New York StateForeclosure Crisis

David A. PatersonGovernor

Deborah VanAmerongenChairperson

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AgendaAgendaState of ForeclosureState of Foreclosure

• National Foreclosure Crisis National Foreclosure Crisis • Foreclosure Crisis in New YorkForeclosure Crisis in New York• New York’s Response New York’s Response • NYS Subprime Foreclosure Prevention Services ProgramNYS Subprime Foreclosure Prevention Services Program• New York State Banking DepartmentNew York State Banking Department• Program Bill No. 44/Chapter 472 of the Laws of 2008/Subprime Program Bill No. 44/Chapter 472 of the Laws of 2008/Subprime

Lending Reform BillLending Reform Bill• Center for NYC NeighborhoodsCenter for NYC Neighborhoods• National Foreclosure Mitigation Counseling ProgramNational Foreclosure Mitigation Counseling Program• American Housing Rescue and Foreclosure Prevention Act of American Housing Rescue and Foreclosure Prevention Act of

20082008• Foreclosure ResourcesForeclosure Resources• Question & Answer PeriodQuestion & Answer Period• Discussion on Unmet Needs Discussion on Unmet Needs

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• Subprime or Unconventional mortgage - Subprime or Unconventional mortgage - For a first lien For a first lien loan, one that has an annual percentage rate of three or loan, one that has an annual percentage rate of three or more percentage pointsmore percentage points above the yield on treasury above the yield on treasury securities of comparable maturity measured as of the securities of comparable maturity measured as of the fifteenth day of the month immediately preceding the fifteenth day of the month immediately preceding the month in which the application for the loan is received by month in which the application for the loan is received by the lender. the lender. For a subordinate lien loan, it shall mean one For a subordinate lien loan, it shall mean one that has an annual percentage rate of five or more that has an annual percentage rate of five or more percentage pointspercentage points above the yield on treasury securities of above the yield on treasury securities of comparable maturity measured as of the fifteenth day of comparable maturity measured as of the fifteenth day of the month immediately preceding the month in which the the month immediately preceding the month in which the application for the loan is received by the lenderapplication for the loan is received by the lender

• Alt-A mortgage - Alt-A mortgage - Short for Alternative A-paper, is a type Short for Alternative A-paper, is a type of U.S. of U.S. mortgagemortgage that, for various reasons, is considered that, for various reasons, is considered riskier than riskier than A-paperA-paper, or "prime", and less risky than ", or "prime", and less risky than "subprimesubprime," the riskiest category. Alt-A interest rates, which ," the riskiest category. Alt-A interest rates, which are determined by are determined by credit riskcredit risk, therefore tend to be between , therefore tend to be between those of prime and subprime home loansthose of prime and subprime home loans

Foreclosure Crisis Foreclosure Crisis DefinitionsDefinitions

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According to Center for Responsible According to Center for Responsible Lending, foreclosures will have the Lending, foreclosures will have the following impact in the United States -following impact in the United States -

• In late 2008 through end of 2009, In late 2008 through end of 2009, 2,164,000 homes lost through foreclosure. 2,164,000 homes lost through foreclosure. As a result:As a result:

• 40.6 million homes will suffer price declines40.6 million homes will suffer price declines• Decrease in home values will average $352 Decrease in home values will average $352

billionbillion• Home value per unit affected will average Home value per unit affected will average

$8,667 $8,667

National Foreclosure CrisisNational Foreclosure Crisis

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The Center for Responsible Lending The Center for Responsible Lending predicts subprime loans made in 2005-predicts subprime loans made in 2005-2006 in New York will result in: 2006 in New York will result in:

• Approximately 32,317 homes will ultimately be Approximately 32,317 homes will ultimately be lost through foreclosurelost through foreclosure

• 3,552,642 homes in New York State will lose 3,552,642 homes in New York State will lose value due to subprime foreclosures in their value due to subprime foreclosures in their neighborhoodsneighborhoods

• Average decrease in value for each home will Average decrease in value for each home will be $10,370 be $10,370

• $36,841,416,732 will be the overall loss in the $36,841,416,732 will be the overall loss in the tax base of Counties for this periodtax base of Counties for this period

NYS Foreclosure CrisisNYS Foreclosure Crisis

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For 2008-2009, the Center for Responsible For 2008-2009, the Center for Responsible Lending predicts for New York State: Lending predicts for New York State:

