Rules Impact Mortgagees Foreclosing in the Town of Hempstead, Long Island, New York

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Local Law 46-2016 was enacted by the Town Board of the Town of Hempstead to add Section 128-61.1 (“Foreclosures; Undertaking”) to the Town’s Code which requires a lender foreclosing a mortgage on vacant property improved by a single-family, a two-family or a multiple-family residence to provide the Town, within  forty-five calendar days from the date on which the foreclosure is commenced, an undertaking of $25,000 to enable the Commissioner of Sanitation to eliminate violations of Code Section 128-61 (“Accumulation of garbage, litter, refuse or rubble; height of lawns, weeds or brush”) at the property.

Funds utilized for such purposes are to be replenished on notice from the Town. An undertaking may be in the form of cash, a cash bond, or a letter of credit. Unused funds are to be returned once the foreclosure is discontinued. Fines may be imposed by the Town for the failure to comply with the requirements of Section 128-61-1. The Local Law was effective on June 6, 2016; it applies to all foreclosures within this Section commenced after that date. See Bergman, “Legislative Assaults on Mortgage Holders”, New York Law Journal, June 29, 2016. Section 128-61.1 and Section 128-61.2, discussed below, are posted at

http://ecode360.com/print/HE0207?guid=15515810&children=true.

 Local Law 55-2016 added Section 128-61.2 (“Nonresidential foreclosures; undertaking”) to the Town of Hempstead’s Code requiring a lender foreclosing a mortgage on any vacant property not subject to the provisions of Section 128-61.1 to provide the Town, within  forty-five calendar days from the date on which the foreclosure is commenced, an undertaking of $35,000 to enable the Commissioner of Sanitation to eliminate violations of Code Section 128-61 (“Accumulation of garbage, litter, refuse or rubble; height of lawns, weeds or brush”) at the property. Section 128-61.2 is similar to Section 128-61.1. Differences between the Sections are the amount of the required undertaking, the effective date, and the penalties for the failure to post or replenish the undertaking, Under Section 128-61.1, fines are imposed; under Section 128-61.2, fines and/or imprisonment for not more than 15 days may be imposed. Local Law 55-2016 was effective on June 28, 2016; it applies to all foreclosures within this Section commenced after that date.

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