STATE OF NEW YORK ________________________________________________________________________ 2632--B 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 -- again reported from said committee with amendments, ordered reprinted as amended and recommit- ted 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 shares or membership in a cooperative apartment that is or intended 8 to be the primary residence of the borrower or borrowers the proceeds of 9 which are advanced to the borrower or borrowers during the term of the 10 loan in equal installments, or in advances through a line of credit or 11 otherwise, in a lump sum, or through a combination thereof. Interest 12 and fees will accrue during the life of the loan and will be added to 13 the principal balance of the loan, but will not become due and payable 14 until the borrower(s) dies, permanently vacates the apartment or 15 defaults on the terms of the loan, and will continue to accrue until the 16 loan is paid in full. 17 (b) Loan payout options: EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD01344-09-9A. 2632--B 2 1 (i) Term payment option. Under the term payment option, equal monthly 2 payments are made by the lender to the borrower for a fixed term of 3 months chosen by the borrower. 4 (ii) Tenure payment option. Under the tenure payment option, equal 5 monthly payments are made by the lender to the borrower, until the loan 6 is prepaid in full or becomes due and payable. 7 (iii) Line of credit payment option. Under the line of credit payment 8 option, payments are made by the lender to the borrower at times and in 9 amounts determined by the borrower as long as the amounts do not exceed 10 the maximum amount of loan proceeds. 11 (iv) Single lump sum payment option. Under the single lump sum payment 12 option, the borrower receives an amount from the lender that does not 13 exceed the maximum amount of loan proceeds. Set asides required for 14 disbursements such as loan closing costs or for monthly maintenance 15 fees, will be deducted from the amount of proceeds available to the 16 borrower. 17 (c) Authorized lender. Any bank, trust company, national banking asso- 18 ciation, savings bank, savings and loan association, federal savings 19 bank, federal savings and loan association, credit union, or federal 20 credit union or any licensed mortgage banker approved for the making of 21 reverse mortgage loans by the superintendent or any entity exempted from 22 licensing pursuant to section five hundred ninety of this chapter and 23 approved for the making of reverse mortgage loans by the superintendent. 24 (d) Borrower. A tenant in severalty who is sixty-two years of age or 25 older, or if the cooperative apartment unit is held by tenants by the 26 entirety or by joint tenancy, the youngest of which is sixty-two years 27 age or older. 28 (e) Superintendent. The superintendent of financial services of this 29 state. 30 (f) Department. The department of financial services of this state. 31 (g) Third-party contact. The lender must ask the borrower if they want 32 to designate a third-party contact, such as a family member, trusted 33 friend, advisor or other party whom the borrower would like to be 34 contacted. It shall be the borrower's discretion to choose if the third- 35 party contact is to be contacted if (i) the borrower has not returned 36 the occupancy form, and/or (ii) the loan is in default for any reason 37 and the lender plans to proceed on collecting on the loan, i.e., initi- 38 ating eviction or foreclosure and/or (iii) the borrower cannot be 39 reached. 40 2. A cooperative apartment unit loan pursuant to this section shall be 41 subject to the following: 42 (a) the borrower shall be granted lifetime possession of the subject 43 premises of the cooperative apartment unit which is the security for the 44 reverse cooperative apartment unit loan, as long as such apartment unit 45 remains the borrowers' primary residence and the borrower is not in 46 default under the reverse cooperative apartment unit loan. The borrower 47 or borrowers must certify annually on each anniversary of the loan, that 48 they reside in the unit and that it is their primary residence; 49 (b) the lender shall ask the borrower if they designate a third party 50 contact, collect such information from the borrower and update such 51 information annually on each anniversary of the loan; 52 (c) subject to such rules or regulations as the superintendent may 53 adopt, a reverse cooperative apartment unit loan shall be made at either 54 a fixed or variable rate of interest; 55 (d) subject to such rules or regulations as the superintendent may 56 adopt, the authorized lender may require a borrower to establish a setA. 2632--B 3 1 aside account for the purposes of paying property taxes, maintenance or 2 cooperative fees, insurance premiums of the property securing