Gind
40 (yi :Li.L.<::oIl:t:EiIl_th~.fc>J,l._Cl.W:i,.ll..Q _Ilc>j:;i..C::E:!.L_wh:i.C::~_...oSl.hall __.I:>sL..E.tin1:Eld __:LIl Git
41 least fourteen PQi.Ilt: boldface 1:YPE:!, <::c>,IllpJEl1:eci with the name of the
42 ci:L§_tres sed_p:r:..C>PEl:r::t:Y__ C::9nS."l;l.J..ta.n:t:LE_n_c!. _1,9<::.a._te~t..i.Il __:i,.mmedj,.9- tEl __ p:r:.Q~i.znitL. _1:9
431:hE:!~pa.<::E:!:r:E:!sEl:r:YE:lcif9:r:1:hE:!hoIllE:!9WI1er's$ignfi1:tlrE:!:
44 I,-~OTICE...MQUIRE~ BY _!'fEW_¥QmL1AW
45 ¥_ou __ !ll..GlY. _.c..a..l1.<::E:!L_.thi.~ _coIl-t£Gi<:::t:, ..w.i.:t:h2.Q.LCi.11.Y...P§llaltY_ oJ:"......().I:>Jj,gGi1:_i0l1.1-At
46 GillY time beforezn:LciI1ight:: of (~i.f-tl1 businesscia.y after
47 E:!~Elc::u,:t:j_C>..l1.L.
48 (NaznE:!O~ Pist::r:Els;sed propElrt::Y CO Il sli1.t.a.11.t:) (tl1E:!HGC>Ilsu,l t:a.nt I' t o r
4 9 a.I'lY9I!.E:!..... W9l:'..lc.~IlQ..Lc>:r: _il1.El_ G9.Il..~U,J,j;l;H'lt:. .Il@"y --!!Q1;. _1:..?.k-..E:!__Gl.11.Y._IllC>!1.E:!.Y...:f"~9m ..YO!! _C> :r:_a..~lc
5 0 Y_Ol,l .. .f-o_~ I119]leY_1.lnt::Ll. _t1'l.§ G.QIlS: u,J.1;.GlIlt:l1.Gi1:l_ 9_Q~J,§! _t..§1.y_ %.i,A~oSlh.e..(L <ioAIlg_ElY§!J:"Y=
51thj,llg-tl1is;C0I1t::rGict SGiystllEl Cqnsult a.I1t::willciq-
52 XQtl~hot:l.lciC:Ol1§icie:r-cOI1sul ting an attQ~IlE:!Y_c>:r: .ago.YEl:r:Il~§I1t:-·CiJ2P~9Y§ci
53 hou,s:LIlg counselor before signiIlg 9-11.Y le9"Gil<i9c::U,nt§!IltcOIlc§rniIlgyou,r
5 4 hoznE:!..!. _11:..J..-f3 _a..Q.v:L.l? a.b 1 lS!_ _1;.l1~Lt..-Yc>'1.:l._:f"i!1c:lY01±.~_C>FA_~tj;Q:r:.l1.§Y-L_an~_ _Il.Qt:: CQ.Il.8.tl:U
55 wi.t:1L _a.ll. __~t:t:9.:r:..IlElY :r:..ElC::O_Ill1ll.§Il<i~d. __ 9:r:..p:r:Q_Y~ciE:!gLtQ_Y2U_.I:>Y__t:.l1§__G.C>IlEl..1.l..l t:a._Ilt:..._.1I.
5 6 1 i s t g f 1l0usiI1g cotlI1sE:!lqr$mGiybEl:fOtlnd.on tl1El WE!.I:>s:j.1:E:!o:fthe New York
~.c 1 Kl.Jj V b Page 30 of38
s. 8143--A 30
1 $ t;a"te .~;aI1]{'i.I1g PE:!P<:iJ::"1:J:nE:!Il"tlWV,rw·p<:iIl]{ iI"l~I. :3t.;at.E:!·IlY .1.1$ orpY9;a11:i,I1gt.llE:!

