Today, New York Attorney General James issued a press release directing mortgage loan servicers, doing business in New York State, to take numerous steps to comply with New York mandates to prevent a residential foreclosure crisis like the one seen in 2008. In the press release, Attorney General James requests mortgage servicers implement the following procedures within ten (10) business days:
In addition, Attorney General James is asking servicers of Fannie Mae and Freddie Mac-insured loans to take all necessary steps required under federal and New York law to provide borrowers with options to avoid foreclosure.
An example of a letter sent to a mortgage servicer by the New York Attorney General is available here. The attorney general is requesting all servicers implement the above procedures to protect homeowners within ten (10) business days. The attorney general is additionally requesting that all servicers implement requested or alternative loan modification procedures in order to offer a long-term solution subsequent to when forbearance agreements become due within thirty (30) days.
The attorney general warns that servicers who fail to comply with these directives may be in violation of New York’s mortgage servicing regulations and other applicable state and federal consumer protection laws that prohibit servicers from “engaging in unfair or deceptive or abusive business practices.” Moreover, Attorney General James reminds servicers that they are required to “act in good faith and deal fairly” with borrowers, including by structuring any necessary loan modifications to result in payments that are reasonably affordable and sustainable for the borrower at the time the modification is made.
Mortgage loan servicers should heed this warning and act quickly to adopt the necessary practices and procedures to not only avoid scrutiny from the attorney general but to protect homeowners from losing their most valuable asset during the COVID-19 pandemic.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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