BROOKLYN — Assemblyman Jim Brennan, D-Brooklyn, chair of the Assembly Standing Committee on Cities, is introducing two bills in the state Assembly to address the mortgage foreclosure crisis.
State Sen. Frank Padavan, is introducing the bills in the New York State Senate.
Addressing Foreclosures
The first bill would impose a one-year delay in the time a court issues an order of foreclosure after a lender has proven entitlement to foreclosure. The U.S. Supreme Court approved a Minnesota law enacted during the Depression that imposed a two-year moratorium on bank foreclosures.
During the Depression, New York State also enacted a foreclosure moratorium law that expired in 1949. This bill would require that the court provide for a minimum payment by a homeowner that would be fair and equitable and would not alter the relative financial position of the parties, says Brennan.
Crisis Growing
In July 2007, there were 4,270 foreclosures in New York State, including 2,561 in New York City, according to Realty/Trac. Foreclosure filings rose 22 percent statewide from July 2006 and 55 percent in New York City. The Associated Press reported that national foreclosure rates in November 2007 are up 68 percent from last year, and Sen. Charles Schumer has estimated that 15,000 homes in New York City would face foreclosure in the coming year. At current rates, says Brennan, during the next two years, as many as 100,000 homes would be subject to foreclosure in New York.
SONYMA Authorized To Issue $3 Billion in Bonds
A second bill, also sponsored by Brennan and Padavan, would allow the State of New York Mortgage Agency to issue $3 billion in bonds to buy out high-cost subprime mortgages. With SONYMA sometimes able to issue bonds at lower rates than high-cost subprime mortgages, homeowners could save thousands of dollars in monthly payments, and many thousands of homes could be saved by lowering monthly payments. If the Federal government approved tax-exempt refinancing, savings could be dramatically increased. Legislation is likely to be introduced shortly in Congress to authorize tax-exempt refinancing.
Foreclosure rates are staggering in some parts of New York City. In Bedford-Stuyvesant, foreclosure rates are 51 percent of subprime mortgages; and in Bushwick, 43 percent.
“The dramatically rising number of foreclosures has led to declining property values and threatens New York State’s economy. New York City alone faces 15,000 foreclosures with national rates in November 2007 up 68 percent from the same month last year,” said Brennan.
“The ripple effect of foreclosures affects property values, tax revenue, jobs and communities. Property owners in the state stand to lose nearly $10 billion in property value due to the subprime mortgage crisis. The state and local municipalities will have over $100 million less in tax revenue. Housing construction has drastically slowed,” Brennan added.
© Brooklyn Daily Eagle 2007
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