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See Bill Summary
S T A T E O F N E W Y O R K
________________________________________________________________________
4744--A
2005-2006 Regular Sessions
I N S E N A T E
April 18, 2005
___________
Introduced by Sens. FARLEY, BALBONI, DeFRANCISCO, FLANAGAN, FUSCHILLO,
GOLDEN, LARKIN, LAVALLE, LEIBELL, PADAVAN, RATH, SALAND, SEWARD,
SPANO, TRUNZO, VOLKER -- read twice and ordered printed, and when
printed to be committed to the Committee on Banks -- recommitted to
the Committee on Banks in accordance with Senate Rule 6, sec. 8 --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the banking law, the real property law and the real
property actions and proceedings law, in relation to enacting the home
equity theft prevention act
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "home equity theft prevention act".
3 S 2. Paragraphs (e), (f) and (g) of subdivision 1 of section 595-a of
4 the banking law, paragraphs (e) and (f) as added by chapter 571 of the
5 laws of 1986, paragraph (g) as added by chapter 445 of the laws of 1990,
6 are amended and a new paragraph (h) is added to read as follows:
7 (e) The improper refusal to issue a satisfaction of mortgage; {and}
8 (f) Engaging in any transaction, practice, or course of business which
9 operates a fraud upon any person in connection with the purchase or sale
10 of any mortgage loan{.};
11 (g) Violation of section six-j of this chapter{.}; AND
12 (H) MAKING A MORTGAGE LOAN, OR INDIRECTLY OR DIRECTLY PROVIDING FOR
13 THE MAKING OF A MORTGAGE LOAN, TO AN EQUITY PURCHASER, AS DEFINED IN
14 SECTION TWO HUNDRED SIXTY-FIVE-A OF THE REAL PROPERTY LAW, IF THE MORT-
15 GAGE BANKER, MORTGAGE BROKER OR EXEMPT ORGANIZATION HAD KNOWLEDGE THAT
16 THE EQUITY PURCHASER WAS NOT COMPLYING WITH THE PROVISIONS OF SECTION
17 TWO HUNDRED SIXTY-FIVE-A OF THE REAL PROPERTY LAW WITH RESPECT TO SUCH
18 TRANSACTION.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
{ } is old law to be omitted.
LBD11039-04-6
S. 4744--A 2
1 S 3. The real property law is amended by adding a new section 265-a to
2 read as follows:
3 S 265-A. HOME EQUITY THEFT PREVENTION. 1. (A) THE LEGISLATURE FINDS
4 AND DECLARES THAT HOMEOWNERS WHO ARE IN DEFAULT ON THEIR MORTGAGES OR IN
5 FORECLOSURE MAY BE VULNERABLE TO FRAUD, DECEPTION, AND UNFAIR DEALING BY
6 HOME EQUITY PURCHASERS. THE RECENT RAPID ESCALATION OF HOME VALUES
7 THROUGHOUT URBAN AND RURAL AREAS HAS RESULTED IN A SIGNIFICANT INCREASE
8 IN HOME EQUITY, WHICH CONSTITUTES THE GREATEST FINANCIAL ASSET HELD BY
9 MANY HOMEOWNERS OF THIS STATE. DURING THE TIME PERIOD BETWEEN THE
10 DEFAULT ON THE MORTGAGE AND THE SCHEDULED FORECLOSURE SALE DATE, HOME-
11 OWNERS IN FINANCIAL DISTRESS, ESPECIALLY POOR, ELDERLY, AND FINANCIALLY
12 UNSOPHISTICATED HOMEOWNERS, ARE VULNERABLE TO AGGRESSIVE "EQUITY
13 PURCHASERS" WHO INDUCE HOMEOWNERS TO SELL THEIR HOMES FOR A SMALL FRAC-
14 TION OF THEIR FAIR MARKET VALUES, OR IN SOME CASES EVEN SIGN AWAY THEIR
15 HOMES, THROUGH THE USE OF SCHEMES WHICH OFTEN INVOLVE ORAL AND WRITTEN
16 MISREPRESENTATIONS, DECEIT, INTIMIDATION, AND OTHER UNREASONABLE COMMER-
17 CIAL PRACTICES.
18 (B) THE LEGISLATURE DECLARES THAT IT IS THE EXPRESS POLICY OF THE
19 STATE TO PRESERVE AND GUARD THE PRECIOUS ASSET OF HOME EQUITY, AND THE
20 SOCIAL AS WELL AS THE ECONOMIC VALUE OF HOMEOWNERSHIP.
21 (C) THE LEGISLATURE FURTHER FINDS THAT EQUITY PURCHASERS MAY HAVE A
22 SIGNIFICANT IMPACT UPON THE ECONOMY AND WELL-BEING OF THIS STATE AND ITS
23 LOCAL COMMUNITIES, AND THEREFORE THE PROVISIONS OF THIS SECTION ARE
24 NECESSARY TO PROMOTE THE PUBLIC WELFARE.
25 (D) THE INTENT AND PURPOSES OF THIS SECTION ARE TO PROVIDE A HOMEOWNER
26 WITH INFORMATION NECESSARY TO MAKE AN INFORMED AND INTELLIGENT DECISION
27 REGARDING THE SALE OR TRANSFER OF HIS OR HER HOME TO AN EQUITY PURCHAS-
28 ER; TO REQUIRE THAT THE SALES AGREEMENT BE EXPRESSED IN WRITING; TO
29 SAFEGUARD EQUITY SELLERS AGAINST DECEIT AND FINANCIAL HARDSHIP; TO
30 ENSURE, FOSTER AND ENCOURAGE FAIR DEALING IN THE SALE AND PURCHASE OF
31 HOMES IN FORECLOSURE OR DEFAULT; TO PROHIBIT REPRESENTATIONS THAT TEND
32 TO MISLEAD; TO PROHIBIT OR RESTRICT UNFAIR CONTRACT TERMS; TO PROVIDE A
33 COOLING OFF PERIOD FOR EQUITY SELLERS WHO ENTER INTO COVERED CONTRACTS;
34 TO AFFORD EQUITY SELLERS A REASONABLE AND MEANINGFUL OPPORTUNITY TO
35 RESCIND SALES TO EQUITY PURCHASERS; AND TO PRESERVE AND PROTECT HOME
36 EQUITY FOR THE HOMEOWNERS OF THIS STATE.
37 2. THE FOLLOWING DEFINITIONS SHALL APPLY TO THIS SECTION:
