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Temporary relief for anxious homeowners facing foreclosure may be on the horizon as state lawmakers appear poised to pass a bill giving subprime borrowers immediate assistance.
This measure comes as Queens County continues to lead New York City in foreclosures with 58 percent of the City’s total number of newly scheduled auctions.

The State Assembly already passed moratorium legislation tucked into a package of similar bills early in the month. Now the Senate Democratic conference announced its support for mortgage moratorium legislation.

If the Senate can follow the Assembly’s lead and pass similar legislation Governor Paterson can sign a bill into law. Paterson has submitted his own slightly different bill to the Legislature addressing the need for relief.

In recent months New York City foreclosures remained high, with a third consecutive month over the 300 mark.
Under the legislation, courts would require that at-risk homeowners provide a minimum payment that would be fair and equitable and would not alter the financial position of all parties involved.

Members of the Senate Democratic conference are responding to this growing crisis and have voiced their support, bolstering the moratorium bill which the Assembly passed by an overwhelming 126 to 11 margin.

The legislation, if passed by the senate, would impose a one-year delay on foreclosure proceedings to allow borrowers affected by predatory lending to avoid loss of their homes.
Supporters claim the landslide vote signals strong support for the bill, but now much depends on State Sen. Frank Padavan (R-Bellerose), the bill’s main sponsor and proponent in the senate. Earlier this year Padavan came out in favor of providing relief to distressed homeowners.

“Owning and maintaining a home is the foundation of the American dream,” Padavan said in March. “For many that dream is becoming a nightmare with the startling rise in home foreclosures throughout New York City and the state. It is imperative to act on this common-sense legislation immediately in order to provide peace of mind to at-risk homeowners and help restore stability in the local housing market and strengthen the health of our economy.”

At the city level, Councilman James Gennaro (D-Fresh Meadows) and Association of Community Organizations for Reform Now (ACORN) New York are drawing attention to the issue and pressing Padavan to force a vote on the measure.
“This legislation will finally create a real incentive for lenders to get serious about adjusting subprime loans for thousands of New Yorkers in crisis,” said Marilyn Mays, Chair of Hollis ACORN. “That’s why Senator Padavan and the Senate GOP need to take the Assembly’s lead and get serious about passing this bill. The subprime crisis is attacking families in Queens and all over this state.”

Padavan was less direct in comments by phone this week. He remains committed to passing some form of relief but would not discuss details.

“Something is going to be done,” he said. “We will have to wait and see what happens.”

Conversely, Senate Democratic Leader Malcolm Smith (D-St. Albans) was forceful in his support and cautioned lawmakers to act quickly.

“In the first quarter of 2008 the rate of foreclosures throughout the state has increased by 40 percent. As legislators, we have an obligation to our constituents and must act now to pass legislation which immediately provides relief to homeowners faced with losing their homes,” he said in a released statement.

Senate Democrats are urging Republican to support the bill, which according to the conference “could prevent up to 125,000 foreclosures in the next year.”

The Democratic conference also believes now is the time to act as failure to provide comprehensive reform could result in property values declining “by an average of $18,000 as a result of subprime foreclosures leading to a $65 billion decline in the statewide tax base.”

In the Republican controlled Senate, Majority Leader Joe Bruno controls which bills appear before the body for full vote, complicating passage of legislation.

In the Assembly, Queens Democrats appear unified in favor of the bill, urging members of the senate to follow suit.
Assemblyman Jose Peralta (D-Jackson Heights) said the City delegation has presented a unified front.

“Everybody from the city was in favor of the package,” and
voted for the mortgage relief moratorium. He added only “upstate republicans” opposed the measure.
Peralta and colleague Michael Gianaris (D-Astoria) now both recommend senate affirmation.

“I hope the Senate can agree and pass it,” Peralta said from Albany. “Giving an opportunity for people to take a breather is a win-win for lending institutions and consumers. It’s a lose-lose situation for [lenders] if a home goes into foreclosure. I think in the end everyone wins.”
Assemblyman Gianaris agrees.

“The fact that people are losing homes because of unscrupulous mortgage bankers is well known. This bill is an attempt to buy some time. We need to do something,” he said.
The mortgage moratorium is not unprecedented in New York State history. If it became law the moratorium would be the first of its kind in New York State since the Great
Depression.

In 1933 state lawmakers and then Gov. Herbert H. Lehman imposed a moratorium of one year on foreclosure on all real estate for which interest, taxes and other charges had been paid. That moratorium was renewed annually until 1949.