Pheffer:Attack Subprime Crisis
Assemblywoman Audrey I. Pheffer is pleased to join with Speaker Sheldon Silver and her Assembly colleagues in introducing a comprehensive plan designed to help address the subprime lending crisis. The measure will help homeowners across New York who took advantage of low-interest loans only to find that they are unable to afford the mortgages they have received.
"The subprime lending crisis in the United States is depriving countless Americans of a fundamental American dream - owning one's own home," Assemblywoman Pheffer said. "We can't sit around and do nothing while tens of thousands of hardworking New Yorkers lose their homes because of some bum-deal adjustable rates offered by subprime lenders. The legislation delivers real relief, helping borrowers who are in default on their mortgages."
The subprime lending crisis has been fed by adjustable-rate mortgages that often offer low initial "teaser" interest rates that then skyrocket after several years. The crisis leaves existing homeowners who obtained a second mortgage or home equity loan - and first-time homebuyers - unable to afford repayment. Other questionable practices include lenders granting interest-only mortgages and mortgages made with little or no verification of borrowers' abilities to repay their loans.
The new legislation Assemblywoman Pheffer is sponsoring creates a $150 million mortgage assistance grant fund to assist borrowers in owner-occupied homes who are in default. The bill also provides $30 million that will be dispersed to counseling entities and legal services organizations to provide counseling, mediation assistance and foreclosure representation.
In addition, the plan includes, The Responsible Lending Act of 2008 (A.8972-A), which is aimed to curb questionable loan practices by addressing current subprime predatory lending practices, including adjustable rate mortgages, negative amortization, prepayment penalties and lending without regard to repayment ability; and increasing the duties owed borrowers by lenders and brokers, as well as many other provisions to address this industry.
According to experts more than 50,000 New York households were in foreclosure or default in 2006 alone. Many of these foreclosures are geographically concentrated; suggesting pockets of the state will be more affected than others.
"This legislation will help more New York families stay in their homes and will also help these communities stay intact," Assemblywoman Pheffer said. "By taking action we can help keep people in their homes and the preserve the economy."