38 (A) "BONA FIDE PURCHASER OR ENCUMBRANCER FOR VALUE" MEANS ANYONE
39 ACTING IN GOOD FAITH WHO PURCHASES THE RESIDENTIAL REAL PROPERTY FROM
40 THE EQUITY PURCHASER FOR VALUABLE CONSIDERATION OR PROVIDES THE EQUITY
41 PURCHASER WITH A MORTGAGE OR PROVIDES A SUBSEQUENT BONA FIDE PURCHASER
42 WITH A MORTGAGE, PROVIDED THAT HE OR SHE HAD NO NOTICE OF THE EQUITY
43 SELLER`S CONTINUING RIGHT TO, OR EQUITY IN, THE PROPERTY PRIOR TO THE
44 ACQUISITION OF TITLE OR ENCUMBRANCE, OR OF ANY VIOLATION OF THIS SECTION
45 BY THE EQUITY PURCHASER AS RELATED TO THE SUBJECT PROPERTY.
46 (B) "BUSINESS DAY" MEANS ANY CALENDAR DAY EXCEPT SUNDAY OR THE PUBLIC
47 HOLIDAYS AS SET FORTH IN SECTION TWENTY-FOUR OF THE GENERAL CONSTRUCTION
48 LAW.
49 (C) "COVERED CONTRACT" MEANS ANY CONTRACT, AGREEMENT, OR ARRANGEMENT,
50 OR ANY TERM THEREOF, BETWEEN AN EQUITY PURCHASER AND EQUITY SELLER
51 WHICH:
52 (I) IS INCIDENT TO THE SALE OF A RESIDENCE IN FORECLOSURE; OR
53 (II) IS INCIDENT TO THE SALE OF A RESIDENCE IN FORECLOSURE OR DEFAULT
54 WHERE SUCH CONTRACT, AGREEMENT OR ARRANGEMENT INCLUDES A RECONVEYANCE
55 ARRANGEMENT.
S. 4744--A 3
1 FOR PURPOSES OF THIS SECTION, ANY REFERENCE TO THE "SALE" OF A RESI-
2 DENCE BY AN EQUITY SELLER TO AN EQUITY PURCHASER SHALL INCLUDE A TRANS-
3 ACTION WHERE AN EQUITY SELLER RECEIVES CONSIDERATION FROM THE EQUITY
4 PURCHASER, AND A TRANSACTION INVOLVING A TRANSFER OF TITLE TO THE EQUITY
5 PURCHASER WHERE NO CONSIDERATION IS PROVIDED TO THE EQUITY SELLER.
6 (D) "DEFAULT" MEANS THAT THE EQUITY SELLER IS TWO MONTHS OR MORE
7 BEHIND IN HIS OR HER MORTGAGE PAYMENTS.
8 (E) "EQUITY PURCHASER" MEANS ANY PERSON WHO ACQUIRES TITLE TO ANY
9 RESIDENCE IN FORECLOSURE OR, WHERE APPLICABLE, DEFAULT, OR HIS OR HER
10 REPRESENTATIVE AS DEFINED IN THIS SUBDIVISION, EXCEPT A PERSON WHO
11 ACQUIRES SUCH TITLE AS FOLLOWS:
12 (I) TO USE, AND WHO USES, SUCH PROPERTY AS HIS OR HER PRIMARY RESI-
13 DENCE;
14 (II) BY A DEED FROM A REFEREE IN A FORECLOSURE SALE CONDUCTED PURSUANT
15 TO ARTICLE THIRTEEN OF THE REAL PROPERTY ACTIONS AND PROCEEDINGS LAW;
16 (III) AT ANY SALE OF PROPERTY AUTHORIZED BY STATUTE;
17 (IV) BY ORDER OR JUDGMENT OF ANY COURT;
18 (V) FROM A SPOUSE, OR FROM A PARENT, GRANDPARENT, CHILD, GRANDCHILD OR
19 SIBLING OF SUCH PERSON OR SUCH PERSON`S SPOUSE;
20 (VI) AS A NOT-FOR-PROFIT HOUSING ORGANIZATION OR AS A PUBLIC HOUSING
21 AGENCY; OR
22 (VII) A BONA FIDE PURCHASER OR ENCUMBRANCER FOR VALUE.
23 (F) "EQUITY SELLER" MEANS A NATURAL PERSON WHO IS A PROPERTY OWNER OR
24 HOMEOWNER AT THE TIME OF THE EQUITY SALE.
25 (G) "FORECLOSURE" MEANS THAT THERE IS AN ACTIVE LIS PENDENS FILED IN
26 COURT PURSUANT TO ARTICLE THIRTEEN OF THE REAL PROPERTY ACTIONS AND
27 PROCEEDINGS LAW AGAINST THE SUBJECT PROPERTY, OR THE SUBJECT PROPERTY IS
28 ON AN ACTIVE PROPERTY TAX LIEN SALE LIST.
29 (H) "PROPERTY OWNER" OR "HOMEOWNER" MEANS ANY OR ALL RECORD TITLE
30 OWNERS OF THE RESIDENTIAL REAL PROPERTY IN FORECLOSURE OR, WHERE APPLI-
31 CABLE, DEFAULT AT THE TIME OF THE EQUITY SALE.
32 (I) "RECONVEYANCE ARRANGEMENT" MEANS:
