Bill Text: NY A02632 | 2019-2020 | General Assembly | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relates to authorizing reverse cooperative apartment unit loans for persons sixty-two years of age or older; provides additional consumer protections.
Spectrum: Partisan Bill (Democrat 19-0)
Status: (Vetoed) 2019-12-13 - VETOED MEMO.213 [A02632 Detail]
Download: New_York-2019-A02632-Amended.html
Bill Title: Relates to authorizing reverse cooperative apartment unit loans for persons sixty-two years of age or older; provides additional consumer protections.
Spectrum: Partisan Bill (Democrat 19-0)
Status: (Vetoed) 2019-12-13 - VETOED MEMO.213 [A02632 Detail]
Download: New_York-2019-A02632-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 2632--A 2019-2020 Regular Sessions IN ASSEMBLY January 24, 2019 ___________ Introduced by M. of A. DINOWITZ, WILLIAMS, L. ROSENTHAL, ORTIZ, SEAWRIGHT, ENGLEBRIGHT, HYNDMAN, BARRON, BLAKE, GLICK, D'URSO, DICK- ENS, RIVERA, GALEF, ARROYO, COOK, STERN, RICHARDSON -- Multi-Sponsored by -- M. of A. SIMON -- read once and referred to the Committee on Banks -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the banking law, the uniform commercial code and the civil practice law and rules, in relation to reverse cooperative apartment unit loans The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The banking law is amended by adding a new section 6-n to 2 read as follows: 3 § 6-n. Reverse cooperative apartment unit loans for persons sixty-two 4 years of age or older. 1. For purposes of this section, the following 5 terms shall have the following meanings: 6 (a) Reverse cooperative apartment unit loan. A loan which is secured 7 by an interest in a cooperative apartment that is or intended to be the 8 principal residence of the borrower or borrowers the proceeds of which 9 are used to purchase the property, or advanced to the borrower or 10 borrowers during the term of the loan in equal installments, or in 11 advances through a line of credit or otherwise, in a lump sum, or 12 through a combination thereof. 13 (b) Loan payout options: 14 (i) Term payment option. Under the term payment option, equal monthly 15 payments are made by the lender to the borrower for a fixed term of 16 months chosen by the borrower. 17 (ii) Tenure payment option. Under the tenure payment option, equal 18 monthly payments are made by the lender to the borrower, until the loan 19 is prepaid in full or becomes due and payable. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD01344-04-9A. 2632--A 2 1 (iii) Line of credit payment option. Under the line of credit payment 2 option, payments are made by the lender to the borrower at times and in 3 amounts determined by the borrower as long as the amounts do not exceed 4 the maximum amount of loan proceeds. 5 (iv) Single lump sum payment option. Under the single lump sum payment 6 option, the borrower receives an amount from the lender that does not 7 exceed the maximum amount of loan proceeds. Set asides required for 8 disbursements such as loan closing costs or for monthly maintenance 9 fees, will be deducted from the amount of proceeds available to the 10 borrower. 11 (c) Authorized lender. Any bank, trust company, national banking asso- 12 ciation, savings bank, savings and loan association, federal savings 13 bank, federal savings and loan association, credit union, or federal 14 credit union or any licensed mortgage banker approved for the making of 15 reverse mortgage loans by the superintendent or any entity exempted from 16 licensing pursuant to section five hundred ninety of this chapter and 17 approved for the making of reverse mortgage loans by the superintendent. 18 (d) Borrower. A tenant in severalty who is sixty-two years of age or 19 older, or if the cooperative apartment unit is held by tenants by the 20 entirety or by joint tenancy, the youngest of which is sixty-two years 21 age or older. 22 (e) Superintendent. The superintendent of financial services of this 23 state. 24 (f) Department. The department of financial services of this state. 25 (g) Third-party contact. The borrower may designate a third-party 26 contact, such as a family member, trusted friend, advisor or other party 27 whom the borrower would like to be contacted. It shall be the borrower's 28 discretion to choose if the third-party contact is to be contacted if 29 (i) the borrower has not returned the occupancy form, and/or (ii) the 30 loan is in default for any reason and the lender plans to proceed on 31 collecting on the loan, and/or (iii) the borrower cannot be reached. 