Showdown In New York Senate

May 13th, 2008 | Tags: Foreclosures

The showdown in the New York Senate is over a bill that would put foreclosures in hold for one year. An overwhelming majority passed the bill last week. It has drawn flak from the banking group and also from few Republicans. They want to give support to another bill initiated by Governor David Paterson.

In New York State foreclosures increased by 40% during the first quarter in comparison to the first quarter of the previous year. 14,000 foreclosures were posted. More and more residents of New York are failing in their mortgage payments. Federal legislation has come to a point of stalemate with both political parties agreeing that something has to be done to stem the tide; the difference is over what that something is to be.

The lending industry is quite sharp and clear about what its demands – it does not want any regulations. They are just repeating what they have been saying for the last decade. This has led to the mess of today, opines Josh Zinner of Neighborhood Economic Development Advocacy Project.

The Democrats and other housing activists want a one-year moratorium to be added to the plan of the government. The main focus is on preventing foreclosures. Many are against the idea because with a precedent of allowing judicial interference in mortgage repayment matters will make it difficult for sanctioning of future mortgages. The focus of attention is on the Governor’s bill.

The fight will be in the chamber with the punch coming in from ACORN. Republican senator Frank Padavan has been persuaded by them to sponsor the motion on the moratorium. The executive director of ACORN Bertha Lewis hopes that the legislation will be passed without further delay. On the other hand the Paterson legislation that evades the issue of moratorium, dictates that the lenders will have to allow a 60 days gap after issuing notice before starting foreclosure. It also stipulates that it would be mandatory for both the sides to meet a judge to work out an agreement. Anti-predatory laws are also being expanded as well as rules regarding the ability of borrowers to repay loans. But many feel that the borrowers require more protection. On the other side of the fence the pro-mortgage groups says that this will inhibit the flow of future mortgages. The debate will rage before the Senate Working Committee as each side gears up with valid arguments.