Archive for 'New York'

New York’s repo homes fraud prevention effort has made progress with the arrest of Anita Bareja, a former loan officer at EFI Capital Corp., a mortgage brokerage firm. She is charged with grand larceny, first-degree business record falsification, defrauding scheme and possession of forged instruments.

According to the office of Nassau District Attorney Kathleen Rice, Bareja approved three loan applications that used forged bank and employment documents. Bareja and her co-conspirators allegedly approved mortgage applications based on falsified appraisals that ballooned the loan cost and allowed them to gain huge profits.

One of the loans approved by Bareja was made purportedly by a sales manager who had a monthly income of $15,000. Upon investigation, it was learned that the borrower was in reality a welder who earned $11 per hour. The welder is one of the partners of Bareja in her fraudulent repo homes scheme.
According to the investigation, Bareja and her partners started their fraudulent activity in May 2006. They allegedly used forged financial appraisals and information and employment records to obtain over $1.5 million in mortgage loans.

The scheme involves Bareja’s partners finding new, existing or foreclosed properties to buy. They would then get a false appraisal or increase or falsified assessment on the loan application. The fraudsters would support their loan application with forged personal financial information.

Once the loan with an inflated price has been approved by Bareja, she and her partners would gain profit from the difference between the real and inflated price of the property.

Rice said that the fraudulent activity not only affected lending institutions but also potential homebuyers and Bareja’s employer. She added that fraudulent activities such as the one perpetrated by Bareja and her partners may result on an increase in foreclosure proceedings and affect neighborhoods with abandoned and vacant foreclosed homes.

Meanwhile, investigators found various falsified appraisal and financial documents in Bareja’s e-mail account. Investigators estimate the total amount illegally pocketed by Bareja and her partners to be more than $500,000.

Rice pointed out that her office is currently investigating individuals believed to be involved with Bareja’s fraudulent activity. Superintendent for Banks Richard H. Neiman said that the New York State Banking Department, being the major regulator for brokers and mortgage bankers in the state, will not tolerate fraudulent lending practices. He added that the department will continue to work with law enforcement authorities to aggressively pursue and stop repo homes fraudulent activities.

In a 44-month New York Times study of over 218,000 foreclosure filings and foreclosed houses for sale in New York City, Long Island, New Jersey and Western Connecticut from 2005 to August 2008, the researchers found that Long Island had over 31,000 houses in default or have become foreclosed houses for sale.

With a foreclosure rate of 3.7 percent, Long Island is among the worst hit by foreclosures in the region researched by The Times. Its foreclosure rate surpassed the 3.3 percent foreclosure rate for the entire region.

According to recent bank report on loan delinquencies, at least six percent of homeowners on Long Island are already behind in payments by three months or more. Housing officials worry that the delinquency rate will rise further, as the default rate was only 3.5 percent in the first months of 2008.

The epicenter of foreclosure filings and foreclosed houses for sale on Long Island is Roosevelt, where over 19 percent of homes have been hit with foreclosure filings. Roosevelt has a population of 15,930.

Nine communities on Long Island had over 10 percent of houses in foreclosure or already have become foreclosed houses for sale. All of these communities are mostly populated by minorities based on the 2000 census, except two – Mastic Beach and Islandia.

Suffolk County is the hardest hit among counties in the region in terms of number of foreclosures, with over 19,000 homes in foreclosure or turned into foreclosed houses for sale. With a foreclosure rate of 4.3 percent, Suffolk is sixth in the rate ranking in the region.

In 2005, foreclosures were only found in Brentwood, Islandia, Central Islip, Wyandach and the Farmingdale-Amityville area. In 2008, foreclosures have spread to Mastic, Shirley, the Ridge area near Ronkonkoma and Bay Shore. Foreclosure rates grew by more than three times around Central Islip and Brentwood.

In Nassau County, the foreclosure rate of 3.1 percent was a bit lower than the region’s rate of 3.3 percent and the wealthier neighborhoods in its northern part had low foreclosure rates. But foreclosure numbers in Hempstead, Elmont, Freeport and Roosevelt are among the biggest in the region.

