The U.S. endured a housing crisis as part of an economic recession from 2007 through 2012. The effects are still lingering in many New York regions. A primary indicator of the problem was a massive volume of mortgage foreclosures. A foreclosure is a lawsuit initiated by a lender, such as a bank or a mortgage holder. When homeowners fail to pay back the mortgage loan, the party holding the mortgage will seek to reassume possession of the property. During the recession, New York saw unprecedented rates of foreclosure. The NY State Department of Financial Services reported that New York made up 4.7% of U.S. mortgages in 2015, yet represented 11.6% of all loans in foreclosure. Although conditions have improved, the state government is still implementing laws and other solutions in hopes of a full recovery.
Mandatory Settlement Conferences
The implementation of mandatory settlement conferences is actually not a recent initiative, as it was implemented in 2010; however, the significance of the action cannot be overlooked in any discussion of New York's actions in response to the housing crisis. These conferences encouraged communication and required disclosure of many critical rights and responsibilities among the parties in a foreclosure. Since its inception, default judgments in foreclosure actions plummeted from approximately 80% to nearly 20%. The conferences are designed to educate and clarify the lawful duties and rights of the parties involved--particularly those beneficial to homeowners.
Consumer Bill of Rights
Many homeowners lack an understanding of the foreclosure process. The consumer bill of rights began to help homeowners aware of and understand what their rights are, particularly as it relates to the timing of vacating the property. It explains a consumer's rights both before and after the process. It also encouraged homeowners to utilize resources from attorneys or local agencies.
Abandoned Property Relief Act for Reducing “Zombie Homes”
In 2015, the Abandoned Property Neighborhood Relief Act sought to inform homeowners of their right to remain in their home until advised otherwise through a court order. The state was plagued with abandoned properties (“zombie homes”), which was a source of residential blight because properties became overgrown and attracted vagrants, thieves, and vandals. In addition, the foreclosing entity was mandated to secure and maintain abandoned properties and accelerated the process of making the property available to potential buyers.
Community Restoration Fund
The Community Restoration Fund (CRF) provides assistance to struggling homeowners. It allocates funding to purchase foreclosed properties and creates affordable mortgage modification plans. This is useful in cases where the value of the home had significantly declined or the homeowner's income has fallen. The CRF helps to expedite the foreclosure process and prevent long periods of home vacancy.
The Cities for Responsible Investment & Strategic Enforcement (“Cities RISE”) program invested over $10 million toward neighborhood restoration. The program allowed for tools and labor necessary to revitalize troubled properties. The cities that have received grants include: Albany, Binghamton, Buffalo, White Plains, Elmira, Huntington, Islip, Mount Vernon, Newburgh, Niagara Falls, North Hempstead, New York City and others.
It is hoped that with these recent changes in New York foreclosure laws and recovery initiatives, consumers will have a better understanding of their rights and mechanisms to use to fight foreclosure.