32 2. A cooperative apartment unit loan pursuant to this section shall be 33 subject to the following: 34 (a) the borrower shall be granted lifetime possession of the subject 35 premises of the cooperative apartment unit which is the security for the 36 reverse cooperative apartment unit loan, as long as such apartment unit 37 remains the borrowers' principal residence and the borrower is not in 38 default under the reverse cooperative apartment unit loan. The borrower 39 or borrowers must certify annually on each anniversary of the loan, that 40 they reside in the unit and that it is their primary residence; 41 (b) the lender shall ask the borrower if they designate a third party 42 contact, collect such information from the borrower and update such 43 information annually on each anniversary of the loan; 44 (c) subject to such rules or regulations as the superintendent may 45 adopt, a reverse cooperative apartment unit loan shall be made at either 46 a fixed or variable rate of interest; and 47 (d) subject to such rules or regulations as the superintendent may 48 adopt, the authorized lender may require a borrower to establish a set 49 aside account for the purposes of paying property taxes, maintenance or 50 cooperative fees, insurance premiums of the property securing the 51 reverse cooperative apartment unit loan, or for the payment of any other 52 fees and expenses; 53 (e) subject to such rules or regulations as the superintendent may 54 adopt, an authorized lender or any successor or assign of such author- 55 ized lender which suspends, ceases or makes late payments to a borrower 56 as provided under a reverse cooperative apartment unit loan shall beA. 2632--A 3 1 subject to forfeiture (as liquidated damages to such borrower and not as 2 a penalty) of twice the interest which would otherwise have been earned 3 during the period in which payments were suspended, ceased, or made 4 late; provided a lender or any successor or assign is not required to 5 make payments under a reverse cooperative apartment unit loan if a matu- 6 rity event under the loan has occurred or a borrower is in default under 7 the loan; 8 (f) the outstanding balance may be prepaid in full by the borrower 9 without penalty at any time during the reverse cooperative apartment 10 unit loan term; 11 (g) an authorized lender is prohibited from using or attaching any 12 property or asset of the borrower or heirs of the borrower except the 13 apartment unit securing the reverse cooperative apartment unit loan in 14 settlement of a reverse loan obligation--the loan is a non-recourse 15 loan; 16 (h) an authorized lender shall deliver to the applicant upon applica- 17 tion, a statement prepared by the department providing the contact 18 information for New York approved housing counselors whom the cooper- 19 ative apartment owner can call for independent counseling and informa- 20 tion services. Further, no reverse loan commitment shall be issued by 21 the authorized lender until the applicant presents, in writing, a form 22 that certifies the terms of the reverse cooperative apartment unit loan 23 have been explained to them by a New York approved housing counselor. 24 The form of such statement and affidavit shall be developed by the 25 superintendent; 26 (i) an authorized lender shall deliver to an applicant such disclo- 27 sures as may be required by the superintendent which shall describe the 28 relevant portions of the reverse loan being offered, and shall include 29 but not be limited to the following items: 30 (i) a schedule of payments to and from the borrower and the total 31 payments in dollars over the life expectancy of the youngest borrower of 32 the reverse cooperative apartment unit loan for the borrower; 33 (ii) a statement prominently displayed advising applicants to consult 34 with appropriate authorities regarding tax and estate planning conse- 35 quences of a reverse cooperative apartment unit loan; 36 (iii) where applicable a description of prepayment and refinancing 37 features; 38 (iv) to the extent determinable at or prior to the inception of the 39 reverse cooperative apartment unit loan, the interest rate and, an esti- 40 mate of the total interest payable on the reverse cooperative apartment 41 unit loan; 42 (v) a statement concerning the compliance of the lender with the 43 criteria established by