the 3 reverse cooperative apartment unit loan, or for the payment of any other 4 fees and expenses; 5 (e) a lender who fails to make loan advances as required in the loan 6 documents, and fails to cure an actual default after notice as specified 7 in the loan documents, shall forfeit any right to collect interest or 8 service charges under the contract. The lender's right to recovery at 9 loan maturity shall be limited to the outstanding balance as of the 10 date of lender's default, minus all interest. However, a lender shall 11 not be required to make loan advances under a loan if the borrower is in 12 default under the loan; 13 (f) the outstanding balance may be prepaid in full by the borrower 14 without penalty at any time during the reverse cooperative apartment 15 unit loan term; 16 (g) an authorized lender is prohibited from using or attaching any 17 property or asset of the borrower or heirs of the borrower except the 18 apartment unit securing the reverse cooperative apartment unit loan in 19 settlement of a reverse loan obligation--the loan is a non-recourse 20 loan; 21 (h) an authorized lender shall deliver to the applicant upon applica- 22 tion, a statement prepared by the department providing the contact 23 information for New York approved, or U.S. Department of Housing and 24 Urban Development approved, reverse mortgage housing counselors with 25 cooperative housing training approved by the department whom the cooper- 26 ative apartment owner can call for independent counseling and informa- 27 tion services. Further, no reverse loan commitment shall be issued by 28 the authorized lender until the applicant presents, in writing, a form 29 that certifies the terms of the reverse cooperative apartment unit loan 30 have been explained to them by a New York or U.S. Department of Housing 31 and Urban Development approved reverse mortgage housing counselor with 32 cooperative housing training approved by the department. The form of 33 such statement and affidavit and cooperative housing counseling services 34 shall be approved by the superintendent; 35 (i) an authorized lender shall deliver to an applicant such disclo- 36 sures as may be required by the superintendent which shall describe the 37 relevant portions of the reverse loan being offered, and shall include 38 but not be limited to the following items: 39 (i) a schedule of payments to and from the borrower and the total 40 payments in dollars over the life expectancy of the youngest borrower of 41 the reverse cooperative apartment unit loan for the borrower; 42 (ii) a statement prominently displayed advising applicants to consult 43 with appropriate authorities regarding tax and estate planning conse- 44 quences of a reverse cooperative apartment unit loan; 45 (iii) where applicable a description of prepayment and refinancing 46 features; 47 (iv) to the extent determinable at or prior to the inception of the 48 reverse cooperative apartment unit loan, the interest rate and, an esti- 49 mate of the total interest payable on the reverse cooperative apartment 50 unit loan; 51 (v) a statement concerning the compliance of the lender with the 52 criteria established by the superintendent that an authorized lender 53 must meet before it may make reverse cooperative apartment unit loans 54 pursuant to this section;A. 2632--B 4 1 (vi) a statement setting forth those events which would cause the loan 2 to become due and payable (or cause the borrower to default) the reverse 3 cooperative apartment unit loan; 4 (vii) the loan is subject to a three day right of rescission by the 5 borrower; and 6 (viii) a financial statement setting forth an estimate of all costs 7 associated with the loan; 8 (j) an authorized lender shall deliver to each borrower at the time of 9 closing of a reverse cooperative unit loan two copies of the borrower's 10 right to cancel and instructions for how to cancel the loan to be 11 prescribed by the superintendent; 12 (k) a reverse cooperative apartment unit loan pursuant to this section 13 shall expressly and conspicuously bear a legend identifying it as such 14 in at least fourteen-point font; 15 (l) a reverse cooperative apartment unit loan shall clearly set forth 16 the terms for when the loan becomes due and payable, including: 17 (i) regardless of loan payout option chosen by the borrower, the loan 18 note shall state that the outstanding loan balance will not be due and 19 payable in full until the last borrower dies, or if a borrower conveys 20 all of his or her title in the property and no other borrower retains 21 title to the property; and 22 (ii) the loan note shall state that the outstanding loan balance shall 23 be due and payable in full if any of the following occur: 24 (1) the property ceases to be the primary residence of a borrower for 25 reasons other than death and the property is not the primary