According to a First American CoreLogic’s study, the pace of foreclosures and foreclosed houses for sale in Nassau and Suffolk is higher than the rates in many counties in the region.

As the number of foreclosure homes continues to soar across the country, home prices continue to slide down. New York City’s housing market, which was generally shielded from price declines in 2008 due to continued prosperity on Wall Street, has now joined the other U.S. cities in home price declines.

The stock market collapse, the mortgage crisis and the glut of foreclosure homes across the country have adversely affected New York City, which is now saddled with 8,000 unsold new condos and an additional 22,000 units scheduled to be marketed in 2010.

These condos were all built to serve young financial hotshots and international investors, but the continued entry of foreclosure homes into the housing market nationwide, the global economic downturn and corporate downsizing have put a stop to most real estate purchase plans.

Residential real estate developers in the city are now awash with inventories, as more and more New Yorkers lose their jobs and fewer foreigners buy Manhattan condos because of the global downturn. Developers are also considering real estate auctions, which are rare in New York, just to move properties and show buyers how low home prices have fallen. The city is rarely mentioned in news related to foreclosure homes, but the nationwide foreclosure crisis has extended its adverse effects on the city.

Real estate auctions were last undertaken in New York City in the 1990s when the city was overloaded with a surplus of co-op condos and interest rates were at two-digit levels. Now New York City condo and apartment builders are planning to use auctions to obtain liquidity. They also have seen how auctions succeeded in rescuing housing markets in South Florida which were devastated by foreclosure homes.

Boston-based Accelerated Marketing Partners, an auctioneer and real estate marketer, has been approached by several developers for possible auction deals. One is a developer who wants to auction five mid-range and high-end condos in Manhattan in Brooklyn. Another is a condo builder who wants to auction units in his downtown building, priced previously at $1,100 per square foot. Now the units would probably be priced at minimum bids of $700 per square foot.

One strategy of Accelerated to prevent condo prices from diving to the price level of foreclosure homes is to auction only several units of a particular building at a time. The other unsold units are marketed outside the auction arena. Auctioneer Sheldon Good & Company will also auction condo properties located in various parts of the city and neighboring New Jersey in May. Among these condo properties are the 17 units of a new condo in one wealthy community of New Jersey.

New York City Mayor Michael Bloomberg announced he is going to spend the $24 million given by the U.S. Department of Housing and Urban Development to repair foreclosed homes and then resell them under a scheme that would prevent a repeat of past administrations’ costly acquisition and management of dilapidated housing inventories.

In a news conference held together with HUD Secretary Steven Preston, he said he will spend his city’s share of the HUD’s Neighborhood Stabilization Program to prevent what happened in the 1970s and 1980s when the housing crisis during those years filled the city with abandoned properties and blighted neighborhoods.

Bloomberg said he is going to solve the foreclosure problem differently this time. Instead of taking over foreclosed homes, which has been done by past administrations, he has chosen the nonprofit group Restored Homes Housing Development Fund Corporation to manage the rehabilitation.

The nonprofit will buy most of the 115 foreclosed properties, rehabilitate them with subsidies from the city and then sell them to families earning between $80,000 and $90,000 a year at prices that they can afford. Restores Homes was chosen because of its good record in the acquisition, rehabilitation and reselling of foreclosed houses previously owned by the federal government.

Most of the foreclosed homes that will be repaired are in South Jamaica, which is part of Queens, and in 12 other neighborhoods identified as the neediest and the places with the biggest number of foreclosed homes and adjustable-rate mortgages.

According to PropertyShark.com, New York City’s foreclosure rate increased by 50 percent from last year’s figures, with 12 of the top zip codes with the most foreclosures located in Queens.

The HUD money received by the city is part of the $54.5 million given to the state of New York to address New York foreclosures. According to RealtyTrac, New York State posted an increase in foreclosures by 29.3 percent from 2007 levels.