the superintendent that an authorized lender 44 must meet before it may make reverse cooperative apartment unit loans 45 pursuant to this section; 46 (vi) a statement setting forth those events which would cause the loan 47 to become due and payable (or cause the borrower to default) the reverse 48 cooperative apartment unit loan; 49 (vii) the loan, if not a purchase money loan, is subject to a three 50 day right of rescission by the borrower; and 51 (viii) a financial statement setting forth an estimate of all costs 52 associated with the loan; 53 (j) an authorized lender shall deliver to each borrower at the time of 54 closing of a reverse cooperative unit loan two copies of the borrower's 55 right to cancel and instructions for how to cancel the loan to be 56 prescribed by the superintendent;A. 2632--A 4 1 (k) a reverse cooperative apartment unit loan pursuant to this section 2 shall expressly and conspicuously bear a legend identifying it as such 3 in at least fourteen-point font; 4 (l) a reverse cooperative apartment unit loan shall clearly set forth 5 the terms for when the loan becomes due and payable, including: 6 (i) regardless of loan payout option chosen by the borrower, the loan 7 note shall state that the outstanding loan balance will not be due and 8 payable in full until the last borrower dies, or if a borrower conveys 9 all of his or her title in the property and no other borrower retains 10 title to the property; and 11 (ii) the loan note shall state that the outstanding loan balance shall 12 be due and payable in full, upon approval of the superintendent, if any 13 of the following occur: 14 (1) the property ceases to be the principal residence of a borrower 15 for reasons other than death and the property is not the principal resi- 16 dence of at least one other borrower; 17 (2) for a period of longer than twelve consecutive months, a borrower 18 fails to occupy the property because of physical or mental illness and 19 the property is not the principal residence of at least one other 20 borrower; or 21 (3) an obligation of the borrower under the loan note is not met; 22 (m) in the event that an authorized lender or holder of the reverse 23 cooperative apartment unit loan determines the loan is in default and 24 intends to initiate proceedings pursuant to the note, the lender shall 25 notify the borrower's third-party contact. In the event that the borrow- 26 er has not designated a third-party contact to receive such notice of 27 foreclosure, then the authorized lender or the holder of said reverse 28 cooperative apartment unit loan shall notify the local or county office 29 for the aging of its intent to commence foreclosure proceedings. Such 30 entity shall take appropriate action to protect the interests of the 31 borrower; 32 (n) a reverse cooperative apartment unit loan secured by a unit in a 33 cooperative housing development shall also be subject to the prior 34 approval by the cooperative housing association's board of directors; 35 and 36 (o) no reverse cooperative apartment unit loan shall be subject to 37 mandatory binding arbitration. 38 3. A reverse cooperative apartment unit loan pursuant to this section 39 may: 40 (a) provide that an authorized lender may, consistent with federal 41 laws and regulations, include a due-on-sale clause in its reverse coop- 42 erative apartment unit loan agreement and at its option exercise and 43 enforce such clause in accordance with its terms; and 44 (b) provide that the borrower's closing costs, including but not 45 limited to loan or commitment fees if any, insurance premiums, repairs, 46 legal fees, the costs of third party counseling, the costs of paying off 47 any existing mortgages or liens, and other appropriate costs be included 48 in the principal of the reverse cooperative apartment unit loan and 49 disbursed out of the loan proceeds at closing. 50 4. The superintendent shall adopt such rules or regulations as he or 51 she considers appropriate to govern a reverse cooperative apartment unit 52 loan made pursuant to this section. No reverse cooperative apartment 53 unit loan shall be made unless it conforms to the requirements of this 54 section and such rules and regulations as the superintendent may adopt. 55 5. No authorized lender or any other party or entity shall in any 56 manner, in the marketing or offering of reverse cooperative apartmentA. 