NY judges punish banks that fail to negotiate “in good faith” with distressed homeowners

New York /
Sep.September 12, 2011 03:11 PM

New York judges are beginning to take a stricter interpretation of the “good faith effort” banks are required to make under a 2009 state law passed to offer support to distressed homeowners, according to the New York Daily News.

The law states that banks must try to negotiate with distressed homeowners so that they can modify the loans and keep their property. But those homeowners are increasingly complaining that they can’t get modifications. Since November, 2009 judges have found at least seven cases where banks, including Wells Fargo, HSBC, Bank of America and Deutsche Bank, failed to act in good faith, and in one case the judge ordered the mortgage debt wiped out (although that was later reversed by an appeals court).

The banks sanctioned are slow to accept paperwork, ask for extra paperwork, refuse applications without merit or prolong negotiations for more than a year.

“We’re not looking to find banks not negotiating in good faith and we’re not looking to sanction banks,” Judge Herbert Kramer, who sanctioned HSBC and Deutsche Bank in two separate cases, told the Daily News. “We’re looking to get the underlying problem resolved.” [NYDN]


Related Articles

arrow_forward_ios
Exhausting other options, buyers flock to fixer-uppers
Exhausting other options, buyers flock to fixer-uppers
Exhausting other options, buyers flock to fixer-uppers
Better.com CEO Vishal Garg (Better.com, iStock)
Mortgage lender Better to go public via SPAC merger
Mortgage lender Better to go public via SPAC merger
(iStock)
Drop in home refinancing crimps mortgage firms’ profits
Drop in home refinancing crimps mortgage firms’ profits
From left: 909 Third Avenue, 79 Fifth Avenue, 240 West 37th Street and 27 East 62nd Street (VNO, Cercone Exterior Restoration, Google Maps)
These were the largest Manhattan real estate loans in April
These were the largest Manhattan real estate loans in April
Lenders are being stingy about granting home equity lines of credit. (iStock)
Home values are up, but just try getting a line of credit
Home values are up, but just try getting a line of credit
(Getty)
Mortgage applications resume decline after one-week surge
Mortgage applications resume decline after one-week surge
Deutsche Bank Chief Financial Officer James von Moltke (Getty)
Deutsche Bank eyes hybrid model while JPMorgan plans office return
Deutsche Bank eyes hybrid model while JPMorgan plans office return
Signature Bank CEO Joseph DePaolo (Getty, Google Maps, iStock)
Signs of success, trouble for property lender Signature Bank
Signs of success, trouble for property lender Signature Bank
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...