• Approximately 122,192 homes will be lost Approximately 122,192 homes will be lost through foreclosurethrough foreclosure

• 3,552,642 homes in New York State will lose 3,552,642 homes in New York State will lose value due to subprime foreclosures in their value due to subprime foreclosures in their neighborhoodsneighborhoods

• The projected average overall decrease in The projected average overall decrease in home values is expected to be $64,362,000 home values is expected to be $64,362,000

• The average decrease in home value is $18,117The average decrease in home value is $18,117

NYS Foreclosure CrisisNYS Foreclosure Crisis

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Filings in New YorkFilings in New York

Foreclosures Filed from 1/31/07-6/30/08 by County

CountyCounty#Filings#Filings

20072007#Filings 1Q#Filings 1Q

+2Q2008+2Q200818 Month18 Month

Total Total FilingsFilings

PercentPercent

of Totalof Total

QueensQueens 11,05311,053 5,4985,498 16,55116,551 18.64%18.64%

KingsKings 9,4679,467 3,9643,964 13,43113,431 15.12%15.12%

SuffolkSuffolk 7,3207,320 4,1514,151 11,47111,471 12.92%12.92%

NassauNassau 4,5604,560 2,6502,650 7,2107,210 8.12%8.12%

MonroeMonroe 3,6343,634 1,8161,816 5,4505,450 6.14%6.14%

BronxBronx 3,4633,463 1,3861,386 4,8494,849 5.46%5.46%

WestchesterWestchester 2,6722,672 1,6461,646 4,3184,318 4.86%4.86%

ErieErie 2,6572,657 1,1151,115 3,7723,772 4.25%4.25%

RichmondRichmond 2,1502,150 1,5731,573 3,7233,723 4.19%4.19%

RocklandRockland 1,2041,204 576576 1,7801,780 2.00%2.00%

NiagaraNiagara 1,1931,193 402402 1,5951,595 1.80%1.80%

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New York’s ResponseNew York’s Response

• Coordinated response among state agencies Coordinated response among state agencies and local partnersand local partners

• Leveraging resources and activitiesLeveraging resources and activities

• Ongoing communication and coordinationOngoing communication and coordination

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Subprime Foreclosure Subprime Foreclosure Prevention Services Prevention Services

ProgramProgram• $25 million to HTFC for development of Subprime $25 million to HTFC for development of Subprime

Foreclosure Prevention Services ProgramForeclosure Prevention Services Program• Coordination with NYS Banking Department, Coordination with NYS Banking Department,

Office of Court Administration and SONYMAOffice of Court Administration and SONYMA• $20 million will be awarded to not-for-profit $20 million will be awarded to not-for-profit

counseling agencies and legal service providers counseling agencies and legal service providers delivering direct servicesdelivering direct services

• HTFC has contracted with NeighborWorksHTFC has contracted with NeighborWorks® ® America to provide training to not-for-profit America to provide training to not-for-profit agency awardeesagency awardees

• HTFC is currently in contract negotiation with HTFC is currently in contract negotiation with Empire Justice Center to provide training to not-Empire Justice Center to provide training to not-for-profit legal service providersfor-profit legal service providers

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Subprime Foreclosure Subprime Foreclosure Prevention Program Prevention Program

Grants to empower organizations to provide Grants to empower organizations to provide outreach and education, counseling, outreach and education, counseling, mediation, legal representation, and court-mediation, legal representation, and court-based services on behalf of New York State based services on behalf of New York State homeowners who hold subprime or homeowners who hold subprime or unconventional mortgagesunconventional mortgages

Provide a continuum of foreclosure prevention Provide a continuum of foreclosure prevention services throughout New York Stateservices throughout New York State

Collaboration among multiple applicants Collaboration among multiple applicants strongly encouragedstrongly encouraged

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Award AmountsAward Amounts $20 Million available under this RFP$20 Million available under this RFP No minimum or maximum application limitsNo minimum or maximum application limits Grant rangesGrant ranges

Individual - $75,000 to $250,000Individual - $75,000 to $250,000 Joint - $150,000 to $750,000Joint - $150,000 to $750,000 Applicants are encouraged to evaluate the Applicants are encouraged to evaluate the

need in their proposed service area and need in their proposed service area and estimate the number of households to be estimate the number of households to be served within 24 monthsserved within 24 months