2632--A 5 1 unit loans, engage in any unfair or deceptive practices in connection 2 with the marketing or offering of reverse cooperative apartment unit 3 loans, and, additionally, shall not: 4 (a) use the words "public service announcement" in any commercial, 5 mailing, advertisement or writing relating thereto; 6 (b) use the words "government insured" or other similar language 7 representing that reverse cooperative apartment unit loans are insured, 8 supported and sponsored by any governmental entity in any commercial, 9 mailing, advertisement or writing relating thereto; or 10 (c) represent that any such loan is other than a commercial product. 11 6. (a) Every authorized lender or its agent shall provide, with any 12 solicitation for reverse cooperative apartment unit loan products mailed 13 to a physical address within the state, supplemental consumer protection 14 materials the content and form of which shall be specified by the super- 15 intendent or his or her designee. 16 (b) Every authorized lender shall provide each applicant or potential 17 applicant for a reverse cooperative apartment unit loan with the tele- 18 phone number and internet website address provided by the department for 19 the purposes of acquiring reverse cooperative apartment unit loan coun- 20 seling. 21 (c) The superintendent is authorized to promulgate such rules and 22 regulations as he or she shall deem necessary to implement the 23 provisions of this subdivision. 24 7. For reverse cooperative apartment unit loans, authorized lender and 25 their agents shall: 26 (a) provide a monthly account statement, and for all borrowers whose 27 maintenance fees, special assessments mortgage insurance payments, home- 28 owners insurance payments, or payments stemming from any other property 29 obligation or obligations are administered by the authorized lender, and 30 where these payments are derived from the proceeds of the loan, the 31 authorized lender shall provide on the borrower's account statement the 32 current balance remaining in the borrower's line of credit or lifetime 33 expectancy set aside, the projected annual property charges for that 34 year, and a notice which reads in at least twelve point type: 35 "YOUR MAINTENANCE FEES AND SPECIAL ASSESSMENTS ARE CURRENTLY BEING 36 PAID BY THE PROCEEDS OF THIS LOAN. THE FUNDS THAT HAVE BEEN SET ASIDE 37 ARE EXPECTED TO BE EXHAUSTED AFTER THE MAINTENANCE FEES AND SPECIAL 38 ASSESSMENT PAYMENTS OF (SPECIFY EXPECTED MONTH AND YEAR). IF THE 39 PROCEEDS OF THIS LOAN CANNOT PAY THE MAINTENANCE FEES AND SPECIAL 40 ASSESSMENTS, YOU MUST PAY THESE OBLIGATIONS OR YOUR COOP SHARES MAY BE 41 LOST TO FORECLOSURE. PLEASE NOTE THAT MAINTENANCE FEES AND SPECIAL 42 ASSESSMENTS CAN VARY SO YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR 43 CHANGES." 44 (b) by telephone and first class mail, inform and provide notice to a 45 borrower when his or her home equity line of credit or life expectancy 46 set aside is depleted to twenty percent or less of its value. Such 47 notice shall inform the borrower of his or her obligations relating to 48 such real property including, but not limited to, mortgage insurance, 49 homeowners insurance and real property taxes previously paid by such 50 line of credit or life expectancy set aside, and that such obligations 51 must continue to be paid when the home equity line of credit or life 52 expectancy set aside is depleted. Such notice shall use plain language, 53 written in a clear and coherent manner using words with common and every 54 day meanings, appropriately divided and captioned by its various 55 sections. If the lender or its agent is unable to contact the borrowerA. 2632--A 6 1 by telephone, notice must be sent to the third-party contact if author- 2 ized by the borrower. 3 (c) Each authorized lender shall, by telephone and first class mail, 4 inform and provide notice to a borrower when his or her home equity line 5 of credit or life expectancy set aside is depleted. Such notice shall 6 inform the borrower of his or her obligations relating to the cooper- 7 ative apartment unit including, but not limited to, mortgage insurance, 8 homeowners insurance and real property taxes, and that the home equity 9 line of credit or life expectancy set aside will no longer pay these 10 obligations. Such notice shall use plain language, written in a clear 11 and coherent manner using words with common and every day meanings, 12 appropriately divided and captioned by its various sections. 