New York residents now have further protection against foreclosures. On Tuesday, New York Gov. David A. Paterson signed comprehensive foreclosure legislation into law, providing additional critical protections for New York state homeowners, tenants, and neighborhoods in the wake of the ongoing foreclosure crisis.

Building upon Gov. Paterson’s landmark subprime lending reform law enacted last year, this legislation will assist homeowners currently at risk of foreclosure and minimize the negative impacts foreclosures have on communities. This legislation was proposed as one of Gov. Paterson’s program bills and was submitted as part of the agenda for the recent session of the Legislature.

“This legislation protects homeowners by providing mandatory settlement conferences and protects tenants from premature evictions,” Gov. Paterson said. “It also safeguards New York neighborhoods from the decay caused by foreclosure by reducing the erosion of area property values and by preventing vacant homes from becoming sites of criminal activity.”

According to Gov. Paterson, this effort is about keeping New Yorkers in their homes and protecting them during this economic crisis. He said the laws passed in New York have stood as a national model for foreclosure mitigation, and the legislation will expand the reforms achieved in last year’s law in several ways to protect homeowners, tenants, and neighborhoods.

Currently, a 90-day pre-foreclosure notice is sent for subprime loans, but the new legislation will require this letter to be expanded to include all home loans, giving homeowners additional time to work with lenders. Under this law, lenders who serve a 90-day notice on a homeowner will be required to make a regulatory filing with the banking department within three days of that service with specified information. This will allow the banking department and the Division of Housing and Community Renewal (DHCR) to provide targeted assistant to distressed homeowners during the critical foreclosure timeframe.

Additionally, the scope of the early mandatory settlement conference will be expanded to include borrowers of all home loans, not just borrowers with subprime loans. The legislation will establish protections for tenants in foreclosed properties by requiring that they receive written notification of the change in ownership of the property and be permitted to remain in their home for the remainder of the lease term or 90 days, whichever is longer.

Under this new law, plaintiffs in a foreclosure action who obtain a judgment of foreclosure and sale will be required to maintain the foreclosed property. The legislation will also enhance consumer protections to prevent homeowners from falling prey to rescue scams, and it will prevent brokers who perform distressed property consulting services from accepting upfront fees.

“With this legislation we can stabilize the housing market and return our state to prosperity,” said Malcolm A. Smith, Senate president. “These measures effectively ward off the threat of foreclosure for high risk individuals, while ensuring that every possible measure is taken to lower the foreclosure rate going forward. I commend Gov. Paterson for working with the legislature to sign this bill into law.”

In response to the mortgage crisis, New York officials have offered funding and administration of grant programs for counseling and legal services, outreach and loan modification events that bring homeowners face-to-face with lender and servicers, and refinancing and mortgage programs such as the introduction of the 40-year fixed rate mortgage through the state of New York Mortgage Agency. Additionally, there have been neighborhood stabilization initiatives to return foreclosed properties to productive use, and enforcement actions have been created through the formation of the mortgage fraud unit within the banking department.

Gov. Paterson has also taken administrative steps to help stem the foreclosure crisis. In 2008, DHCR funded 64 foreclosure prevention programs across the state. As a result, at least one provider is operating in each county to offer education, counseling, and legal services to homeowners facing foreclosure. An additional $25 million has been included in the 2009-2010 state budget to support foreclosure prevention measures.

During the first three quarter of 2009, there were 39,923 foreclosures filings in New York, representing an 11 percent decrease when compared to the first three quarters of 2008. New York officials believe this 11 percent decrease year-over-year, compared to the national 22 percent increase over the same period, demonstrates the success of New York’s foreclosure prevention policies.