Calling his state's foreclosure process "badly broken and in need of change," New York banking regulator Benjamin Lawsky wants new policies enacted to fast-track vacant property foreclosures and reform the state's mandatory foreclosure mediation requirements.

Foreclosures in the Empire State take an average of 900 days to complete, creating a backlog in court dockets, a financial burden on municipalities that must maintain vacant properties, and a critical impediment to the recovery of the state's housing market, the superintendent of the New York Department of Financial Services said Tuesday during a speech at the Mortgage Bankers Association's Secondary Market Conference in Manhattan.

"This is a problem long in the making, and I doubt it is one that we will definitively solve this legislative session," Lawsky said.

New York Attorney General Eric Schneiderman recently introduced legislation to protect communities from "zombie" properties, and is hoping, according to Lawsky, to see that pushed through before the legislative session ends on June 17. One in every 1,556 New York residential properties was in some stage of the foreclosure process during the month of March, according to RealtyTrac.

Coinciding with his speech, Lawsky's office published an 18-page report detailing the source of delays in the state's foreclosure process and recommendations for improving its efficiency.

Truly vacant and abandoned properties should not be afforded the same lengthy judicial foreclosure process in place for borrowers still living in their homes, Lawsky said. Foreclosure fast-tracking initiatives in Suffolk, Nassau and Bronx counties have yielded positive results, and "it's time to take the best of these trial programs and employ them statewide," he said.

Approximately 30% of all foreclosed homes are abandoned either after the first notice of foreclosure action or at some point throughout the process, Lawsky said. As part of a broader effort to reduce the number of vacant properties throughout the state, he proposed outreach efforts to educate distressed borrowers with actions as simple as letting a borrower know that receiving a foreclosure notice does not mean they immediately have to vacate their property.

Lawsky also took aim at New York's mandatory settlement conferences that state law requires servicers and borrowers to participate in prior to completing the foreclosure process. At the crux of the mess is the phrase "negotiating in good faith," which is not defined by the mediation law and consequently has no punishment on the books if a judge determines that one party is not negotiating in good faith.

The law should be amended to detail what constitutes negotiating in good faith, and include requirements such as attendance at mediation sessions and consequences for both servicers and borrowers who fail to meet minimum standards.

Rampant inefficiency also plagues the settlement conference process. The first settlement conference is not scheduled until an average of five months after a foreclosure action is first taken, and the mediation process tacks an extra nine months on to the entire foreclosure timeline.

Settlement conferences often plod on for reasons like borrowers arriving with incorrect paperwork and servicer representatives not having the authority to agree to settlement terms, borrowers' delinquencies grow from the added interest, penalties and fees incurred during the process — often resulting in the total amount owed exceeding the limits of loan modification programs.

The proposed reforms would ease the burden on the judicial backlog of foreclosure cases, as well as reduce the number of court appearances required per case, saving limited judicial system resources, Lawsky said.

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