13 8. In the event that an authorized lender determines a reverse cooper- 14 ative apartment unit loan to be in default on the basis that the cooper- 15 ative apartment is no longer the primary residence of or occupied by the 16 borrower, if during the verification of the borrower's primary residence 17 and/or occupancy no responses are received in response to mailings 18 relating thereto, such lender shall cause a telephone call to be made to 19 the borrower, or if the borrower is unreachable by telephone, to the 20 third-party contact if designated, and an in person visit to be made to 21 the borrower at the cooperative apartment to be made prior to the 22 commencement of any proceeding to enforce the lender's rights under the 23 note. During such visit, the authorized lender or its agent shall 24 provide clear information as to who they are, that the visit pertains to 25 the reverse cooperative apartment unit loan, the reason for the home 26 visit, and the telephone number to call for further information. The 27 authorized lender must wait at least thirty days following such visit, 28 in addition to any additional time or notice requirements specified by 29 any other provision of law, before initiating a foreclosure action on 30 the basis that the cooperative apartment is no longer the primary resi- 31 dence of the borrower. If the borrower contacts the authorized lender 32 and provides proof of residence or occupancy after such visit but before 33 the commencement of a proceeding to enforce the lender's rights under 34 the note, the authorized lender shall be barred from initiating such 35 action. Furthermore, no authorized lender shall charge a borrower any 36 fee for any such visit and inspection. This prohibition on the imposi- 37 tion of fees shall include any and all inspections conducted by the 38 authorized lender to verify the status of the reverse cooperative apart- 39 ment unit loan, or any suspected or actual default condition. 40 9. Notwithstanding any inconsistent provision of law, the priority of 41 the lien of a reverse cooperative apartment unit loan, including the 42 lien for all principal, interest, fees, costs, and other charges 43 assessed in connection with the reverse loan, shall date from the 44 recording of the loan irrespective of the date of any advance of reverse 45 loan proceeds or the date by which an authorized lender shall be enti- 46 tled to accrued but unpaid interest, fees, costs or other charges. 47 10. Nothing in this section shall be construed to limit, impair or 48 otherwise affect the priority, under applicable law, of any other mort- 49 gage, deed of trust, encumbrance or lien which was recorded or filed 50 prior to the effective date of this section. 51 11. The sale or transfer of the interest in the cooperative apartment 52 unit securing the reverse cooperative apartment unit loan to a person 53 other than an original borrower or borrowers shall result in the termi- 54 nation of the reverse loan.A. 2632--A 7 1 12. The principal, including any accrued but unpaid interest, of a 2 reverse cooperative apartment unit loan agreement entered into pursuant 3 to this section must be insured by the borrower. 4 13. Any person who has been injured by reason of any violation of this 5 section or any violation of the rules and regulations of the department 6 relating to the reverse cooperative apartment unit loan program may 7 bring an action in his or her own name to recover treble his or her 8 actual damages, plus the prevailing plaintiff's reasonable attorneys' 9 fees. 10 14. Compliance with the provisions of this section shall be conditions 11 precedent to commencing an action to foreclose upon a reverse cooper- 12 ative apartment unit loan which is subject to the provisions of this 13 section, and the failure to comply therewith shall be a complete defense 14 to such action. 15 § 2. Subsection (f) of section 9-611 of the uniform commercial code is 16 amended by adding a new paragraph 1-a to read as follows: 17 (1-a) Notwithstanding any other provision of law, with regard to a 18 reverse cooperative apartment unit loan, at least ninety days before a 19 secured party, as defined under Section 9-102(a)(73), or its agent takes 20 any steps to dispose of its collateral, as provided for in Section 21 9-610, the secured party or its agent shall give notice to the borrower, 22 and separate notice to the borrower's designated third-party if one has 23 been designated in at least fourteen-point type except for the heading 24 which shall be in at least sixteen-point type. The notice shall include 25 the following: 26 YOU COULD LOSE YOUR COOPERATIVE APARTMENT UNIT TO FORECLOSURE. 