Legislation will require licensing of property consultants and root out bad actors

CITY HALL – Speaker Christine C. Quinn, together with the Executive Director of the Center for NYC Neighborhoods, Michael Hickey, Anne Fleming of South Brooklyn Legal Services, Ellen Davidson of the Legal Aide Society, Sarah Ludwig, co-director of the Neighborhood Economic Development Advocacy Project, Consumer Affairs Chair Leroy Comrie, Housing and Buildings Chair Erik Martin-Dilan and Council Members Lewis Fidler, James Sanders and Thomas White, today announced legislation that will increase the regulatory requirements for distressed property consultants. This bill, when signed into law, will crackdown on people attempting to prey upon homeowners facing foreclosure.

While there are many credible organizations that can help a homeowner facing foreclosure, some organizations have swindled people by offering solutions to their financial problems while providing little to no actual relief. These unscrupulous organizations advertise services they have no intention of delivering, costing the homeowner money and wasting critically important time they could be using to save their home.

The Council’s legislation would give authorities a way to determine who is offering a legitimate consulting service by requiring licensing or registration of these organizations. The bill will also:

Make compliance with State law a condition to obtain and keep a license;
Make it a crime to operate with without a license;
Prohibit licensing of anyone convicted of real-estate related fraud;
Create the ability to track consultants and prevent repeat offenders from doing business.
“There are plenty of legitimate organizations out there that are looking to help people facing foreclosure,” said Speaker Christine C. Quinn. “But some out there, the lowest of the low, are preying on people in impossible situations by offering services they have no intention of delivering. With this legislation we will be able to regulate this industry and root out those bad apples. People facing foreclosure need a helping hand, not a stab in back.”

“It is important that we not repeat the mistakes and omissions that got us into our present difficulties,” said Council Member Lewis Fidler. “There are too many operators out there that prey on the distressed and vulnerable. This bill will help minimize their reach. I would also urge anyone seeking mortgage assistance to call 311 and ask for help from the Center for NYC Neighborhoods. It’s free. It’s reputable. It’s available.”

New York State recently enacted legislation that prohibits consultants from accepting payment prior to completing services or taking power of attorney from a homeowner, requires certain disclosures in writing prior to performing services and imposes monetary penalties on violators.

Though the foreclosure crisis has not been as severe in New York City as it has been in the rest of the country, Southeast Queens has been hit the worst, something the local Council Members know all too well.

“If left unchecked, the mortgage meltdown will result in the largest loss of black wealth since the Great Depression, the largest lost of Latino wealth since the Spanish American War, and the largest loss of Asian wealth since the interment camps of World War II,” said Council Member James Sanders. “We need to let people caught in this crisis know they can trust the people they reach out to for help. Let those who would prey upon people in these desperate situations beware, the City Council will put them out of them out of business.”

“As the number of foreclosure filings continue to increase throughout Southeast Queens and elsewhere in this City,” said Council Member Thomas White Jr., “we as a Council have the responsibility to help families and homeowners avoid foreclosure, but also to avoid being unmercifully taken advantage of by foreclosure rescue scams and the criminals who prey on those who are most vulnerable and distressed through the tightening of regulations and the hunting down the worst offenders.”

“I’m particularly pleased to join the Speaker today because my district is ground zero of the foreclosure crisis in New York City,” said Consumer Affairs Chair Leroy Comrie. “Hundreds of my constituents are need of assistance and many, particularly seniors, have fallen victim to these scam artists. This epidemic – and it is an epidemic – has become so prevalent that I’ve personally taken the steps to allow legitimate foreclosure specialists to use space in my office to meet with local homeowners and offer them free assistance in preventing foreclosure. I want to again congratulate the Speaker and her staff for putting forward this much-needed legislation and urge my colleagues to pass it with all deliberate speed.”

“People facing a foreclosure are undergoing difficult challenges,” said Housing and Buildings Chair Erik Martin-Dilan. “The least we should be able to do is foster confidence in the people they reach out to for help. I want to thank the Speaker and all my colleagues for their work on this issue.”

“Homeowners in foreclosure have many options to save their homes or recover their equity. There are many non-profit housing counselors and legal organizations available to help homeowners at no cost,” said Anne Fleming, who works on the Foreclosure Prevention Program for South Brooklyn Legal Services. “These for-profit consultants target homeowners aggressively, charging thousands of dollars in fees, and ultimately destroying any chance the homeowners have of keeping their homes.”

“This legislation will be a powerful tool in helping to stop the scams and rip-offs of vulnerable people in a desperate hour,” said Michael Hickey, Executive Director of the Center for New York City Neighborhoods. “Thanks to the progressive leadership of Speaker Quinn and her colleagues in the City Council, the Mayor and private funders, New Yorkers at risk of losing their homes can access free, local, nonprofit services to help them avoid foreclosure by simply calling 311. Our network of over 30 local providers is smarter, better equipped and better trained.”

“The Legal Aid Society is delighted to stand with Speaker Quinn to support this incredibly important legislation,” said Ellen Davidson, an attorney with the Legal Aide Society. “In a time of a housing crisis, we must stop unscrupulous businesses from preying on vulnerable homeowners.”

“Many homeowners in NYC now facing foreclosure were victims of predatory lending. Now unscrupulous loan modification consultancy outfits are targeting these distressed homeowners for another round of abuse,” said Sarah Ludwig, co-director of the Neighborhood Economic Development Advocacy Project (NEDAP). “The City Council’s legislation will bolster the recently passed state foreclosure prevention law, as we also work to alert New Yorkers to avoid these loan modification scams.”