Hopes of Reducing Number of Foreclosed Homes

Distressed borrowers are being encouraged by various efforts to help them avoid being added to the thousands of foreclosed homes in New York. They are being helped by their state government, several nonprofits and President Barack Obama's foreclosure program. In the fall of 2008, New York Governor David Paterson approved a proposal that would require lenders to send notices of pre foreclosure to homeowners whose accounts have been overdue by at least 30 days. This notices would enable troubled borrowers begin negotiating for loan modifications with their lenders before their units become foreclosed homes. Typically, lenders refuse to modify borrowers' loans which are not yet in default. Meanwhile, three of several nonprofits in the state focused on helping borrowers troubled by foreclosures are the Legal Aid Society of Northeastern New York, the Better Neighborhoods Inc. and the Capital District Women's Bar Association's Legal Project. All these three nonprofits help troubled homeowners negotiate favorable loan modifications with their lenders by providing legal assistance. In previous years, most borrowers approaching them were low-income homeowners. Now, they are serving more and more moderate-income borrowers who have been laid off, have been struck with serious illnesses or have lost their businesses due to the economic downturn. Legal Aid's foreclosure prevention head Debra Willsey said while Obama's Homeowner Affordable initiatives are targeted at borrowers who are not yet in foreclosure, the initiatives will also help borrowers who took adjustable rate mortgages. Previously, she said, lenders refused to restructure high-interest loans, but now they are willing to look at modifications options because of Obama's incentives and because of the effect of the high number of homes in foreclosure on their finances. Based on the Center for Responsible Lending's projections, there will be 8.1 million foreclosed homes across the country by the year 2013 if no intervention is implemented on a national level. It projected 2.4 million foreclosed homes nationwide and 70,700 foreclosed homes in the state of New York for the year 2009. The center hopes that modifications would reduce the projected number of foreclosed homes by 30,300. Additionally, Denise Gillen, communications director for New York State's Banking Department, supported the call for a state and national system for collecting data on mortgages, lenders, defaults and foreclosures to help Obama's housing program succeed. Start your Search for:

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