Gov. Paterson Requests Proposals To Assist Homeowners Facing Mortgage Default

Governor David A. Paterson today announced the Division of Housing & Community Renewal (DHCR) is seeking applications from not-for-profits statewide to provide financial counseling and legal services for homeowners who hold a subprime or unconventional mortgage. As much as $20 million is available under the Subprime Mortgage Foreclosure Prevention Services Program.

The 2008-09 New York State budget provided $25 million to the Housing Trust Fund Corporation (HTFC) for the development of the Program. In addition to grants to the not-for-profits that are providing direct counseling and legal services to New York homeowners, the remaining $5 million of the funding will be used for training and support of those not-for-profits.

"Home ownership is a cornerstone of the American Dream, and part of a sound financial plan," said Governor David A. Paterson. "Predatory lending and overzealous mortgage marketing have contributed to thousands of New Yorkers facing default and foreclosure on their homes. This national crisis has put a strain on the ability of existing housing counselors, mediators, and other advocates to provide borrowers with the help they need. We must make more help available to prevent foreclosures and keep people from losing their homes. This program taps the talents and resources of the state’s existing not-for-profit organizations and equips them with the tools they need to supply a continuum of services in every part of the state."

The April 2008 "Report of the Governor’s Interagency Task Force to Halt Abusive Lending Transactions (HALT)" noted that at least 280,000 of New York’s two million outstanding mortgages are subprime and approximately one in 200 New York homes are currently in the foreclosure process.

Senate Majority Leader Joseph L. Bruno said: "This program will provide families with the counseling and assistance they need to help them stay in their homes and is a critical part of the banking and lending reforms we are announcing today."

Senate Banking Committee Chairman Hugh Farley said: "One of the most important things which we can do for homeowners facing foreclosure today is to get them strong financial counseling and legal assistance. Legitimate lenders want people to be able to keep their homes and pay off their mortgages. Financial counselors can help families to restructure their debts and to build a strong financial future. Commissioner VanAmerongen and her staff are already providing excellent support, and these new grants will help ensure strong assistance programs throughout the State."

Senate Democratic Minority leader Malcolm A. Smith said: "This funding goes to help homeowners help themselves as we as legislators continue to reign in predatory lending and look to new measures that will break the cycle of home foreclosures. We need to halt the domino effect these subprime loans set off or it will continue to run its course until we stop it. While Senate Democrats work in the legislature to close the loopholes that allowed unscrupulous lenders to put these families on the verge of losing their homes, we praise Governor Paterson for bolstering not-for-profits statewide who can help in protecting homeowners and their life investments, their homes."

Senator Martin Connor said: "Building a smarter consumer base is key to stopping the aftermath of the subprime mortgage crisis in New York. As legislators we can close loopholes and strengthen the practices and standards of the lending industry, but we need smarter consumers who can protect themselves. Foreclosure counseling and legal services will do that."

Assembly Speaker Sheldon Silver said: "Putting the dream of owning a home within the reach of working men and women and then, placing them in situations where they could lose their home, is callous at best. Together, my Assembly Majority colleagues and I have fought throughout this legislative session to ensure that the cries of besieged homeowners did not fall upon deaf ears and that take necessary action to preserve our communities. I am pleased that Gov. Paterson has taken steps to ensure my debt counseling and legal services initiative was enacted. Far too many New Yorkers are struggling to make monthly payments while staring down the barrel of an interest-rate hike that they cannot afford and are not able to re-negotiate on their own. This debt counseling and legal representation will help prevent struggling homeowners from making the same mistakes and enduring the same nightmares in the future."

Assemblyman Darryl C. Towns said: "The counseling and legal services available through this program will certainly assist thousands of New York families suffering from the subprime meltdown to hold on to their homes. This program is a valuable tool for assisting homeowners as they navigate the rough waters of the mortgage crisis, but is still only a starting point. Much more can and should be done to address the fallout of this economic calamity, which threatens the stability and vibrancy of communities in New York. As a state heavily affected by unscrupulous lending practices, New York must lead the way in helping its affected residents hold on to their homes while putting in place safeguards to prevent a worsening of this crisis."

