2012 New York Consolidated Laws
RPP - Real Property
Article 8 - (240 - 282) CONVEYANCES AND MORTGAGES
265-B - Distressed property consulting contracts.

 
    § 265-b. Distressed property consulting contracts. 1. Definitions. The
  following definitions shall apply to this section:
    (a)  "Homeowner"  means  a  natural  person  who is the mortgagor with
  respect to a distressed home loan or who is in danger of losing  a  home
  for nonpayment of taxes.
    (b)  "Consulting  contract" or "contract" means an agreement between a
  homeowner  and  a  distressed  property  consultant  under   which   the
  consultant agrees to provide consulting services.
    (c)  "Consulting  services"  means  services  provided by a distressed
  property consultant to a homeowner that the consultant  represents  will
  help to achieve any of the following:
    (i)  stop,  enjoin,  delay, void, set aside, annul, stay or postpone a
  foreclosure filing, a foreclosure  sale  or  the  loss  of  a  home  for
  nonpayment of taxes;
    (ii) obtain forbearance from any servicer, beneficiary or mortgagee or
  relief  with respect to the potential loss of the home for nonpayment of
  taxes;
    (iii) assist the homeowner to exercise a  right  of  reinstatement  or
  similar  right  provided  in  the  mortgage  documents  or any law or to
  refinance a distressed home loan;
    (iv) obtain any extension of the period within which the homeowner may
  reinstate or otherwise restore his or her rights  with  respect  to  the
  property;
    (v)  obtain  a  waiver  of  an  acceleration  clause  contained in any
  promissory note or contract secured by  a  mortgage  on  a  property  in
  foreclosure;
    (vi) assist the homeowner to obtain a loan or advance of funds;
    (vii) assist the homeowner in answering or responding to a summons and
  complaint,  or otherwise providing information regarding the foreclosure
  complaint and process;
    (viii) avoid or ameliorate the impairment of  the  homeowner's  credit
  resulting from the commencement of a foreclosure proceeding or tax sale;
  or
    (ix)  save  the  homeowner's  property  from  foreclosure  or loss for
  non-payment of taxes.
    (d) "Distressed home loan" means a home loan  that  is  in  danger  of
  being  foreclosed  because  the homeowner has one or more defaults under
  the mortgage that entitle the lender to accelerate full payment  of  the
  mortgage and repossess the property, or a home loan where the lender has
  commenced  a foreclosure action. For purposes of this paragraph, a "home
  loan" is a loan in which the debt is incurred by the homeowner primarily
  for personal, family or household purposes, and the loan is secured by a
  mortgage or deed of trust on property upon which  there  is  located  or
  there  is  to  be located a structure or structures intended principally
  for occupancy of from one to four families which is or will be  occupied
  by the homeowner as the homeowner's principal dwelling.
    (e)   "Distressed   property  consultant"  or  "consultant"  means  an
  individual or a corporation, partnership, limited liability  company  or
  other   business  entity  that,  directly  or  indirectly,  solicits  or
  undertakes employment to provide consulting services to a homeowner  for
  compensation  or  promise  of  compensation with respect to a distressed
  home loan or a potential loss of the home for  nonpayment  of  taxes.  A
  consultant does not include the following:
    (i) an attorney admitted to practice in the state of New York when the
  attorney is directly providing consulting services to a homeowner in the
  course of his or her regular legal practice;

