For a few years many people were enticed by low mortgage rates offered by an insurance industry that suckered people into a bad situation. Senator Chuck Schumer released a report on the upcoming spike of foreclosures that is going to hit his hometown burrough of Brooklyn especially hard. The lenders that offered homeowners what looked like a good deal is going to leave thousands homeless.
From The Bayridge Courier:
The most popular “affordable” subprime loans are adjustable rate mortgages that offer an initial fixed rate that is set low.
But the rate resets after an initial fixed rate period to a more onerous rate that leads to a significantly higher mortgage payment that low-income borrowers will have difficulty affording, Schumer said.
Schumer’s analysis showed that in the next two years, 91,000 families will be at risk of foreclosure because of these lending practices. In the New York Metropolitan area alone, an estimated 53,000 families will see their mortgages reset to onerous rates, he said.
“The bottom line here is that the subprime bust is leading us right into a foreclosure boom, and thousands of Brooklyn residents will be left in the lurch,” Schumer said.
I think it is great that Senator Schumer is finally highlighting this serious issue that leaves thousands homeless from predatory lenders. My question is why did it take so long? Schumer is no stranger to the world of finance, thats for sure. The article also interviewed experts around New York on this and they have the same question.
Oda Friedheim, a staff attorney with the Legal Aid Society said the issue is nothing new.
“Too bad it took Wall Street’s pain to put the problem on the spotlight,” she said. “They have a bellyache because they swallowed too many bad loans,” she said.
“Our clients have been suffering for years under these abusive mortgages,” she added.
Deyanira Del Rio, the associate director of the Manhattan-based Neighborhood Economic Development Advocacy Project has been tracking mortgage lending and foreclosure data for the past seven years.
“What we have seen is that consistently higher priced mortgage loans are overwhelmingly concentrated in neighborhoods that are overwhelmingly black and Latino,” she said, noting her group will soon release a study showing this trend.
So why the outrage now Senator? It is unfortunate that it has to come to this to help out people that have been targeted for financial exploitation. Hopefully his intentions are genuine and meant to help those in need and not the Wall Street crowd.
|