Assembly Minority Leader Jim Tedisco said: "Providing access to these types of educational, counseling and legal services for homeowners adversely impacted by the subprime mortgage meltdown is exactly the right prescription to ensure people can keep their homes and avoid foreclosure. Giving homeowners additional tools and resources such as these is an effective way to make certain they have information necessary to avoid being further victimized by unscrupulous predatory lenders, or the vagaries of an adjustable rate mortgage. When people are hurting, government has a duty to help. And, with today's announcement, Governor Paterson and my colleagues have started the process of assisting struggling homeowners get back on their feet."

Assemblyman Andrew Raia, Ranking Member on the Assembly Banks Committee, said: "The extreme upheaval in the subprime mortgage industry has resulted in the 'American Dream' transforming into the 'American Nightmare' for some homeowners. I believe that when we can provide homeowners with the tools necessary to weather this mortgage storm, we have an obligation to do so, because nobody who works hard and plays by the rules should ever face the risk of losing their home. Not in America. I credit Governor Paterson for having the foresight to utilize a request for proposal process to tap the best and brightest in New York's non-profit community to deliver these crucial informational and legal services to homeowners struggling to stay afloat. Our message? Hang on, help is on the way."

Deborah VanAmerongen, Commissioner of the DHCR and Chair of the HTFC, said: "DHCR is coordinating with other state agencies and local organizations to maximize the impact of this program and make it work for homeowners. We've created a two-year open application process to best meet the increasing demands of this crisis and give our not-for-profit partners the flexibility they need to develop programs and assure adequate staffing."

Richard H. Neiman, New York State Superintendent of Banks said: "The urgency in the allocation of these funds clearly demonstrates the state’s commitment to addressing this crisis and ensuring counseling agencies have sufficient resources to assist homeowners in avoiding unnecessary foreclosures. This initiative is a critical component in the state’s multiple efforts to address the subprime crisis, including a sweeping legislative proposal to assist current borrowers at risk, as well as prevent a similar crisis in the future."

Priscilla Almodovar, State of New York Mortgage Agency (SONYMA) President and Chief Executive Officer said: "These grants will provide another valuable resource to homeowners faced with losing their homes and will further the State's goal to reduce foreclosures. Grantees will tailor their services for each homeowner's situation because one size doesn't fit all. Some homeowners will work with a counselor to develop a financial plan they can afford so they can keep their homes. Others will need legal representation for what is probably a scary time in their life. I applaud DHCR and the other state agencies in recognizing the complexity of the housing crisis we face."

Eligible applicants must be not-for-profit entities with experience providing community outreach and education, direct housing counseling, mediation, or other legal services. Proposals for funding will be evaluated based on the applicants’ experience and staffing capacity, the needs of borrowers in the area served, applicant’s ability to demonstrate collaborative relationships for providing services and marketing services to borrowers at risk, and the efficiency and cost-effectiveness of the proposal. Collaborative proposals by multiple applicants are strongly encouraged to ensure that all necessary services are available throughout the State in a manner that decreases duplication and maximizes the impact of public resources.

The program will be administered by the Division of Housing and Community Renewal (DHCR) and the Housing Trust Fund Corporation (HTFC), in consultation with the New York State Banking Department, the Office of Court Administration, and the State of New York Mortgage Agency (SONYMA). To assist applicants, DHCR will hold a series of Subprime Foreclosure Prevention Services Workshops in July throughout the state (dates and locations can be found at the DHCR website at www.dhcr.state.ny.us). Workshops will include a discussion of program applicant requirements and the funding process. Applicants interested in attending one of the upcoming workshops should contact Marie Goldston at mgoldston@dhcr.state.ny.us or 518-402-3231.