Following a series of damning articles spotlighting New York reverse mortgage borrowers in foreclosure, lawmakers this week introduced new legislation that seeks to create additional consumer protections for these afflicted seniors.
On Monday, New York Assemblywoman Helene Weinstein (D-Brooklyn) and Senator Jeff Klein (D-Bronx/Westchester) announced the introduction of legislation (A10745/S8177). The bill will provide reverse mortgage homeowners with the consumer protections given to other homeowners currently not included in many of the protections of New York State’s residential foreclosure prevention laws.
This includes requiring lenders to provide notices to reverse mortgage borrowers 90 days in advance of filing a foreclosure action against the homeowner, including a notice containing contact information to free non-profit resources to help negotiate a resolution early in efforts to avert the filing of a foreclosure action.
Under the legislation, homeowners would also be entitled to in-person mandatory residential foreclosure settlement conferences with the foreclosing entities under court oversight.
“These changes must be made so courts can protect seniors from losing homes they worked their whole life to attain,” said Assemblywoman Weinstein in a prepared statement.
Weinstein, who is also chair of the New York State Assembly Judiciary Committee, attributes the need for additional foreclosure protection to recent articles that have appeared in the New York Post over the last month.
The articles, which also caught the attention of the New York State Department of Financial Services, described an “uptick” in foreclosure cases involving reverse mortgage borrowers in the state, as well as “numerous” complaints about reverse mortgages serviced and originated by several of the industry’s largest players.
In a release issued Monday, Weinstein and Klein noted that reverse mortgage lenders “seem to be engaging in deceptive or exploitative practices” when offering reverse mortgages to New York seniors.
“In light of the recent increase in foreclosure filings against New York’s senior homeowners with reverse mortgages, and an uptick in the outrageous deceptive practices of the lending industry, affording these often vulnerable homeowners with the full protections of our residential foreclosure prevention laws is timely, and the right thing to do,” Weinstein said.
Sen. Klein acknowledged that reverse mortgages have been a useful financial tool for many seniors, however, he said the “unscrupulous actors have left some on a road to financial ruin.”
“We must take action to protect our seniors from predatory practices, and to extend the protections of our foreclosure prevention laws to include this type of mortgage,” said Sen. Klein.
While the lawmakers don’t expect the legislature to resume session before year’s end, Weinstein told the New York Post that she plans to push the law and “plug the hole” next year.
In response to the legislation introduced Monday, the National Reverse Mortgage Lenders Association (NRMLA) told RMD that it recognizes the importance of providing homeowners with the time and opportunity to discuss loss mitigation options with their lender.
“NRMLA has been supportive of HUD’s efforts to refine its loss mitigation policies that allow for curing of de minimus amounts, repayment plans and at-risk extensions,” NRMLA said in a statement provided to RMD.
Written by Jason Oliva