New York's New Single Point of Contact Law Has a Silver Lining
Gov. Hochul was busy last week signing laws affecting banks and other financial institutions. On November 3, 2021, the Governor signed a law requiring lenders to provide the borrower on a home loan that is 60 days or more delinquent a “single point of contact” if the borrower wants to pursue a loan modification or other foreclosure prevention alternative. The Governor stated in her approval message that she has reached an agreement with legislators to amend the law to change the 60-day delinquent standard to only 30 days.
The law only applies to:
- mortgage loans on residential 1-4 family properties in New York, including loans secured by residential coops;
- that are not guaranteed by a state agency;
- that are for not more than the applicable Fannie Mae loan limit;
- that are made to natural persons; and
- that are or will be occupied by the borrower as the borrower's principal dwelling.
The borrower must request the contact information in writing or by electronic communication. The lender must then provide the information within 10 business days after receiving the request. If the contact information changes, the lender must give notice of the change within five business days after the change is effective.
The “single point of contact” is responsible for
- providing information to the borrower about options that the borrower may have to modify a delinquent home loan;
- assisting the borrower in identifying documents that the borrower needs in order to pursue a loan modification; and
- providing accurate information regarding the status of a modification application if the borrower chooses to apply for one.
Unfortunately, the new law does not define what “single point of contact” means, but we can assume that it refers to a named individual plus either a telephone number or an email address. The statute does not indicate whether the lender must provide both a telephone number and an email address, or whether the telephone number must be toll-free. Department of Financial Services regulations applicable to loan servicers require two methods of contact, one of which must be a toll-free telephone number, so we recommend that lenders provide both a toll-free number and an email address.
We believe that a single point of contact is a good idea for lenders because it avoids the borrower being able to claim, “but one of your employees whose name I don’t remember told me . . .” It also makes it easier for an attorney, if there is a foreclosure, to collect accurate information about modification requests and to rebut false accusations by a borrower.
The silver linings in the new law are that it does not obligate the lender to grant a modification and it only applies to loans originated on or after the January 25, 2022, effective date. Loans made before that date are not covered. We recommend that our clients, in most cases, designate a single person who is responsible for speaking to third parties whenever litigation is possible. That recommendation applies to all loans in default, but designating a single person is mandatory under the new law only for covered loans that are originated after the law is effective and only if the borrower is seeking a modification or trying to prevent a foreclosure.
If you have any questions about the new law, please contact Jay L. Hack, Esq. at 212-935-3131, firstname.lastname@example.org, or your regular attorney contact at our firm for assistance.