33 (I) THE TRANSFER OF TITLE TO RESIDENTIAL REAL PROPERTY BY AN EQUITY
34 SELLER WHO IS IN DEFAULT OR FORECLOSURE, EITHER BY TRANSFER OF INTEREST
35 FROM AN EQUITY SELLER TO AN EQUITY PURCHASER OR BY CREATION OF A MORT-
36 GAGE OR OTHER LIEN OR ENCUMBRANCE DURING THE TIME OF DEFAULT OR FORECLO-
37 SURE THAT ALLOWS THE EQUITY PURCHASER TO OBTAIN LEGAL OR EQUITABLE TITLE
38 TO ALL OR PART OF THE PROPERTY, AND
39 (II) THE SUBSEQUENT CONVEYANCE, OR PROMISE OF A SUBSEQUENT CONVEYANCE,
40 OF AN INTEREST BACK TO THE EQUITY SELLER BY THE EQUITY PURCHASER THAT
41 ALLOWS THE EQUITY SELLER TO REGAIN POSSESSION OF THE PROPERTY, WHICH
42 INTEREST SHALL INCLUDE BUT NOT BE LIMITED TO A PURCHASE AGREEMENT,
43 OPTION TO PURCHASE, OR LEASE.
44 (J) "REPRESENTATIVE" MEANS A PERSON WHO IN ANY MANNER SOLICITS,
45 INDUCES, ARRANGES, OR CAUSES ANY EQUITY SELLER TO TRANSFER TITLE OR
46 SOLICITS ANY MEMBER OF THE EQUITY SELLER`S FAMILY OR HOUSEHOLD TO INDUCE
47 OR CAUSE ANY EQUITY SELLER TO TRANSFER TITLE TO THE RESIDENCE IN FORE-
48 CLOSURE OR, WHERE APPLICABLE, DEFAULT TO THE EQUITY PURCHASER.
49 (K) "RESIDENCE" AND "RESIDENTIAL REAL PROPERTY" MEANS RESIDENTIAL REAL
50 PROPERTY CONSISTING OF ONE- TO FOUR-FAMILY DWELLING UNITS, ONE OF WHICH
51 THE EQUITY SELLER OCCUPIES OR OCCUPIED AT A TIME IMMEDIATELY PRIOR TO
52 THE EQUITY SALE AS HIS OR HER PRIMARY RESIDENCE.
53 3. EVERY COVERED CONTRACT AND NOTICE OF CANCELLATION ATTACHED THERETO
54 SHALL BE WRITTEN IN LETTERS OF A SIZE EQUAL TO AT LEAST TWELVE-POINT
55 BOLD TYPE, IN ENGLISH OR IN BOTH ENGLISH AND SPANISH IF SPANISH IS THE
56 PRIMARY LANGUAGE OF THE EQUITY SELLER, AND SHALL BE FULLY COMPLETED AND
S. 4744--A 4
1 SIGNED AND DATED BY THE EQUITY SELLER AND EQUITY PURCHASER. ANY INSTRU-
2 MENT OF CONVEYANCE SHALL BECOME EFFECTIVE NO SOONER THAN MIDNIGHT OF THE
3 FIFTH BUSINESS DAY AFTER THE DATE ON WHICH THE COVERED CONTRACT IS
4 EXECUTED.
5 4. ALL COVERED CONTRACTS SHALL CONTAIN THE ENTIRE AGREEMENT OF THE
6 PARTIES AND SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING TERMS:
7 (A) THE NAME, BUSINESS ADDRESS, AND THE TELEPHONE NUMBER OF THE EQUITY
8 PURCHASER;
9 (B) THE ADDRESS OF THE RESIDENCE IN FORECLOSURE OR, WHERE APPLICABLE,
10 DEFAULT;
11 (C) THE TOTAL CONSIDERATION TO BE GIVEN BY THE EQUITY PURCHASER IN
12 CONNECTION WITH OR INCIDENT TO THE SALE;
13 (D) A COMPLETE DESCRIPTION OF THE TERMS OF PAYMENT OR OTHER CONSIDER-
14 ATION INCLUDING, BUT NOT LIMITED TO, ANY SERVICES OF ANY NATURE WHICH
15 THE EQUITY PURCHASER REPRESENTS HE OR SHE WILL PERFORM FOR THE EQUITY
16 SELLER BEFORE OR AFTER THE SALE;
17 (E) THE TIME, IF ANY, AT WHICH PHYSICAL POSSESSION OF THE RESIDENCE IS
18 TO BE TRANSFERRED TO THE EQUITY PURCHASER AND THE RESIDENCE VACATED BY
19 THE EQUITY SELLER;
20 (F) THE TERMS OF ANY RENTAL OR LEASE AGREEMENT;
21 (G) THE TERMS OF ANY RECONVEYANCE ARRANGEMENT;
22 (H) A NOTICE OF CANCELLATION AS PROVIDED IN PARAGRAPH (A) OF SUBDIVI-
23 SION SIX OF THIS SECTION; AND
24 (I) THE FOLLOWING NOTICE SHALL APPEAR ON THE CONTRACT IN IMMEDIATE
25 PROXIMITY TO THE SPACE RESERVED FOR THE EQUITY SELLER`S SIGNATURE AND
26 SHALL BE IN AT LEAST FOURTEEN-POINT BOLD TYPE IF THE COVERED CONTRACT IS
27 PRINTED OR IN CAPITAL LETTERS IF THE COVERED CONTRACT IS TYPED. THE
28 NOTICE MUST CONTAIN THE NAME OF THE EQUITY PURCHASER AND THE DATE AND
29 TIME BY WHICH THE COVERED CONTRACT MUST BE CANCELLED. THE NOTICE SHALL
30 BE COMPLETED BY THE EQUITY PURCHASER:
31 "NOTICE REQUIRED BY NEW YORK LAW
32 YOU MAY CANCEL THIS CONTRACT AT ANY TIME BEFORE MIDNIGHT OF
33 ________________________________________.
34 (DATE)
35 ________________________________________________________________________
36 (NAME OF EQUITY PURCHASER)
37 OR ANYONE WORKING FOR ____________________________ CANNOT ASK YOU TO
38 (NAME OF EQUITY PURCHASER)
