New York To Use New Law To Hammer Loan Servicers Giving Financially Strapped Homeowners Loan Modification Jerk-Around

In New York City, ProPublica reports:

• New York regulators have crafted new laws to give the state authority to punish mortgage servicers -- something the Treasury Department, in administering its struggling mortgage modification program, has so far failed to do. The new rules set clear standards for how servicers must handle homeowners seeking a modification.(1)

• "We will not hesitate to bring an enforcement action or to refer an enforcement action," said Richard Neiman, the New York superintendent of banks. "In fact, we'll be looking for that case in the event of any wrongdoing, because we know the message it will send to the entire industry."

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• The New York laws, which go into effect Oct. 1, lay out how servicers should handle homeowners in danger of foreclosure.(2)

For more, see New York Jumps Ahead of Feds With Law Holding Mortgage Companies Accountable on Mods.

See also, Housing Wire: NY Establishes Loss Mitigation, Fair Dealing Duties for Mortgage Servicers.

(1) See ProPublica: Bankruptcy Judges, Justice Dept. Rip Mortgage Companies for the type of abuses and egregious practices by mortgage servicers that precipitated the need for this new law.

(2) Among other things, the new laws require servicers to have adequate staffing and systems to ensure that homeowners "are not required to submit multiple copies of required documents," a frequent problem, and prohibit servicers from continuing foreclosure proceedings if the homeowner is being evaluated for a modification, the story states. ProPublica has previously reported that foreclosures occurring during the modification process have been a persistent problem.