Statement of New York Superintendent of Banks and TARP Oversight Panel Member Richard H. Neiman Regarding President Obama’s Announcement of New Funding for States to Address Foreclosure Crisis
February 19, 2010
New York, N.Y.: Today’s announcement by President Obama is the right next step needed to help struggling families at risk of losing their homes. Federal foreclosure prevention programs alone cannot fully address this crisis, so financial support to the states is critical to inspire innovative solutions that fill the gaps and serve as national models. Further, states are in the best position to quickly provide this urgently needed assistance as more than four million families face foreclosure today.
Several states have already demonstrated innovative leadership by creating emergency mortgage assistance programs to prevent foreclosures that stem from temporary unemployment. These state programs provide temporary loans at low interest rates to at-risk families and now exist in Pennsylvania, Delaware, North Carolina, New Jersey and Connecticut. Foreclosures among the unemployed are particularly tragic as such homeowners often entered affordable mortgages but later suffered loss of income as a result of the nationwide recession.
Lessons learned from these existing emergency assistance programs will help states, especially those that receive this federal assistance, to create even better solutions. Future innovation should experiment with requiring lenders who receive payments through this program to accept some losses and should consider establishing partnerships with nonprofits to reach out to families to help prepare their applications for assistance.
When states are empowered to innovate, they often succeed. New York and North Carolina several years ago were among the first states to require the licensing of mortgage loan originators, with strict background checks. This law then became a model for Congress’s 2008 Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) which set critical uniform, minimum standards for licensing throughout the country, with 49 states now participating.
The New 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 $2.4 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.dfs.ny.gov.