39 SIGN OR HAVE YOU SIGN ANY DEED OR ANY OTHER DOCUMENT UNTIL YOUR RIGHT TO
40 CANCEL THIS CONTRACT HAS ENDED. SEE ATTACHED NOTICE OF CANCELLATION FORM
41 FOR AN EXPLANATION OF THIS RIGHT. YOU SHOULD ALWAYS CONSULT AN ATTORNEY
42 OR COMMUNITY ORGANIZATION BEFORE SIGNING ANY LEGAL DOCUMENTS CONCERNING
43 YOUR HOME. IT IS ADVISABLE THAT YOU FIND YOUR OWN ATTORNEY, AND NOT
44 CONSULT WITH AN ATTORNEY WHO HAS BEEN PROVIDED TO YOU BY THE PURCHASER.
45 THE LAW REQUIRES THAT THIS CONTRACT CONTAIN THE ENTIRE AGREEMENT. YOU
46 SHOULD NOT RELY UPON ANY OTHER WRITTEN OR ORAL AGREEMENT OR PROMISE."
47 THE EQUITY PURCHASER SHALL ACCURATELY ENTER THE DATE ON WHICH THE
48 RIGHT TO CANCEL ENDS. THE COVERED CONTRACT REQUIRED BY THIS SECTION
49 SHALL SURVIVE DELIVERY OF ANY INSTRUMENT OF CONVEYANCE OF THE RESIDENCE
50 IN FORECLOSURE OR, WHERE APPLICABLE, DEFAULT, AND SHALL HAVE NO EFFECT
51 ON PERSONS OTHER THAN THE PARTIES TO THE COVERED CONTRACT.
52 5. (A) IN ADDITION TO THE RIGHT OF RESCISSION DESCRIBED IN SUBDIVISION
53 EIGHT OF THIS SECTION, THE EQUITY SELLER HAS THE RIGHT TO CANCEL ANY
54 COVERED CONTRACT WITH AN EQUITY PURCHASER UNTIL MIDNIGHT OF THE FIFTH
55 BUSINESS DAY FOLLOWING THE DAY ON WHICH THE EQUITY SELLER AND EQUITY
56 PURCHASER SIGN A COVERED CONTRACT THAT COMPLIES WITH THIS SECTION.
S. 4744--A 5
1 (B) CANCELLATION OCCURS WHEN THE EQUITY SELLER, OR A REPRESENTATIVE OF
2 THE EQUITY SELLER, PERSONALLY DELIVERS WRITTEN NOTICE OF CANCELLATION TO
3 THE ADDRESS SPECIFIED IN THE COVERED CONTRACT OR SENDS A LETTER VIA
4 FACSIMILE OR OTHER MEANS OF WRITTEN COMMUNICATION, UNITED STATES MAIL,
5 OR THROUGH AN ESTABLISHED COMMERCIAL LETTER DELIVERY SERVICE, INDICATING
6 CANCELLATION TO THE BUSINESS ADDRESS OF THE EQUITY PURCHASER LISTED ON
7 THE COVERED CONTRACT. PROOF OF FACSIMILE DELIVERY OR PROOF OF MAILING
8 CREATES A PRESUMPTION THAT THE NOTICE OF CANCELLATION HAS BEEN DELIV-
9 ERED.
10 (C) A NOTICE OF CANCELLATION GIVEN BY THE EQUITY SELLER PURSUANT TO
11 PARAGRAPH (A) OF THIS SUBDIVISION NEED NOT TAKE THE PARTICULAR FORM AS
12 PROVIDED WITH THE COVERED CONTRACT AND, HOWEVER EXPRESSED, IS EFFECTIVE
13 IF IT INDICATES THE INTENTION OF THE EQUITY SELLER NOT TO BE BOUND BY
14 THE COVERED CONTRACT.
15 (D) WITHIN TEN DAYS FOLLOWING RECEIPT OF A NOTICE OF CANCELLATION
16 GIVEN IN ACCORDANCE WITH THIS SUBDIVISION, THE EQUITY PURCHASER SHALL
17 RETURN WITHOUT CONDITION ANY ORIGINAL COVERED CONTRACT AND ANY OTHER
18 DOCUMENTS SIGNED BY THE EQUITY SELLER AS WELL AS ANY FEE OR OTHER
19 CONSIDERATION RECEIVED BY THE EQUITY PURCHASER FROM THE EQUITY SELLER.
20 CANCELLATION OF THE CONTRACT SHALL RELEASE THE EQUITY SELLER OF ALL
21 OBLIGATIONS TO PAY FEES TO THE EQUITY PURCHASER.
22 6. (A) THE COVERED CONTRACT SHALL BE ACCOMPANIED BY A FORM COMPLETED
23 BY THE EQUITY PURCHASER IN DUPLICATE, CAPTIONED "NOTICE OF CANCELLATION"
24 IN AT LEAST TWELVE-POINT BOLD TYPE IF THE COVERED CONTRACT IS PRINTED OR
25 IN CAPITAL LETTERS IF THE COVERED CONTRACT IS TYPED. THIS FORM SHALL BE
26 ATTACHED TO THE COVERED CONTRACT, SHALL BE EASILY DETACHABLE, AND SHALL
27 CONTAIN IN TYPE OF AT LEAST TWELVE-POINT IF THE COVERED CONTRACT IS
28 PRINTED OR IN CAPITAL LETTERS IF THE COVERED CONTRACT IS TYPED, THE
29 FOLLOWING STATEMENT WRITTEN IN THE SAME LANGUAGE AS USED IN THE COVERED
30 CONTRACT:
31 "NOTICE OF CANCELLATION
32 THIS CONTRACT WAS ENTERED INTO ON ____________________________________
33 (ENTER DATE COVERED CONTRACT SIGNED)
34 YOU MAY CANCEL THIS CONTRACT FOR THE SALE OF YOUR HOUSE, WITHOUT ANY
35 PENALTY OR OBLIGATION, AT ANY TIME BEFORE MIDNIGHT OF
36 ___________________________. (ENTER DATE)
37 TO CANCEL THIS TRANSACTION, PERSONALLY DELIVER A SIGNED AND DATED COPY
38 OF THIS CANCELLATION NOTICE, OR SEND IT BY FACSIMILE, UNITED STATES
39 MAIL, OR AN ESTABLISHED COMMERCIAL LETTER DELIVERY SERVICE, INDICATING
40 CANCELLATION TO ____________________________________________________, AT
41 (NAME OF PURCHASER) ___________________________________
42 (STREET ADDRESS OF PURCHASER`S PLACE OF BUSINESS AND FACSIMILE NUMBER IF
43 ANY) NOT LATER THAN MIDNIGHT OF _______________________________________.
44 (ENTER DATE)
45 IF YOU WISH TO CANCEL THIS CONTRACT, SIGN AND DATE BOTH COPIES AND
46 RETURN ONE COPY IMMEDIATELY TO THE PURCHASER.
47 I HEREBY CANCEL THIS TRANSACTION.
48 __________________________________/_______________________________"
49 (SELLER`S SIGNATURE) (DATE)
