As the end of the year approaches and foreclosure filings continue at record levels throughout Queens, local and federal agencies are attempting to provide some relief to current homeowners facing possible foreclosure as well as initiate programs to decrease these rates going forward.
Recently, Mayor Michael Bloomberg and the city council announced an initiative to create a new non-profit organization called the Center for New York City Neighborhoods (CNYCN) that will focus on counseling services, preventative outreach and education as well as loan remediation assistance.
“Homeownership hasn’t only been a path to building wealth and achieving the American Dream. For cities like ours, increased rates of homeownership have meant stronger, thriving communities,” Bloomberg said. “By helping homeowners and potential homeowners navigate the world of subprime loans, we are helping New York to continue to grow and prosper.”
The organization, which will receive $5.3 million in funding during its first year, hopes to reach 18,000 residents annually with a majority expected to come from neighborhoods in south Queens, which has been hit hard by the high numbers of foreclosures this year.
However, the CNYCN will not provide bailouts to lenders or homeowners; instead, it will focus on giving the borrower advice on how to keep their home equity, credit and savings in order to avoid bankruptcy or foreclosure.
Sarah Ludwig, Executive Director of the Neighborhood Economic Development Advocacy Project (NEDAP), which helped plan the initiative, said that the foreclosure crisis is not only affecting individual homeowners, but also resonating throughout entire neighborhoods across the city.
“The funding commitments announced will help thousands of aggrieved New York City homeowners avert foreclosure and avoid abusive subprime lending practices, and will help protect the city’s neighborhoods and overall economy,” Ludwig said.
Meanwhile, President George W. Bush also announced a plan called HOPE NOW, which could help as many as 1.2 million homeowners nationwide avert foreclosure.
The plan is designed to do one of three things — help refinance an existing loan into a new private mortgage; move homeowners into a Federal Housing Administration (FHA) secure loan; or freeze borrowers’ current interest rates for five years.
However, the proposal is drawing criticism both at a national and local level from those who believe that it does not do enough to combat the current crisis.
City Councilmember Leroy Comrie, who represents areas in Jamaica where he said some blocks have three or four houses facing foreclosure, said the plan would do little to help his constituents.
“I believe that this is simply a band-aid being applied to a gunshot wound,” Comrie said. “To expect that the mortgage industry will voluntarily freeze interest rates, even for the small percentage of sub-prime homeowners who have yet to fall into foreclosure, is akin to expecting the wolf to guard the hen house after he’s eaten the hens.”