Propose Moratorium and Safeguards to Protect Victims of Predatory Lending

Albany—More than 20-percent of the sub-prime mortgage loans that originated in 2005 will end in foreclosure, jeopardizing the homes of more than 28,000 New York families, according to a report unveiled today by the State Senate Democratic Conference. The report shows that sub-prime foreclosure rates in Nassau-Suffolk County (22-percent) and the NYC-White Plains area (21.7-percent) would place both areas among the top 20 cities in the United States. Upstate cities like Ithaca (17.8-percent), Buffalo-Niagara Falls (15.6-percent) and Albany (17.4-percent) indicate that this is a statewide problem.

Alarmed by the growing number of foreclosures across New York State, and stunned by the accounts of New Yorkers who are on the verge of losing their homes, Senate Democrats announced the Predatory Lending Mitigation Program which will help families that have been victimized by predatory lenders. They were joined at the announcement by David Collymore, Vice President of Amalgamated Bank and Bruce Beaudette, President and CEO of Sunmark Federal Credit Union.

Senate Democratic Leader Malcolm A. Smith (D-Queens) said, “if we don’t work together to find a solution today, the foreclosure crisis will have a devastating effect on our communities and families as well as the banking industry itself.” Smith said the measures proposed are part of the Senate Democrats “9 to 5 Agenda” designed to aid and protect the working families of New York State.

Sub-prime loans are offered to individuals whose credit history prevents them from securing a low-rate loan. A typical sub-prime borrowers 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 high interest rates, regular fees or an upfront charge. Borrowers are often enticed by low introductory rates that are then raised significantly within a few years making much more difficult, if not impossible, to keep up with monthly payments.

The report shows that African-American and Latino borrowers are far more likely to pay more for their mortgages than other borrowers. 

The Democratic Senators proposed several measures that will protect consumers from predatory lending practices. And, in an effort to help borrowers who have already been victimized by questionable, and perhaps unethical, lending practices, the Senators called for an immediate voluntary six-month moratorium on foreclosures of sub-prime loans in New York.

Senator Liz Krueger (D-Manhattan) said the moratorium, combined with a planned series of public hearings, “would allow an opportunity to hear from the banking industry and from victims of predatory lending and hopefully provide sufficient time to devise a solution that helps victims without hurting ethical lenders.”

The public hearings will be chaired by Senator Martin Connor, the ranking Democrat on the Senate’s Banking Committee. Connor said he would be holding hearings in each region of the State in order to gauge the full magnitude of the problem. “The more information we have available, the greater our chances of addressing and solving this crisis.”

The Senate Democrats also proposed measures to help consumers avoid the pitfalls of predatory loans. One bill, sponsored by Senator Smith, would bar the State from doing business with banks that partake in predatory lending practices.

“Predatory loans are unethical. Targeting people who are naïve in order to rob them of their dreams is unconscionable, and New York State should not be doing business with banks that engage in such practices,” Smith concluded.

Contacts:
Fernando Aquino 212-298-5616
Jim Plastiras 518-455-2415
Travis Proulx 212-490-9535

Travis Proulx                                
Press/Communications Liaison
Office of State Senator Liz Krueger
WWW.LIZKRUEGER.COM

211 East 43rd Street, Suite #1300
New York, NY 10017
Tel:  (212) 490-9535
Fax: (212) 490-2151