New York Real Property Law

Sec. § 265-B
Distressed Property Consulting Contracts


1.

Definitions. The following definitions shall apply to this section:

(a)

“Homeowner” means a natural person who is the mortgagor with respect to a distressed home loan or who is in danger of losing a home for nonpayment of taxes.

(b)

“Consulting contract” or “contract” means an agreement between a homeowner and a distressed property consultant under which the consultant agrees to provide consulting services.

(c)

“Consulting services” means services provided by a distressed property consultant to a homeowner that the consultant represents will help to achieve any of the following:

(i)

stop, enjoin, delay, void, set aside, annul, stay or postpone a foreclosure filing, a foreclosure sale or the loss of a home for nonpayment of taxes;

(ii)

obtain forbearance from any servicer, beneficiary or mortgagee or relief with respect to the potential loss of the home for nonpayment of taxes;
(iii)
assist the homeowner to exercise a right of reinstatement or similar right provided in the mortgage documents or any law or to refinance a distressed home loan;

(iv)

obtain any extension of the period within which the homeowner may reinstate or otherwise restore his or her rights with respect to the property;

(v)

obtain a waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a property in foreclosure;

(vi)

assist the homeowner to obtain a loan or advance of funds;
(vii)
assist the homeowner in answering or responding to a summons and complaint, or otherwise providing information regarding the foreclosure complaint and process;
(viii)
avoid or ameliorate the impairment of the homeowner’s credit resulting from the commencement of a foreclosure proceeding or tax sale; or

(ix)

save the homeowner’s property from foreclosure or loss for non-payment of taxes.

(d)

“Distressed home loan” means a home loan that is in danger of being foreclosed because the homeowner has one or more defaults under the mortgage that entitle the lender to accelerate full payment of the mortgage and repossess the property, or a home loan where the lender has commenced a foreclosure action. For purposes of this paragraph, a “home loan” is a loan in which the debt is incurred by the homeowner primarily for personal, family or household purposes, and the loan is secured by a mortgage or deed of trust on property upon which there is located or there is to be located a structure or structures intended principally for occupancy of from one to four families which is or will be occupied by the homeowner as the homeowner’s principal dwelling.

(e)

“Distressed property consultant” or “consultant” means an individual or a corporation, partnership, limited liability company or other business entity that, directly or indirectly, solicits or undertakes employment to provide consulting services to a homeowner for compensation or promise of compensation with respect to a distressed home loan or a potential loss of the home for nonpayment of taxes. A consultant does not include the following:

(i)

an attorney admitted to practice in the state of New York when the attorney is directly providing consulting services to a homeowner in the course of his or her regular legal practice;

(ii)

a person or entity who holds or is owed an obligation secured by a lien on any property in foreclosure while the person or entity performs services in connection with the obligation or lien;
(iii)
a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company, credit union or insurance company organized under the laws of this state, another state or the United States, or a subsidiary or affiliate of such entity or a foreign banking corporation licensed by the superintendent of financial services or the comptroller of the currency;

(iv)

a federal Department of Housing and Urban Development approved mortgagee and any subsidiary or affiliate of such mortgagee, and any agent or employee of these persons while engaged in the business of such mortgagee;

(v)

a judgment creditor of the homeowner, if the judgment creditor’s claim accrued before the written notice of foreclosure sale is sent;

(vi)

a title insurer authorized to do business in this state, while performing title insurance and settlement services;
(vii)
a person licensed as a mortgage banker or registered as a mortgage broker or registered as a mortgage loan servicer as defined in article twelve-D of the banking law, provided that no such person shall take any upfront fee in conjunction with activities constituting the business of a distressed property consultant;
(viii)
a bona fide not-for-profit organization that offers counseling or advice to homeowners in foreclosure or loan default; or

(ix)

a person licensed or registered in the state to engage in the practice of other professions that the superintendent of financial services has determined should not be subject to this section.

(f)

“Property” shall mean real property located in this state improved by a one-to-four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons, but shall not refer to unimproved real property upon which such dwellings are to be constructed.

(g)

“Business day” shall mean any calendar day except Sunday or the public holidays as set forth in section twenty-four of the general construction law.

2.

Prohibitions. A distressed property consultant is prohibited from doing the following:

(a)

performing consulting services without a written, fully executed consulting contract with a homeowner;

(b)

charging for or accepting any payment for consulting services before the full completion of all such services, including a payment to be placed in escrow pending the completion of such services;

(c)

taking a power of attorney from a homeowner;

(d)

retaining any original loan document or other original document related to the distressed home loan, the property or the potential loss of the home for nonpayment of taxes; or

(e)

inducing or attempting to induce a homeowner to enter a consulting contract that does not fully comply with the provisions of this article. 3
Source

Last accessed
Dec. 13, 2016