N.Y.C. Admin. Code § L.L. 2009/074: L.L. 2009/074

Enactment date: 11/17/2009

Int. No. 1070-A

By Council Members Sanders Jr., Comrie, Gerson, Nelson, White, Arroyo, Lappin, Jackson, Barron, Koppell, Liu, Gennaro, Mitchell and Weprin

A Local Law to amend the administrative code of the city of New York, in relation to distressed property consultants.

Be it enacted by the Council as follows:

Section 1. Legislative Findings. The country is currently in the midst of a foreclosure crisis, with thousands of homes being foreclosed upon monthly. Foreclosures in New York City increased steadily throughout 2008, with the highest rates of foreclosure in The Bronx, Queens and Staten Island. Increasing rates of foreclosures and defaults on home loans created an industry of distressed property consultants, or individuals who market themselves as uniquely able to help homeowners negotiate with their lenders. The Council finds that unfortunately, homeowners already in precarious situations find themselves in even worse positions as unscrupulous consultants take their money and do nothing on their behalf. In an effort to combat the perceived wide-spread fraud in this industry, New York State enacted a law in August 2008 that prohibited distressed property consultants from collecting any funds prior to rendering services or taking power of attorney from a homeowner and mandated the parties enter into a fully executed, written contract prior to rendering services. Additionally, consultants are required to notify potential clients that they should consider consulting an independent attorney or government-approved housing counselor prior to signing any documents pertaining to their home and must provide the homeowner with information about how to locate a government-approved housing counselor.

The Council finds that while the state law seeks to prevent fraud by unscrupulous distressed property consultants, distressed property consultants continue to solicit business in communities with high foreclosure rates throughout the City. Many local non-profits offer foreclosure prevention or loan modification services for free, but as long as for-profit distressed property consultants exist, it behooves City residents to be aware of the legal constraints placed on consultants under state law. Therefore, the Council finds it necessary to mandate disclosure requirements in advertisements placed by distressed property consultants. These disclosures will ensure New York City residents are aware of their rights when paying for distressed property consulting services.

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[Consolidated provisions are not included in this Appendix A]

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§ 3. This local law shall take effect 90 days after its enactment into law; provided, however, that the commissioner of consumer affairs shall take any actions necessary prior to such effective date for the implementation of this local law including, but not limited to, the adoption of any necessary rules.