CAPITOL Assembly OKs 1-year foreclosure delay Bills in 2 chambers aim to limit impact of subprime crisis BY MICHAEL VIRTANEN The Associated Press
The state Assembly passed legislation Wednesday to impose a one-year delay on foreclosures when New York homeowners default on mortgage payments, while the Senate was poised to consider a related measure backed by Gov. David Paterson. Both are meant to limit the impact here of the national crisis in subprime lending. Lawmakers and staff said they expect some version of the legislation to pass in the next several weeks. The Senate Banks Committee will hold a hearing Monday on Paterson’s proposal to delay foreclosure for 60 days after lenders get an owner’s offer to renegotiate. “There’s nothing wrong with the governor’s proposal. It’s a welcome proposal and would do a lot of good, I’m sure,” said Assemblyman James Brennan. But the Brooklyn Democrat said his bill for a year-long delay, which passed the Assembly 118-10, is also aimed at stopping predatory lenders trying to foreclose while giving homeowners respite to refinance as other national, state and commercial relief measures get off the ground. Brennan pointed to data showing 14,000 foreclosure filings in New York during the first three months of this year, with 6,700 in March, a trend projected to total 80,000 in 2008 and roughly quadruple the number in 2004. The subprime lending problems resulted from variations on low adjustable-rate mortgages that rise sharply for borrowers marginally qualified to meet payments. “The mortgage industry aggressively marketed mortgages with low ‘teaser’ interest rates. . . . Other questionable loans include interest-only mortgages and mortgages made with little or no income verification,” said Assemblyman Darryl Towns, another Brooklyn Democrat who chairs the Assembly Banks Committee. “These schemes have also placed millions of Americans, particularly in low-income communities and communities of color, at risk of foreclosure.” Testimony to the Senate Banks Committee indicated 98 to 99 percent of mortgages in New York were being paid on time last year, but with pockets of problems and higher foreclosure rates in the Bronx, Queens and more recently Brooklyn. Subprime loans account for a fraction of total lending. “Most of the statistics seem to show New York is sort of in the middle of the country,” said Peter Edman, staff director of the Senate Banks Committee, adding the reliability of some data is in dispute. “But we have seen significant increases in the number of foreclosures compared to a year ago, two years ago, three years ago.” New York already requires a judicial process for foreclosure that can take an additional year once a second or third missed mortgage payment starts the process. Michael Smith, president of the New York Bankers Association, said New York already has the longest foreclosure process of any state, which can average 445 days. Prolonging it “benefits neither the borrower nor the lender,” he said. Senate Banks Committee Chairman Hugh Farley, a Niskayuna Republican, said Paterson’s measure will likely be the vehicle for state lawmakers to deal with the issue, which will require three-way agreement. “What we’re trying to do is address the problem,” he said, “and not dry up the credit market.” Paterson’s proposal would also require lenders to notify delinquent homeowners at least 60 days before starting foreclosure actions, as well as a court-supervised conference with the lender and homeowner in an attempt to work out a compromise.
Farley hopeful of agreement on foreclosure relief bill BY BOB CONNER Gazette Reporter Reach Gazette reporter Bob Conner at 462-2499 or bconner@dailygazette.net.
With rising foreclosure rates across New York state linked to a crisis in the subprime lending market, the Senate, Assembly and governor are all seeking to help. After a lengthy public hearing Monday on Gov. David Paterson’s bill, the chairman of the Senate Banks Committee, Hugh Farley, RNiskayuna, said he is hopeful that the parties can agree on some version of it by the end of the regular legislative session on June 23. Paterson’s program bill (A-10817/ S-8143) would give delinquent homeowners more notice before foreclosure, and the opportunity for a court-supervised settlement conference. It would create a new crime, mortgage fraud; put responsibility on brokers to honestly advise their customers; and require lenders to determine that borrowers can repay their debts before making the loan. Farley said he shared some concerns brought up by bankers and mortgage brokers at the six-and-ahalf-hour public hearing he chaired. They said the bill could make it harder for poor people to buy houses. Farley said amendments to the Paterson bill are needed, but noted that the bankers and brokers “don’t vote on anything.” New York Bankers Association President Michael Smith testifi ed that the Paterson bill “would create unnecessary new legal and regulatory challenges for the entire mortgage market, which would have the unintended consequence of limiting home lending credit to qualifi ed New Yorkers.” John Scarchilli, president of the Capital Region-based Pioneer Bank, said it rarely forecloses on loans it originates, and expressed concern that the bill could eliminate the legitimate subprime lending market, and adversely affect prime mortgage lending. The bankers said the subprime problems were largely caused by mortgage brokers. But Gene Tricozzi, president of the state Association of Mortgage Brokers, noted later that a mortgage originated by a broker must also be approved by a bank. Representatives of nonprofit agencies, including Albany’s Empire Justice Center, generally supported the bill, and suggested ways to strengthen it. Ellie Pepper, assistant director of Better Neighborhoods Inc. in Schenectady, said it received four times more calls for foreclosure assistance last year than the year before, and this year calls are up another 25 percent. In Amsterdam, she said, almost a quarter of homeowners are behind on their mortgage payments. BNI recently started Montgomery County’s fi rst foreclosure counseling service, using a State of New York Mortgage Agency grant, she said. Richard Neiman, state superintendent of banks, testified that foreclosure filings in Albany County were up more than 400 percent in the first quarter of 2008, compared with the same quarter one year ago. In raw numbers, Albany saw the 10th highest increase in foreclosure filings in the state. The Banking Department said Saratoga was 17th on that list, Schenectady County 20th, Montgomery 30th, Fulton 35th and Schoharie 59th. The percentage numbers for those counties were not available Monday, a Banking Department spokeswoman said. The chairman of the Assembly Banks Committee, Assemblyman Darryl Towns, D-Brooklyn, is sponsoring the Paterson bill in that house. He could not be reached for comment. The Assembly also passed a package of four subprime bills last week, addressing many of the same concerns as the governor’s bill. Democrats used the votes as an opportunity to attack Assemblyman George Amedore, R-Rotterdam, who won a previously Democratic seat in a special election last year. Assembly Majority Leader Ron Canestrari, D-Cohoes, co-chairman of the Democratic Assembly Campaign Committee, said in a news release that Amedore “built his career and his fortune building big luxury homes. But now, when ordinary New Yorkers can’t pay their mortgages, Amedore voted against giving them assistance.” Amedore noted that he voted for one bill in the Assembly majority package, calling for a one-year moratorium on foreclosures, and said he could vote for other parts of the package if they were modified. But he said he was opposed to a bailout. Assembly Minority Leader James Tedisco, R-Schenectady, issued a statement last week saying the Assembly majority “would use millions in taxpayer dollars to cover bad loans made by speculators in search of a quick buck,” and denounced the “bailout of billionaire bankers.”
This is the government stepping in to take care of something before the free market has a chance to react. This is exactly what has ruined the U.S. economy and why we're in a recession as we know it right now.
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