residence 26 of at least one other borrower; 27 (2) for a period of longer than twelve consecutive months, a borrower 28 fails to occupy the property because of physical or mental illness and 29 the property is not the primary residence of at least one other borrow- 30 er; or 31 (3) an obligation of the borrower under the loan note is not met; 32 (m) in the event that an authorized lender or holder of the reverse 33 cooperative apartment unit loan determines the loan is in default and 34 intends to initiate proceedings pursuant to the note, the lender shall 35 notify the borrower's third-party contact. In the event that the borrow- 36 er has not designated a third-party contact to receive such notice of 37 foreclosure, then the authorized lender or the holder of said reverse 38 cooperative apartment unit loan shall notify the local or county office 39 for the aging of its intent to commence foreclosure proceedings. Such 40 entity shall take appropriate action to protect the interests of the 41 borrower; 42 (n) a reverse cooperative apartment unit loan secured by a unit in a 43 cooperative housing corporation shall also be subject to the prior 44 approval by the cooperative's board of directors; and 45 (o) no reverse cooperative apartment unit loan shall be subject to 46 mandatory binding arbitration. 47 3. A reverse cooperative apartment unit loan pursuant to this section 48 may: 49 (a) provide that an authorized lender may, consistent with federal 50 laws and regulations, include a due-on-sale clause in its reverse coop- 51 erative apartment unit loan agreement and at its option exercise and 52 enforce such clause in accordance with its terms; and 53 (b) provide that the borrower's closing costs, including but not 54 limited to loan or commitment fees if any, insurance premiums, repairs, 55 legal fees, the costs of third party counseling, the costs of paying off 56 any existing mortgages or liens, and other appropriate costs be includedA. 2632--B 5 1 in the principal of the reverse cooperative apartment unit loan and 2 disbursed out of the loan proceeds at closing. 3 4. The superintendent shall adopt such rules or regulations as he or 4 she considers appropriate to govern a reverse cooperative apartment unit 5 loan made pursuant to this section. No reverse cooperative apartment 6 unit loan shall be made unless it conforms to the requirements of this 7 section and such rules and regulations as the superintendent may adopt. 8 5. No authorized lender or any other party or entity shall in any 9 manner, in the marketing or offering of reverse cooperative apartment 10 unit loans, engage in any unfair or deceptive practices in connection 11 with the marketing or offering of reverse cooperative apartment unit 12 loans, and, additionally, shall not: 13 (a) use the words "public service announcement" in any commercial, 14 mailing, advertisement or writing relating thereto; 15 (b) use the words "government insured" or other similar language 16 representing that reverse cooperative apartment unit loans are insured, 17 supported and sponsored by any governmental entity in any commercial, 18 mailing, advertisement or writing relating thereto; or 19 (c) represent that any such loan is other than a commercial product. 20 6. (a) Every authorized lender and assignee must obtain a surety bond 21 in the amount of one hundred thousand dollars for the benefit of claims 22 against the lender/assignee for failure to perform their obligations to 23 the borrower. The superintendent will hold the surety bond. In addition, 24 a lender or assignee shall maintain an irrevocable standby letter of 25 credit from a financial institution approved by the superintendent in 26 favor of the lender or assignee in an amount necessary to fund all 27 reverse mortgage loan requirements anticipated over the next twelve 28 months for loans then on the lender's books and those expected to be 29 made over the next twelve months or three million dollars, whichever is 30 greater. The initial term of the letter of credit shall be at least two 31 years. A lender or assignee also shall maintain a minimum capital of ten 32 million dollars. A lender may rely upon its parent company to meet the 33 minimum capital requirements. The requirements for a letter of credit 34 shall not apply to loans that are fully funded at consummation. The 35 minimum capital requirements shall not apply to lenders or assignees 36 that sell loans in the secondary market to a financially viable finan- 37 cial institution, and the superintendent shall define the requirements 38 of what constitutes a "financially viable financial institution prior to 39 any secondary market sale". 40 (b) Every authorized lender or its agent shall provide, with any 41 solicitation for reverse cooperative apartment unit loan products mailed 42 to a physical address within the state, supplemental consumer protection 43 materials the content and form of which shall be specified by the super- 44 intendent or his or her designee. 