New York Amends Contact Necessities For Sure Delinquent Debtors – Finance and Banking

A&B ABstract: On February 24, Governor
Kathy Hochul signed into legislation Meeting Invoice 8771 (2022 N.Y. Legal guidelines 48),
amending single level of contact necessities for sure
delinquent debtors. What adjustments does the measure require for
servicer protocols?

New York SPOC Necessities: As created efficient January 2, 2022, Part 6-o of the
New York Banking Regulation required a lender to offer a single level of
contact (“SPOC”) to a borrower who: (a) is 60 or extra
days delinquent on a “residence mortgage”; and (b) chooses to
pursue a mortgage modification or different foreclosures prevention
various. The duty arose in response to a written or
digital request from the borrower, and required the lender (or a
servicer appearing on the lender’s behalf) to offer the SPOC
inside 10 enterprise days of such request.

As amended by AB 8771 retroactive impact to its creation, the
part: (a) applies the SPOC obligation to any borrower who’s 30
or extra days delinquent; and (b) not situations the
obligation on an affirmative request from the borrower. The amended
part additionally authorizes the Superintendent of Monetary Companies to
set up guidelines and laws referring to the SPOC
requirement.

Impression of the Modification: The modification brings
Part 6-o of the Banking Regulation nearer to the language of New
York’s Mortgage Mortgage Servicer Enterprise Conduct
Laws (“Half 419” of the Superintendent of
Monetary Companies Laws). Since its adoption in remaining kind
in December 2019, Rule 419.7 has required a servicer to
“assign a single level of contact to any borrower who’s at
least 30 days delinquent or has requested a loss mitigation
utility (or earlier at a servicer’s possibility).”
(Emphasis added.) As now we have mentioned, each necessities are in
distinction to the CFPB’s Mortgage Servicing Guidelines, which requires
project of a SPOC to debtors who’re 45 days delinquent.
Nevertheless, there are just a few notable distinctions.

First, Part 6-o doesn’t outline a “single level of
contact,” leaving open whether or not just one particular person could serve
that function with respect to any explicit borrower. Half 419
supplies the SPOC could also be both “a person or designated
group of servicer personnel every of whom has the flexibility and
authority to carry out the duties” of the SPOC as set
forth in Rule 419.7(b). Half 419 additional clarifies, nonetheless, that
if a servicer designates a gaggle of personnel to meet the SPOC
duties, “the servicer shall be sure that every member
of the group is educated concerning the borrower’s scenario
and present standing within the loss mitigation course of, together with the
content material and end result of any communication with the
borrower.”

Second, Half 419 specifies the obligations of a servicer and a
designated SPOC for a delinquent borrower. Particularly, Half
419:

• requires the SPOC to “try and provoke contact with the
  borrower promptly following the project of the one level of
  contact to the borrower;”




• specifies the duties of the SPOC with respect to the
  borrower’s participation in mortgage modification or loss
  mitigation actions;




• requires coordination with different servicer personnel (in
  explicit, to make sure that foreclosures proceedings are halted when
  required by Half 419); and




• requires the SPOC to stay assigned and obtainable to the
  borrower till both the borrower’s account turns into present or
  the servicer determines that the borrower has exhausted all loss
  mitigation choices obtainable from or by the servicer.

Part 6-o, in contrast, doesn’t embody such specs.
Nevertheless, by granting the Superintendent rulemaking authority, the
amended part leaves open the likelihood that such necessities
could also be established by rule.

Lastly, the requirement underneath Rule 419.7 supplies broad
protection, extending to any mortgage mortgage serviced by a servicer
throughout the scope of Half 419 (i.e., all first- and subordinate-lien
ahead and reverse mortgage loans) the place the borrower (a) is 30
days or extra delinquent, or (b) has requested a loss mitigation
utility. In contrast, the requirement underneath Part 6-o applies
to a narrower subset of residential mortgage loans. The duty
extends solely to a “residence mortgage,” outlined underneath Part 6-l
of the Banking legislation to be restricted to ahead mortgages secured by
one- to four-family residential property that, at origination, do
not exceed the Fannie Mae conforming mortgage restrict (amongst different
situations). Additional, the duty underneath Part 6-o requires
each that the borrower meet the delinquency threshold (30 or extra
days) and have chosen to pursue a mortgage modification or different
foreclosures prevention various.

Takeaways: Given the distinctions between the
obligations to which a lender is topic underneath Part 6-o (and
which it might delegate to a servicer), and people to which a servicer
is topic underneath Half 419, we advocate cautious overview and
coordination of loss mitigation procedures to make sure the right
success of SPOC obligations for delinquent debtors in New
York. Additional given the retroactive efficient date of the measure,
the necessity for such overview is pressing.

The content material of this text is meant to offer a normal
information to the subject material. Specialist recommendation ought to be sought
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