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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Comments
The Foreclosure Moratorium seems as though it has some political spin to it. Will the NY State Senate leadership want to try to defend its very thin majority as the party of foreclosure? Further it's good policy. A foreclosure moratorium will, if enacted, encourage lenders to bargain in good faith with borrowers.
Republicans reading tea leave this morning may be careful not reflect only the wishes of banks. The special election results from Mississippi (where a right-wing GOP house candidate was defeated by a fairly conservative Democrat) suggest those who stand by business as usual GOP politics will be invited to find other employment in a tough job market.
But where is the Governor on the moratorium?
Posted by: Daniel Millstone | May 14, 2008 01:11 PM
I agree with you, Daniel, but I don't know if those tea leaves will make for a strong enough brew to compel the Senate to pass the moratorium bill. Perhaps a bigger question is, do NY Senators want ACORN members sitting on their front lawn?
As for the Governor, I don't believe he has taken a public position on the moratorium bill. My read is that he only has one horse in this race and that's all he really cares about as far as foreclosure prevention efforts.
Let me also add that the Governor's bill while good, good actually stand to be tightened up in a few areas. The moratorium bill could be used in a bad cop-good cop sort of way to leverage that.
Posted by: Mark Winston Griffith | May 14, 2008 01:33 PM