What Role Might Stuyvesant Town Have Played in New York Legislature's Foreclosure Protection?

This week, New York Gov. David A. Paterson signed comprehensive foreclosure legislation into law, providing additional critical protections for New York state homeowners, tenants, and neighborhoods in the wake of the ongoing foreclosure crisis. “This legislation protects homeowners by providing mandatory settlement conferences and protects tenants from premature evictions,” Gov. Paterson said. “It also safeguards New York neighborhoods from the decay caused by foreclosure by reducing the erosion of area property values and by preventing vacant homes from becoming sites of criminal activity.” Currently, a 90-day pre-foreclosure notice is sent for subprime loans, but the new legislation will require this letter to be expanded to include all home loans, giving homeowners additional time to work with lenders. Under this law, lenders who serve a 90-day notice on a homeowner will be required to make a regulatory filing with the banking department within three days of that service with specified information. This will allow the banking department and the Division of Housing and Community Renewal (DHCR) to provide targeted assistant to distressed homeowners during the critical foreclosure timeframe. Additionally, the scope of the early mandatory settlement conference will be expanded to include borrowers of all home loans, not just borrowers with subprime loans. The legislation will establish protections for tenants in foreclosed properties by requiring that they receive written notification of the change in ownership of the property and be permitted to remain in their home for the remainder of the lease term or 90 days, whichever is longer. Under this new law, plaintiffs in a foreclosure action who obtain a judgment of foreclosure and sale will be required to maintain the foreclosed property. The legislation will also enhance consumer protections to prevent homeowners from falling prey to rescue scams, and it will prevent brokers who perform distressed property consulting services from accepting upfront fees. Regular readers of this site must be wondering: What does this have to do with Stuyvesant Town? Politicians score easy points by addressing the concerns of tenants at large-scale apartment complexes. After all, there are more tenants votes than owners'. Likewise, there are more homeowners and tenants than there are bank and servicing company executives. The latter category are less likely to vote against a particular candidate because of this legislation. On the other hand, politicians who fail to take what appears to be decisive action for the benefit of homeowners and tenants will have serious re-election concerns. On top of that, such legislation is easier than the hard choices of dealing with budget shortfalls.