HALT Task Force Publishes Progress Report on Subprime Mortgage Crisis
Superintendent of Banks, Richard H. Neiman Delivers Report to Governor
May 11, 2008
New York, NY: Superintendent of Banks, Richard H. Neiman, today delivered a report to update Governor David A. Paterson on the progress made by the Governor’s Task Force to Halt Abusive Lending Transactions (HALT). The HALT Task Force is an interagency task force established in March 2007 to address the mortgage crisis and to combat predatory lending practices in New York State.
The HALT Task Force has been taking a comprehensive look at the subprime mortgage industry and predatory lending practices in order to recommend legislative solutions to protect borrowers, while maintaining industry vitality and limiting the economic impact of the mortgage crisis.
“Our report to the Governor highlights the aggressive and innovative efforts being taken by the task force at the state level on multiple fronts,” said Superintendent Neiman. “However, as the housing market continues to deteriorate more needs to be done including legislation at both the state and federal level.”
"These latest statistics show that the state and federal government need to act now," said Governor Paterson. "The situation will not fix itself. Thousands of New York families face the possibility of losing their homes and we can not sit idly by and watch it happen."
Superintendent Neiman is scheduled to testify on behalf of the New York State Banking Department before the Senate Committee on Banks in Albany on Monday, May 12. In addition to evaluating the Governor’s Program Bill, which addresses the subprime mortgage crisis, Superintendent Neiman’s testimony will update the Committee on the latest statistics of the subprime mortgage market and its impact on New York and the state’s most recent responses to stem the crisis.
The Governor’s Program Bill is a comprehensive piece of legislation, which addresses immediate solutions to assist borrowers and lenders in finding alternative work-out arrangements and avoiding unnecessary foreclosures while pursuing long-term, permanent solutions to assure a similar crisis does not occur in the future. The bill also takes into consideration the importance of striking the right balance between consumer protection and the availability of affordable credit.
The report focuses on delinquencies and foreclosures within New York State, and particularly highlights the following key statistics and initiatives:
Mortgage Data: There were approximately 14,000 foreclosure filings in New York during the first three months of 2008, up 40 percent over the same period in 2007. Approximately one in 200 New York homes is in the foreclosure process. While New York is not hit as hard as other states, some areas of the state are being disproportionately impacted. For example, Queens and Brooklyn account for 32 percent of the total foreclosure filings in the state and Long Island accounts for 24 percent, while Monroe County accounts for almost 6 percent.
Loan Programs and Servicing: New programs to provide options for subprime borrowers and prevent unnecessary foreclosures have been developed. SONYMA expanded the “Keep the Dream” refinance program; substantial new programs to fund homeowner counseling have been established, including a $25 million statewide grant program approved by the legislature; and the State Foreclosure Prevention Working Group has issued two reports focused on servicers’ loan modification efforts. The Group is a multi-state task force consisting of the New York State Banking Department and the Attorneys General and Banking Departments of 11 other states. Created to work with subprime mortgage loan servicers to reduce the number of unnecessary foreclosures by encouraging loan modifications and other sustainable long-term solutions, the Group continues to hold servicers accountable for their loss mitigation efforts. The Groups reports are available on the New York State Banking Department’s Web site at http://www.banking.state.ny.us/
Consumer Outreach: Regional events and coordinated efforts have been held to reach out directly to mobilize impacted communities, by bringing together regulators, law enforcement, local community and advocacy groups, and industry representatives. The most notable outreach effort is Operation Protect Your Home, a series of foreclosure prevention forums bringing borrowers and servicers together face-to-face to discuss possible alternatives to foreclosure. Five Operation Protect Your Home forums have been held across the state to date, specifically in the Bronx, Brooklyn, Queens and Westchester, with the most recent forum in Buffalo on May 10. The next forum is scheduled for June 7 on Long Island.
Legislation: The HALT Task Force worked with the Governor’s office to develop comprehensive legislative solutions for preventing foreclosures and predatory lending practices. Members have also testified at state and federal hearings on the need for heightened consumer protection standards.
Enforcement: Supervisory standard and enforcement efforts have been heightened. New York was one of the first states to use the National Mortgage Licensing System established to enroll mortgage originators with the purpose of curbing mortgage fraud by further integrating inter-state supervision. The Mortgage Fraud Unit of the Banking Department has been working with other state agencies and local, state and federal law enforcement officials to prosecute fraudulent lending practices, such as inflated appraisals and flipping, and has held seminars to educate law enforcement and prosecutors.
The HALT Task Force is chaired by Superintendent Neiman and consists of agency heads from the Department of State, the State of New York Mortgage Agency (SONYMA), the Division of Human Rights, the Consumer Protection Board, the Division of Housing and Community Renewal, the Governor’s Office of Regulatory Reform and members of the Governor’s Executive Chamber. The April 30, 2008 HALT report is available on the New York State Banking Department’s Web site at http://www.banking.state.ny.us/pr080511.pdf
The New York State Banking Department is the regulator for all state-chartered banking institutions, virtually all of the United States offices of international banking institutions, all of the State’s mortgage brokers, mortgage bankers, check cashers, money transmitters and budget planners. The aggregate assets of the depository institutions supervised by the Banking Department are more than $1.8 trillion.
In addition to regulating banking institutions, the Banking Department is active in informing and educating all New Yorkers on banking matters. To contact the Banking Department, please call 1-877-BANK-NYS or visit our Web site at www.banking.state.ny.us.