50 (B) THE EQUITY PURCHASER SHALL PROVIDE EACH EQUITY SELLER WITH TWO
51 COPIES OF THE COVERED CONTRACT AND ATTACHED NOTICE OF CANCELLATION. THE
52 EQUITY PURCHASER SHALL ACCURATELY ENTER THE DATE ON WHICH THE RIGHT TO
53 CANCEL ENDS.
54 7. (A) BEFORE MIDNIGHT OF THE FIFTH BUSINESS DAY AFTER THE DATE ON
55 WHICH THE COVERED CONTRACT IS EXECUTED, THE EQUITY PURCHASER SHALL NOT
56 DO ANY OF THE FOLLOWING:
S. 4744--A 6
1 (I) ACCEPT FROM ANY EQUITY SELLER AN EXECUTION OF, OR INDUCE ANY EQUI-
2 TY SELLER TO EXECUTE, ANY INSTRUMENT OF CONVEYANCE OF ANY INTEREST IN
3 THE RESIDENCE IN FORECLOSURE OR, WHERE APPLICABLE, DEFAULT;
4 (II) RECORD WITH THE COUNTY CLERK ANY DOCUMENT, INCLUDING, BUT NOT
5 LIMITED TO, ANY INSTRUMENT OF CONVEYANCE, SIGNED BY THE EQUITY SELLER;
6 (III) TRANSFER OR ENCUMBER OR PURPORT TO TRANSFER OR ENCUMBER ANY
7 INTEREST IN THE RESIDENCE IN FORECLOSURE OR, WHERE APPLICABLE, DEFAULT
8 TO ANY THIRD PARTY;
9 (IV) PAY THE EQUITY SELLER ANY CONSIDERATION; OR
10 (V) SUGGEST, ENCOURAGE, OR PROVIDE ANY FORM WHICH ALLOWS THE EQUITY
11 SELLER TO WAIVE HIS OR HER RIGHT TO CANCEL OR RESCIND UNDER THIS
12 SECTION.
13 (B) AN EQUITY PURCHASER SHALL MAKE NO FALSE OR MISLEADING STATEMENT
14 REGARDING THE VALUE OF THE RESIDENCE IN FORECLOSURE OR, WHERE APPLICA-
15 BLE, DEFAULT; THE AMOUNT OF PROCEEDS THE EQUITY SELLER WILL RECEIVE
16 AFTER A FORECLOSURE SALE; THE TIMING OF THE JUDICIAL FORECLOSURE PROC-
17 ESS; ANY CONTRACT TERM; THE EQUITY SELLER`S RIGHTS OR OBLIGATIONS INCI-
18 DENT TO OR ARISING OUT OF THE SALE TRANSACTION; THE NATURE OF ANY DOCU-
19 MENT WHICH THE EQUITY PURCHASER INDUCES THE EQUITY SELLER TO SIGN; OR
20 ANY OTHER FALSE OR MISLEADING STATEMENT CONCERNING THE SALE OF THE RESI-
21 DENCE IN FORECLOSURE OR, WHERE APPLICABLE, DEFAULT, OR CONCERNING THE
22 RECONVEYANCE ARRANGEMENT.
23 (C) AN EQUITY PURCHASER IS PROHIBITED FROM REPRESENTING, DIRECTLY OR
24 INDIRECTLY, THAT:
25 (I) THE EQUITY PURCHASER IS ACTING AS AN ADVISOR OR A CONSULTANT, OR
26 IN ANY OTHER MANNER REPRESENTS THAT THE EQUITY PURCHASER IS ACTING ON
27 BEHALF OF THE EQUITY SELLER;
28 (II) THE EQUITY PURCHASER HAS CERTIFICATION OR LICENSURE THAT THE
29 EQUITY PURCHASER DOES NOT HAVE, OR THAT THE EQUITY PURCHASER IS NOT A
30 MEMBER OF A LICENSED PROFESSION IF HE OR SHE IS ACTUALLY SUCH A MEMBER;
31 (III) THE EQUITY PURCHASER IS ASSISTING THE EQUITY SELLER TO SAVE THE
32 HOUSE UNLESS THE EQUITY PURCHASER HAS A GOOD FAITH BASIS FOR THE REPRE-
33 SENTATION; OR
34 (IV) THE EQUITY PURCHASER IS ASSISTING THE EQUITY SELLER IN PREVENTING
35 A COMPLETED FORECLOSURE UNLESS THE EQUITY PURCHASER HAS A GOOD FAITH
36 BASIS FOR THE REPRESENTATION.
37 (D) IT IS UNLAWFUL FOR ANY EQUITY PURCHASER TO INITIATE, ENTER INTO,
38 NEGOTIATE, OR CONSUMMATE ANY COVERED CONTRACT INVOLVING RESIDENTIAL REAL
39 PROPERTY IN FORECLOSURE OR, WHERE APPLICABLE, DEFAULT IF SUCH PERSON, BY
40 THE TERMS OF SUCH COVERED CONTRACT, TAKES UNCONSCIONABLE ADVANTAGE OF
41 THE EQUITY SELLER.
42 8. (A) ANY TRANSACTION INVOLVING RESIDENTIAL REAL PROPERTY IN FORECLO-
43 SURE OR, WHERE APPLICABLE, DEFAULT WHICH IS IN MATERIAL VIOLATION OF
44 SUBDIVISION THREE, FOUR, SIX, SEVEN OR ELEVEN OF THIS SECTION IS VOIDA-
45 BLE AND THE TRANSACTION MAY BE RESCINDED BY THE EQUITY SELLER WITHIN TWO
46 YEARS OF THE DATE OF THE RECORDING OF THE CONVEYANCE OF THE RESIDENTIAL
47 REAL PROPERTY IN FORECLOSURE OR, WHERE APPLICABLE, DEFAULT.
48 (B) SUCH RESCISSION SHALL BE EFFECTED BY GIVING WRITTEN NOTICE TO THE
49 EQUITY PURCHASER AND HIS OR HER SUCCESSOR IN INTEREST, IF THE SUCCESSOR
50 IS NOT A BONA FIDE PURCHASER OR ENCUMBRANCER FOR VALUE AS SET FORTH IN
51 PARAGRAPH (C) OF THIS SUBDIVISION, AND BY RECORDING SUCH NOTICE WITH THE
52 COUNTY CLERK OF THE COUNTY IN WHICH THE PROPERTY IS LOCATED, WITHIN TWO
53 YEARS OF THE DATE OF THE RECORDING OF THE CONVEYANCE TO THE EQUITY
54 PURCHASER. THE NOTICE OF RESCISSION SHALL CONTAIN THE NAME OF THE EQUITY
55 SELLER AND THE NAME OF THE EQUITY PURCHASER IN ADDITION TO ANY SUCCESSOR
56 IN INTEREST HOLDING RECORD TITLE TO THE RESIDENTIAL REAL PROPERTY AND
S. 4744--A 7
1 SHALL PARTICULARLY DESCRIBE SUCH RESIDENTIAL REAL PROPERTY. THE EQUITY
2 PURCHASER AND HIS OR HER SUCCESSOR IN INTEREST IF THE SUCCESSOR IS NOT A
3 BONA FIDE PURCHASER OR ENCUMBRANCER FOR VALUE AS SET FORTH IN PARAGRAPH
4 (C) OF THIS SUBDIVISION, SHALL HAVE TWENTY DAYS AFTER THE DELIVERY OF
5 THE NOTICE IN WHICH TO RECONVEY TITLE TO THE PROPERTY FREE AND CLEAR OF
6 ENCUMBRANCES CREATED SUBSEQUENT TO THE RESCINDED TRANSACTION AND WHICH
7 ARE DUE TO THE ACTIONS OF THE EQUITY PURCHASER. AS A CONDITION OF THE
8 RECONVEYANCE OF TITLE, THE EQUITY SELLER SHALL RETURN TO THE EQUITY
9 PURCHASER ANY CONSIDERATION RECEIVED FROM THE EQUITY PURCHASER AS PART
10 OF THE ORIGINAL TRANSACTION. UPON FAILURE TO RECONVEY TITLE WITHIN SUCH
11 TIME, THE EQUITY SELLER MAY BRING AN ACTION TO ENFORCE THE RESCISSION
12 AND FOR CANCELLATION OF THE COVERED CONTRACT AND DEED.
