Legislation To Mitigate Foreclosure Crisis In New York

June 30th, 2008 | Tags: Foreclosure Crisis

Finally a legislation that will mitigate to a great extent the foreclosure crisis in New York! For this there were kudos for Governor Paterson, Speaker Silver and the majority leader of the Senate Bruno. New York is badly in need of help with foreclosures touching 1,100 in a month.

The worst hit are the middle and lower income groups that had taken the sub-prime mortgages. Many seniors too had availed of this opportunity to own a house. Those who have crossed 65 are three times more likely to have opted for a sub-prime mortgage than those aged less than 35 years. This was because this category of people had less chance of qualifying for prime mortgages.

The leaders of the state have agreed upon the bill. It will make it mandatory for the lenders to send pre-foreclosure notices at least 90 days before the start of the proceedings. It also makes it compulsory for talks to be held between two parties before any foreclosure gets into motion. Borrowers will be guided to take the advice of government supported housing counselors. All these steps will be supported by a grant of $25 million that has been approved by the state budget for financing counseling and legal help for the foreclosure victims.

To prevent a repeat of the present foreclosure crisis steps have also been envisaged. Lenders in the sub-prime category will have to verify the affordability of the borrowers for a particular loan applied for. All headings like principal, interest, taxes, insurance, assessment fees etc will have to be taken into account while calculating the feasibility of the loan.

The agents and brokers will be expected to act in the interest of the borrowers by suggesting manageable loan products. To give more teeth to these injunctions the legislation states that mortgage fraud will be treated as crime.

The legislation however does not apply to those who are now already in foreclosure. Unfortunately it is these that will goad on the economy to be saddled with more foreclosures.

However with something being better than nothing there is strong optimism that many will benefit from the legislation. Thousands of homes will be saved. For some this is the only asset.

The foreclosure crisis in New York is concentrated in certain pockets like Queens and this brings into the question of targeting a special section for peddling these dubious loans.