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Funding DeterminationsFunding Determinations

Total statewide demandTotal statewide demand Need in proposed geographic service Need in proposed geographic service

areaarea Collaborative approachCollaborative approach CoverageCoverage Ratio of award to number of households Ratio of award to number of households

servedserved Program funding balance – which is Program funding balance – which is

currently $currently $8,116,000 8,116,000

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Subprime Foreclosure Subprime Foreclosure Prevention Program To DatePrevention Program To Date

-HTFC has received 47 applications to date totaling $28.7M-HTFC has received 47 applications to date totaling $28.7M -There have been 27 awards totaling $11,884,000 - there is -There have been 27 awards totaling $11,884,000 - there is

$8,116,000 remaining of initial $20M announced in RFP$8,116,000 remaining of initial $20M announced in RFP -18 NPCs are either awardees or partners in the funds -18 NPCs are either awardees or partners in the funds

awarded to dateawarded to date -Awards include not for profits serving 36 counties including -Awards include not for profits serving 36 counties including

the top ten counties that accounted for 81% of all lis the top ten counties that accounted for 81% of all lis pendens filings for the State in the 18 month period ending pendens filings for the State in the 18 month period ending 6/30/086/30/08

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Subprime Foreclosure Subprime Foreclosure Prevention Program Prevention Program

Successful Applications:Successful Applications: Outstanding collaborationOutstanding collaboration Continuum of services providedContinuum of services provided Cost effective/streamlined servicesCost effective/streamlined services

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Subprime Foreclosure Subprime Foreclosure Prevention Program - TrainingPrevention Program - Training

TrainingTraining NeighborWorksNeighborWorks®® to provide housing to provide housing

counseling professionals in New York State counseling professionals in New York State over the next two years with the skills and over the next two years with the skills and knowledge they need to best assist their knowledge they need to best assist their clients in foreclosure counselingclients in foreclosure counseling

NeighborWorksNeighborWorks®® contracted with Doug contracted with Doug Dylla to conduct a training needs surveyDylla to conduct a training needs survey

Courses to be offered around State based Courses to be offered around State based on needs identified in surveyon needs identified in survey

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Subprime Foreclosure Subprime Foreclosure Prevention Program - TrainingPrevention Program - Training

Now AvailableNow Available

E-Learning Course: “Foreclosure Basics”E-Learning Course: “Foreclosure Basics”

First “Place-Based” Class: “Lending Basics for Homeownership First “Place-Based” Class: “Lending Basics for Homeownership Counselors”Counselors”

Syracuse Workshop Syracuse Workshop Wednesday-Friday, November 5-7Wednesday-Friday, November 5-7----------------------------------------------------------------------------------------------Manhattan Workshop Manhattan Workshop Wednesday-Friday, November 12-14 Wednesday-Friday, November 12-14

Tentative week-long Institute training in January 2009Tentative week-long Institute training in January 2009

Information: www.nysdhcr.govInformation: www.nysdhcr.gov

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NYS Banking DepartmentNYS Banking Department $2 million fund created by the Governor's office $2 million fund created by the Governor's office

to provide financial support for counseling to provide financial support for counseling groups and legal services assisting homeowners groups and legal services assisting homeowners facing delinquency or foreclosure, came from facing delinquency or foreclosure, came from prior enforcement actions by the Banking prior enforcement actions by the Banking DepartmentDepartment

Grant funds were allocated by regions into three Grant funds were allocated by regions into three discreet funding pools, taking into consideration discreet funding pools, taking into consideration the foreclosure rates, existing resources and the foreclosure rates, existing resources and geographic areas to be servedgeographic areas to be served

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NYS Banking DepartmentNYS Banking DepartmentPool APool A:   :   $800,000 was apportioned$800,000 was apportioned to South Brooklyn Legal Services, Legal Aid to South Brooklyn Legal Services, Legal Aid Society, Neighborhood Housing Services of New York City, Legal Services for New Society, Neighborhood Housing Services of New York City, Legal Services for New York-Staten Island, Cypress Hills Local Development Corp., City Bar Justice York-Staten Island, Cypress Hills Local Development Corp., City Bar Justice Center, Brooklyn Cooperative Federal Credit Union and Legal Services of New Center, Brooklyn Cooperative Federal Credit Union and Legal Services of New York- BronxYork- Bronx

