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UNHP Deputy Director Testifies in front of House Subcommittee on Consumer Protections in Financial Services
UNHP Deputy Director Gregory Lobo Jost testified on February 28th in front of the Financial Services and General Government Appropriations Subcommittee. The committee, chaired by Congressman Jose Serrano, heard testimony from the Department of Treasury, the Federal Trade Commission, the Center for Responsible Lending, Nataion Council of La Raza, and the American Financial Services Association in addition to University Neighborhood.
The focus of the hearing was on protections against subprime lending abuses, but UNHP also brought significant attention to the issue of Refund Anticipation Loans.
Download the full testimony here (PDF).
UNHP Partnering with Other Nonprofits to Provide Free Tax Preparation Services for Northwest Bronx Residents
Northwest Bronx households making under $75,000 will be able to avail themselves of free tax preparation assistance thanks to a collaborative effort by UNHP, FoodChange, Fordham Bedford Housing Corporation and Fordham Bedford Children's Services.
Each year millions of dollars are siphoned out of the Northwest Bronx in the form of Refund Anticipation Loans (RALs) that charge extremely high interest rates (in excess of 500% including fees) for short periods of time. Northwest Bronx residents interested in keeping all of their tax return (and Earned Income Tax Credit) for themselves and their family can contact Andres Romero at 718-933-2539 or aromero@unhp.org before March 1st to make an appointment.
Center for NYC Neighborhoods Will Bring Needed Resources to Distressed Bronx Homeowners
Nearly two years ago at a forum on the State of Homeownership in the Bronx, University Neighborhood Housing Program called on the City and bank partners to expand their pilot foreclosure prevention on 311 program citywide. Finally, that day is arriving, and it will benefit Bronx homeowners (and their neighbors) tremendously.
In December, the Mayor, City Council and NEDAP announced the Center for NYC Neighborhoods (CNYCN), a new nonprofit entity that will "fund a major expansion and coordination of counseling and referral services, legal assistance, loan remediation, preventive outreach and education, training, research and advocacy around sub-prime lending and mortgage foreclosures."
The reason that this program offers real help for homeowners is not just that it streamlines the process onto 311, but that it provides resources for existing counseling agencies to expand their work, hire new counselors, and funds legal assistance for homeowners throughout the five boroughs. The $1 million from HPD and $1.8 million from the City Council will be the base of the organization's $5.3 million budget for its first year, with financial and philanthropic donations making up the remainder. These resources will allow counseling groups to take on more volume instead of turning people away who need the help. Instead of another hotline referring distressed homeowners to the same over-strapped groups, CNYCN will offer real assistance for New York's homeowners and neighborhoods.In all, 24 new homeowner counselors along with 22 new legal services staff and five or six community educators. will be hired throughout the City at various nonprofits. The Center itself with have an initial staff of five to coordinate foreclosure prevention efforts around the City, and they will be supported by three program partners focusing on legal services, counseling and education/outreach.
For the Bronx, this assistance comes not a moment too soon. For years, the only homeowner counseling group in the Bronx had been Neighborhood Housing Services of the North Bronx, where one counselor had been responsible for foreclosure prevention for an entire borough. Recently, through a City Council earmark, the Neighborhood Initiatives Development Corporation (NIDC) took on homeowner counseling, but their counselor also can't handle the volume.
Until new staff are hired, Bronx homeowners can still call 311 for a referral to a counseling agency, but it could be difficult to receive assistance just because of the overwhelming volume. If you can't get assistance through 311, Bronx homeowners can contact UNHP's hotline at 718-933-2539 or a national hotline that may be able to help you (1-888-995-HOPE), although they don't provide legal assistance.
Most Bronx Loans in Foreclosures are Less than Two Years Old
Our recent analysis of foreclosure data for Bronx 1-4 family homes shows that the majority of loans going into foreclosure are less than two years old. For the first three quarters of 2007, 63%, 66%, and 64% of all loans going into default (having a lis penden filed) were made in the previous 24 months, respectively.
This data shows the extent of poor underwriting by lenders in 2005 and 2006, where clearly many loans were made in the Bronx without regards to the borrower's ability to repay. A good chunk of these loans could probably be considered predatory for this very reason, while others may just be bad loans. Based on research by a number of national groups, it's likely that many of these borrower's qualified for better loans but were steered into mortgage products that maximized profits for brokers and loan officers.
It also is important to consider when thinking about solutions to the problem. Many proposals (including this one from the FDIC) call for freezing the introductory interest rates on so-called 2/28 and 3/27 mortgages, where a lower interest rate resets after the first two or three years to a higher rate for the remaining years on the 30 year mortgage. While this is not a bad idea and will help a percentage of homeowners, it will do no good for many Bronx borrowers.
2006 HMDA Data Shows Subprime Lending Concentrated in Low Income Outer-Borough Neighborhoods
Newly released Home Mortgage Disclosure Act data shows that subprime lending in New York City was concentrated in low income (predominately Black and Latino)
neighborhoods in the outer boroughs in 2006. The Furman Center at NYU analyzed the data by Sub-Borough Areas, showing that the highest percent of home purchase loans that were subprime was in the University Heights/Fordham section of the Bronx (comparable to Community District 5). The northeast Bronx, central Brooklyn, and southeast Queens also had very high rates of subprime purchase loans.
UNHP was also able to obtain the raw HMDA data and did an analysis of allsubprime lending (purchase, refinance and home improvement loans)
by census tract for all of New York City. Similarly, high rates of subprime lending permeate most of the Bronx, central Brooklyn, and southeast Queens. The map also shows circles that represent the number of subprime loans made, showing concentrations in neighborhoods with large numbers of Black and Latino homeowners.