45 (c) Every authorized lender shall provide each applicant or potential 46 applicant for a reverse cooperative apartment unit loan with the tele- 47 phone number and internet website address provided by the department for 48 the purposes of acquiring reverse cooperative apartment unit loan coun- 49 seling. 50 (d) The superintendent is authorized to promulgate such rules and 51 regulations as he or she shall deem necessary to implement the 52 provisions of this subdivision. 53 7. For reverse cooperative apartment unit loans, authorized lender and 54 their agents shall: 55 (a) provide a monthly account statement, and for all borrowers whose 56 maintenance fees, special assessments mortgage insurance payments, home-A. 2632--B 6 1 owners insurance payments, or payments stemming from any other property 2 obligation or obligations are administered by the authorized lender, and 3 where these payments are derived from the proceeds of the loan, the 4 authorized lender shall provide on the borrower's account statement the 5 current balance remaining in the borrower's line of credit or lifetime 6 expectancy set aside, the projected annual property charges for that 7 year, and a notice which reads in at least fourteen point type: 8 "YOUR MAINTENANCE FEES AND SPECIAL ASSESSMENTS ARE CURRENTLY BEING 9 PAID BY THE PROCEEDS OF THIS LOAN. THE FUNDS THAT HAVE BEEN SET ASIDE 10 ARE EXPECTED TO BE EXHAUSTED AFTER THE MAINTENANCE FEES AND SPECIAL 11 ASSESSMENT PAYMENTS OF (SPECIFY EXPECTED MONTH AND YEAR). IF THE 12 PROCEEDS OF THIS LOAN CANNOT PAY THE MAINTENANCE FEES AND SPECIAL 13 ASSESSMENTS, YOU MUST PAY THESE OBLIGATIONS OR YOUR COOP SHARES MAY BE 14 LOST TO FORECLOSURE. PLEASE NOTE THAT MAINTENANCE FEES AND SPECIAL 15 ASSESSMENTS CAN VARY SO YOU SHOULD CONTINUE TO REVIEW THIS NOTICE FOR 16 CHANGES." 17 (b) by telephone and first class mail, inform and provide notice to a 18 borrower when his or her home equity line of credit or life expectancy 19 set aside is depleted to twenty percent or less of its value. Such 20 notice shall inform the borrower of his or her obligations relating to 21 such real property including, but not limited to, mortgage insurance, 22 homeowners insurance and real property taxes previously paid by such 23 line of credit or life expectancy set aside, and that such obligations 24 must continue to be paid when the home equity line of credit or life 25 expectancy set aside is depleted. Such notice shall use plain language, 26 written in a clear and coherent manner using words with common and every 27 day meanings, appropriately divided and captioned by its various 28 sections. If the lender or its agent is unable to contact the borrower 29 by telephone, notice must be sent to the third-party contact if author- 30 ized by the borrower. 31 (c) Each authorized lender shall, by telephone and first class mail, 32 inform and provide notice to a borrower when his or her home equity line 33 of credit or life expectancy set aside is depleted. Such notice shall 34 inform the borrower of his or her obligations relating to the cooper- 35 ative apartment unit including, but not limited to, mortgage insurance, 36 homeowners insurance and real property taxes, and that the home equity 37 line of credit or life expectancy set aside will no longer pay these 38 obligations. Such notice shall use plain language, written in a clear 39 and coherent manner using words with common and every day meanings, 40 appropriately divided and captioned by its various sections. 41 8. In the event that an authorized lender determines a reverse cooper- 42 ative apartment unit loan to be in default on the basis that the cooper- 43 ative apartment is no longer the primary residence of or occupied by the 44 borrower, if during the verification of the borrower's primary residence 45 and/or occupancy no responses are received in response to mailings 46 relating thereto, such lender shall cause a telephone call to be made to 47 the borrower, or if the borrower is unreachable by telephone, to the 48 third-party contact if designated, and an in person visit to be made to 49 the borrower at the cooperative apartment to be made prior to the 50 commencement of any proceeding to enforce the lender's rights under the 51 note. During such visit, the authorized lender or its agent shall 52 provide clear information as to who they are, that the visit pertains to 53 the reverse cooperative apartment unit loan, the reason for the home 54 visit, and the telephone number to call for further information. The 55 authorized lender must wait at least thirty days following such visit, 56 in addition to any additional time or notice requirements specified byA. 2632--B 7 1 any other provision of law, before