Relief could be coming soon for victims of deed theft
Brooklyn pols sponsored a bill that would return stolen homes to their rightful owners
A bill that will help ripped-off homeowners get their property back has passed both the New York Assembly and the Senate, and is awaiting the governor’s signature.
The bill is meant to combat property fraud, which has turned into a crisis in Brooklyn’s gentrifying neighborhoods, according to housing advocates and local officials.
Sponsored by state Sen. Velmanette Montgomery (Bedford-Stuyvesant-Red Hook) and Assemblymember Helene Weinstein (Flatlands-Sheepshead Bay), the legislation provides greater protections for homeowners who are in default or foreclosure. It also strengthens laws regulating shady property “consultants.”
“It has a simple point,” Weinstein told the Brooklyn Eagle. “A District Attorney can bring an action and find fraud, but there’s not a way to get the homeowner’s home back. This allows the DA to get into court and have the illegal deed thrown out, and have the house restored to the owner.” As it stands now, “There’s no legal way to get it back.”
“While it’s clearly good to lock somebody up, this voids the illegal transfer and allows the owner to get their home back,” she said.
Weinstein says she has sponsored this bill in the Assembly for a number of years, but it only passed now that Democrats are in the majority in the Senate.
“I’m happy Sen. Montgomery co-sponsored the bill,” she added.
New York State Attorney General Letitia James said in a statement on Wednesday that her office receives more deed theft complaints from Brooklyn than the four other boroughs combined, and deed fraud scams disproportionately impact homeowners of color.
Brooklyn officials have been sounding the alarm over the past year about increasing housing fraud in Brooklyn.
At a Borough Hall hearing in March, distraught residents and housing experts testified that homes worth millions of dollars are being systematically stolen through deed theft, liens for minor unpaid bills, fraudulent documents, predatory foreclosures and HPD’s Third Party Transfer (TPT) program. The hearing was co-sponsored by Montgomery, Borough President Eric Adams and Assemblymember Tremaine Wright.
Deed theft primarily happens in two ways. The simplest way is through forgery; a thief submits falsified documents to the city recording a transfer of ownership. More insidious, however, is deed fraud that occurs when malicious actors prey on homeowners facing foreclosure or other financial burden. After identifying distressed properties, scammers pressure their victims into a quick, cheap sale by pretending to be authorities or making too-good-to-be-true promises.
Homeowners may inadvertently sign away the deeds to their homes, sometimes not realizing the mistake until years later, according to Montgomery. Reversing the deed transfer can be close to impossible when homeowners have to take on the cost and time of a lawsuit.
Deed crimes are highly concentrated in Bedford-Stuyvesant, Crown Heights, Flatbush and Brownsville, James said. This is where property values have skyrocketed.
According to a statement from Montgomery, fraudulent companies especially target seniors, homeowners struggling financially, and those for whom English is not their first language.
If signed, the new legislation would build upon the Home Equity Theft Prevention Act, which passed in 2006 to provide more protections, and transparency, to burdened homeowners who could make for ripe targets. HETPA provides the right to a complete contract, five days to cancel the contract and the right to an honest buyer and a fair sale.
The new bill expands on this by prohibiting certain tactics used by scammers.
Other fraudulent activities are also prohibited:
- Prohibiting deceptive behaviors such as pretending to be law enforcement or government representatives, taking temporary ownership of a deed, or engaging in harassment of the homeowner or the homeowner’s family
- Eliminating the requirement that a homeowner post a bond in order to file a lawsuit to stop a deed transfer.
- Prohibiting loan modification consultants from requiring upfront fees for services.
- Extending the amount of time a homeowner has to rescind transactions with distressed property consultants from five days to 14 days.
In her statement, Montgomery called the bill “a major step forward in addressing one of the most pressing issues among homeowners.”
“This is such a huge win for Brooklyn and our state. Fraudulent companies have targeted our homeowners for far too long,” Wright said.
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