13 (C) THE PROVISIONS OF THIS SUBDIVISION SHALL NOT AFFECT THE INTEREST
14 OF A BONA FIDE PURCHASER OR ENCUMBRANCER FOR VALUE IF SUCH PURCHASE OR
15 ENCUMBRANCE OCCURRED PRIOR TO THE RECORDING OF THE NOTICE OF RESCISSION
16 PURSUANT TO PARAGRAPH (B) OF THIS SUBDIVISION. KNOWLEDGE THAT THE PROP-
17 ERTY WAS RESIDENTIAL REAL PROPERTY IN FORECLOSURE OR, WHERE APPLICABLE,
18 DEFAULT SHALL NOT IMPAIR THE STATUS OF SUCH PERSONS OR ENTITIES AS BONA
19 FIDE PURCHASERS OR ENCUMBRANCERS FOR VALUE. THIS SUBDIVISION SHALL NOT
20 BE DEEMED TO ABROGATE ANY DUTY OF INQUIRY WHICH EXISTS AS TO RIGHTS OR
21 INTERESTS OF PERSONS IN POSSESSION OF THE RESIDENTIAL REAL PROPERTY IN
22 FORECLOSURE OR, WHERE APPLICABLE, DEFAULT.
23 (D) IN ANY ACTION BROUGHT TO ENFORCE A RESCISSION PURSUANT TO THIS
24 SECTION, A COURT MAY AWARD TO A PREVAILING EQUITY SELLER COSTS AND
25 REASONABLE ATTORNEYS` FEES.
26 9. AN EQUITY SELLER MAY BRING AN ACTION FOR THE RECOVERY OF DAMAGES OR
27 EQUITABLE RELIEF AGAINST AN EQUITY PURCHASER FOR A VIOLATION OF SUBDIVI-
28 SION THREE, FOUR, SIX, SEVEN OR ELEVEN OF THIS SECTION. A COURT MAY
29 AWARD TO A PREVAILING EQUITY SELLER ACTUAL DAMAGES PLUS REASONABLE
30 ATTORNEYS` FEES AND COSTS. IN ADDITION, THE COURT MAY AWARD EQUITABLE
31 RELIEF, OR INCREASE THE AWARD IN AN AMOUNT NOT TO EXCEED THREE TIMES THE
32 EQUITY SELLER`S ACTUAL DAMAGES, OR BOTH, IF THE COURT DEEMS SUCH AWARD
33 PROPER. ANY ACTION BROUGHT PURSUANT TO THIS SECTION SHALL BE COMMENCED
34 WITHIN SIX YEARS AFTER THE DATE OF THE ALLEGED VIOLATION.
35 10. (A)(I) ANY EQUITY PURCHASER WHO, WITH INTENT TO DEFRAUD, VIOLATES
36 SUBDIVISION SEVEN OF THIS SECTION OR ENGAGES IN ANY PRACTICE WHICH WOULD
37 OPERATE AS A CRIMINAL FRAUD OR DECEIT UPON AN EQUITY SELLER SHALL, UPON
38 CONVICTION, BE GUILTY OF A CLASS E FELONY AND SUBJECT TO A FINE OF NOT
39 MORE THAN TWENTY-FIVE THOUSAND DOLLARS, IMPRISONMENT IN ACCORDANCE WITH
40 THE PENAL LAW, OR BOTH.
41 (II) ANY EQUITY PURCHASER WHO KNOWINGLY VIOLATES SUBDIVISION SEVEN OF
42 THIS SECTION SHALL, UPON CONVICTION, BE GUILTY OF A CLASS A MISDEMEANOR
43 AND SUBJECT TO A FINE OF NOT MORE THAN TWENTY-FIVE THOUSAND DOLLARS,
44 IMPRISONMENT IN ACCORDANCE WITH THE PENAL LAW, OR BOTH. A SECOND OFFENSE
45 WITHIN FIVE YEARS SHALL BE A CLASS E FELONY AND SUBJECT TO A FINE OF NOT
46 MORE THAN TWENTY-FIVE THOUSAND DOLLARS, IMPRISONMENT IN ACCORDANCE WITH
47 THE PENAL LAW, OR BOTH.
48 (B) AN EQUITY PURCHASER WHO, WHEN ACTING IN GOOD FAITH, VIOLATES
49 SUBDIVISION SEVEN OF THIS SECTION, SHALL NOT BE DEEMED TO HAVE VIOLATED
50 SUCH SUBDIVISION IF THE EQUITY PURCHASER:
51 (I) ESTABLISHES BY A PREPONDERANCE OF THE EVIDENCE THAT THE COMPLIANCE
52 FAILURE WAS NOT INTENTIONAL AND RESULTED FROM A BONA FIDE ERROR NOTWITH-
53 STANDING THE MAINTENANCE OF PROCEDURES REASONABLY ADAPTED TO AVOID SUCH
54 ERRORS;
55 (II) NOTIFIES THE EQUITY SELLER WITHIN NINETY DAYS OF THE CONTRACT
56 DATE OF THE COMPLIANCE FAILURE; AND
S. 4744--A 8
1 (III) MAKES APPROPRIATE RESTITUTION TO THE EQUITY SELLER AND APPROPRI-
2 ATE ADJUSTMENTS TO THE TRANSACTION WITHIN NINETY DAYS OF THE CONTRACT
3 DATE. EXAMPLES OF BONA FIDE ERRORS INCLUDE, BUT ARE NOT LIMITED TO,
4 CLERICAL, CALCULATION, COMPUTER MALFUNCTION AND PROGRAMMING, AND PRINT-
5 ING ERRORS. AN ERROR OF LEGAL JUDGMENT WITH RESPECT TO A PERSON`S OBLI-
6 GATIONS UNDER THIS SECTION IS NOT A BONA FIDE ERROR, NOR IS A FAILURE TO
7 PROVIDE NOTICES OR OTHER MATERIAL INFORMATION REQUIRED BY THIS SECTION.
8 11. (A) IN ANY TRANSACTION IN WHICH AN EQUITY SELLER PURPORTS TO GRANT
9 A RESIDENCE IN FORECLOSURE OR DEFAULT TO AN EQUITY PURCHASER BY ANY
10 INSTRUMENT WHICH APPEARS TO BE AN ABSOLUTE CONVEYANCE AND RESERVES TO
11 HIMSELF OR HERSELF OR IS GIVEN BY THE EQUITY PURCHASER AN OPTION TO
12 REPURCHASE, SUCH TRANSACTION SHALL CREATE A PRESUMPTION THAT THE TRANS-
13 ACTION IS A LOAN TRANSACTION, WHICH MAY BE OVERCOME BY CLEAR AND
14 CONVINCING EVIDENCE TO THE CONTRARY, AND THAT THE PURPORTED ABSOLUTE
15 CONVEYANCE IS A MORTGAGE.
16 (B) AN EQUITY PURCHASER SHALL NOT ENTER INTO A RECONVEYANCE ARRANGE-
17 MENT UNLESS:
18 (I) THE EQUITY PURCHASER VERIFIES BY APPROPRIATE DOCUMENTATION THAT
19 THE EQUITY SELLER HAS OR IS LIKELY TO HAVE A REASONABLE ABILITY TO PAY
20 FOR THE SUBSEQUENT CONVEYANCE OF AN INTEREST BACK TO THE EQUITY SELLER.
21 IN THE CASE OF A LEASE WITH AN OPTION TO PURCHASE, PAYMENT ABILITY ALSO
22 INCLUDES THE REASONABLE ABILITY TO PURCHASE THE PROPERTY WITHIN THE TERM
23 OF THE OPTION TO PURCHASE. THERE IS A REBUTTABLE PRESUMPTION THAT THE
24 EQUITY PURCHASER HAS NOT VERIFIED REASONABLE PAYMENT ABILITY IF THE
25 EQUITY PURCHASER HAS NOT OBTAINED DOCUMENTS OTHER THAN A STATEMENT BY
26 THE EQUITY SELLER OF ASSETS, LIABILITIES AND INCOME. THE STANDARD FOR
27 DETERMINING A REASONABLE ABILITY TO PAY SHALL BE THE SAME STANDARD AS
28 SET FORTH IN PARAGRAPH (K) OF SUBDIVISION TWO OF SECTION SIX-L OF THE
29 BANKING LAW;
30 (II) THE EQUITY PURCHASER AND THE EQUITY SELLER COMPLETE A CLOSING FOR
