History of the Foreclosure Prevention Services Network
The network was established in 2008 with $25 million in state general fund dollars to NYS Homes and Community Renewal (HCR). In 2009, New York directed $21.825 million more to support services through December 2011.
In 2012, the program moved to the NYS Office of the Attorney General after $60 million was committed to fund services for three years ($20 million per year) from a national mortgage servicing settlement. The Homeowner Protection Program (HOPP) was created and has been extended twice with more money going into it from subsequent bank settlements. HOPP continues to run at about $20 million per year (not including administrative costs for oversight, training, and programming) and is now in its seventh and final year, scheduled to end March 31, 2019.
State Laws and Programs Dependent on the Network
Since 2008, New York State has passed and implemented several laws and programs to help homeowners, tenants and communities which are predicated and/or depend on the network of housing counseling and legal services professionals:
90 Day Pre-Foreclosure Filing Notices (RPAPL sec. 1304) - A notice sent to homeowners by lenders at least 90 days prior to filing a foreclosure complaint, and must attach a list of at least 5 non-profit housing counseling agencies serving the geographic region of the homeowner.
NYS Department of Financial Services (DFS) maintains the statewide list of counseling agencies which is comprised almost entirely of network partners.
Settlement Conferences (CPLR 3408) – Mandatory settlement conference must be held by courts to bring the parties together to negotiate an alternative to foreclosure.
Network partners are integral to the settlement conference process, appearing with homeowners as well as being available in courts on settlement conference days.
Consumer Protections Extended to Reverse Mortgages (RPAPL sec. 1304.1-A, 1304.6(b)(2); CPLR 3408) – In 2018, the Governor and Legislature extended the mandatory settlement conference and 90 day pre-foreclosure filing notice protections to seniors with reverse mortgage loans.
Network partnerss see a steady increase in folks needing reverse mortgage foreclosure assistance and seniors are especially vulnerable to the scammers preying upon them.
New York Homeowner Bill of Rights (RPAPL sec. 1303.3-a) – DFS publishes a Consumer Bill of Rights for courts to provide to foreclosure defendants.
The Homeowner Bill of Rights states that free legal services are available and refers homeowners to the network partners.
Foreclosure Rescue Scam Prevention – New York has two laws designed to help homeowners avoid being scammed (the Distressed Property Consultant Law (RPL sec. 265-b) and the “Help for Homeowners in Foreclosure” Notice (RPAPL sec. 1303)).
Homeowners are routinely referred to network partners by state agencies and others as means to avoid being scammed; network partners are the strongest front against scammers.
DFS Business Conduct Rule for Servicing Mortgage Loans (Part 419 of Superintendent’s Regs) – The rule sets forth standards of prescribed and prohibited behavior for mortgage servicing and provides guidance to courts on mortgage servicing conduct.
Network partners are the main enforcers of the regulations and routinely identify violations during the settlement conference negotiations.
Tenants Rights to Notice and Holdover (RPAPL secs. 1303, 1305, 1307) – Tenants in foreclosed properties must be given notice when foreclosures are filed, and are given the right to remain in the property for up to ninety days after a foreclosure sale of a building.
Network partners often are the only source of information and counseling to tenants about their rights.
Mortgage Assistance Program (MAP) - A zero percent interest rate loan program to help homeowners cure tax arrears, mortgage arrears, or get a loan modification.
MAP depends on network partners to screen, counsel, and submit applications.
Homeowner Hotline (1-855-HOME-456) – A statewide hotline for homeowners in default and foreclosure to call and have their delinquency or foreclosure case triaged.
Homeowners are given a warm transfer to the network partner in their area.
The Community Restoration Fund (CRF) – NYS Homes and Community Renewal (HCR) purchased discounted pools of defaulted residential mortgage loans.
HCR depends on network partners located in the communities of the mortgage loans to work with homeowners and identify vacant properties.
Zombie and Vacant Properties Remediation and Prevention for Municipalities (RPAPL sec. 1308) – 76 municipalities across NYS have received funding to enforce the Abandoned Property Neighborhood Relief Act of 2016, a/k/a “the zombie property law.”
Municipalities subcontract with network partners and depend on the services provided to homeowners as a piece of their neighborhood preservation efforts, and network partners identify the zombie properties in their communities.
Land Banks – Created in NYS in 2012, there are now 25 land banks across the state.
Network partners work with land banks to identify properties, prepare individuals to become homebuyers, and assist in efforts addressing neighborhood blight.