2016 Foreclosure Legislation 

In 2016, legislation was signed to address the threat posed to communities by vacant and abandoned “zombie properties” throughout the State of New York was passed.

This new law, which took effect on December 20, 2016, builds upon the foreclosure reforms of 2008 and 2009 and targets the zombie property epidemic in a number of ways, including: (1) by imposing inspection, maintenance and reporting requirements on mortgagees or their servicing agents; (2) by expediting the foreclosure process and making sure the participants understand their rights and responsibilities during that process; and (3) by setting up a vacant and abandoned property registry.

First, with regard to inspection, maintenance and reporting, the law requires mortgagees or their servicing agents to inspect one-to-four family residential properties within 90 days of when the corresponding mortgage loan falls into delinquency and to conduct periodic follow-up inspections thereafter. If the mortgagee or servicer determines that the property is vacant and abandoned, as defined in the new law, the mortgagee or agent must assume maintenance obligations for the property and provide pertinent information regarding the property to the Department for inclusion in the Department’s vacant and abandoned property registry.

Second, with regard to the judicial foreclosure process, the new law seeks to reduce the amount of time vacant and abandoned properties linger in that process by allowing plaintiffs to seek expedited judgments of foreclosure and sale. The new law also seeks to improve the mandatory settlement conference in residential foreclosure actions by imposing (1) new requirements on participating parties to ensure that the parties are prepared to participate meaningfully in the conference; and (2) penalties for a party’s failure to negotiate in good faith during the conference. Moreover, the new law requires the presiding judge to provide defendants with a DFS-published Consumer Bill of Rights and Responsibilities at the initial mandatory settlement conference. To further ensure that borrowers are apprised of their rights and obligations both prior to and during the foreclosure process, the new law amends the language which must be included on pre-foreclosure notices and foreclosure notices sent by mortgagees and their servicing agents to borrowers. In cases where a foreclosure plaintiff or its affiliate purchases the foreclosed property at auction following a judgment of foreclosure and sale, the new law imposes a timeline on the purchaser for marketing the property for rental or resale.

Finally, with regard to the vacant and abandoned property registry, the law requires the Department to establish such a registry and to determine the limited circumstances in which information from the registry can and should be made public, in the interests of justice.

Descriptions of the New Law