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FORECLOSURES MOVE TO NEW YORK SENATE

05/15/2008


The latest bill passed by the New York Assembly asks for a moratorium on all foreclosures. Presumably, the Assembly thinks that a sledge hammer is the correct approach to the housing crisis.

This piece of legislation merely extends the misery of many of these homeowners for an additional year. It fails to propose a practical solution to the following fundamental problems:

·
There is insufficient income to cover the mortgages in question.

·
In many cases, these lower home prices will fail to cover the amount of the mortgage on the property.

This legislation will create an environment that makes it difficult for the general population to secure mortgages in New York State. Rather, New York taxpayers will soon find themselves paying for the 2 or 3 percent of their fellow citizens who have encountered financial difficulty. This legislation is a “band-aid” solution that will cause more financial damage to the entire population than assistance to the few that need it.

What should our legislators in Albany do?


·
Create a department within the HPD (and the affiliated agencies across the State) that is staffed by knowledgeable people to provide actual targeted assistance to homeowners suffering from foreclosure.

·
Provide a formal notice to borrowers at least 60 days before beginning a residential foreclosure action (this is part of Governor Patterson’s alternative “foreclosure” legislation).

·
Set up mediation for possible resolution of each residential foreclosure. There are many companies such as JAMS or AAA that are geared up to do this.

Please let me know what you think by responding to us at
info@kleinsolomon.com .


Thank You. -- Ed Klein

FORECLOSURE FIGHT MOVES TO NY SENATE
CRAIN'S NEW YORK BUSINESS
BY DANIEL MASSEY


http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20080511/FREE/24030254

A showdown looms in the state Senate over a bill that would impose a one-year moratorium on foreclosures.

The legislation, which the Assembly passed by an overwhelming majority last week, has drawn the ire of the banking industry and some Republicans, who seem prepared instead to support a bill proposed by Gov. David Paterson.

Foreclosure filings in the state rose 40% in the first quarter from the year-earlier period, to about 14,000, according to RealtyTrac, and more New Yorkers are falling behind on their mortgage payments. With federal legislation stalled, state Democrats and Republicans and their allies say that something needs to be done, but that's where the agreement ends.

“The industry's answer is 'We don't need regulation,' but that's what they were saying 10 years ago, and you see the mess we've gotten into,” says Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project.

Democrats and housing activists say that a one-year moratorium combined with a strengthening of the governor's plan—which focuses on assisting those facing foreclosure and avoiding another crisis—would help address the issue.

But the idea of stopping the clock for subprime borrowers who make minimum monthly payments determined by a judge is anathema to lenders, who say it would make it harder for creditworthy New Yorkers to get mortgages.

Senate Republicans appear to be getting behind the Paterson bill.

Emphasis on governor's bill

“If something is going to happen in this area, it's going to involve the governor's program bill,” says Hugh Farley, R-Schenectady, chairman of the Senate Banking Committee.

But housing advocates are gearing up for a fight in the chamber, where, spearheaded by Acorn, they have persuaded Republican Sen. Frank Padavan of Queens to sponsor the moratorium measure.

“If Sen. Padavan and his colleagues are serious, they will follow the Assembly's lead and pass this legislation without delay,” says Acorn Executive Director Bertha Lewis.

The Paterson legislation, which came out of the Banking Department, steers clear of the tricky moratorium question. It would require lenders to send a notice to borrowers at least 60 days before beginning a residential foreclosure action and would mandate that the parties meet with a judge to work out a settlement. It also expands the state's anti-predatory lending laws and rules governing borrowers' ability to repay loans.

Advocates say that bill needs even more protection for borrowers, but mortgage industry experts say it goes too far and would inhibit lenders' ability to provide credit.

Hearing today

The debate will continue before the Senate Banking Committee today as mortgage and housing groups testify on the governor's proposal. It's unclear how the Assembly would react if a watered-down Paterson bill is approved by the Senate.

Banking and financial services companies spent $7.3 million on lobbying statewide in 2007, according to the state Commission on Public Integrity. Banking industry political action committees donated a total of at least $426,000 to Senate and Assembly members—a significant amount in a nonelection year—according to the New York Public Interest Research Group.

At least $168,000 of that amount went to Senate Republicans, and at least $107,000 was donated to Assembly Democrats.

Observers of state politics say that the moratorium might have served a purpose, even if it doesn't become law.

“What it does is provide an impetus and momentum to bring attention to the issue,” says Patricia Salkin, director of the Government Law Center of Albany Law School. “Somehow, you always wind up with a new law where all the different perspectives have had a chance to weigh in.”

-- Daniel Massey is a Reporter at Crain's New York Business

Copyright 2008 Crain's New York Business


 


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