It seems surreal, or like a nasty joke. How can Americans be so far into the foreclosure crisis and still not see any significant foreclosure prevention legislation from their lawmakers? As The New York Times commented last week:
In responding to the subprime mortgage crisis, most Congressional Republicans and many Bush administration officials apparently believe they have time on their side. They are wrong.
The housing bust is feeding on itself: price declines provoke foreclosures, which provoke more price declines. And the problem is not limited to subprime mortgages. There is an entirely different category of risky loans whose impact has yet to be felt — loans made to creditworthy borrowers but with tricky terms and interest rates that will start climbing next year.
For those of us living in New York State, where foreclosures have risen by 40 percent since last year, national legislative inaction is matched only by state ineffectiveness. An AP article recently reported that with a month to go in its six-month session, the New York State legislature seems poised to end the session without passing any more significant legislation.
In New York’s case, the failure to generate an anti-foreclosure bill is all the more frustrating because there is actually very good legislation on the table waiting to be deliberated on and passed. ACORN is promoting a foreclosure moratorium bill. Last year Darryl Towns, chairman of the Assembly Banks Committee, introduced the Responsible Lending Act. And perhaps more important, New York Governor David Paterson introduced a sweeping set of measures this year that would, among other things, expand New York’s anti-predatory lending law, require that lenders verify the borrower’s ability to pay and provide more opportunities for homeowners to avoid foreclosure.
Paterson’s bill is not only regarded as the most comprehensive response to the foreclosure crisis, but the one with the greatest chance of passing. With Paterson’s proposal causing resistance from both the banking industry and from senate Republicans, it’s more crucial than ever to put pressure on the legislature to get this bill moving again.
Everyday in New York dozens of people with subprime and other abusively underwritten loans are losing their homes to foreclosure. As was noted in a recent New Yorkers for Responsible Lending press conference, it would be shameful and a stunning dereliction of duty for the legislature to go home for the summer without addressing perhaps the most serious economic challenge facing the people across New York State and the nation.