Comrie seeks to reduce foreclosures

Seeking to understand a citywide foreclosure epidemic that is striking southeast Queens with particular ferocity, City Councilmember Leroy Comrie recently held an oversight hearing on the predatory lending practices that are devastating vulnerable populations as well as possible legislative solutions.
“Lenders creep into our communities, financed by the banks that won’t even set up shop in those same communities, and they make loans with no regard as to whether borrowers can actually pay them off,” said Comrie.
Comrie, chairperson of the Council’s Committee on Consumer Affairs, joined with Bronx Councilmember Larry Seabrook, Civil Rights Committee chairperson, to hear testimony from city and state agency representatives, members of the academic community, and housing, financial and legal empowerment advocates.
According to Comrie’s office, many New Yorkers have recently fallen victim to adjustable rate mortgages (ARMs). ARMs may initially appear attractive to low-income families because of their low initial fixed interest rates and affordable monthly payments. When the fixed-term expires, however, the interest rate turns variable and the monthly payment becomes subject to market conditions.
Home-owners who can no longer afford their monthly payments may be forced into default and foreclosure.
“These brokers cast themselves as friends of the neighborhood but they’re actually out to destroy our communities - pressuring the uninformed and the vulnerable into dead-end mortgages that are increasingly ending in foreclosure,” said Comrie.
“Some of these brokers are so unscrupulous that they are holding foreclosure prevention classes in the community, under the guise of helping people, when they are actually just suckering them in for another scam.”
Department of Consumer Affairs assistant commissioner Cathie Mohan testified to the city’s commitment to helping local consumers. She announced that its new Office of Financial Empowerment (OFE) will soon launch a multi-pronged approach to address troubling lending and borrowing practices.
“We are designing a large-scale public awareness campaign aimed at helping consumers identify the difference between a smart loan and a trap, and then point them to alternatives,” she said. “A ‘smart-safe’ debt campaign will guide consumers contemplating mortgages, automobile financing, credit cards and emergency loans.”
Comrie is currently drafting legislation that would enable the OFE to investigate complaints of predatory lending and create a public database for the listing of lenders who have been cited by the federal and state governments for criminal practices.
He is also drafting legislation that will call for a New York City Borrower’s Bill of Rights. It would mandate that the Department of Consumer Affairs conduct lien searches on transactions for first-time home buyers and assure that homeowners have a right to counsel in foreclosure actions.
Other hearing recommendations included: