NYS Home Equity Theft Prevention Act. New York State Banking Department Consumer Services Division

Transcription

1 NYS Home Equity Theft Prevention Act New York State Banking Department Consumer Services Division

2 What is the Home Equity Theft Prevention Act (HETPA)? The law protects people who are in foreclosure or default The Act became effective February 1, It can be found at NY Real Property Law sec. 265-a and Real Property Actions and Proceedings Law sec

3 What is the purpose of HETPA? To protect vulnerable homeowners who are in default on their mortgages or facing foreclosure from fraud, deception and unfair dealing. To preserve and guard the precious asset of home equity. To provide homeowners with information they need to make an informed and intelligent decision regarding the sale or transfer of their home to an equity purchaser. 3

4 When Does HETPA Apply? HETPA generally applies to the sale of a home in foreclosure or default to a buyer who wants to purchase the home as an investment A home is in default if the homeowner is at least two months behind in mortgage payments 4

5 When Doesn t HETPA Apply? Home used as buyer s primary residence Court-ordered foreclosure auction Not-for-profit housing organization or a public housing agency Buyer is a family member of the seller Bonafide purchaser or encumbrancer for value 5

6 What HETPA Requires Agreements in writing Agreements in English and Spanish if that is the homeowner s primary language Agreements to be signed and dated Five day right to cancel Additional disclosures and protections Protections cannot be waived 6

7 Homeowners have a right to a completed and detailed contract A notice that the homeowner is allowed to cancel the contract until midnight of the 5 th business after the contract is signed; A cancellation form and date the cancellation period ends; The Equity Purchaser s full contact information, i.e. name, address and telephone number; The total value of the house being sold; 7

8 Contract Requirements (continued) The total consideration to be given by the purchaser, including any services to be performed; The time at which physical possession of the residence is to be transferred; The terms of any rental or lease agreement; The terms of any buyback or reconveyance agreement 8

9 Notice of Cancellation Rights Required by HETPA YOU MAY CANCEL THIS CONTRACT AT ANY TIME BEFORE MIDNIGHT OF (DATE). (Name of Equity Purchaser) CANNOT ASK YOU TO SIGN OR HAVE YOU SIGN ANY DEED OR ANY OTHER DOCUMENT UNTIL YOUR RIGHT TO CANCEL THIS CONTRACT HAS ENDED. SEE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT. YOU SHOULD ALWAYS CONSULT AN ATTORNEY OR COMMUNITY ORGANIZATION BEFORE SIGNING ANY LEGAL DOCUMENTS CONCERNING YOUR HOME. IT IS ADVISABLE THAT YOU FIND YOUR OWN ATTORNEY, AND NOT CONSULT WITH AN ATTORNEY WHO HAS BEEN PROVIDED TO YOU BY THE PURCHASER. THE LAW REQUIRES THAT THIS CONTRACT CONTAIN THE ENTIRE AGREEMENT. YOU SHOULD NOT RELY UPON ANY OTHER WRITTEN OR ORAL AGREEMENT OR PROMISE. 9

10 Notice of Cancellation THIS CONTRACT WAS ENTERED INTO ON YOU MAY CANCEL THIS CONTRACT FOR THE SALE OF YOUR HOUSE, WITHOUT ANY PENALTY OR OBLIGATION, AT ANY TIME BEFORE MIDNIGHT OF. TO CANCEL THIS TRANSACTION, PERSONALLY DELIVER A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE, OR SEND IT BY FACSMILE, UNITED STATES MAIL, OR AN ESTABLISHED COMMERCIAL LETTER SERVICE, INDICATING CANCELLATION TO,(NAME OF PURCHASER) AT (STREET ADRESS OF PURCHASER S PLACE OF BUSINESS AND FASCMILE # IF ANY) NOT LATER THAN MIDNIGHT OF (DATE). IF YOU WISH TO CANCEL THIS CONTRACT, SIGN AND DATE BOTH COPIES AND RETURN ONE COPY IMMEDIATELY TO THE PURCHASER. I HEARBY CANCEL THIS TRANSACTION. (SELLER S SIGNATURE) (DATE). 10

