New York Foreclosed Homes List Reduction Program Criticized

by Paul McCain on May 25, 2009

The foreclosed homes list reduction program launched in 2008 by New York Governor David Paterson has been criticized by New York Senator Jeffrey Klein and State Assemblyman Hakeem Jeffries and by the community organization New York Acorn.

New York Governor David Paterson

Paterson’s program requires lenders to participate in mandatory meetings with borrowers who are determined to keep their houses from any foreclosed homes list. The governor launched the program in August 2008 as he overhauled state foreclosure laws. He cited the legislation as among the best ways to slow down foreclosures and control subprime lending across the state.

Klein, Jeffries and Acorn officials said that Paterson’s program had done so little since August, especially in the city of New York and in the counties of Nassau and Westchester. They claim that hundreds of conferences were held but only a few settlements were achieved.

The negotiations were meant to resolve subprime mortgage loans taken out between January 2003 and September 2008.

From October to April, 419 conferences were held in Queens and resulted in 16 settlements. During the first four months this year, 1,032 meetings were held in Nassau and resulted in 30 agreements. In March and April, 94 conferences were held in Westchester and resulted in 6 settlements.

Klein and Jeffries based their claims on research made by the New York unit of Acorn which examined court records in the counties mentioned.

The legislators said that the distressed homeowners were attending the conferences without knowing what to do to save their houses from being added to any foreclosed homes list. Also, the mortgage lenders were assigning representatives who were not authorized to modify loans.

Jeffries stated that more things need to be done in order for the lenders to carry out loan modifications. More government intervention is needed to force lenders to cooperate.

Governor Paterson’s spokesperson Morgan Hook responded to the criticism by saying that the governor took the lead in signing a foreclosure bill that became a model for other states in addressing the challenge of foreclosed homes list mitigation.

In the legislation introduced this month by Klein and Jeffries in the State Senate and Assembly, a borrower whose house is in danger of being added to a foreclosed homes list is required to talk with a certified housing counselor before working out a settlement with his lender.

The proposed program is modeled after Philadelphia’s foreclosure prevention program which was developed in partnership with Acorn.
Hook, the governor’s spokesperson, said Acorn had previously asked the office of Governor Paterson to review Philadelphia’s program of helping homeowners whose houses are in danger of being added to foreclosed homes list.

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