2 Banking Department toll-free at 1-877-B~K=NY§._~'Z.2-226=-~697) "-___ The
3 J.CiWJ::"§gtl:i,J::"§$t.l:l;at:t.ll:i,:3C::9I".lt.J::";ac::t. 99I".lt.;ai.Il.t.llE:!E:!I"lt.:i,J::"E:!;a9J::"eE:!IIl§I".lt.pE:!t:WE:!E:!nY91..1
4 an~:L._t.ll§L_Qgnsl!l t.Cl!L~."--_X9t:l.-_$ll91.1IcLI".l9-.t.. _J::"E:!lY__1.lpgn_ any_ QthE:!:t"_ w!'.i.t.~ell_9:t"_9--E.<:lJ.
5;agJ::"E:!E:!IllE:!Ilt.QJ::" PJ::"9I1l:i,:3E:!.H
6~11§ .... ci:i,:3t.J::"E:!:3SE:!clPJ::"QPE:!J::"tYcQI1:31.11 t<:lIlt.sl:l<:lJ.1;a9C::1.lJ::"Ci t.E:!J.YE:!I".lt.E:!J::" the date on
7 which the right to cancel.--E:!nds-,-
8 (pJ{iJ':rhellOIll§0V:1I".lE:!J::'ll<:lSt.llE:!J::'i.9lltt9 9<:lI".lC::E:!1.,Wi.t.ll91.1t <:lI1YPE:!I"lCi1.t.y or
9 obligatio~any .--99ntra9:t....-~ith E__ distre§§...E:!d __p~gpert.Y__ ~9!"lsl!:l,t.ant n1.1ntil
10 Ill.i.ciI"li.ght. qf the . fifth l::>1.lsinessci<:lY t'Q1.:L9vri.!"l9 t.l1E:!cl<:lYQI"lWhi.c::llt.llE:!
11 ci.i.st.J::'E:!S:3E:!cipJ::'9PE:!J::'t.YC::9!"l:31.1.lt.Ci!"lt. and the homeowner si.g!"l a c.:QI".lS1.l1t:i.I19
12 contract. Cancellation occurs when the homeowner~ a representative of
13 the ll9!llE:!QWI"lE:!J::"L§.i.t.hE:!J::'elE:!J.iYE:!J::'s ..... V:1J::' i t.t.E:!!"lI".lQt..i. ce 9:f.. c.:;aI1c::e lJ.;at.i QI1i.I".lPE:!J::'$OI1
14 to the address specified in the consultin~contract or sends a written
15 C9I1lI1luniC::Citi.QI"l PY :t:Ci9:3i.IIl.i..l§ ,J:::>YlJ"I".li. t.E:!cl$t.;at.E:!S ....IIl;a.i.J.QJ::" PYCi!"lE:!:3t.Citl:>J.i.Sl1E:!el
16 c::9I1lI1lE:!J::'c::i.;a1J.E:!t.t:E:!J::'clE:!1i.YE:!J::'Ys§rviCE:!,p.. ....ciCi1tE:!cipJ::'Q9t'q:Et';aC::s:i,IIliJ.E:!cle1iYE:!J::'Y
17 or _--proof of mailing creates_<:l~§sum--ption_t.llatthe notice of cancella-
18 t ion has been ciel i VE:!J::'E:!ci9I".lt.hE:!el;at§t.ll§:ECic::s:i,IIli.lE:!i.::; :3E:!nt.QJ::'t.llE:! notice
19 is __deposi ted_in _the_mail_QJ::'_~_t.-ll_.t.he_clE:!liV.E:!.J::'Y~erviC::E:l."-_~~Ilc::ella t.i..on_ o:t:
2 Ot.llE:!C::9r1t.J::';ac::t.$11;a1.:LJ::'§1§!Ci$§l ....tll§lllC>IIlE:!QW!"lE:!J::'9:t:Ci.lJ.Qpli.gClt:i9I".l$t.9PCiy:t:E:!E:!S
21 C>J::'Ci!"lYQt.h§J::' .... 9Cl!llPE:!I"l$Clt.i.QI1..... t:9t.llE:! ....clistrE:! sS§lcipJ::'QPE:!J::"t:Y .... 9qI1S1.1J.t.ClI".lt,
22 J.i.:i..L.- The consulting. contract shall be accompanied :Qy. two. copies of ~
23 :t:ClJ::'IIl/C::Clpti.9!"lE:!cf"!"lQti.C::E:!O:t:9ClI".lC::§lJ.J.Cit.i.QI".l".:LIlCit:J.E:!Ci$t. t.WE:!J.YE:!-PQi.I".lt: bold
24 type. This form shall be at.t:Clched __ t.Q__t:..he_contract, shall be easily
25 detachabl~ and shall contain the fo110wi~ statement written in the
26 SClIllE:! J.CiI".l9YCi9E:! CiS 1.lSE:!<:li!"lt.llE:!99n t.J::'Cl c t.LCiI".l<:l the contrac::t.9J::'$llCiJ.1i.I".l$E:!J::'t.
27 accurate information as to the date on which the rigl:lt __ .t:~_ cance_I__E:!nds
28 CiI".lcitllE:!9QI".lt.J::'Ci9tClJ::"::;C::C>I".lt.Cic.:t.i!"lfoJ::'IIlClt:iq!"l:
29 "NOTICE OF CANCELLATION
30 ~Qt...E:l.~ __ You __ may .--9ancel_this C::9!"l.t..J::'.Ci.-c::t.LvrJ-_thou.."t- a~_penalt.Y- or -.-<:>.bliga tioIh
31 Cit. ClI".lyt.i.IIlE:!PE:!:t:QJ::'E:! IIl iciI"li.9llt ():t: (E:Ilt.E:!J::'clCit.E:!J
32 To C::CiI".lC::E:!J.tl1i.::;c.:QIlt.J::"Clc.:t.Lsi.9I".lClI1cl elat§! PQt.l:J.C::9Pi.§l$9:E this canc§l11a:t:i.9 n

