Assembly Measure Addresses Subprime Mortgage Crisis
Assemblyman Michael Cusick (D-Mid-Island), Assemblywoman Janele Hyer-Spencer (D-East Shore/Brooklyn) and Assemblyman Matthew Titone (D-North Shore) announced the Assembly passed legislation addressing the subprime mortgage crisis and providing some assistance to at risk homeowners (A.10817-A). Under an agreement reached by the Assembly, Senate and governor, the measure puts tougher regulations into place for lenders and offers assistance to homeowners struggling to pay their mortgages.
“Families suffering from this subprime lending crisis are losing their homes,” said Assemblyman Titone. “We are offering some protections to ensure homeowners struggling have some guidance about how to get through this difficult process, before foreclosure becomes the only option. We want people to be able to stay in their homes.”
To help existing homeowners, the agreement modifies the current foreclosure process by:
- Providing a 90-day pre-foreclosure notice to alert borrowers that they are in default or foreclosure and advise them that there may be help; and
- Establishing Mandatory Settlement Conferences to bring a borrower together with the party initiating the foreclosure proceeding to attempt to reach a satisfactory conclusion.
“Overzealous lenders shouldn’t be allowed to take advantage of families who are simply trying to achieve the American dream of owning a home,” continued Assemblywoman Hyer-Spencer. “For too long lenders have been taking advantage of homeowners by offering adjustable rates and lending money regardless of the borrowers’ ability to pay.”
The agreement also establishes protections for future homeowners by:
- Enacting a subprime mortgage lending statue that identifies limitations and prohibited practices for subprime home loans, requires lenders to consider borrowers’ ability to repay the loan and provides remedies to borrowers who have been subjected to violations;
- Setting standards and limits for home loans by requiring brokers to act in the best interests of the borrower and prohibiting lenders or brokers from improperly influencing the outcome of a real estate appraisal; and
- Establishing the crime of residential mortgage fraud and establishing penalties for residential mortgage fraud ranging from a class A misdemeanor to class B felony.
“Unfortunately, predatory lenders targeted some families and seniors that simply did not have the resources to maintain their mortgages,” said Assemblyman Cusick. “No one wants to see families being thrown out of their homes, and this measure was necessary to preserve our communities and provide some help to victims of the subprime crisis get back on track.”
The 2008-09 state budget supplied $25 million for the Assembly-created Subprime Foreclosure Prevention Services Program. The program offers grants to non-profit organizations and legal service providers to provide counseling, mediation and legal representation to victims of subprime lending facing default or foreclosure.