    (ii)  a person or entity who holds or is owed an obligation secured by
  a lien on any  property  in  foreclosure  while  the  person  or  entity
  performs services in connection with the obligation or lien;
    (iii)  a  bank,  trust  company, private banker, bank holding company,
  savings bank, savings and  loan  association,  thrift  holding  company,
  credit  union  or  insurance  company  organized  under the laws of this
  state, another state or the United States, or a subsidiary or  affiliate
  of  such  entity  or  a  foreign  banking  corporation  licensed  by the
  superintendent of financial services or the comptroller of the currency;
    (iv) a federal Department of Housing and  Urban  Development  approved
  mortgagee  and  any  subsidiary  or affiliate of such mortgagee, and any
  agent or employee of these persons while engaged in the business of such
  mortgagee;
    (v) a judgment creditor of the homeowner, if the  judgment  creditor's
  claim accrued before the written notice of foreclosure sale is sent;
    (vi)  a  title  insurer authorized to do business in this state, while
  performing title insurance and settlement services;
    (vii) a person licensed as  a  mortgage  banker  or  registered  as  a
  mortgage  broker or registered as a mortgage loan servicer as defined in
  article twelve-D of the banking law, provided that no such person  shall
  take  any  upfront  fee  in conjunction with activities constituting the
  business of a distressed property consultant;
    (viii) a bona fide not-for-profit organization that offers  counseling
  or advice to homeowners in foreclosure or loan default; or
    (ix)  a  person  licensed  or registered in the state to engage in the
  practice of other  professions  that  the  superintendent  of  financial
  services has determined should not be subject to this section.
    (f) "Property" shall mean real property located in this state improved
  by  a  one-to-four  family  dwelling used or occupied, or intended to be
  used or occupied, wholly or partly, as the home or residence of  one  or
  more persons, but shall not refer to unimproved real property upon which
  such dwellings are to be constructed.
    (g)  "Business  day"  shall mean any calendar day except Sunday or the
  public holidays as set forth  in  section  twenty-four  of  the  general
  construction law.
    2.  Prohibitions.  A distressed property consultant is prohibited from
  doing the following:
    (a) performing consulting services without a written,  fully  executed
  consulting contract with a homeowner;
    (b)  charging  for  or  accepting  any payment for consulting services
  before the full completion of all such services, including a payment  to
  be placed in escrow pending the completion of such services;
    (c) taking a power of attorney from a homeowner;
    (d)  retaining  any  original loan document or other original document
  related to the distressed home loan, the property or the potential  loss
  of the home for nonpayment of taxes; or
    (e) inducing or attempting to induce a homeowner to enter a consulting
  contract that does not fully comply with the provisions of this article.
    3.  Distressed  property  consulting  contracts.    (a)  A  distressed
  property consulting contract shall:
    (i) contain the entire agreement of the parties;
    (ii) be provided  in  writing  to  the  homeowner  for  review  before
  signing;
    (iii) be printed in at least twelve point type and written in the same
  language  that  is  used  by  the  homeowner and was used in discussions
  between the consultant and the homeowner to  describe  the  consultant's
  services or to negotiate the contract;