27 PLEASE READ THE FOLLOWING NOTICE CAREFULLY. 28 Date 29 Borrower's address 30 Loan Number: 31 Property Address: 32 Dear Borrower(s) {or heirs of Debtor?}: 33 As of ___________, your reverse cooperative apartment unit loan is in 34 default. Under New York State Law, we are required to send you this 35 notice to inform you that you may be at risk of losing your home. 36 Your reverse loan is in default because you have not complied with the 37 following conditions of your loan: 38 _____ You are not occupying your cooperative apartment unit as your 39 principal residence 40 _____ You did not submit the required annual certificate of occupancy 41 _____ The named borrower on the reverse loan has died 42 _____ You did not pay maintenance on your unit to the cooperative corpo- 43 ration, and {servicer} paid your maintenance for you on the following 44 date(s) in the following amount(s):________________________________ 45 ____________________________________ 46 _____ You did not make required repairs to your unit 47 If the claim is based on your failure to pay maintenance to the cooper- 48 ative corporation, you can cure this default by making the payment of 49 $____________ for the advances we made towards these payments on your 50 behalf. 51 You have the right to dispute the claims listed above by contacting us, 52 by calling ___________ or sending a letter to __________________. This 53 may include proof of payments made for water and sewer charges or a 54 current declaration page from your insurance company, or any other proof 55 to dispute the servicer's claim.A. 2632--A 8 1 OPTIONS MAY BE AVAILABLE FOR YOU TO CURE YOUR DEFAULT. SOME OF THESE 2 OPTIONS ARE LISTED BELOW. YOU MAY CONTACT {SERVICER} AT {TOLL-FREE 3 NUMBER} TO DISCUSS YOUR OPTIONS. 4 If you are in default for failure to pay maintenance, you may qualify 5 for a re-payment plan to cure the default balance owed. 6 Attached to this notice is a list of New York approved housing coun- 7 seling agencies and legal services in your area which provide free coun- 8 seling. A statewide listing by county is also available at 9 http://www.dfs.ny.gov/consumer/mortg nys np counseling agencies.htm. 10 You may also call your local Department of Aging for a referral or call 11 311 if you live in New York City. 12 Qualified free help is available; watch out for companies or people who 13 charge a fee for these services. 14 You may also contact {SERVICER} directly at __________ and ask to 15 discuss all possible options to allow you to cure your default and 16 prevent the foreclosure of your home. While we cannot ensure that a 17 resolution is possible, we encourage you to take immediate steps to try 18 to achieve a resolution. The longer you wait, the fewer options you may 19 have. 20 If you have not taken any actions to resolve this matter within ninety 21 days from the date this notice was mailed, we will have the right to 22 take your cooperative shares from you. 23 If you need further information, please call the New York State Depart- 24 ment of Financial Services' toll-free helpline at 877-226-5697 or visit 25 the Department's website at http://www.dfs.ny.gov. 26 IMPORTANT: You have the right to remain in your unit until you receive a 27 court order telling you to leave the property. If a foreclosure action 28 is filed against you in court, you still have the right to remain in the 29 unit until a court orders you to leave. You legally remain the owner of 30 your cooperative shares and are responsible for the unit until the 31 shares are transferred to a new owner through a sale. However, there 32 will be no court proceeding before the shares are transferred to a new 33 owner. After the shares are transferred, the new owner may begin a court 34 proceeding to evict you from the unit. 35 This notice is not an eviction notice. 