31 ANY RECONVEYANCE ARRANGEMENT IN WHICH THE EQUITY PURCHASER OBTAINS A
32 DEED OR MORTGAGE FROM AN EQUITY SELLER. FOR PURPOSES OF THIS SECTION,
33 "CLOSING" MEANS AN IN-PERSON MEETING TO COMPLETE FINAL DOCUMENTS INCI-
34 DENT TO THE SALE OF THE REAL PROPERTY OR CREATION OF A MORTGAGE ON THE
35 REAL PROPERTY CONDUCTED BY AN ATTORNEY WHO IS NOT EMPLOYED BY OR AN
36 AFFILIATE OF THE EQUITY PURCHASER;
37 (III) THE EQUITY PURCHASER OBTAINS THE WRITTEN CONSENT FROM THE EQUITY
38 SELLER BEFORE THE EQUITY PURCHASER GRANTS ANY INTEREST IN THE PROPERTY
39 TO ANYONE ELSE DURING SUCH TIME AS THE EQUITY SELLER MAINTAINS AN INTER-
40 EST IN THE PROPERTY, INCLUDING AN OPTION TO REPURCHASE; AND
41 (IV) THE EQUITY PURCHASER NOTIFIES ALL EXISTING MORTGAGE LIEN HOLDERS
42 OF HIS OR HER INTENT TO ACCEPT CONVEYANCE OF AN INTEREST IN THE PROPERTY
43 FROM THE EQUITY SELLER, AND FULLY COMPLIES WITH ALL TERMS AND CONDITIONS
44 CONTAINED IN THE MORTGAGE LIEN DOCUMENTS, INCLUDING BUT NOT LIMITED TO
45 DUE-ON-SALE PROVISIONS OR MEETING ALL QUALIFICATION REQUIREMENTS FOR
46 ASSUMING THE REPAYMENT OF THE MORTGAGE.
47 (C) AN EQUITY PURCHASER SHALL NOT ENTER INTO REPURCHASE OR LEASE TERMS
48 AS PART OF THE RECONVEYANCE ARRANGEMENT THAT ARE UNFAIR OR COMMERCIALLY
49 UNREASONABLE, AND IS PROHIBITED FROM ENGAGING IN ANY OTHER UNFAIR OR
50 UNCONSCIONABLE CONDUCT.
51 (D) AS PART OF A RECONVEYANCE ARRANGEMENT, AN EQUITY PURCHASER SHALL
52 EITHER:
53 (I) ENSURE THAT TITLE TO THE RESIDENCE IS RECONVEYED TO THE EQUITY
54 SELLER; OR
55 (II) MAKE A PAYMENT TO THE EQUITY SELLER SUCH THAT THE EQUITY SELLER
56 HAS RECEIVED CONSIDERATION IN AN AMOUNT OF AT LEAST EIGHTY-TWO PERCENT
S. 4744--A 9
1 OF THE FAIR MARKET VALUE OF THE PROPERTY WITHIN ONE HUNDRED TWENTY DAYS
2 OF EITHER THE EVICTION OR VOLUNTARY RELINQUISHMENT OF POSSESSION OF THE
3 RESIDENCE BY THE EQUITY SELLER. THE EQUITY PURCHASER SHALL MAKE A
4 DETAILED ACCOUNTING OF THE BASIS FOR THE PAYMENT AMOUNT, OR A DETAILED
5 ACCOUNTING OF THE REASONS FOR FAILURE TO MAKE A PAYMENT, INCLUDING
6 PROVIDING WRITTEN DOCUMENTATION OF EXPENSES, WITHIN SUCH ONE HUNDRED
7 TWENTY-DAY PERIOD. THE ACCOUNTING SHALL BE ON A FORM PRESCRIBED BY THE
8 BANKING DEPARTMENT. FOR PURPOSES OF THIS SUBPARAGRAPH, THE FOLLOWING
9 APPLIES:
10 (A) THERE IS A REBUTTABLE PRESUMPTION THAT AN APPRAISAL BY A PERSON
11 LICENSED OR CERTIFIED BY AN AGENCY OF THE FEDERAL GOVERNMENT OR THIS
12 STATE TO APPRAISE REAL ESTATE ESTABLISHES THE FAIR MARKET VALUE OF THE
13 PROPERTY;
14 (B) THE TIME FOR DETERMINING THE FAIR MARKET VALUE AMOUNT SHALL BE
15 DETERMINED IN THE RECONVEYANCE ARRANGEMENT AS EITHER AT THE TIME OF THE
16 EXECUTION OF THE RECONVEYANCE ARRANGEMENT OR AT RESALE TO A BONA FIDE
17 PURCHASER. IF THE COVERED CONTRACT STATES THAT THE FAIR MARKET VALUE
18 SHALL BE DETERMINED AT THE TIME OF RESALE, THE FAIR MARKET VALUE SHALL
19 BE THE RESALE PRICE IF IT IS SOLD WITHIN ONE HUNDRED TWENTY DAYS OF THE
20 EVICTION OR VOLUNTARY RELINQUISHMENT OF THE PROPERTY BY THE EQUITY SELL-
21 ER. IF THE COVERED CONTRACT STATES THAT THE FAIR MARKET VALUE SHALL BE
22 DETERMINED AT THE TIME OF RESALE, AND THE RESALE IS NOT COMPLETED WITHIN
23 ONE HUNDRED TWENTY DAYS OF THE EVICTION OR VOLUNTARY RELINQUISHMENT OF
24 THE PROPERTY BY THE EQUITY SELLER, THE FAIR MARKET VALUE SHALL BE DETER-
25 MINED BY AN APPRAISAL CONDUCTED WITHIN TEN DAYS AFTER THE END OF SUCH
26 ONE HUNDRED TWENTY-DAY PERIOD AND PAYMENT, IF REQUIRED, SHALL BE MADE TO
27 THE EQUITY SELLER. IF PAYMENT IS NOT MADE TO THE EQUITY SELLER AT SUCH
28 TIME, THE FAIR MARKET VALUE SHALL BE RECALCULATED AS THE RESALE PRICE ON
29 RESALE AND PAYMENT SHALL BE MADE TO THE EQUITY SELLER WITHIN FIFTEEN
30 DAYS OF RESALE. A DETAILED ACCOUNTING OF THE BASIS FOR THE PAYMENT
31 AMOUNT SHALL BE MADE WITHIN FIFTEEN DAYS OF RESALE, INCLUDING PROVIDING
32 WRITTEN DOCUMENTATION OF EXPENSES. THE ACCOUNTING SHALL BE ON A FORM
33 PRESCRIBED BY THE BANKING DEPARTMENT;
34 (C) "CONSIDERATION" SHALL MEAN ANY PAYMENT OR THING OF VALUE PROVIDED
35 TO THE EQUITY SELLER, INCLUDING UNPAID LEASE PAYMENTS OWED BY THE EQUITY
36 SELLER PRIOR TO THE DATE OF EVICTION OR VOLUNTARY RELINQUISHMENT OF THE
37 PROPERTY, REASONABLE COSTS PAID TO THIRD PARTIES NECESSARY TO COMPLETE
38 THE RECONVEYANCE TRANSACTION, PAYMENT OF MONEY TO SATISFY A DEBT OR
39 LEGAL OBLIGATION OF THE EQUITY SELLER OR THE REASONABLE COST OF REPAIRS
40 FOR DAMAGE TO THE DWELLING CAUSED BY THE EQUITY SELLER BEYOND ORDINARY
41 WEAR AND TEAR; BUT SHALL NOT INCLUDE AMOUNTS IMPUTED AS ANY FEE PAID
42 DIRECTLY OR INDIRECTLY TO THE EQUITY PURCHASER, OR HIS OR HER REPRESEN-
43 TATIVE, INCIDENT TO A RECONVEYANCE ARRANGEMENT, EXCEPT FOR REASONABLE
44 COSTS PAID TO THIRD PARTIES NECESSARY TO COMPLETE THE RECONVEYANCE.
45 (D) "RESALE" MEANS A BONA FIDE MARKET SALE OF THE PROPERTY SUBJECT TO
46 THE RECONVEYANCE ARRANGEMENT BY THE EQUITY PURCHASER TO AN UNAFFILIATED
47 THIRD PARTY.
48 (E) "RESALE PRICE" MEANS THE PURCHASE PRICE OF THE PROPERTY ON RESALE.
