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Banking Officials Warn NY Legislature of Possible Effects of New Legislation
June 3rd, 2008 by 
Joseph Smith
Bank executives are warning the New York legislature and governor not to go too far in their efforts to address the foreclosure crisis and lending industry through new regulations, as they warn it could have a larger effect on the ability of new applicants to receive loans.
This has been a worry of many legislators from the beginning, especially on the republican side. As banks are already losing money on defaulted loans, many worry that new measures might make it more difficult for banks to extend credit to citizens, which could result in less loans being handed out.
The banks have indicated a willingness to work with Governor Paterson, and have expressed that lending legislation in New York could set that model for the rest of the country. One of the main proposed items on the bill that the banks are opposed to is the one-year foreclosure moratorium, which would delay mortgage payments even longer, and thus the bank’s stream of money. This would significantly hamper their ability to lend, they say.
Some are also concerned about the new restrictions that could be imposed on sub-prime lending, restricting the types of mortgages banks can hand out. They have expressed concern that these measures might affect the regular prime market as well.
It will be interesting to see how the two sides come to an agreement that will benefit homeowners and protect buyers from getting into bad mortgage situations in the future, but also allow the banking industry the room it needs to be able to steadily hand out new loans and mortgages.
