Foreclosure Prevention Efforts Not Keeping Pace With Trends
April 22, 2008
New York, N.Y.: The State Foreclosure Prevention Working Group’s second report indicates that industry efforts to avoid unnecessary foreclosures are not keeping pace with the rising rate of homeowners in trouble. The report, which provides analysis of data from October 2007 through January 2008, stresses the need for new and more robust approaches to avoiding preventable foreclosures.
“I am disappointed that the findings in this report show little progress has been made in addressing a crisis that is having devastating consequences for families and communities across New York State,” said Richard H. Neiman, Superintendent of Banks for New York, and a member of the State Foreclosure Prevention Working Group.
The report found that seven out of 10 seriously delinquent borrowers are still not on track for any loss mitigation procedures and there have not been significant improvements in avoiding foreclosures, despite widely-publicized campaigns to encourage homeowners in trouble to seek help and for servicers to fast-track loan modifications. However, it appears that mortgage servicers’ loss mitigation departments are severely overtaxed. The group recommends that subprime mortgage servicers, investors and state officials work together to develop a more systematic loan workout system to replace the time-consuming, labor-intensive methods now in place that address the crisis on a case-by-case basis.
Another challenge faced in assessing the scope of the issue and the progress being made is the lack of complete and comprehensive data. While 13 of the 20 largest subprime mortgage servicers participated in the report, additional servicers continued to refuse to provide data.
“While I commend the 13 servicers who participated, the refusal of others to participate re-emphasizes the importance of cooperation,” said Neiman. “Collaboration of state and federal agencies and institutions in addressing the mortgage crisis is vital to our success. I continue to call on nonparticipating servicers and the Comptroller of the Currency to work with us and share aggregated data so we can truly assess the breadth of the efforts being made.”
“Beyond their cooperation with the State Working Group, servicers’ willingness to work directly with states is having a very positive impact on the success of many outreach efforts, including ‘Operation Protect Your Home’ - New York’s ongoing series of foreclosure prevention forums that bring borrowers face-to-face with servicers,” said Neiman.
The New York State Banking Department has been proactively addressing this crisis for over a year and is committed to continuing its focus on assisting homeowners currently in trouble, as well as identifying and implementing plans to avoid a similar crisis in the future. In addition to leading the multi-agency Halt Abusive Lending Transactions (HALT) Task Force, the Banking Department:
- was one of first states to implement authorization for mortgage loan originators using a national licensing system that includes fingerprinting, background checks and educational requirements;
- created a dedicated Mortgage Fraud Unit to investigate reports of fraudulent practices, and educate law enforcement and the financial sector in identifying, investigating and prosecuting mortgage fraud;
- hosted a series of HALT Summits that bring industry, consumer groups and government agencies together;
- issued guidance for mortgage brokers and bankers;
- participated in local and community outreach and educational programs across the state;
- partnered with local senators in coordinating Operation Protect Your Home forums to bring borrowers and servicers together in an effort to identify ways to avoid foreclosures;
- announced a $2 million matching grant for counseling agencies;
- participated in the development of a proposed legislative bill;
- and will be assisting in the distribution of $25 million in grants and aid to non-profit agencies s providing counseling, mediation, legal representation and support for borrowers facing default or foreclosure.
The State Foreclosure Prevention Working Group, which comprises state bank and mortgage regulators and representatives of state attorneys general’s offices, was created in July 2007. The first report was issued in February 2008; that report and the current one are available online at www.csbs.org.
TheNew York State Banking Department is the regulator for all state-chartered banking institutions, virtually all of the United States offices of international banking institutions, all of the State’s mortgage brokers, mortgage bankers, check cashers, money transmitters and budget planners. The aggregate assets of the depository institutions supervised by the Banking Department are more than $1.8 trillion.
In addition to regulating banking institutions, the Banking Department is active in informing and educating all New Yorkers on banking matters. To contact the Banking Department, please call 1-877-BANK-NYS or visit our Web site at www.banking.state.ny.us.