36 § 3. The civil practice law and rules is amended by adding a new rule 37 3410 to read as follows: 38 Rule 3410. Face-to-face meeting for foreclosure of reverse cooperative 39 apartment unit loans. (a) In any action involving a reverse cooperative 40 apartment unit loan, as defined in paragraph (a) of subdivision one of 41 section six-n of the banking law, the lender shall file a petition with 42 the supreme court of the county in which the cooperative apartment is 43 located stating that the loan is in default and the reason for the 44 default. The petition must be served on the borrower pursuant to section 45 three hundred eight of this chapter. Within ten days of the date of 46 service of the notice to the borrower, the petitioner must file a 47 specialized request for judicial intervention with the clerk. Within 48 sixty days of receipt of the notice or on such adjourned date as has 49 been agreed to by the parties, the court shall hold a mandatory settle- 50 ment conference for the purpose of holding settlement discussions 51 pertaining to the relative rights and obligations of the parties under 52 the loan documents, including, but not limited to: 53 1. determining whether the parties can reach a mutually agreeable 54 resolution to help the borrower avoid losing his or her cooperative 55 apartment unit, and evaluating the potential for a resolution in whichA. 2632--A 9 1 payment schedules or amounts may be modified or other workout options 2 may be agreed; or 3 2. whatever other purposes the court deems appropriate. 4 (b) At any meeting held pursuant to this section, the lender and the 5 borrower shall appear in person or by counsel, and each party's repre- 6 sentative at the meeting shall be fully authorized to dispose of the 7 matter. If the borrower is appearing without counsel, the court shall 8 inform the borrower of the nature of the action and his or her rights 9 and responsibilities. Where appropriate, the court may permit the 10 borrower or a representative of the borrower or the defendant to attend 11 the settlement conference telephonically or by video-conference. 12 (c) Upon the filing of the notice of default with the court, the court 13 shall send either a copy of the notice or the borrower's name, address 14 and telephone number (if available) to a housing counseling agency or 15 agencies on a list designated by the department for the geographic 16 region in which the borrower resides. Such information shall be used by 17 the designated housing counseling agency or agencies exclusively for the 18 purpose of making the borrower aware of housing counseling and foreclo- 19 sure prevention services and options available to them. 20 (d) The court shall promptly send a notice to parties advising them of 21 the time and place of the meeting, the purpose of the meeting and the 22 requirements of this section. The notice shall be in a form prescribed 23 by the court, and shall advise the parties of the documents that they 24 shall bring to the meeting. 25 (e) Both the lender and the borrower shall negotiate in good faith to 26 reach a mutually agreeable resolution, including but not limited to a 27 loan modification, payment agreement, or any other loss mitigation, if 28 possible. Compliance with the obligation to negotiate in good faith 29 pursuant to this section shall be measured by the totality of the 30 circumstances, including but not limited to the following factors: 31 1. compliance with the requirements of this rule and applicable regu- 32 lations pertaining to the face-to-face meeting process; 33 2. compliance with applicable lending and servicing laws, rules, regu- 34 lations, investor directives, and loss mitigation standards or options; 35 and 36 3. conduct consistent with efforts to reach a mutually agreeable 37 resolution, including but not limited to, avoiding unreasonable delay, 38 appearing at the meeting with authority to fully dispose of the matter, 39 avoiding moving forward to take possession while loss mitigation appli- 40 cations and attempts are pending, and providing accurate information to 41 the department and all parties. 42 Neither of the parties' failure to make the offer or accept the offer 43 made by the other party is sufficient to establish a failure to negoti- 44 ate in good faith. 45 (f) A party to a default action may not charge, impose, or otherwise 46 require payment from the other party for any cost, including but not 47 limited to attorneys' fees, for appearance at or participation in the 48 settlement conference process. 49 (g) A settlement conference is not required if: 50 1. the borrower does not reside in the unit; or 51 2. a repayment plan or other workout consistent with the borrower's 52 circumstances is entered into to bring the borrower's account current or 53 otherwise cure the default thus making a meeting unnecessary. 54 § 4. This act shall take effect on the one hundred eightieth day after 55 it shall have become a law.
