2009-07-31 / Top Stories

New Bill Targets Unscrupulous Foreclosure Consultants

Councilman James Sanders Jr. has announced that he will introduce a bill in the City Council targeting unscrupulous consultants who take homeowners' money and do nothing on their behalf to fight foreclosures.

"No longer will we allow unscrupulous foreclosure consultants, who are no better than predatory lenders, to prey on homeowners that are trying to hold onto their American dream of homeownership," said Sanders.

In 2008, New York State enacted a law that prohibits distressed property consultants from collecting funds from homeowners prior to rendering services or taking power of attorney, 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 governmentapproved housing counselor prior to signing any documents pertaining to their home, and must provide the homeowner with information on how to locate a government approved housing counselor.

Sanders found that while the state law seeks to prevent fraud by distressed property consultants, they continue to solicit business in communities with high foreclosure rates throughout the city. Many local non-profits offer free foreclosure prevention or loan modification services, but as long as forprofit distressed property consultants exist, it behooves City residents to be aware of the legal constraints placed on consultants under state law.

Sanders' bill would mandate disclosure requirements in advertisements placed by distressed property consultants. .In 2002, Sanders authored (and passed) the toughest anti-predatory lending law in the country to protect homeowners.

The law prohibited the City from doing business with institutions that engage in any way in predatory lending. It also regulates the participation of home improvement contractors in the home loan market.

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