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Gov. David Paterson came to Queens Borough Hall Tuesday morning to sign a new piece of subprime lending reform legislation expected to affect the borough more than just about any other part of the state.
"We have seen thousands of families lose their homes, and no state has been hit harder by the broader effects of the lending crisis. Wall Street's woes have helped to drive New York into recession," Paterson said.
In Queens alone, almost 600 homes have been foreclosed since the beginning of the year, he said.
The new law — which the state Legislature passed in June and which served as a model for the recent federal Housing and Economic Recovery Act of 2008 — assists those currently facing foreclosure by providing $25 million in the state budget to cover financial counseling and attorneys' fees and attacking flaws in New York's banking regulations to prevent such a crisis from happening again.
"There's $25 million in there to assist with attorneys and courts to come up with reasonable, appropriate payments," said state Sen. Frank Padavan (R-Bellerose). "It's not a bailout and it's not using tax money to pay people's mortgages."
The law requires lenders to send a pre-foreclosure notice with a list of government-approved housing counselors in the area to defaulting borrowers at least 90 days before proceedings may be initiated, and encourages homeowners to seek help before the start of foreclosure proceedings.
It also establishes a mandatory settlement conference for foreclosure proceedings involving homeowners with certain subprime loans, and for those who cannot afford an attorney, the court may provide one.
Under the new law, there are strong consumer protections, and mortgage fraud would be classified as a crime under penal law, making it easier for prosecutors to pursue cases. Mortgage servicers dealing with residential property in the state would be required to register with the state Banking Department.
The law also establishes a standard for a borrower's ability to pay and requires brokers to act in the borrower's interest by presenting the loans that are most appropriate.
In New York State, parts of Queens, Brooklyn, Long Island and several counties upstate are the most affected by the mortgage crisis.
"We remember driving through neighborhoods with signs that said, 'Why rent when you can own?' These are the neighborhoods that are hardest hit," said state Assemblyman Darryl Towns (D-Brooklyn). "This is not a bailout. This is stabilization."
State Senate Minority Leader Malcolm Smith (D-St. Albans) praised the governor for signing the bill in Queens, "where the mortgage crisis is at its worst."
In New York State, "in the month of July, foreclosures have risen 67 percent," Smith said. "Something has to be done, and it has to be done now."
Paterson said that U.S. Rep. Gregory Meeks (D-Jamaica) had brought the issue of subprime lending to the state Legislature's attention 11 or 12 years ago.
"We didn't act quickly enough. Now it's clear that if we'd listened, we could have prevented the crisis," Paterson said.
Reach reporter Alex Christodoulides by e-mail at email@example.com or by phone at 718-229-0300, Ext. 155.
©2008 Community Newspaper Group
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