    (iv)  fully  disclose  the  exact  nature  of  the distressed property
  consulting services to be provided by the distressed property consultant
  or  anyone  working  in  association  with   the   distressed   property
  consultant;
    (v) fully disclose the total amount and terms of compensation for such
  consulting services;
    (vi)  contain  the  name, business address and telephone number of the
  consultant and the street address (if different) and facsimile number or
  email address of the distressed property consultant where communications
  from the homeowner may be delivered;
    (vii) be  dated  and  personally  signed  by  the  homeowner  and  the
  distressed  property  consultant  and be witnessed and acknowledged by a
  New York notary public; and
    (viii) contain the following notice, which  shall  be  printed  in  at
  least  fourteen  point  boldface  type,  completed  with the name of the
  distressed property consultant, and located in  immediate  proximity  to
  the space reserved for the homeowner's signature:
  "NOTICE REQUIRED BY NEW YORK LAW
    You  may  cancel  this contract, without any penalty or obligation, at
  any  time  before  midnight  of          (fifth   business   day   after
  execution).
            (Name of Distressed Property Consultant) (the "Consultant") or
  anyone working for the Consultant may not take any money from you or ask
  you  for  money  until  the  Consultant  has  completely  finished doing
  everything this Contract says the Consultant will do.
  You should consider consulting  an  attorney  or  a  government-approved
  housing  counselor  before  signing  any  legal document concerning your
  home. It is advisable that you find your own attorney, and  not  consult
  with  an  attorney  recommended  or provided to you by the Consultant. A
  list of housing counselors may be found on the website of the  New  York
  State  Department  of  Financial  Services,  (enter  web  address) or by
  calling  the  Department  of  Financial  Services  toll-free  at  (enter
  number).  The  law  requires  that  this  contract  contain  the  entire
  agreement between you and the Consultant. You should not rely  upon  any
  other written or oral agreement or promise."
  The  distressed  property  consultant shall accurately enter the date on
  which the right to cancel ends.
    (b)(i) The homeowner has the right to cancel, without any  penalty  or
  obligation,  any  contract  with  a distressed property consultant until
  midnight of the fifth business  day  following  the  day  on  which  the
  distressed  property  consultant  and  the  homeowner  sign a consulting
  contract. Cancellation occurs when the homeowner, or a representative of
  the homeowner, either delivers written notice of cancellation in  person
  to  the  address specified in the consulting contract or sends a written
  communication by facsimile, by United States mail or by  an  established
  commercial  letter delivery service. A dated proof of facsimile delivery
  or  proof  of  mailing  creates  a  presumption  that  the   notice   of
  cancellation has been delivered on the date the facsimile is sent or the
  notice   is  deposited  in  the  mail  or  with  the  delivery  service.
  Cancellation  of  the  contract  shall  release  the  homeowner  of  all
  obligations  to  pay  fees  or  any other compensation to the distressed
  property consultant.
    (ii) The consulting contract shall be accompanied by two copies  of  a
  form,  captioned  "notice of cancellation" in at least twelve-point bold
  type. This form shall be attached  to  the  contract,  shall  be  easily
  detachable,  and  shall  contain  the following statement written in the
  same language as used in the contract, and the contractor  shall  insert

  accurate  information  as  to the date on which the right to cancel ends
  and the contractor's contact information:
  "NOTICE OF CANCELLATION
  Note:  You  may cancel this contract, without any penalty or obligation,
  at any time before midnight of ______. (Enter date)
 
  To cancel this contract, sign and date both copies of this  cancellation
  notice  and  personally deliver one copy or send it by facsimile, United
  States mail, or  an  established  commercial  letter  delivery  service,
  indicating  cancellation to the Distressed Property Consultant at one of
  the following:
 
  Name of Contractor_________________________
  Street Address_____________________________
  City, State, Zip___________________________
  Facsimile:_________________________________
 
  I hereby cancel this transaction.
 
  Name of Homeowner:_________________________
 
  Signature of Homeowner:____________________
 
  Date:______________________________________"
    (iii) Within ten days following receipt of a  notice  of  cancellation
  given  in  accordance  with  this  subdivision,  the distressed property
  consultant shall return any original contract and  any  other  documents
  signed  by  or provided by the homeowner. Cancellation shall release the
  homeowner of all obligations to pay any  fees  or  compensation  to  the
  distressed property consultant.
    3-a.   Distressed   property  consultant  advertisements.     (a)  All
  advertisements disseminated by a  distressed  property  consultant  must
  prominently include the following statement: "In New York State, Housing
  Counselors,  who  are approved by the U.S. Department of Housing & Urban
  Development or the New York State Department of Financial Services,  may
  provide the same or similar services as a distressed property consultant
  for  free. A list of approved Housing Counselors can be found on the New
  York State Department  of  Financial  Services  website  at  (enter  web
  address)  or  by  contacting  the New York State Department of Financial
  Services toll-free at (enter number). You should consider consulting  an
  attorney  or  a government-approved housing counselor before signing any
  legal document concerning  a  distressed  property  consultant."    Such
  statement,  if  disseminated  by  print  media or the internet, shall be
  clearly and legibly printed or displayed in not less  than  twelve-point
  bold  type, or, if the advertisement is printed to be displayed in print
  that is smaller than twelve point, in bold type print that is no smaller
  than the print in which the text of  the  advertisement  is  printed  or
  displayed.
    (b)  For  the  purposes  of this subdivision, the term "advertisement"
  shall  include,  but  is  not  limited  to,  all  forms  of   marketing,
  solicitation,  or  dissemination  of  information  related,  directly or
  indirectly, to securing or obtaining a consulting contract or  services.
  Further, it shall include any and all commonly recognized forms of media
  marketing  via  television,  radio, print media, all forms of electronic
  communication via the internet, and  all  prepared  sales  presentations
  given in person or over the internet to the general public.
    (c)  The advertising provisions of this subdivision shall apply to all
  distressed property consultants who disseminate  advertisements  in  the