49 (E) THIS SUBDIVISION SHALL NOT BE DEEMED TO ABROGATE ANY DUTY OF
50 INQUIRY WHICH EXISTS AS TO RIGHTS OR INTERESTS OF PERSONS IN POSSESSION
51 OF THE RESIDENTIAL REAL PROPERTY IN FORECLOSURE OR DEFAULT.
52 (F) ALL DEEDS OR CONVEYANCES SUBJECT TO A RECONVEYANCE ARRANGEMENT
53 SHALL STATE EXPLICITLY ON THE FACE OF THE DOCUMENT THAT THE CONVEYANCE
54 IS SUBJECT TO A RECONVEYANCE ARRANGEMENT, AND SHALL STATE THE TERMS OF
55 THE RECONVEYANCE ARRANGEMENT. MOREOVER, ALL RECONVEYANCE ARRANGEMENTS
S. 4744--A 10
1 MUST BE SIMULTANEOUSLY RECORDED BY THE EQUITY PURCHASER WITH THE SUBJECT
2 DEED IN THE COUNTY CLERK`S OFFICE WHERE THE PROPERTY IS LOCATED.
3 12. ANY PROVISION OF A COVERED CONTRACT WHICH ATTEMPTS OR PURPORTS TO
4 LIMIT THE LIABILITY OF THE EQUITY PURCHASER UNDER THIS SECTION SHALL BE
5 NULL AND VOID. INCLUSION OF SUCH PROVISION SHALL AT THE OPTION OF THE
6 EQUITY SELLER RENDER THE COVERED CONTRACT VOID. THE EQUITY PURCHASER
7 SHALL BE LIABLE TO THE EQUITY SELLER FOR ALL DAMAGES PROXIMATELY CAUSED
8 BY SUCH PROVISION. ANY PROVISION IN A COVERED CONTRACT WHICH ATTEMPTS OR
9 PURPORTS TO REQUIRE ARBITRATION OF ANY DISPUTE ARISING UNDER THIS
10 SECTION SHALL BE VOID AT THE OPTION OF THE EQUITY SELLER.
11 13. IN ADDITION TO THE OTHER REMEDIES PROVIDED, WHENEVER THERE SHALL
12 BE A VIOLATION OF THIS SECTION, APPLICATION MAY BE MADE BY THE ATTORNEY
13 GENERAL IN THE NAME OF THE PEOPLE OF THE STATE OF NEW YORK TO A COURT OR
14 JUSTICE HAVING JURISDICTION BY A SPECIAL PROCEEDING TO ISSUE AN INJUNC-
15 TION, AND UPON NOTICE TO THE DEFENDANT OF NOT LESS THAN FIVE DAYS, TO
16 ENJOIN AND RESTRAIN THE CONTINUANCE OF SUCH VIOLATIONS; AND IF IT SHALL
17 APPEAR TO THE SATISFACTION OF THE COURT OR JUSTICE THAT THE DEFENDANT
18 HAS, IN FACT, VIOLATED THIS SECTION, AN INJUNCTION MAY BE ISSUED BY SUCH
19 COURT OR JUSTICE, ENJOINING AND RESTRAINING ANY FURTHER VIOLATION, WITH-
20 OUT REQUIRING PROOF THAT ANY PERSON HAS, IN FACT, BEEN INJURED OR
21 DAMAGED THEREBY. IN ANY SUCH PROCEEDING, THE COURT MAY MAKE ALLOWANCES
22 TO THE ATTORNEY GENERAL AS PROVIDED IN PARAGRAPH SIX OF SUBDIVISION (A)
23 OF SECTION EIGHTY-THREE HUNDRED THREE OF THE CIVIL PRACTICE LAW AND
24 RULES, AND DIRECT RESTITUTION. WHENEVER THE COURT SHALL DETERMINE THAT A
25 VIOLATION OF THIS SECTION HAS OCCURRED, THE COURT MAY IMPOSE A CIVIL
26 PENALTY OF NOT MORE THAN TWENTY-FIVE THOUSAND DOLLARS FOR EACH
27 VIOLATION. IN CONNECTION WITH ANY SUCH PROPOSED APPLICATION, THE ATTOR-
28 NEY GENERAL IS AUTHORIZED TO TAKE PROOF AND MAKE A DETERMINATION OF THE
29 RELEVANT FACTS AND TO ISSUE SUBPOENAS IN ACCORDANCE WITH THE CIVIL PRAC-
30 TICE LAW AND RULES.
31 14. THIS SECTION SHALL NOT APPLY TO A PRIOR LIEN HOLDER WHERE THE LIEN
32 WAS PROPERLY RECORDED PRIOR TO THE EXECUTION OF ANY COVERED CONTRACT BY
33 BOTH THE EQUITY SELLER AND THE EQUITY PURCHASER NOR SHALL ANY PROVISION
34 OF THIS SECTION BE DEEMED TO IMPAIR ANY EQUITY OR OTHER AVAILABLE RIGHTS
35 OF ANY SUCH PRIOR LIEN HOLDER.
36 15. THE PROVISIONS OF THIS SECTION SHALL BE LIBERALLY CONSTRUED TO
37 EFFECTUATE THE INTENT AND TO ACHIEVE THE PURPOSES SET FORTH IN SUBDIVI-
38 SION ONE OF THIS SECTION.
39 16. THE PROVISIONS OF THIS SECTION ARE NOT EXCLUSIVE AND ARE IN ADDI-
40 TION TO ANY OTHER REQUIREMENTS, RIGHTS, REMEDIES, AND PENALTIES PROVIDED
41 BY LAW.
42 17. ANY WAIVER OF THE PROVISIONS OF THIS SECTION SHALL BE VOID AND
43 UNENFORCEABLE AS CONTRARY TO THE PUBLIC POLICY.
44 18. IF ANY PROVISION OF THIS SECTION, OR IF ANY APPLICATION THEREOF TO
45 ANY PERSON OR CIRCUMSTANCES IS HELD UNCONSTITUTIONAL, THE REMAINDER OF
46 THIS SECTION AND THE APPLICATION OF ITS PROVISIONS TO OTHER PERSONS AND
47 CIRCUMSTANCES SHALL NOT BE AFFECTED THEREBY.
48 S 4. The real property actions and proceedings law is amended by
49 adding a new section 1303 to read as follows:
50 S 1303. FORECLOSURES; REQUIRED NOTICES. 1. THE FORECLOSING PARTY IN A
51 MORTGAGE FORECLOSURE ACTION SHALL PROVIDE NOTICE TO THE MORTGAGOR IN
52 ACCORDANCE WITH THE PROVISIONS OF THIS SECTION WITH REGARD TO INFORMA-
53 TION AND ASSISTANCE ABOUT THE FORECLOSURE PROCESS.
54 2. THE NOTICE REQUIRED BY THIS SECTION SHALL BE DELIVERED WITH THE
55 SUMMONS AND COMPLAINT TO COMMENCE A FORECLOSURE ACTION. THE NOTICE
56 REQUIRED BY THIS SECTION SHALL BE IN BOLD, FOURTEEN-POINT TYPE AND SHALL
S. 4744--A 11
1 BE PRINTED ON COLORED PAPER THAT IS OTHER THAN THE COLOR OF THE SUMMONS
2 AND COMPLAINT, AND THE TITLE OF THE NOTICE SHALL BE IN BOLD,
3 TWENTY-POINT TYPE. THE NOTICE SHALL BE ON ITS OWN PAGE.
4 3. THE NOTICE REQUIRED BY THIS SECTION SHALL APPEAR AS FOLLOWS:
5 HELP FOR HOMEOWNERS IN FORECLOSURE
6 NEW YORK STATE LAW REQUIRES THAT WE SEND YOU THIS NOTICE ABOUT THE
7 FORECLOSURE PROCESS. PLEASE READ IT CAREFULLY.
8 MORTGAGE FORECLOSURE IS A COMPLEX PROCESS. SOME PEOPLE MAY APPROACH
9 YOU ABOUT "SAVING" YOUR HOME. YOU SHOULD BE EXTREMELY CAREFUL ABOUT ANY
10 SUCH PROMISES.
11 THE STATE ENCOURAGES YOU TO BECOME INFORMED ABOUT YOUR OPTIONS IN
12 FORECLOSURE. THERE ARE GOVERNMENT AGENCIES, LEGAL AID ENTITIES AND OTHER
13 NON-PROFIT ORGANIZATIONS THAT YOU MAY CONTACT FOR INFORMATION ABOUT
14 FORECLOSURE WHILE YOU ARE WORKING WITH YOUR LENDER DURING THIS PROCESS.
15 TO LOCATE AN ENTITY NEAR YOU, YOU MAY CALL THE TOLL-FREE HELPLINE
16 MAINTAINED BY THE NEW YORK STATE BANKING DEPARTMENT AT _____________
17 (ENTER NUMBER) OR VISIT THE DEPARTMENT`S WEBSITE AT _______________
18 (ENTER WEB ADDRESS).
19 THE STATE DOES NOT GUARANTEE THE ADVICE OF THESE AGENCIES.
20 4. THE BANKING DEPARTMENT SHALL PRESCRIBE THE TELEPHONE NUMBER AND WEB
21 ADDRESS TO BE INCLUDED IN THE NOTICE.
22 5. THE BANKING DEPARTMENT SHALL POST ON ITS WEBSITE OR OTHERWISE MAKE
23 READILY AVAILABLE THE NAME AND CONTACT INFORMATION OF GOVERNMENT AGEN-
24 CIES OR NON-PROFIT ORGANIZATIONS THAT MAY BE CONTACTED FOR INFORMATION
25 ABOUT THE FORECLOSURE PROCESS, INCLUDING MAINTAINING A TOLL-FREE HELP-
26 LINE TO DISSEMINATE THE INFORMATION REQUIRED BY THIS SECTION.
27 S 5. This act shall take effect February 1, 2007 and shall apply to
28 any covered contract entered into on or after such date.
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