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Preventing Deed Fraud and Mortgage Scams

New York Governor Andrew Cuomo signed a group of bills intended to increase consumer homeowner protections. By press release, the Governor’s office announced three important improvements in an effort to strengthen homeowner safeguards and close loopholes to prevent deed fraud and mortgage scams.

 

Unbeknownst to the homeowner, deed fraud occurs when someone steals your identity, forges your name on a deed, and takes title to your home. The homeowner only becomes aware of the fraud when a third-party tries to collect on a mortgage or debt. Seniors are often targeted as unknowing participants in mortgage scams, especially surrounding reverse mortgage products. The purpose of the scam is to steal the equity from your home. Beware of any offer for a free home, investment opportunity or foreclosure or refinance assistance. No reputable company will be calling you cold or knocking on your door with offers that sound too good to be true.

 

The new laws passed in New York to protect homeowners are as follows:

 

Bill A 92

Effective mid-November 2019, the new law imposes obligations on banks or financial institutions that sell or transfer mortgages after a borrower has applied for a loan modification. Specifically, the law requires the original holder of the loan to provide the borrower with a list of all modification application documents provided to the buyer or transferee of the mortgage. The measure also requires the new mortgage servicer to honor the terms and conditions of a loan modification that was approved by the original servicer. Before, when financial institutions sold or transferred a mortgage after a loan modification was approved, the new bank or financial institution did not have to honor the loan modification agreement.

 

Bill A 1800

Effective immediately, this bill requires mortgage loan servicers of vacant or abandoned residential properties to continue to pay homeowners’ association fees or cooperative fees on properties in the state to ensure they do not become dilapidated before a foreclosure is finalized. This law is meant to cut down on squatters and combat the abandonment of the property by the loan service providers

 

Bill A 5615

Effective immediately, this bill amends the state law related to distressed home loans to extend consumer protections for homes in default and foreclosure by, among other things, (i) providing homeowners additional time to cancel a covered contract with a purchaser; (ii) preventing distressed property consultants from inducing the consumer to transfer the deed to the consultant or anyone else; and (iii) allowing consumers to void contracts, deeds, or other agreements material to the consumer’s property where an individual was convicted of or pled guilty to making false statements in connection with that agreement.

 

How to protect yourself

According to the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center, in 2018, 11,300 people reported real estate fraud. If you become a victim of deed forgery or its associated crimes, report it to local law enforcement immediately. You should also contact an attorney who specializes in real estate law. A lawyer can help you identify the nature of the fraud and initiate actions to protect or regain your interest in the real property.

 

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