11 During the 5 day grace period, the Equity Purchaser is may not: Accept execution or induce the homeowner to execute any instrument of conveyance of any interest in the residence in foreclosure or default Record any document with the county clerk Transfer any interest in the residence to a third party Pay the homeowner any consideration Induce the homeowner to waive his or her rights under HETPA 11

12 Additional Protections Under HETPA The Homeowner has a right to an honest buyer and a fair sale 12

13 Equity Purchasers MAY NOT... Represent that they are acting as an advisor or consultant to the homeowner Represent that they are assisting the homeowner seller to save the house unless they have a good faith basis for the representation Represent that they are assisting the homeowner seller in preventing a completed foreclosure unless they have a good faith basis for the representation 13

14 Special Notice for Homeowners in Foreclosure Actions When a foreclosure action is commenced, the foreclosing party must deliver to the homeowner along with the summons and complaint a separate notice in 14 point type. The notice must be on a different color paper than the summons and complaint. 14

15 Help for Homeowners Warns homeowners to be extremely careful about people promising to save their home Encourages homeowners to become informed about their options Advises homeowners that there are government agencies, legal aid entities and other non-profit organizations that he or she may contact for information about foreclosure while working with his or her lender during this process Invites homeowners in foreclosure to call the State Banking Departments toll-free helpline or visit the Department's website to obtain information about such organizations. 15

16 HELP FOR HOME OWNERS IN FORECLOSURE NEW YORK STATE LAW REQUIRES THAT WE SEND YOU THIS NOTICE ABOUT THE FORECLOSURE PROCESS. PLEASE READ IT CAREFULLY. MORTGAGE FORECLOSURE IS A COMPLEX PROCESS. SOME PEOPLE MAY APPROACH YOU ABOUT SAVING YOUR HOME. YOU SHOULD BE EXTEREMELY CAREFUL ABOUT ANY SUCH PROMISES. THE STATE ENCOURAGES YOU TO BECOME INFORMED ABOUT YOUR OPTIONS IN FORECLOSURE. THERE ARE GOVERNMENT AGENCIES, LEGAL AID ENTITIES AND OTHER NON-PROFIT ORGANIZATIONS THAT YOU MAY CONTACT FOR INFORMATION ABOUT FORECLOSURE WHILE YOU ARE WORKING WITH YOUR LENDER DURING THIS PROCESS. TO LOCATE AN ENTITY NEAR YOU, YOU MAY CALL THE TOLL-FREE HELPLINE MAINTED BY THE NEW YORK STATE BANKING DEPARTMENT AT BANK-NYS OR VISIT THE DEPARTMENT S WEBSITE AT THE STATE DOES NOT GUARANTEE THE ADVICE OF THESE AGENCIES. 16

17 Buyback and Reconveyance Agreements 17

18 Buyback & Reconveyance Agreements Agreements where an equity purchaser takes title to the property in default or foreclosure pursuant to an agreement that allows the homeowner to regain the property The equity purchaser must consider and verify the following seller information: Current and expected income Employment status Current debts Other financial resources and assets that the seller may have 18

19 HETPA Requires A legitimate, in-person closing with a disinterested lawyer present Rental agreements must be fair and reasonable The mortgage lender must be notified of the agreement Buyer must obtain written consent from the homeowner before transferring any interest 19

20 HETPA Requires If the homeowner cannot afford or chooses not to repurchase the home the purchaser must buy out the homeowner The conveyance is subject to a reconveyance arrangement must be on the face of deeds/conveyance documents The purchaser must record the agreement with the subject deed in the county clerk s office Purchasers may not limit their liability. Any such provisions will be considered to be null & void. 20

21 End Result of Buyback or Reconveyance Agreements: Title to the residence is reconveyed to the homeowner; or Purchaser pays the homeowner seller the agreed amount which must be at least 82% of the Fair Market Value of the property. 21

22 What if the law is violated? Transaction may be rescinded by the original homeowner within two years of the date of the recording of the conveyance The original homeowner may bring an action for the recovery of damages or equitable relief for violation of the law Class E Felony Attorney General enforcement: Civil 22 penalties of up to $25,000 for each violation.