May 3, 2013
by Robert H. King
Rosicki, Rosicki & Associates, P.C.
USFN Member (New York)
Towns and villages throughout New York State enacted foreclosure notification ordinances and promulgated regulations in 2012, akin to New York City’s Local Law 4. Mortgagees in New York must now provide notification of new and existing foreclosures to local towns and villages or face fines and penalties.
In January 2012, the New York City Council unanimously passed an amendment to Chapter 2 of Title 27 of the New York City Administrative Code that required specific information from foreclosing mortgagees to be provided to the New York City Department of Housing Preservation and Development (HPD). The mayor signed the law, which went into effect on June 16, 2012. Local Law 4 of 2012, as the law is now known, granted authority to HPD to promulgate rules in accordance with the law.
Without much fanfare, and shortly after New York City enacted its law, the incorporated village of Massapequa Park passed an amendment to Chapter 254 of its Village Code, as did the incorporated village of Hempstead, which passed an amendment to Chapter 78A of its Village Code. Both municipalities require foreclosure notification, and both village codes include monetary penalties — ranging from $1,000 to upwards of $10,000 for each week of noncompliance for severe and repeat offenders.
An important struggle revolves around the consideration of local laws and ordinances by town councils and village boards. Mortgagees and their foreclosure counsel rarely have an opportunity to comment about the proposals or attend hearings prior to the enactment of the laws. The result is that at a most critical, pre-passage stage mortgagees are often left in the dark. An unsurprising consequence is that these laws and ordinances, despite good intentions, are often problematic in both their expectations and application. A prime example is the challenge of developing processes to respond to the laws and ordinances, which is borne exclusively by mortgagees; and, in addition, the relatively short time frames in which these processes must be instituted.
To their credit, the local towns and villages are helpful when asked to provide important information about the laws. In particular, the villages of Hempstead and Massapequa Park are forthcoming as to the intent and implementation of the laws and ordinances. According to the officials, the purpose of the ordinances is to control vacant housing efforts and prevent vacant buildings from becoming hazards to communities and public officials charged with overseeing these properties. The trend continues as other municipalities hear about and attempt to pass similar ordinances.
With New York’s 62 counties and hundreds of local municipalities, and the prospect of fines and surcharges against mortgagees for noncompliance, it remains necessary for servicers and their legal counsel to discover these new laws and ordinances, and perhaps develop a centralized means of foreclosure notification to the smaller municipalities in order to mitigate costs and bring uniformity to the process.
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