33 notice and persona1J.y deliver one_ CO.l;)Y.--9:t"__send_J--.t..j::>y_%acsi.IIl;iI~_Qni ted
34 States mail, or an established commercial letter__clE:!li.yeJ::'Y_~E:!J::'yJ-_C::E:l.-Li.ndi=
35 C:Clt.iI".lg c.:ClI19E:!].].Clt.i.9Ilt.9t.l:1§lP:i.St:r:§!SSE:!cfl?J::'c>P§!:r:t.yQ9I1:31.l1t.<:l,I".lt.Clt. ....QI"lE:!():f.. the
36 f 0].1 O}'1j.P--SL~
37 Name of Contractor
=============
38 Street Address~~~~=======~~====,
39 Qj,t.YL .... $t.Clt.E:l.,:z::i.P=.===============
40 Facsimile :~===================
44 RCit.E:!: "
45 (i.iiJ Wi thin ten elClY$ :f..q1.:Lowin9 rE:!9E:!i.p-S oLaI1Qtice of cancellation
46 giYE!I1 i.I1. .Gl.C::<::()J:"ci~IlC::~ _.wi,t.I1 t.his .stll::>elivi$i.on!! thecl i ::;tJ::'§l:3£Elel pI:'e>p§lrty
47 consultant shall return aI"lyo:r;iginCilcQI1tiJ::'act.CiI"lelaI1Y ()t.llE:!I."doc.:1.l!llE:!Ilts
4 8 §j..9.Il.E:!(Ll::>.Y__9.J:'_p~.C>_v i cled__:Qy~.t..hE:!. l"lClJILE3.9li!"l§!:t"...__ . Ca!1P..§!.1J. a t..:i...9I L shE_lLJ::'.E:!_l_E:!Cl$.§! t.llE:!.
49 llQlll_E3.Qli!"l§!r __Q:E._ aU.__ .9.h.li.g9-tt.QI1$._ .t..9. _p~__CiI1Y_ .f§!"E:!:3._ .9.I."._C::9I1lP.E:!_1l1:lCit.i.9_11_t..9_J::ll§!
5 Od;is t:r:es;SElclP:r:9P§!J:'t.yc.:9Il$1.1:L.1:CiIlt..
http://nyslrs.state.ny.usINYSLBDCI/bstfime.cgi 6/25/2008
KDIKLI:-V b Page 31 of38
S. 8143--A 31
1 4,I?§Ilalt::i.§s Clllclgt1:J.er P:r:9yisioIlSl . t",,} If a court finds that a