Now that he has already been elected as the new President of the United States of America, he has started his actions by appointing a new Secretary of Housing and Urban Development. This person he has chosen is Shaun Donovan, a former New York City Housing Commissioner. Obama recognizes the lead role HUD plays in stopping the rise of foreclosures and rebuilding the efforts of the nation in expanding homeownership.

In Obama’s latest weekly address, he has stated that he has ordered his economic team to come up with a “bold plan” that would keep more people in their homes despite foreclosure threats. Of course, putting such plans into is accompanied by great costs; but Obama says it is necessary in restarting a slowed economy and laying foundations for growth.

Why Donovan? It is because he is someone with a broad experience in the issues that the department is facing. Talking about his experience in housing matters, Donovan has become a managing director of Prudential Mortgage Capital’s $1.5 billion affordable-housing investments, and in 2004, has led New York’s department of Housing Preservation and Development. He has also worked as the head of HUD’s multifamily housing and as the acting commissioner of the Federal Housing Administration during former President Bill Clinton’s term.

The challenge for Donovan is to help more families keep their homes. In fact, the congressional Budget Office has estimated that HUD could help 400,000 families in negotiating lower mortgage payments and remain in their homes for the next three years.

What makes Donovan even more qualified is leading the nation’s largest affordable-housing plan, which aims to preserve or build 165,000 housing units by 2003. This effort is now halfway, having financed more than 82,500 units now. Also, he has initiated efforts in providing financial education, legal and credit assistance to home owners who are very much prone to predatory lending.

Hopefully, Donovan’s expertise is the solution to the growing foreclosure problems.

The banking regulators of New York and other states have launched public service advertisements to encourage troubled homeowners to talk with their mortgage lenders, loan servicers or mortgage counselors to avoid foreclosure.

The ads urge borrowers to go to the web site of New York’s state Banking Department to look at a list of government agencies, organizations and housing counselors that can help them. According to Richard H. Neiman, superintendent of banks for the state of New York, borrowers who have been delayed in their monthly payments need to contact their lenders as early as possible to avoid foreclosure.

New York foreclosures have increased from 39,000 in 2007 to 57,000 in 2008. But the state’s foreclosure rate is better than the rates of other states and the nation. According to housing research company RealtyTrac, New York ranked 37th among U.S. states in total foreclosures. The highest number of foreclosures occurred in Queens and Brooklyn, which together account for 25 percent of New York foreclosures.

The state of New York has undertaken other efforts to reduce the state’s number of foreclosed homes. They include the following:

1. The Halt Abusive Lending Transactions Task Force: This consists of state agencies that hold meetings to brainstorm foreclosure prevention strategies.
2. Operation: Protect Your Home: The task force launched sessions that brought together lenders and borrowers to work out loan modifications.
3. State of New York Mortgage Agency’s financial aid to 20 nonprofit housing counseling agencies.
4. Division of Housing and Community Renewal: This division provided almost $19 million to fund foreclosure prevention efforts in 56 counties.
5. New York Banking Department’s Mortgage Fraud Unit: This works with 250 law enforcement officers to investigate usurious lending.
6. New York’s cooperation with ten other states: The state has agreed with other states to monitor the loan modification initiatives by mortgage servicers.

Search foreclosures by state.

This year, an estimated number of 50,000 property owners in New York suffered from foreclosure, specifically in Mid-Hudson Valley and the western part of the state.

The growing number of foreclosures is starting to be a threat to the local government as it can affect their finances — 44% of the revenue comes from tax properties according to Comptroller Thomas DiNapoli. He also stated that tax properties may increase if foreclosures continue to rise in the state which could make property values drop.

New York was ranked 36th in terms of foreclosure. One out of 546 homes was filed as foreclosed. Since 2007, foreclosures increased in Finger Lakes, Mid-Hudson Valley and in some parts of Southern Tier according to a report. The highest is Orange County at one in every 205 houses in 3rd quarter.

In 2006-2007, there was an increase of 77 percent in foreclosures in the state, and a surprisingly 99 percent for 2008.