  state  of  New  York  or  who intend to directly or indirectly contact a
  homeowner who  has  property  located  in  New  York  state.  Distressed
  property  consultants  shall establish and at all times maintain control
  over the content, form and method of dissemination of all advertisements
  of  its  services.  Further,  all  advertisements  shall be sufficiently
  complete and clear to avoid the possibility of deception or the  ability
  to mislead or deceive.
    4.  Penalties  and  other  provisions.  (a)  If  a  court finds that a
  distressed property  consultant  has  violated  any  provision  of  this
  section,  the  court  may  make  null and void any agreement between the
  distressed homeowner and the distressed property consultant.
    (b) If the distressed property consultant violates  any  provision  of
  this  section and the homeowner suffers damage because of the violation,
  the homeowner may recover actual and  consequential  damages  and  costs
  from  the  distressed  property  consultant  in  an action based on this
  section.    If  the  distressed  property  consultant  intentionally  or
  recklessly  violates  any provision of this section, the court may award
  the homeowner treble damages, attorneys' fees and costs.
    (c) Any provision of a consulting contract that attempts  or  purports
  to  limit the liability of the distressed property consultant under this
  section shall be null and void. Inclusion of such provision shall at the
  option of  the  homeowner  render  the  consulting  contract  void.  Any
  provision   in   a  contract  which  attempts  or  purports  to  require
  arbitration of any dispute arising under this section shall be  void  at
  the  option  of  the  homeowner.  Any  waiver  of the provisions of this
  section shall be void and unenforceable as contrary to public policy.
    (d) In addition to the other remedies provided, whenever  there  shall
  be  a violation of this section, application may be made by the attorney
  general in the name of the people of the state of New York to a court or
  justice  having  jurisdiction  by  a  special  proceeding  to  issue  an
  injunction, and upon notice to the defendant of not less than five days,
  to  enjoin  and  restrain  the continuance of such violations; and if it
  shall appear to the satisfaction  of  the  court  or  justice  that  the
  defendant  has,  in  fact,  violated  this section, an injunction may be
  issued by such court or justice, enjoining and restraining  any  further
  violation,  without  requiring  proof that any person has, in fact, been
  injured or damaged thereby. In any such proceeding, the court  may  make
  allowances  to  the  attorney  general  as  provided in paragraph six of
  subdivision (a) of section  eighty-three  hundred  three  of  the  civil
  practice law and rules, and direct restitution. Whenever the court shall
  determine  that  a violation of this section has occurred, the court may
  impose a civil penalty of not more than ten thousand  dollars  for  each
  violation.  In  connection  with  any  such  proposed  application,  the
  attorney general is authorized to take proof and make a determination of
  the relevant facts and to issue subpoenas in accordance with  the  civil
  practice law and rules.
    (e)  The  provisions  of  this  section  are  not exclusive and are in
  addition to any other  requirements,  rights,  remedies,  and  penalties
  provided by law.
    5.  The department of financial services shall prescribe the telephone
  number and web address to be included in the notice.