Pre-Foreclosure Notices Facilitate Targeted Outreach in New York

Wed, Jun 23, 2010


By: Carrie Bay

Ninety-day pre-foreclosure notices have been sent to 57,256 New York homeowners who have fallen behind on their mortgage since February 13, 2010, according to the New York State Banking Department.

The five counties with the highest number of pre-foreclosure filings on owner-occupied homes in the state are Suffolk with 8,293, Queens with 6,267, Nassau with 5,755 filings, Brooklyn with 4,485, and Erie with 2,917.

The figures are based on filings received by the state banking regulator from nearly 200 mortgage loan servicers between February 13 and May 31, in accordance with Gov. David A. Paterson’s 2009 Mortgage Foreclosure Law.

The new law requires that a pre‐foreclosure notice be sent, at least 90 days before the lender commences legal action against the borrower, to all borrowers with home loans, effective January 2010.

These notifications alert homeowners of their default status and outline steps they can take to avoid foreclosure, including working with their lender to devise a resolution and consulting with a local, non‐profit housing counselor. The state law mandates that all servicers of New York residential mortgages provide the Banking Department with key information from the pre-foreclosure notices sent to homeowners.

“With the new information gained from these pre-foreclosure notices, we are now able to identify geographic areas of the most at-risk homeowners before

they fall into the foreclosure process,” said Richard H. Neiman, superintendent of banks for New York state. “An important part of resolving this mortgage crisis is getting homeowners the help that they desperately need before they fall too far behind to recover.”

Neiman says he hopes this type of information-gathering to target foreclosure prevention efforts will set an example for other states to follow, and ultimately clear the way for a national database of mortgage statistics.

Under the 2009 Mortgage Foreclosure Law, the New York State Banking Department has the authority to share the information it gathers with housing counseling agencies, in an effort to direct foreclosure prevention services to borrowers at risk of foreclosure.

Currently, the department has shared information with nine counseling agencies covering 38 counties. Additional counties will begin receiving data within the coming weeks, officials said.

One agency, the Affordable Housing Partnership in New York’s Capital Region, uses the information to proactively reach out to delinquent borrowers and invite them to a free, monthly Foreclosure Clinic to meet one-on-one with experienced attorneys and housing counselors to review their options.

Data from the Banking Department shows that more than half, or 30,182, of the pre-foreclosure notices sent so far have been on mortgages or refinances originated between 2005 and 2007.

Throughout the state, more than 31 percent of the pre-foreclosure notices were sent on loan amounts under $100,000, which the department says suggests that economic issues are at the root of current defaults.

“We are well past the point of this being a subprime or predatory loan crisis,” Neiman said. “The recession and job losses, as well as the overall decline of the housing market, have led to the current situation of responsible homeowners who may have had a good loan being overwhelmed by temporary economic hardships.”

The New York State Banking Department says it plans to complete more detailed analysis of delinquency trends and actual foreclosure filings as more data is collected on these 90-day pre-foreclosure notices

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