Skip to Main Content

Printer Friendly


Memorandum of Support

Empire Justice Memo of Support: Protect the Homes of Welfare Recipients

S.3269 (Krueger)

Repeal Social Services Law § 106: Protect the Homes of Welfare Recipients

New York is one of only two states in the nation that takes deeds and mortgages against the homes of welfare recipients to recover the public assistance paid to these homeowners.  If the goal of New York’s public assistance policy is to restore individuals to self-sufficiency, then it is time to repeal this archaic law.

Although New York treats a home as an exempt resource [18 NYCRR 352.23(b)(2)] in determining public assistance eligibility, the mortgage provision in Social Services Law (SSL) 106 permits counties to require public assistance recipients to execute a mortgage in favor of the county in the amount of public assistance received, as a condition of eligibility for public assistance.

Social Services Law 106 is an impediment to self-sufficiency: The goal of self-sufficiency is undercut in a number of ways when a social services district takes a mortgage against the home of a welfare recipient.

SSL 106 opens the door to predatory lending practices: Many homeowners refinance or seek to obtain home equity loans against their homes to make repairs or improvements.  When homeowners attempt to borrow, a lender will usually not provide a loan when there is an existing public assistance lien.  Predatory lenders are often more than willing to refinance these liens at very high interest rates.  Hence, the public assistance lien becomes a very costly loan.

SSL 106 places homeowners at risk of foreclosure in a precarious position: Mortgage servicers are now requiring that all other liens on the home be subordinated (paid off after the servicer is paid) before they will modify a loan in an effort to keep the homeowner in their home. The homeowner must contact the social services district with this request. Some social services districts are refusing to subordinate – meaning that the homeowner cannot modify their loan and is likely to lose it as a result.  The damage this causes is felt by all – the homeowner, the social services district, the bank and the community.

SSL 106 undercuts the goals of Individual Development Accounts (IDAs): New York recognizes that homeownership is an important step toward self-sufficiency.  As part of welfare reform, public assistance recipients are encouraged to save for a home by depositing earnings in special savings accounts called Individual Development Accounts, which can be matched with other funds and used for certain limited purposes, including purchasing a home. Social Services Law §358(5).  For welfare recipients, it is a cruel hoax for the state to encourage the use of these accounts, because the savings which are used to buy a home will be taken back by the local social services district in the form of a mortgage against the newly purchased home.

SSL 106 undercuts the self-sufficiency of abandoned spouses: A women who is abandoned by a spouse who is the family’s primary wage earner is often left with one asset - the house.  Unfortunately, when a social services district takes a mortgage against that home, its value is gradually whittled away.  Ironically, the home of the non-custodial spouse who is not on assistance, but has children who are, is not subject to the imposition of a lien under 106.

SSL 106 undercuts the self-sufficiency of the elderly: Many adults who have been on public assistance, but who have also had moderately paying jobs have one asset when they retire - their home.  They are often surprised to learn that the equity in their home is seriously compromised by the existence of the county’s lien.  Because the lien is open ended, “for all public assistance granted,” they are often unable to obtain home equity loans if they need them for home maintenance or medical care.  

Conclusion: Social Services Law §106 should be repealed.  It is archaic and counterproductive to the current goals of making welfare recipients self-sufficient.  It puts low income homeowners at risk of predatory lenders, is harmful to the elderly and is a disincentive to those who save for a home using an Individual Development Account.

This memo was prepared by:

Susan C. Antos

Empire Justice Center
119 Washington Avenue
Albany, NY  12210 

(518) 462-6831
(518) 935-2852