2 distressed property consultant has violated ~. provision of this
3 s;§c:t::i.9IlLt:1:J.§C:9tl:r:t:lnGiVll1C3.lc§lltl1), C3.Ilcl. Y9i1el C3.IlY ?g:r:§§ll1§Ilt:bEl1::ween t:he
4 gJ-st::r:esse<:i homeotine£_ an(L~he_<:l.. .:Lsj~~es~§<:L~...r...Qf>e:r:t:Y_C:9IlsuJ-_taIlt:.
5 (p) If the <:l:i.s;t::r:El$$El<:lP:r:9P§:r:tY..... C:9Il$tl'.lt:GiIlt:yi9IGi1:El$C3.llvprQyi$:i.gll of'
6 thi $ Sl§c:t::i.9IlGiI1<:ltI1ElI191l1El9tiIl§:r:.. . Stlff'El:r:Sl<:lGi!,I1ClgElPElc:a.tlS§Qf't::h§v:i.Q.lC3.t: i gll,
7 the homeowner may recover actual and consequential damGl,ges_§nd~co$ts
8 f:r:Omt:I1§<:l:i.$t::r:§1313§<:lp:r:QPEl:r:t:YC:9IlSltllt:GiIlt: ,in Cill action based on this
9 sectio I1.....__ :rL_ the __dist:r:essed p...£operty consultant. inteZltioI1GiJJ.Y_Qr_rec:.k-
10 ,l.El$$,l.YV:i.9.la.t:El$GiIlvp:r:Qv:i.$:i.gI1 Qf' . . t::h:i.Sl,5;Elc:t::i.QI1,t:I1§c:9tl:r:t:InGiv award the
11 l1QIll§9tiI1El:r: t::r:E!l:>J.. El.<:la.InC3.gEl13,Ci t t:9:r:I1§Ys' f'ElEl$,a.I1<:lg913t:13·
12 iQL_~__ "'p"'rov~sion of_.a._cons~lt~I!9"- contract that attempts or purports
13 t:QJ..i ll1 :i.t:t1:J.ElJ..:i.C3.l:>:i.J.:i.t:y Qf't:l1e<:l:i$ t:r:§s13ElelR:r:QPEl:r:1::VC:9IlS1.1J..1:a.Ilt:1.1Ilcl.§:r: this
14 section shall be null and void. Inclusion of such-P£QvisiQ~$hall_at
15 tI1ElQP1: Oll Of'1:l1ElhOll1ElQtiIl.El:r: .:r:ElIlclEl:r: ....t:l1Elc:9Il$1.1J..1: i Ilg contract voi.cl . J1.rlV
i
16 p:r:Qyi.13iOIl in C3. c:Ollt::r:Cic:t which GitteInP1:;Slo:r:Ptlrpo:r:tst9requi.rElarpi-
17 tration_Of'_E-n¥_dis"putE!_arising_ u!lSiE!:r:_~hi~secti9n shalJ.....~~~..9...:i....9.... . .....Cl.t:__t:he
18 QP1:::i.Oll of 1::he :h9IllEl9tiI1El:r:·J1.rlv'W'Gii.VEl:r:Of'j::l'l§P:r:9ViSl:i.Oll$QfthiSlsElc:ti9I1
19 shall be void and unenforceable as contrary to"public_P91i_c~~
20 (ell . . :r.r1C3.cl.cl.:i.t::i.911t:Ot:I1§ot:l1El:r::r:Elll1eci:i.El$P:r:9yi.ciElciL'W'l'lElIlElYEl:r: th§:r:El shall
21 P§Ciy:i.OJ..C3.t::i.Qll0f'1:.I1:i.$SlElc::1:.i.9llLCiPPJ...i.C::C3.1:.:i.<:>IlIll?YPElll1C3.ciElPythEl .C3.t:t:O:r:I1§Y
22 general in. the name of the people-Of_ the state of ...J'!ew_Xork _to_'Lcour~_Q...:r:
23 jtlSlt:.i.c:§l'lC3.Y.i.Ilgjtl:r:i Slcl.i.c::t:.i.9IlPVC3.SlP§<:::i.C3.J.P:r:9C::El§c:i:i.llg1:Q:i.SlSl1.1§GiIl :i.Il j tlIlC::::""
24 tion, and upon notice to the defendant of not less than five davs, __~"
25 enjoin and restrain the continuance of such violations; an<:Lif_j.J:... __~all
26 GiPP§C3.:r:t:9 the SlC3.t::i.$f'C3.c:t::i.9ll Of'thElc::9tl:r:t:9:r:j1.1Slt::i.c::El1:l1Git:t:hEl . . ci§f'§ll<:la.Ilt:
27 !las, iZl_f'a.~iolated this section, an injunction may be issued 12v_suc::h
28 C::91.1:r:tQ:r:j1.1$t::i.C::§/ElIlj9:i.Il:i.llga.nci:r:ElSlt:r:C3.i.Il:i.IlgGiIlvf'tl:r:t:h§:r:ViQJ..Gition,'W':i. t l1-
29 out -.F~iri~"'-p£'Q.Q.:f' thaj:~IlY__ P~:t:§o!l.__h~_. .:i.Il__%"§c t ,__ been __cil}i!rreci __or
30 damagecL_ thereby.... __In_anv_.$uch.. ~Q...c:...El....E!di~L-th§!_...9..9_tg'_~lU_~ll1Cllc.ELC3.1I owanc:§$
