Mark Winston Griffith

Is foreclosure relief finally coming to New York State?

For those who want something to be done about the foreclosure crisis and are looking for signs of intelligent life in Albany, there may be hope. On Monday the New York State Senate Banks Committee chairman, Hugh Farley, held hearings on the Governor's foreclosure relief and anti-predatory lending proposal.

The Paterson bill, as you may remember from one of my earlier posts, expands New York's anti-predatory lending law and compels banks and brokers to make loans that are affordable and in the borrower's self-interest, among other things. It also establishes conditions which will help borrowers stave off foreclosure.

Also, as Crain's recently reported, the Assembly passed a one-year foreclosure moratorium bill which I blogged about a couple of months ago. Stunning not only for what it would do - halt foreclosure actions long enough for homeowners to secure meaningful repayment or sale options - this bill is also impressive for its mere survival so far in Albany's legislature. Although it is being pushed along by ACORN and is one of the most potentially effective short-term ways to force lenders to consider more affordable terms for subprime borrowers, the mortgage lobby, predictably, and quite a few Senate Republicans, are strongly against it. This has prompted some to predict that it helps position the Paterson bill as the more reasonable alternative.

But the Paterson measure and the moratorium bill are very different proposals with two very different, I would argue, complementary, goals. One is a multi-faceted instrument that seeks to make structural changes in the mortgage lending industry and strike at the root causes of foreclosures. The other is a blunt tool designed to push the emergency stop button on an out of control foreclosure assembly line.

In other words, each proposal is an apple to the other's orange. Given that there were more than 14000 foreclosure filings in New York State in the first quarter of this year, and increasing numbers of borrowers with subprime mortgages owe more than their homes are worth and are falling behind on their payments before rates reset, New York homeowners need both of these measures on the legislative table.

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Posted at 12:00 PM, May 14, 2008 in Economic Opportunity
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