initiating a foreclosure action on 2 the basis that the cooperative apartment is no longer the primary resi- 3 dence of the borrower. If the borrower contacts the authorized lender 4 and provides proof of residence or occupancy after such visit but before 5 the commencement of a proceeding to enforce the lender's rights under 6 the note, the authorized lender shall be barred from initiating such 7 action. Furthermore, no authorized lender shall charge a borrower any 8 fee for any such visit and inspection. This prohibition on the imposi- 9 tion of fees shall include any and all inspections conducted by the 10 authorized lender to verify the status of the reverse cooperative apart- 11 ment unit loan, or any suspected or actual default condition. 12 9. Notwithstanding any inconsistent provision of law, the priority of 13 the lien of a reverse cooperative apartment unit loan, including the 14 lien for all principal, interest, fees, costs, and other charges 15 assessed in connection with the reverse loan, shall date from the filing 16 of a UCC-1 notice for the loan irrespective of the date of any advance 17 of reverse loan proceeds or the date by which an authorized lender shall 18 be entitled to accrued but unpaid interest, fees, costs or other charg- 19 es. 20 10. Nothing in this section shall be construed to limit, impair or 21 otherwise affect the priority, under applicable law, of any other mort- 22 gage, deed of trust, encumbrance or lien which was filed prior to the 23 effective date of this section. 24 11. The sale or transfer of the interest in the cooperative apartment 25 unit securing the reverse cooperative apartment unit loan to a person 26 other than an original borrower or borrowers shall result in the termi- 27 nation of the reverse loan. 28 12. Any person who has been injured by reason of any violation of this 29 section or any violation of the rules and regulations of the department 30 relating to the reverse cooperative apartment unit loan program may 31 bring an action in his or her own name to recover treble his or her 32 actual damages, plus the prevailing plaintiff's reasonable attorneys' 33 fees. 34 13. Compliance with the provisions of this section shall be conditions 35 precedent to commencing an action to foreclose upon a reverse cooper- 36 ative apartment unit loan which is subject to the provisions of this 37 section, and the failure to comply therewith shall be a complete defense 38 to such action. 39 § 2. Subsection (f) of section 9-611 of the uniform commercial code is 40 amended by adding a new paragraph 1-a to read as follows: 41 (1-a) Notwithstanding any other provision of law, with regard to a 42 reverse cooperative apartment unit loan, at least forty-five days before 43 a secured party, as defined under Section 9-102(a)(73), or its agent 44 takes any steps to dispose of its collateral, as provided for in Section 45 9-610, the secured party or its agent shall give notice to the borrower, 46 and separate notice to the borrower's designated third-party if one has 47 been designated in at least fourteen-point type except for the heading 48 which shall be in at least sixteen-point type. The notice shall include 49 the following: 50 YOU COULD LOSE YOUR COOPERATIVE APARTMENT UNIT TO FORECLOSURE. 51 PLEASE READ THE FOLLOWING NOTICE CAREFULLY. 52 Date 53 Borrower's address 54 Loan Number: 55 Property Address: 56 Dear Borrower(s) {or heirs of Debtor?}:A. 2632--B 8 1 As of ___________, your reverse cooperative apartment unit loan is in 2 default. Under New York State Law, we are required to send you this 3 notice to inform you that you may be at risk of losing your home. 4 Your reverse loan is in default because you have not complied with the 5 following conditions of your loan: 6 _____ You are not occupying your cooperative apartment unit as your 7 primary residence 8 _____ You did not submit the required annual certificate of occupancy 9 _____ The named borrower on the reverse loan has died 10 _____ You did not pay maintenance on your unit to the cooperative corpo- 11 ration, and {servicer} paid your maintenance for you on the following 12 date(s) in the following amount(s):________________________________ 13 ____________________________________ 14 _____ You did not make required repairs to your unit 15 If the claim is based on your failure to pay maintenance to the cooper- 16 ative corporation, you can cure this default by making the payment of 17 $____________ for the advances we made towards these payments on your 18 behalf. 19 You have the right to dispute the claims listed above by contacting us, 20 by calling ___________ or sending a letter to __________________. This 21 may include proof of payments made for water and sewer charges or a 22 current declaration page from your insurance company, or any other proof 23 to dispute the servicer's claim. 