Get the Deed - Not in New York - Posted by David Parker, Esq.
Posted by David Parker, Esq. on June 30, 2008 at 18:21:54:
Since the moderators are not NY attorneys, I thought I would give any New Yorkers a heads up on the new foreclosure legislation and how it will affect some of the short sale strategies that are posted on this page. The law passed both houses of the legislature but the Governor has not signed it into effect. (Donâ??t worry he will). It is supposed to go into effect September 1. Keep in mind that I am working off the bill that passed the legislature, the final law has not been published.
The Real Property Law is amended to create a category called â??Distressed Property Consultantsâ??. I will explain it in detail below but it specifically prohibits obtaining a power of attorney for the purpose of negotiating with a bank or lender on behalf of a homeowner.
If you are not in New York, I still would be watching what is coming out of your state legislature. There have been a lot of people out there that have obtained the deeds or powers of attorney without adequately explaining to the homeowner, what can be fixed and what canâ??t be fixed, leading to charges of fraud or misrepresentation. (and then there have been a few true crooks out there). Many good politicians around the country are going to want to â??do somethingâ?? about the subprime crisis especially in an election year. Therefore your state may adopt a similar prohibition.
The New York law states that:
A Distressed Property Consultant is defined as providing consulting services to a homeowner in the following ways:
â?¢ â??Stop, enjoin, delay, void, set aside, annul, stay, or postpone a foreclosure filing, a foreclosure sale or the loss of a home for non-payment of taxes.
â?¢ Obtain a forbearance from any servicer, beneficiary, or mortgage or relief with respect to the potential loss of the home for nonpayment of taxes.
â?¢ Assist the homeowner to exercise a right of reinstatement or similar right provided in the mortgage documents or any law or to refinance distressed home loan.
â?¢ Obtain any extension of the period within which the homeowner may reinstate or otherwise restore his or her rights with respect to the property.
â?¢ Obtain waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage or a property in foreclosure.
â?¢ Assist the homeowner to obtain a loan or advance of funds.â??
If you are doing any of the above, then as a Consultant you are prohibited from taking a power of attorney from the homeowner. (This is specifically mentioned). In addition the Consultant must; create a full written contract, that is provided to the homeowner prior its execution and the contract must be signed by the homeowner and notarized, the contract must allow a five day recession clause, fully disclose the nature of the services provided, and disclose the full contact information of the Consultant.
Exempt are attorneys (of course), lenders, lien and judgment holders, banks, a HUD approved mortgagee, title insurers, and a bona fide not for profit (this is not defined).
The penalty is that the Consultant is liable for actual and consequential damages. If there is a finding of recklessness, the court can award treble damages.
While people can still make money acting as a pure Consultant, trying to do a short sale in New York by getting the deed is going to be prohibited.
David Parker, Esq.