§ 265-a. Home equity theft prevention. 1. (a) The legislature finds\nand declares that homeowners who are in default on their mortgages or in\nforeclosure may be vulnerable to fraud, deception, and unfair dealing by\nhome equity purchasers. The recent rapid escalation of home values\nthroughout urban and rural areas has resulted in a significant increase\nin home equity, which constitutes the greatest financial asset held by\nmany homeowners of this state. During the time period between the\ndefault on the mortgage and the scheduled foreclosure sale date,\nhomeowners in financial distress, especially poor, elderly, and\nfinancially unsophisticated homeowners, are vulnerable to aggressive\n"equity purchasers" who induce homeowners to sell their homes for a\nsmall fraction of their fair market values, or in some cases even sign\naway their homes, through the use of schemes which often involve oral\nand written misrepresentations, deceit, intimidation, and other\nunreasonable commercial practices.\n (b) The legislature declares that it is the express policy of the\nstate to preserve and guard the precious asset of home equity, and the\nsocial as well as the economic value of homeownership.\n (c) The legislature further finds that equity purchasers may have a\nsignificant impact upon the economy and well-being of this state and its\nlocal communities, and therefore the provisions of this section are\nnecessary to promote the public welfare.\n (d) The intent and purposes of this section are to provide a homeowner\nwith information necessary to make an informed and intelligent decision\nregarding the sale or transfer of his or her home to an equity\npurchaser; to require that the sales agreement be expressed in writing;\nto safeguard equity sellers against deceit and financial hardship; to\nensure, foster and encourage fair dealing in the sale and purchase of\nhomes in foreclosure or default; to prohibit representations that tend\nto mislead; to prohibit or restrict unfair contract terms; to provide a\ncooling off period for equity sellers who enter into covered contracts;\nto afford equity sellers a reasonable and meaningful opportunity to\nrescind sales to equity purchasers; and to preserve and protect home\nequity for the homeowners of this state.\n 2. The following definitions shall apply to this section:\n (a) "Bona fide purchaser or encumbrancer for value" means anyone\nacting in good faith who purchases the residential real property from\nthe equity purchaser for valuable consideration or provides the equity\npurchaser with a mortgage or provides a subsequent bona fide purchaser\nwith a mortgage, provided that he or she had no notice of the equity\nseller's continuing right to, or equity in, the property prior to the\nacquisition of title or encumbrance, or of any violation of this section\nby the equity purchaser as related to the subject property.\n (b) "Business day" means any calendar day except Sunday or the public\nholidays as set forth in section twenty-four of the general construction\nlaw.\n (c) "Covered contract" means any contract, agreement, or arrangement,\nor any term thereof, between an equity purchaser and equity seller\nwhich:\n (i) is incident to the sale of a residence in foreclosure; or\n (ii) is incident to the sale of a residence in foreclosure or default\nwhere such contract, agreement or arrangement includes a reconveyance\narrangement; or\n (iii) is incident to the sale of a residence that is the collateral\nfor a "distressed home loan" as defined in paragraph (d) of subdivision\none of section two hundred sixty-five-b of this article.\n For purposes of this section, any reference to the "sale" of a\nresidence by an equity seller to an equity purchaser shall include a\ntransaction where an equity seller receives consideration from the\nequity purchaser, and a transaction involving a transfer of title to the\nequity purchaser where no consideration is provided to the equity\nseller.\n (d) "
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