24 OPTIONS MAY BE AVAILABLE FOR YOU TO CURE YOUR DEFAULT. SOME OF THESE 25 OPTIONS ARE LISTED BELOW. YOU MAY CONTACT {SERVICER} AT {TOLL-FREE 26 NUMBER} TO DISCUSS YOUR OPTIONS. 27 If you are in default for failure to pay maintenance, you may qualify 28 for a re-payment plan to cure the default balance owed. 29 Attached to this notice is a list of New York approved housing coun- 30 seling agencies and legal services in your area which provide free coun- 31 seling. A statewide listing by county is also available at 32 http://www.dfs.ny.gov/consumer/mortg nys np counseling agencies.htm. 33 You may also call your local Department of Aging for a referral or call 34 311 if you live in New York City. 35 Qualified free help is available; watch out for companies or people who 36 charge a fee for these services. 37 You may also contact {SERVICER} directly at __________ and ask to 38 discuss all possible options to allow you to cure your default and 39 prevent the foreclosure of your home. While we cannot ensure that a 40 resolution is possible, we encourage you to take immediate steps to try 41 to achieve a resolution. The longer you wait, the fewer options you may 42 have. 43 If you have not taken any actions to resolve this matter within ninety 44 days from the date this notice was mailed, we will have the right to 45 take your cooperative shares from you. 46 If you need further information, please call the New York State Depart- 47 ment of Financial Services' toll-free helpline at 877-226-5697 or visit 48 the Department's website at http://www.dfs.ny.gov. 49 IMPORTANT: You have the right to remain in your unit until you receive a 50 court order telling you to leave the property. If a foreclosure action 51 is filed against you in court, you still have the right to remain in the 52 unit until a court orders you to leave. You legally remain the owner of 53 your cooperative shares and are responsible for the unit until the 54 shares are transferred to a new owner through a sale. However, there 55 will be no court proceeding before the shares are transferred to a newA. 2632--B 9 1 owner. After the shares are transferred, the new owner may begin a court 2 proceeding to evict you from the unit. 3 This notice is not an eviction notice. 4 § 3. The civil practice law and rules is amended by adding a new rule 5 3410 to read as follows: 6 Rule 3410. Face-to-face meeting for foreclosure of reverse cooperative 7 apartment unit loans. (a) For purposes of this rule, default shall only 8 include a borrower's breach of an obligation under the reverse mortgage 9 cooperative loan agreement, and shall not include death of the borrower 10 or the borrower's permanent vacating of the cooperative unit. 11 (b) In any action recovery involving a borrower's default under a 12 reverse cooperative apartment unit loan, as defined in paragraph (a) of 13 subdivision one of section six-n of the banking law, the lender shall 14 file a petition with the supreme court of the county in which the coop- 15 erative apartment is located stating that the loan is in default and the 16 reason for the default. The petition must be served on the borrower 17 pursuant to section three hundred eight of this chapter. Within ten days 18 of the date of service of the notice to the borrower, the petitioner 19 must file a specialized request for judicial intervention with the 20 clerk. Within sixty days of receipt of the notice or on such adjourned 21 date as has been agreed to by the parties, the court shall hold a manda- 22 tory settlement conference for the purpose of holding settlement 23 discussions pertaining to the relative rights and obligations of the 24 parties under the loan documents, including, but not limited to: 25 1. determining whether the parties can reach a mutually agreeable 26 resolution to help the borrower avoid losing his or her cooperative 27 apartment unit, and evaluating the potential for a resolution or other 28 workout options may be agreed; or 29 2. whatever other purposes the court deems appropriate. 30 (c) At any meeting held pursuant to this rule, the lender and the 31 borrower shall appear in person or by counsel, and each party's repre- 32 sentative at the meeting shall be fully authorized to dispose of the 33 matter. If the borrower is appearing without counsel, the court shall 34 inform the borrower of the nature of the action and his or her rights 35 and responsibilities. Where appropriate, the court may permit the 36 borrower or a representative of the borrower or the defendant to attend 37 the settlement conference telephonically or by video-conference. 