New York Comptrollers Urge Lenders To Help In Solving Foreclosure Crisis

October 26th, 2007 | Tags: Foreclosure Crisis

The state and city comptrollers of New York together with leaders of ACORN are putting pressure on the mortgage lenders to be more proactive in doing something to close in on the foreclosure tidal wave. Certain points of the crisis have been highlighted to show that all are affected by this tangle. ACORN has released data to show 2,297 sub-prime loans have been sanctioned in 2006 in New York City. Most of these in all likelihood will slip into foreclosures The cost involving all – lenders, borrowers and the socio-economic field – will be more than half a billion dollars. Even the global market is not left unscathed. The States financial officer as well as the sole trustee of New York’s Common Retirement Fund came forward asking lenders to resolve the matter with the borrowers facing foreclosure. In New York the great American dream of house ownership has turned into a nightmare.

Only a handful of banks have come forward but their half measures are not enough considering the gravity and size of the foreclosure crisis. Past dues are being allowed to spread over the next 12/18 months by being added on to the regular mortgage payments. New York ACORN representative was skeptical of this and opined it was like throwing a dead weight to a man who is already drowning. More need to be done.

The comptrollers in cooperation with ACORN decided to approach each of the banks as well as mortgage companies dealing with sub-prime mortgages to permit Mortgage Affordability Principles. Those about to default or already doing should be contacted and each individual situation analyzed. If it is found that the borrower’s income just does not allow continuation of the loan then the option of modification should be given. This timely step will prevent thousands of foreclosures. The implementation of an affordability assessment will guarantee the borrower’s ability to meet mortgage commitments. The assessment should be realistic taking into account the income and balancing it with expenses like repayment of principal, interest, payment of taxes and insurance as well as other debts A reasonable amount must be set aside for survival like food and other essentials. The focus should be on long-term solutions.

There seems to be no hope for the coming year, 2008, with about 1.3 million sub-prime mortgages with floating interest ready to increase.

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