The Bill S4408 has passed the House and Senate in NY and is now being presented to the Governor. The Bill requires a lender which seeks to foreclose on a reverse mortgage issued under the federal Home equity conversion mortgage program to provide notice to the Department of Financial Services and to the mortgagor; directs the Department of Financial service to provide notice to the Mortgagor of legal service organizations which may assist them with the default or foreclosure; and prohibits lenders from making advance payment of debts upon the mortgage real property.
The goal of protecting senior homeowners and creating greater support and access to legal services being paramount. Lenders would also be required to engage in loss mitigation, as outlined by the Department of Financial Services before foreclosing. The new requirements would be a condition precedent to bringing a foreclosure action against a HUD reverse mortgage and may result in treble damages and attorney’s fees for non-compliance.
We will be watching this legislation closely and provide more information if the Governor signs and implements same. Should you have any questions, please contact Deborah Gallo, Director of Operations, at [email protected]