DiNapoli said that majority of foreclosures are located in 6 urban areas as they have the largest number of mortgages considered subprime. Yonkers was very affected with the decrease in mortgage revenues. DiNapoli said the city state may terminate 300 employees due to housing crisis.

A decrease of 31 percent in property sales in January-June of last year was considered very significant in New York City. Mid-Hudson ranked 2nd with a decline of 28 percent.

The areas that only have single-digit decrease include North Country and the western part of the state.

In August, a new set of regulations were made to help property owners prevent foreclosure. One of those is to force banks to have negotiations with a person who accepts a mortgage.

Sarah Ludwig, a Co-executive director of Neighborhood Economic Development Advocacy Project, is asking the local governments to keep assisting the people maintain their properties.

She said that foreclosures not only affect the families, but the whole economy of the state as well.

At a symposium held by Long Island Housing Partnership, County Executive Suozzi spoke on the foreclosure crisis and urged mortgage companies to enforce a 90-day moratorium on foreclosures. He cited the example of JPMorgan Chase which provided troubled borrowers with a grace period of 90 days to enable them to obtain financial advice and find refinancing solutions.

Suozzi also introduced the newly-established Long Island Housing Crisis Task Force, which will consist of county officials, mortgage lenders, nonprofit groups and real estate developers that will find ways to help solve the foreclosure crisis. The task force was set up using funds provided by the U.S. Housing and Urban Development’s Neighborhood Stabilization Program.

According to economist Pearl Kamer, who works for the Long Island Association, there are over 6,000 properties on Long Island which are undergoing foreclosure proceedings. She said that many of the people who took out mortgage loans to acquire these properties were not qualified to take out loans or were granted with loan amounts way above their capacity to pay. Based on this, together with other economic factors, Kamer concluded that it would take up to four years for the housing market to stabilize.

Cynthia Rosicki, a lawyer specializing in foreclosures for legal firm Rosicki & Rosicki, also spoke at the meeting about legal services which homeowners can avail of to prevent foreclosure or to remedy foreclosed homes. She related that there are many homeowners who do not attend foreclosure hearings and who do not seek help, leaving their homes to foreclosure and repossession.

Steve Levy, county executive of Suffolk County and keynote speaker at the meeting, agreed with what Rosicki has said about the need for homeowners to seek help. Levy said that most mortgage lenders have been helpful to borrowers and have been willing to help. He added that no lender likes foreclosure because it is a lengthy unprofitable process.

Search for Foreclosed Homes by New York Top Cities:

• Bronx Foreclosed Homes
• Brooklyn Foreclosed Homes
• Jamaica Foreclosed Homes
• Staten Island Foreclosed Homes

In New York City, more and more apartment buildings are at risk of being foreclosed, possibly resulting to thousands of renters being evicted. According to housing advocates, there are roughly 580 apartment buildings facing foreclosure. This means that about 40,000 tenants will be affected.

This particular problem is being seen as the consequence of speculating. In the last four years, private firms have bought 90,000 units in New York at inflated prices, under leveraged deals. The decision of these firms to do so was based on the hope that rent would soar, allowing them to maximize profit.

Just like the speculators in states like California and Nevada, these private firms found themselves with mortgage payments they could not afford. The rental income from these apartment units were simply not enough to pay for their mortgage debt. Unfortunately, they could not raise rent prices since most of their buildings are governed by strict provisions regarding rent increases.

If these distressed properties go into foreclosure, it is not the landlords who will suffer immensely but the tenants. Even if they were paying their rent religiously, it no longer guarantees that they will always have a place they could call home. In a blink of an eye, they might find themselves out on the street without much choice.

To make matters worse for these tenants, finding a new place to lease or rent has increasingly become difficult. This is because those who lost their homes to foreclosure usually end up renting an apartment. In addition, many landlords have decided to require credit reports. For those with low credit scores, this will add to their burden.

Tenants are advised to stay updated with the mortgage situation of their apartment units. It would probably be better if your contract has provisions that deal with this matter. In most states, tenants are given a 90-day notice to move out of the property before being evicted. Also, most of the lenders who repossessed the property agree to the refund of the deposit.

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.