October 23, 2008

DISTRESSED PROPERTIES TASK FORCE RECEIVES FORECLOSURE PRIMER

WNY Law Center provides legislature with preventative information

At a recent meeting of the Erie County Legislature's Distressed Properties Task Force, Kathleen Lynch of the Western New York Law Center updated members regarding the local impact of the nation's subprime mortgage crisis on homeowners and neighborhoods in Erie County.

According to Lynch, Erie County predatory lenders issued 5,404 subprime loans in 2006. By October 2007, more than one-quarter of these mortgages were in jeopardy. Another one-quarter of those original loans will reset by October 1, 2009.

The statistics were alarming according to Erie County Legislator Bob Reynolds (D-Hamburg, Evans), co-chair of the task force with Angola Village Mayor William Frawley.

"Initially, Erie County appeared to have been spared the worst of the vast mortgage foreclosure crisis that has afflicted many other communities in the country," Legislator Reynolds said. "Yet, these statistics from the WNY Law Center forewarn of an enormous local impact if steps are not taken in the coming year to help homeowners who are struggling to make their mortgage payments."

He noted that the Western New York Law Center and HomeFront have already undertaken measures to stabilize neighborhoods by offering services that help keep people in their homes.

"Reducing the number of foreclosures is the first step in stemming the rise of distressed properties," Legislator Reynolds said. "Clearly, by intervening earlier in the process, government-funded foreclosure prevention services can make a dramatic difference in the lives of the individuals and families who have been preyed upon by unscrupulous lenders, many of whom are already out of business.

The Distressed Properties Task Force acknowledged Governor Paterson's signing into law Senate Bill 8143-A/Assembly Bill 10817-A, effective September 1, 2008. The pro-consumer legislation addresses the mortgage foreclosure crisis in New York State by:

• Providing additional protections and foreclosure prevention opportunities for homeowners at risk of losing their homes.
• Strengthening the Banking Law to prevent similar crises from occurring in the future.
• Establishing standards for lenders and mortgage brokers to prevent borrowers from being placed into unaffordable home loans.
• Registering and regulating mortgage loan servicers to enhance loan servicing standards in the state.
• Defining the crime of residential mortgage fraud and establishing strict criminal penalties to deter those who may engage in such activity.

"What predatory lenders did to our constituents, community, state and nation is a crime," Legislator Reynolds said to the task force. "It is now time to hold accountable those who profited by exploiting others and bringing devastation to our housing and financial markets."

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