New York announces new foreclosure Proposal

Yesterday, a new proposed legislation to deal with current New York foreclosure laws was agreed by Gov. David A. Paterson and leaders of New York Legislature.

The proposed legislation will toughen its mortgage rules but won’t enact a one-year freeze on all home foreclosures. The legislation requires that lending companies give homeowners 90 days warning before initiating any foreclosure proceedings. Lenders would also be required to show good faith to determine whether homeowners can repay a loan.

Under another provision in the bill, the lenders would be required to meet with the borrower if the borrower defaulted and was faced with foreclosure. But the one-year foreclosure freeze passed earlier this year is not very popular among lenders. The New York Bankers Association said that the one-year freeze would cause many lenders to abandon the state, making credit almost impossible for New Yorkers.