Albany, NY (May 9, 2007): State Senator Velmanette Montgomery (D-Brooklyn) and her Senate Democratic colleagues unveiled this week a comprehensive plan that responds to New York's foreclosure crisis which has victimized thousands of borrowers in her Senate District and elsewhere throughout New York. The plan was announced during a press conference at the State Capitol in Albany.
Underscoring the magnitude of unscrupulous lending practices in Brooklyn and in her Senate District in particular, Senator Montgomery noted that between January and March of this year, over 1,110 Brooklyn borrowers received foreclosure notices, and 80 percent of this homeowner population lives in Bedford Stuyvesant and bordering communities.
A report released by the Senate Democratic Conference revealed that more than 20 percent of the sub-prime mortgage loans that originated in 2005 will end in foreclosure, jeopardizing homeownership for more than 28,000 New York families.
According to Richard Trouth, Executive Director of Neighborhood Housing Services (NHS) of Bedford-Stuyvesant, "Predatory lending is a huge problem in Bedford Stuyesant; the rate of foreclosure notices in Bedford-Stuyvesant has ranked the highest in New York City since 2002.
NHS steps in every day to educate consumers on how to spot and steer clear of potential scams. And, for borrowers who have fallen prey to unscrupulous lending practices, we help them refinance their predatory loans and maintain good financial standing."
Montgomery is working with NHS to bring information about the risk of predatory lending practices to the community. They are collaborating on this public education campaign with Bridge Street Development Corporation, Bedford Stuyvesant Restoration, and Brownstoners of Bedford-Stuyvesant, Inc. The coalition plans to hold community forums in churches and other public gathering places throughout the Senator’s Brooklyn district.
In addition, Senator Montgomery will sponsor a public hearing in Brooklyn with the NYS Departments of Banking and Insurance as well as the NYS Attorney General. The hearing will be co-sponsored by Assemblyman Darryl Towns (D-Brooklyn), Assembly Banking Committee Chair and Senator Martin Connor (D-Brooklyn), Ranking Democrat on the Senate Banking Committee.
"By raising public awareness, instituting legal protections and developing counseling services, we can build a significant line of defense against predatory lending practices that are robbing people of their homes and livelihoods," Montgomery said.
Sub-prime loans are loans offered to individuals whose credit history prevents them from securing a low-rate loan. A typical sub-prime borrower has a low credit score and a history of late payments, charge-offs or bankruptcies. Since they are considered at high risk of default, they receive less-than-favorable terms, including higher interest rates, regular fees or an upfront charge.
In some cases, sub-prime borrowers are drawn in by a low introductory rate, which then sharply increases within a few years, making it difficult if not impossible to keep up with monthly payments. Unless they can refinance their loan or sell the house, the borrower can lose their home.
The Senator and NHS noted that not all sub-prime lenders engage in predatory practices, and some sub-prime lenders provide a valuable service to people who would not otherwise be able to qualify for a mortgage loan.
Alarmed by the growing number of foreclosures across New York State, Montgomery is calling on her constituents and residents statewide to endorse the Senate Democrats’ Predatory Lending Mitigation Program, which is aimed at helping families that have been victimized by predatory lenders.
Montgomery and her colleagues proposed several measures that will protect consumers from predatory lending practices. In an effort to help borrowers who have already been victimized by questionable, and perhaps unethical, lending practices, the lawmakers called for an immediate voluntary six-month moratorium on foreclosures of sub-prime loans in New York. "I wholeheartdely endorse this idea," said Trouth of NHS, "and I will encourage our neighborhood banks to participate." The moratorium is joined by a planned series of statewide public hearings to gain input from victims of predatory lending, the banking industry and housing experts whose testimony will help give shape to policy solutions.
The Senator and her colleagues also proposed measures to help consumers avoid the pitfalls of predatory loans, including legislation that would bar the State from doing business with banks that partake in predatory lending practices. In addition, they are introducing a bill to provide training and assistance to loan seekers.
Anyone interested in finding out more about foreclosure prevention and/or the upcoming public hearing and community meetings should call Senator Montgomery’s office at 718-643-6140.