38 (d) Upon the filing of the notice of default with the court, the court 39 shall send either a copy of the notice or the borrower's name, address 40 and telephone number (if available) to a housing counseling agency or 41 agencies on a list designated by the department for the geographic 42 region in which the borrower resides. Such information shall be used by 43 the designated housing counseling agency or agencies exclusively for the 44 purpose of making the borrower aware of housing counseling and foreclo- 45 sure prevention services and options available to them. 46 (e) The court shall promptly send a notice to parties advising them of 47 the time and place of the meeting, the purpose of the meeting and the 48 requirements of this rule. The notice shall be in a form prescribed by 49 the court, and shall advise the parties of the documents that they shall 50 bring to the meeting. 51 (f) Both the lender and the borrower shall negotiate in good faith to 52 reach a mutually agreeable resolution, including but not limited to a 53 re-payment agreement, or any other loss mitigation, if possible. Compli- 54 ance with the obligation to negotiate in good faith pursuant to this 55 rule shall be measured by the totality of the circumstances, including 56 but not limited to the following factors:A. 2632--B 10 1 1. compliance with the requirements of this rule and applicable regu- 2 lations pertaining to the face-to-face meeting process; 3 2. compliance with applicable lending and servicing laws, rules, regu- 4 lations, investor directives, and loss mitigation standards or options; 5 and 6 3. conduct consistent with efforts to reach a mutually agreeable 7 resolution, including but not limited to, avoiding unreasonable delay, 8 appearing at the meeting with authority to fully dispose of the matter, 9 avoiding moving forward to take possession while loss mitigation appli- 10 cations and attempts are pending, and providing accurate information to 11 the department and all parties. 12 Neither of the parties' failure to make the offer or accept the offer 13 made by the other party is sufficient to establish a failure to negoti- 14 ate in good faith. 15 (g) Upon a finding by the court that the plaintiff failed to negotiate 16 in good faith pursuant to subdivision (f) of this rule, the court shall, 17 at a minimum, toll the accumulation and collection of interest, costs, 18 and fees during any undue delay caused by the plaintiff, and where 19 appropriate, the court may also impose one or more of the following: 20 1. compel production of any documents requested by the court or the 21 court's designee during the settlement conference; 22 2. impose a civil penalty payable to the state that is sufficient to 23 deter repetition of the conduct and in an amount not to exceed twenty- 24 five thousand dollars; 25 3. the court may award actual damages, fees, including attorney fees 26 and expenses to the defendant as a result of plaintiff's failure to 27 negotiate in good faith; or 28 4. award any other relief that the court deems just and proper. 29 (h) A party to a default action may not charge, impose, or otherwise 30 require payment from the other party for any cost, including but not 31 limited to attorneys' fees, for appearance at or participation in the 32 settlement conference process. 33 (i) This rule shall not apply if: 34 1. the borrower dies and there is no surviving borrower, unless: (i) 35 the last surviving borrower's spouse, if any, is a resident of the prop- 36 erty subject to foreclosure; or (ii) the last surviving borrower's 37 successor in interest who by bequest or through intestacy, owns, or has 38 a claim to the ownership of the property subject to foreclosure, and who 39 was a resident of such property at the time of death of such last 40 surviving borrower; or the borrower does not reside in the unit after 41 such non-occupancy by the borrower as verified by the lender and the 42 lender has taken action as required by subdivision eight of section 43 six-n of the banking law; or 44 2. a repayment plan or other workout consistent with the borrower's 45 circumstances is entered into to bring the borrower's account current or 46 otherwise cure the default thus making a meeting unnecessary. 47 § 4. The superintendent of financial services shall convene a working 48 group comprised of industry and consumer representatives to study the 49 availability of reverse mortgage counselors within the state of New 50 York, and assess their experience and availability to provide counseling 51 in connection with non-government insured reverse mortgages, and to 52 address any other matters the superintendent deems necessary pursuant to 53 this act. The superintendent shall report on its findings and make 54 recommendations based upon such findings. 55 § 5. This act shall take effect on the one hundred eightieth day after 56 it shall have become a law. Effective immediately, the addition, amend-A. 2632--B 11 1 ment and/or repeal of any rule or regulation necessary for the implemen- 2 tation of this act on its effective date are authorized to be made and 3 completed on or before such effective date.