Attacking The Foreclosure Crisis
Op-Ed Published in New York Daily News
Daily News– Attacking the foreclosure crisis: New York‘s attorney general pushes back on recent reports
BY ERIC SCHNEIDERMAN
In the last decade, the United States experienced the biggest housing bubble in the history of the world. When the bubble burst, Americans lost $7 trillion in household wealth, millions of jobs disappeared and the nation was plunged into the deepest and longest recession in 70 years.
There have recently been some mischaracterizations of the mortgage-backed securities working group created in January by President Obama to investigate the roots of this crisis — a working group I am proud to co-chair.
Here are the facts.
My office — along with the Justice Department, the SEC, the Consumer Financial Protection Bureau, the IRS and our other partners — is working aggressively to provide accountability for any misconduct that contributed to the bubble and crash in the housing market. More than 50 attorneys, investigators and analysts have already been deployed to support our investigations, with many more on the way. The President has requested a congressional appropriation of an additional $55 million to ensure that we have the resources to do a thorough job.
However, this is a law enforcement exercise, not a public policy decision, and must proceed in a rigorous and deliberate fashion. Like any ongoing investigation, the details about the scope of our inquiry are confidential. But I remain committed to following the facts wherever they may lead.
The reckless deregulation and irresponsible conduct that brought down the American economy must be systematically investigated. At the same time, we must deliver as much immediate relief as possible to protect families whose homes are at risk now.
New Yorkhas a pretty good set of laws to protect against wrongful foreclosure. But those laws are of little use to the many New York homeowners — about half — who faced foreclosures in recent years without a lawyer.
That’s why, when I joined my fellow state attorneys general to negotiate a settlement with the five largest mortgage servicing banks over abusive servicing and foreclosure practices, I made it a top priority to get immediate funding for legal services for homeowners facing foreclosure.
On April 5, our office received court approval of a settlement that comprehensively reforms mortgage servicing and the foreclosure process, and commits the banks to reaching out and working with New Yorkers whose homes are underwater. Thousands of New York families should receive reduced interest rates or actual reductions in principal owed.
And my office succeeded in obtaining funds to expand legal services and housing counseling to help troubled New York homeowners avoid foreclosure.
Services like this have a long record of success. In one recent case, a grandmother and her five grandchildren in Brooklyn were facing foreclosure until a legal services agency negotiated a loan modification, reducing her interest rate from 9.55% to 2.13%. This made the loan affordable enough for them to stay in their home.
Help like that is life changing, but state funding for these programs was set to expire on April 1, leaving desperate homeowners nowhere to turn. My office was able to provide $15 million from the settlement to fill this gap in New York’s current budget. These funds will allow lawyers and housing counselors to keep their doors open and continue the work of keeping families in their homes.
And we will now fund these essential services for three more years, ensuring that foreclosure prevention aid doesn’t once again get caught in the crossfire of Albany’s annual budget wars.
Some have argued that the multistate settlement is inadequate to address the problem of foreclosures and underwater mortgages.
I agree that if this settlement were the end of the story, it would not be enough. But it’s not the end. It’s a down payment.
The most important part of the settlement is what’s not included. When I joined the multistate negotiations with the banks in January 2011, the banks wanted broad civil immunity from all legal claims related to the housing bubble and crash. Along with several other attorneys general, I took a very hard line against letting anyone off the hook for conduct that took down the economy.
The final settlement preserves a broad range of claims — both criminal and civil — for investigation and prosecution, including all securities fraud claims. This allows the joint state and federal task force to build upon existing investigations and launch new ones.
We are now committed to moving forward on both of these tracks: providing legal services, housing counseling and loan modifications to homeowners who are at risk, and continuing our investigations into the conduct that caused the foreclosure crisis. Both are needed if we are to do justice and put our hard-hit communities on the road to economic recovery.
Schneiderman is New York’s attorney general.
SOURCE: http://www.ag.ny.gov/
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I wish Schneiderman and peers could see the housing crisis is far from over. Banks have opened their inventory floodgates for short sales and REOs to flood the market. Happening now. Values in some areas are continuing to drop. A zero lot line unit sold originally for over 70K in the late eighties is now valued at 20K. Over 1700 sf and it will sell for cash in a short sale or REO. Tax appraised for 80K and now worth less than the lot cost. There were over 100 foreclosure notices today’s Daily News, which publishes every day one of the two notices required to force an auction on someone’s home. Interest rates below 4% with few takers for these houses except to investor buyers who will rent them, turning entire neighborhoods into a wasteland with tax income sliding in the next few years. It hasn’t even hit municipalities yet what is happening. As values fall, property tax income will fall, services will fall.
There is so much ignorance or perhaps it is “ignoring us” that appeals to banks and government as they turn their backs on what is happening now and will continue years to come. A great wealth divide deepens and poverty swells.
One day someone will say, ” if only we had acted in time to stabilize housing.” But no, we bail out GM and the banks but people flounder, still losing their homes.
AG Schneiderman,
Indictments talk.
Op Ed pieces walk.
use your subpoena power and prosecute the banking and wall st. criminals who have committed crimes against homeowners!
Nice toot of your own horn AG Schneiderman. Unfortunately, after 5 years no high ranking officer of any financial firm has been held criminally accountable. Your words will have meaning when we see indictments of those high ranking, and very highly paid, Wall Street officers that are responsible before we hear that nothing can be done because the Staute(s) of Limitations has expired.
It ain’t rocket science!
Oh sure, and we all have happy feet to dance to the words of Schneiderman.
I am not impressed, nor do I have any faith in his words.
Who thinks the AG of Florida do will anything comparable to the AGs of California, Massachusetts or New York? How about the county/city of San Francisco ceasing all foreclosure activity? No, Harris, Coakley, and Schneiderman are not angels… but how much further away will Bondi veer from the relatively responsible programs that are being implemented by other state AGs? Will Florida’s “settlement” money aid those in need or will it end up in the state’s general fund?
Interested parties want answers and accountability for Florida homeowners at risk of foreclosure and those already foreclosed.