Pool B:Pool B:     $533,000 was apportioned$533,000 was apportioned to Community Development Corporation of to Community Development Corporation of Long Island (covering Nassau & Suffolk counties), Rural Ulster Preservation Long Island (covering Nassau & Suffolk counties), Rural Ulster Preservation Company (covering Ulster, Orange and Sullivan counties), Rockland Housing Company (covering Ulster, Orange and Sullivan counties), Rockland Housing Action Coalition (Rockland, Westchester & Ulster counties), Housing Action Action Coalition (Rockland, Westchester & Ulster counties), Housing Action Council (Westchester, Putnam and Rockland counties) and Nassau Suffolk Law Council (Westchester, Putnam and Rockland counties) and Nassau Suffolk Law Services Committee (covering Nassau & Suffolk counties)Services Committee (covering Nassau & Suffolk counties)

Pool C:Pool C:    $666,000 was apportioned$666,000 was apportioned to The Home Save Coalition (with the to The Home Save Coalition (with the Affordable Housing Partnership as the lead agency in collaboration with  the Affordable Housing Partnership as the lead agency in collaboration with  the Albany County Rural Housing Alliance, Better Neighborhoods Inc., Troy Albany County Rural Housing Alliance, Better Neighborhoods Inc., Troy Rehabilitation and Improvement Program (TRIP) Inc., Homeownership Center, Rehabilitation and Improvement Program (TRIP) Inc., Homeownership Center, Empire Justice Center and Legal Aid Society of Northeastern New York), Empire Justice Center and Legal Aid Society of Northeastern New York), Homefront Inc., Syracuse Cooperative Federal Credit Union, the Housing Council Homefront Inc., Syracuse Cooperative Federal Credit Union, the Housing Council (serving Rochester and Monroe County), the Buffalo Urban league, Keuka (serving Rochester and Monroe County), the Buffalo Urban league, Keuka Housing Council (serving Seneca, Yates, Ontario and Wayne counties), Belmont Housing Council (serving Seneca, Yates, Ontario and Wayne counties), Belmont Housing Resources for Western New York (serving Erie, Niagara, Wyoming, Housing Resources for Western New York (serving Erie, Niagara, Wyoming, Genesee and Orleans counties), Chautauqua Home Rehabilitation and Genesee and Orleans counties), Chautauqua Home Rehabilitation and Improvement Corp. (Chautauqua county) and Legal Aid Society of Northeastern Improvement Corp. (Chautauqua county) and Legal Aid Society of Northeastern New York (Fulton county)New York (Fulton county)

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National Foreclosure Mitigation National Foreclosure Mitigation Counseling ProgramCounseling Program

2008 National Mitigation Foreclosure Counseling 2008 National Mitigation Foreclosure Counseling Program - 1st RoundProgram - 1st Round

-February 2008 NWA awarded $130M out of -February 2008 NWA awarded $130M out of $180M appropriated by Congress$180M appropriated by Congress

-3 categories of funding (HUD approved -3 categories of funding (HUD approved intermediaries, state HFAs, and NW organizations)intermediaries, state HFAs, and NW organizations)

-Approximately $3,230,800 was distributed -Approximately $3,230,800 was distributed among NY and northern NJ based not for profits among NY and northern NJ based not for profits through HUD approved intermediariesthrough HUD approved intermediaries

-SONYMA received $747,718 & provide funding to -SONYMA received $747,718 & provide funding to sub-granteessub-grantees

-Eight NeighborWorks organizations in -Eight NeighborWorks organizations in NY received approximately $835,400NY received approximately $835,400

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Center for NYC NeighborhoodsCenter for NYC Neighborhoods

CNYCN was announced in December of 2007 CNYCN was announced in December of 2007 Its mission is to aggregate resources to support Its mission is to aggregate resources to support

and coordinate foreclosure prevention and and coordinate foreclosure prevention and intervention throughout NYC intervention throughout NYC

CNYCN has exceeded expectations by raising CNYCN has exceeded expectations by raising over $7 million for its first year of operation over $7 million for its first year of operation

CNYCN plans to reach over 15,000 people CNYCN plans to reach over 15,000 people before the end of the year, and another 15,000 before the end of the year, and another 15,000 by June of 2009 by June of 2009

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Center for NYC NeighborhoodsCenter for NYC Neighborhoods