Click on the maps for larger versions, or here for a zoomable PDF of the census tract map.
UNHP Responds to DEP’s 18% mid-Year Water Rate Proposal
DEP’s threat to go to the Water Board for an 18% mid-year rate increase has placed the cost of water in New York City back in the spotlight. City Hall and DEP are apparently hoping to get the City Council to enact legislation to allow the sale of stand alone water liens to bolster revenues from water bills. (Currently, water liens can only be sold if there is an accompanying tax lien.)
Everyone interested in maintaining a safe water supply that is affordable to all New Yorkers should take advantage of the opportunity offered by this political gamesmanship to publicly raise the real issue: the cost of water is out of control and threatens the economic futures of many New Yorkers.
Water bills currently pay for (1) the operation of the system, (2) the debt service on bonds for capital projects related to water and (3) a rental payment to the City of New York. Better collections will help DEP’s financial picture, but other steps must be taken. For instance, the Water Board’s rental agreement with City could be re-negotiated. Few people know that the Water Board’s rental payment this year is $154 million; reducing or eliminating that payment would be a big help this year for the Water Board budget.
Additionally, DEP’s capital budget needs to be examined to determine the necessity of certain projects, the timing of projects and the real costs of projects in construction. For example, the filtration plant in Van Cortlandt Park started out as a $1.2 billion job and now the costs are estimated to be $2.8 billion.
The importance of preserving the infrastructure to maintain an ample source of clean water is obvious. But the existing housing stock is an equally important part of the city’s economic infrastructure. Neither can be replaced and both require long-term capital investment. The housing infrastructure’s capital needs will be starved by the cumulative effect of water rate increases that are now being forecast.
We urge the Mayor and City Council to work with the community to develop a comprehensive answer to the water issue.
Governor Spitzer Tightens "Unique and Peculiar" Rent Hike Loop Hole
City Limits is reporting that Governor Spitzer has "moved to limit how the state housing agency interprets the 'unique and peculiar' clause of state housing law." Under this clause, landlords can apply for an exemption to rent stabilization and bring rents up to market amounts. Affordable housing advocates are praising this change to stricter interpretation of the clause that will immediately help protect 5,000 apartments whose owners are currently applying for the exemption. This change is also much more cost effective than creating 5,000 or more new affordable housing units.
The law was originally written in 1974 and intended for owners who had rented to family members at preferential rents. Its interpretation has since been stretched by some owners to encompass entire buildings exiting the Mitchell-Lama program. Under these new stricter guidelines, the exemption will hopefully mean many affordable rent stabilized units will not be lost in the near future.
To read more about the threats to affordable housing in New York City, see UNHP's report on Shrinking Affordability.
New York State Enacts Law to End “Foreclosure Rescue" Scams
State Responsible Lending Coalition Praises New LawNew Yorkers for Responsible Lending, a state coalition of 122 groups, praised New York State Governor George Pataki for signing into law on July 27 the Home Equity Theft Prevention Act, which protects vulnerable homeowners from “foreclosure rescue” scams.
The bill, introduced in response to the alarming rise in home equity theft across New York State, reached the Governor’s desk after it was unanimously passed by both the NYS Senate and NYS Assembly.
“AARP commends the Governor for his leadership, Senator Hugh Farley and Assemblyman Darryl Towns for their dedication, and the New York State Banking Department for working to protect what is many New Yorkers’ most valuable asset – their homes,” said Lois Aronstein, AARP New York State Director.
“I was pleased to sponsor this important consumer protection bill,” said Senator Farley. “We have seen an increasing number of cases in which scam artists take advantage of desperate homeowners. While they promise to help the family save their home, they actually engage in abusive practices which drain the equity from the home and leave the homeowner in even worse shape. By providing new statutory protections, this law will help eliminate these abuses and will help ensure that homeowners are treated fairly.”
The Home Equity Theft Prevention Act requires written disclosure to homeowners regarding the terms of a title transfer that occurs when a home is in foreclosure, and provides the right to cancel the deal for five days after signing the contract. It prohibits making false statements with intent to defraud the homeowner and provides for a consumer education notice to be sent to all homeowners in foreclosure warning them about such scams. . The legislation establishes civil and criminal penalties for violating the law.
“I am so thankful to the New York State Legislature and Governor for cracking down on these criminals who steal people’s homes. No one else should have to go through this,” said Michell Fayez Olabi, a mother of seven, who is fighting to get back the home she lost in the Rosedale section of Queens to a foreclosure rescue scam.
“This new law provides crucial protections for vulnerable homeowners from foreclosure rescue scams, which have become epidemic in New York,” said Josh Zinner, Director of South Brooklyn Legal Services’ Foreclosure Prevention Project. “This law will prevent unscrupulous speculators from stealing millions of dollars in homeowners’ hard-earned equity.”
“This is, without a doubt, a victory for the New Yorkers for Responsible Lending coalition, which has been at the forefront of exposing these abusive practices,” said Sarah Ludwig, Director of the Neighborhood Economic Development Advocacy Project in New York City. “More important, this is a tremendous victory for seniors and other vulnerable homeowners who have built up precious equity in their homes.”
“New Yorkers can be proud of the fact that we have some of the toughest anti-predatory lending and deed theft laws in the country,” said Kirsten Keefe, Staff Attorney with the Empire Justice Center, in Albany. “Foreclosure rescue scams are a huge problem all over New York State, and this new law will curb these abuses.”
New Yorkers for Responsible Lending (NYRL) is a state coalition of 122 members, including UNHP, which promotes access to fair and affordable financial services and preservation of assets for all New Yorkers and their communities.
