New York has a new law on the books aimed at fraudulent foreclosure rescue scams that trick homeowners into signing their deeds over without compensating them for the equity they’ve accrued in their homes.

The Home Equity Theft Prevention Act, which becomes effective Feb. 1, 2007, requires written contracts fully disclosing the terms of sales of homes in foreclosure. The law gives sellers five days to change their minds for any reason. Homeowners also have up to two years to have a sale cancelled if they can prove the purchaser violated the law, although that provision does not apply to subsequent buyers.

The new law also applies to sales in which homeowners are promised they can get their homes back through a reconveyance arrangement. The Home Equity Theft Prevention Act, however, is not binding on purchasers who buy a home that’s in default as a primary residence.

An attorney who’s represented dozens of victims of foreclosure rescue scams, William Friedman, told New York Newsday that the law’s disclosure requirements will do little for potential victims because they are often too desperate to read contracts closely.

But Sarah Ludwig, a spokeswoman for a nonprofit fair-housing group, told Newsday the law would “completely transform the way business is conducted when people are in foreclosure.”

California, Minnesota, Maryland and Illinois have passed similar laws.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription