New York Plan to Stem Foreclosure Tide

A push to stop people from losing their homes through foreclosure was announced by Mayor Bloomberg...
New York Plan to Stem Foreclosure Tide
Charlotte Cuthbertson
6/12/2009
Updated:
6/12/2009
NEW YORK—A push to stop people from losing their homes through foreclosure was announced by Mayor Bloomberg Thursday during a call with three other U.S. mayors. Mayor Bloomberg is looking to use a campaign that has helped save 1,200 households in Philadelphia after mandatory mediation between borrowers and lenders was introduced.

“We want to do what Philadelphia has done,” Mr. Bloomberg said. “We need a state law to get people to the table.”

Philadelphia Mayor Michael Nutter said bringing lenders and borrowers face-to-face helps speed the process and avoid foreclosures. As many as 80 percent of households eligible for mandatory settlement in Philadelphia have appeared at such meetings, according to Nutter. To date, 35 percent of those who showed up have reached a settlement. Another 1,500 households are in negotiation.

“We know this program works,” Mr. Nutter said on the call. “But cities can’t do it alone. We need the federal government to come to the fore.”

Bloomberg was unable to give a time frame of when the initiative would become law, but said, “We’re optimistic we'll get that.”

He added it was important the people who had the authority to sign a deal attended the meeting. For example, if a husband and wife owned a house, both needed to be at the meeting. The bank also must send people who can close deals, he said.

“Maybe we need to get the lender and borrower, lock them in a room with a big pot of coffee and no bathroom,” Mr. Bloomberg suggested as a way to finalize an agreement.

New York’s Southeast Queens is at the epicenter of the city’s foreclosure crisis, said Council Member Thomas White.

“With unscrupulous foreclosure rescue scam artists preying upon families and individuals who are in dire situations,” he said. The Center for NYC Neighborhoods is providing free foreclosure and legal and counseling services to hundreds of families and homeowners throughout his district.

New Yorkers can call 311 to access the free services. When homeowners call 311, they are transferred to the call center which conducts intake interviews and connects homeowners to free expert counseling services in their neighborhood.

Bertha Lewis, CEO for the housing advocacy organization ACORN (Association of Community Organizations for Reform Now), said many cities are looking to the Philadelphia model, saying the mediation works because it is mandatory.

“The foreclosure crisis is tearing our country apart coast-to-coast,” said Ms. Lewis. ACORN is the nation’s largest grassroots community organization of low- and moderate-income people.

Los Angeles Mayor, Antonio Villaraigosa, said his city already has the largest homeless population in the U.S. and he will ask legislators to back him to introduce a plan similar to Philadelphia’s.

U.S. Conference of Mayors President Miami Mayor Manny Diaz said the amount of homes in the foreclosure process in his city has skyrocketed. This year so far, there have been more than all of 2006.

“If we don’t stem the tide … then we’re going to be severely impacted at the local level,” said Mr. Diaz.

An increase in the number of vacant and abandoned houses cause deterioration in neighborhoods, a decrease in property values, and affect local businesses, he said.