31 to . . tl1ElGit1:9r:IlElYgElIlElr:a J.. Gi13pr 9Y:i.cl.e cl.i.Il.PGir:Gi9':r:C3.ph s :i.:x,Of' §l.l1:>cl.i y is.:i.9Il (Gi)
32 of section eighty-three __hun9sed __th:r:E!El__9..:f'.. _~l"!...E!....c::...i v:iJ._p:r:E-ctic:.El._la~ aIlci
33 :r:1.1],eSl, . . . C3.Il<:l<:l:i.:r:El<::1::r:§Slt:i.t1.1t:i.9Il· . . W1l§IleYEl:r:1:hElC::91.1:r:1:$I1C3.J.JciElt.El:r:ll1:iIlEl . t.hGit.C3.
34 viol.a.tion of thj.E section.. .I1.a.$_.9...9Cu_:r:...:r:...edL_the . . coJ.L:r:-t:....... may__io.IllP_o_s_El...._...lL_ civil
35 penalt:Y....-Q%__ not.. __1l19:r:E!~ thaIl..._teIl_.1:pousand d61Iars......f'or each_Y:i.9Iati"Il..... _]:!!
36 C9IlIlEl<::1:.:i.9I1'W':i.1:.ha.IlY.. Sl1.1c::l1P:r:OP9$§!<:lC3.pp].,i.C::C3.t::L 9IlL .... 1:.hEl.a.t.t.9:r:IlElVgElIlEl:r:C3.,l. is
37 Giuthor...J,.zed __1:.9_t:C3.k..El_proof ancl._ll1ake ~_determinatioI1.- of ... th~L reI El....y"'eint _fagts
38 C3.Ild1:.9.i.sS1.1eSll.l1:>P9ElnGiSl:i.IlC3.<::C::9:r:ciC3.Ilc:§'W'.i.1:.h tl1e c::i.vil p:r:C3.c:1:..i.CEl law and
39 rules......
40 J~L __ '!'hEl_provisions of this _s..§!<::t::i.9!l_ ar...§Lp.d~....E:!-:x,c:J.usi ve ...a...n d _C3.:r:§!_l,..!!..._~ci<:li
41 tion to .a.IlV o:t::h§!r:r:ElqtI:i.:r:ElIllElll1:SlL :r:i.g!lt:$L:r:§lIlEl!cl..i.ElSlLGiIlcl. P§!llGi:Lt:i.§SlP:r:9Yi.ciElg
42 l:>v_J.Giti.. .
43 § 27. Severability clause. If any clause, sentence, paragraph, section
44 or part of this act shall be adjudged by any court of competent juris-
45 diction to be invalid, such judgment shall not affect, impair or invali-
46 date the remainder thereof, but shall be confined in its operation to
47 the clause, sentence, paragraph, section or part thereof directly
48 involved in the controversy in which such judgment shall have been
49 rendered.
50 § 28. This act shall take effect immediately; provided, however, that:
51 a. sections one and seventeen of this act ~hall apply to actions that
52 are commenced on or after September 1, 2008;
53 b. sections two and twenty-six of this act shall take effect September
54 1, 2008;
55 c. sections four, five, six, thirteen and eighteen of this act shall
56 apply to loans that are consummated on or after September 1, 2008;
http://nyslrs.state.ny.us/NYSLBDCllbstfrme.cgi 6/25/2008
l'.C I KIt V b
Page 32 of38
S. 8143--A 32
1 d. section four-a of this act shall of this act take effect July 1,
2 2010;
3 e. sections seven through twelve and een through sixteen of this
4 act shall take effect July I, 2009;
5 f. sections nineteen through twenty-fi~e of this act shall take effect
6 on the first day of November next succeeding the date upon which it
7 shall have become a law; and
8 g. provided however, effective imme~iately the promulgation of any
9 rules, regulations or actions necessary for timely implementation of the
10 provisions of this act are hereby authori~ed.
http://nyslrs.state.ny.uslNYSLBDC 1/bstfrrne.cgi 6/25/2008

