New York City Council Header
File #: Res 1049-2019    Version: * Name: Prohibit the use of a confession of judgment in business loans.
Type: Resolution Status: Laid Over in Committee
Committee: Committee on Small Business
On agenda: 9/12/2019
Enactment date: Law number:
Title: Resolution calling upon the United States Congress and the New York State Legislature to pass legislation to prohibit the use of a confession of judgment in business loans.
Sponsors: Public Advocate Jumaane Williams, Stephen T. Levin, Fernando Cabrera , Farah N. Louis
Council Member Sponsors: 4
Attachments: 1. Res. No. 1049, 2. September 12, 2019 - Stated Meeting Agenda with Links to Files, 3. Hearing Transcript - Stated Meeting 9-12-19, 4. Minutes of the Stated Meeting - September 12, 2019, 5. Committee Report 4/29/20, 6. Hearing Testimony 4/29/20, 7. Hearing Testimony 4/29/20 (Con't), 8. Hearing Transcript 4/29/20
Date Ver.Prime SponsorAction ByActionResultAction DetailsMeeting DetailsMultimedia
4/29/2020*Public Advocate Jumaane Williams Committee on Consumer Affairs and Business Licensing Laid Over by Committee  Action details Meeting details Not available
4/29/2020*Public Advocate Jumaane Williams Committee on Consumer Affairs and Business Licensing Hearing Held by Committee  Action details Meeting details Not available
4/29/2020*Public Advocate Jumaane Williams Committee on Small Business Laid Over by Committee  Action details Meeting details Not available
4/29/2020*Public Advocate Jumaane Williams Committee on Small Business Hearing Held by Committee  Action details Meeting details Not available
9/12/2019*Public Advocate Jumaane Williams City Council Referred to Comm by Council  Action details Meeting details Not available
9/12/2019*Public Advocate Jumaane Williams City Council Introduced by Council  Action details Meeting details Not available

Res. No. 1049

 

Resolution calling upon the United States Congress and the New York State Legislature to pass legislation to prohibit the use of a confession of judgment in business loans.

 

By the Public Advocate (Mr. Williams) and Council Members Levin, Cabrera and Louis

 

Whereas, There are currently 11,938 active taxicab medallions operating in New York City; and 

Whereas, Many medallions owners take out business loans to finance the purchase of their vehicles; and

Whereas, Some of the business loans that medallion owners take out include a document known as a “confession of judgment,” where the borrower waives the right to due process if the debt is unpaid and there is a dispute; and

Whereas, Once signed, a “confession of judgment” can be used by the lender to obtain a judgment against the borrower without any further notification; and 

Whereas, The Federal government currently has prohibitions on the use of confessions of judgment in consumer loans, but not for business loans; and

Whereas, The United States Federal Trade Commission has recently called for the elimination of confessions of judgment in small business lending contracts; and

Whereas, Many states have also banned confessions of judgment practices for business loans, but New York State does not prohibit them; and

Whereas, A recent New York Times expose revealed that “confession of judgment” documents may have been used by lenders to influence some borrowers applying for taxi medallion loans; and

Whereas, According to the New York Times, some of the documents they reviewed show that some medallion borrowers admitted to defaulting on their loans even before the loan was approved; and 

Whereas, A “confession of judgment” can be used by banks and other lending institutions as a document in predatory lending practices, a loophole that should be closed; now, therefore, be it 

Resolved, That the Council of the City of New York calls upon the United States Congress and the New York State Legislature to pass legislation to prohibit the use of a confession of judgment in business loans.

 

LS 9151, 9153, 11030, 11060

RA

7/18/2019