CNYCN has already committed $3 million to CNYCN has already committed $3 million to support housing counselors, legal service support housing counselors, legal service providers, and consumer education providers, and consumer education specialists specialists

CNYCN is now launching its second RFP, and CNYCN is now launching its second RFP, and plans to commit an additional $3 million plans to commit an additional $3 million before the end of 2008.  In all, CNYCN before the end of 2008.  In all, CNYCN expects to support nearly 20 organizations expects to support nearly 20 organizations across NYCacross NYC

If you or anyone you know needs assistance, If you or anyone you know needs assistance, call 311 and ask for the Center for NYC call 311 and ask for the Center for NYC NeighborhoodsNeighborhoods

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Program Bill No. 44Program Bill No. 44

Chapter 472 of the Laws of 2008Chapter 472 of the Laws of 2008 Subprime Lending Reform BillSubprime Lending Reform Bill

Elements of the law to assist borrowers Elements of the law to assist borrowers currently facing foreclosure:currently facing foreclosure:

Pre-foreclosure NoticePre-foreclosure Notice Mandatory Settlement ConferenceMandatory Settlement Conference Rescue ScamsRescue Scams

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Program Bill No. 44Program Bill No. 44

Chapter 472 of the Laws of 2008Chapter 472 of the Laws of 2008 Subprime Lending Reform BillSubprime Lending Reform Bill

Elements of the law to prevent similar future Elements of the law to prevent similar future crisis:crisis:

Extending predatory lending prohibitions to a Extending predatory lending prohibitions to a new class of subprime loansnew class of subprime loans

Underwriting Standards for Subprime Home Underwriting Standards for Subprime Home LoansLoans

Duty of Care for Mortgage BrokersDuty of Care for Mortgage Brokers Registration of ServicersRegistration of Servicers Mortgage FraudMortgage Fraud

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American Housing Rescue and American Housing Rescue and Foreclosure Prevention Act of Foreclosure Prevention Act of

20082008Helping at risk borrowers - Most directly affect Helping at risk borrowers - Most directly affect

consumers & communities include:consumers & communities include: ““Hope for Homeowners” – FHA-backed Hope for Homeowners” – FHA-backed

mortgagemortgage $3.92 billion in CDBG funds for $3.92 billion in CDBG funds for

neighborhood stabilization (approximately neighborhood stabilization (approximately $100 million in NY)$100 million in NY)

Increase funding for housing counseling & Increase funding for housing counseling & new funding for legal services ($180 million)new funding for legal services ($180 million)

A new home-buyer credit – 10% of purchase A new home-buyer credit – 10% of purchase price up to $7,500price up to $7,500

A new affordable housing trust fund A new affordable housing trust fund

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American Housing Rescue and American Housing Rescue and Foreclosure Prevention Act of Foreclosure Prevention Act of

20082008CDBG AllocationCDBG Allocation

Note: Foreclosure start rate is sum of foreclosure starts over 18 months; estimated for local areas. Risk score based on vacancies in Census Tracts with high rates of high cost loans. See methodology.

State Community NSP AllocationLocal Foreclosure

Rate

Local Abandonment

RiskStatewide

Foreclosure RateStatewide

Abandonment RiskNY NEW YORK STATE PROGRAM $54,556,464 3.2% Medium 3.6% LowNY BABYLON TOWN $2,170,909 4.9% Low 3.6% LowNY ISLIP TOWN $3,720,392 5.2% Low 3.6% LowNY NASSAU COUNTY $7,767,916 3.8% Low 3.6% LowNY NEW YORK CITY $24,257,740 3.8% Medium 3.6% LowNY ORANGE COUNTY $2,163,744 3.9% Low 3.6% LowNY SUFFOLK COUNTY $5,681,443 3.7% Low 3.6% Low

                                                                                  

 

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Foreclosure ResourcesForeclosure Resources

• www.nysdhcr.govwww.nysdhcr.gov• http://www.banking.state.ny.ushttp://www.banking.state.ny.us• http://www.newyorkfed.orghttp://www.newyorkfed.org• http://www.nycourts.govhttp://www.nycourts.gov• http://www.hud.govhttp://www.hud.gov• http://www.nw.orghttp://www.nw.org• http://www.fdic.govhttp://www.fdic.gov• www.responsiblelending.orgwww.responsiblelending.org

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Questions & DiscussionQuestions & Discussion