-----~I ----~-

Predatory Lending Bill

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CHAPTER!

STATE OF NEW YORK

Introduced by Sens. FARLEY, PADAVAN, MALTESE, BONACIC, ROBACH, CONNOR,

DATE RECEIVED BY GOVERNOR:

ACTION MUST BE TAKEN BY:

DATE GOVERNOR'S ACTION TAKEN:

SENATE VOTE ~y .JL N HOME RULE MESSAGE _ Y_ N

DATE ~(~J /08

DATE rJ..D) 0l3/0Z

S8143-A FARLEY Same as A 10817-A_ Towns

Aye Griffo Aye Hannon A Hassell-

Dear Ms. Rosenstein:

July 31, 2008

There are three main aspects to bill S.8143-A.

1) The bill promotes effo~ to encourage lendlers and borrowers to reach a

3) The bill targets fraud~lent practices by creating the crime of "residential

S.8143·A into law. Best regards;

/~r~I. Hugh 'f. Farley

NEW YORK STATE SENATE

BILL NUMBER: S8143A

TITLE OF BILL: An act to amend the real property actions and

This bill seeks to address the mortgage foreclosure crisis

SUMMARY OF PROVISIONS: Section 1 of the bill amends Real Property

sure action has already been commenced to also participate in a settle-

Section 6 of the bill adds a new Banking Law § 590-b to establish

Section 17 of the bill amends RPAPL § 1302 to extend its application to

Section 20 of the bill amends Criminal Procedure Law § 700.5(8) (b) to

Sections 22 through 25 of the bill amend various sections of the Banking

http://nyslrs.state.ny.us/NYSLBDC 1/bstfrrne.cgi 000008 6/25/2008

Law that allow the Superintendent to refuse a license or registration to

Section 27 of the bill contains a severability clause.

Section 28 of the bill provides for the effective date of various

STATEMENT IN SUPPORT: New York State faces a mortgage crisis of

A.Pre-Foreclosure Notice According to industry experts, a majority of

http://nyslrs.state.ny.us/NYSLBDC 1/bstfnne. cgi

B'lJI)C;E~J:Ml?:r,.J:C;ATIONS: This bill would not have a siqnificant impact on

EFFECTIVE DATE: This bill would take effect immediately, unless

Session Year 2008

Primary Sponsor: Senator Farley

Law: Real Property Actions and Sections: Various

Division of the Budget recommendation on the above bill

1. Subject and Purpose:

Validation: Document 10: 52721553-14

Section 28 establishes effective dates for various provisions of the bill.

This bill is identical to Governor's Program Bill #44.

By providing for advance foreclosure notifications, settlement conferences, and increased

Validation: Document 10: 52721553-14

6. Other State Agencies Interested:

7. Other Interested Groups:

Validation: Document 10: 52721553-14

July 31, 2008

TO: Honorable Terryl Brown Clemons, Esq.

FROM: Matthew W. Tebo, Esq.

SUBJECT: S.8143-A (Senator Farley)

WWW.DOS.STATE.NY.US E-MAIL: INFO@DOS.STATE.NY.US

New York, NY 10016-1502

July 29, 2008 212.297.1699 Fax 212.297.1658

RE: 5.8143-A (Farley)/A.10817-A(Towns) AN ACT to amend the

Dear Ms. Brown Clemons:

We continue to believe that a statutory "ability to repay" requirement provides an

Once again, we appreciate the opportunity to comment on this legislation .

Arent Fox LLP

Honorable David A. Paterson