June 11, 2009Mayor Bloomberg Joins Philadelphia Mayor Nutter and ACORN to Promote Mandatory Settlement Conferences between Lenders and Homeowners
Increasing Homeownership and Helping New Yorkers Avoid Foreclosure is Part of City’s Five Borough Economic Opportunity Plan
Mayor Michael R. Bloomberg today announced a new public campaign to encourage more New Yorkers to get the free legal assistance, mortgage counseling and education services that are available through the Center for NYC Neighborhood network of providers. While the program has been effective for those who have taken advantage of it, many New Yorkers who have suffered foreclosure filings have not sought the free help. The campaign will urge New Yorkers to call 311 and will highlight the confidentiality of the services. Mayor Bloomberg was also joined by Philadelphia Mayor Michael A. Nutter and NY ACORN President Pat Boone to highlight the success of the Philadelphia program that requires mandatory settlement conferences between lenders and homeowners and to urge similar steps be taken in states across the country. Increasing homeownership and helping New Yorkers avoid foreclosure is part of the City’s Five Borough Economic Opportunity Plan. Also joining the announcement, which took place at Legal Aid Society Queens Neighborhood Office in Kew Gardens, were Council Member Thomas White, Jr., Department of Housing Preservation and Development (HPD) Commissioner Rafael E. Cestero and Center for NYC Neighborhoods Executive Director Michael Hickey.
“More than 18 months ago, we established the Center for NYC Neighborhoods to provide New Yorkers with the legal, technical and financial assistance needed to decrease the risk of home foreclosures,” said Mayor Bloomberg. “The Center has proven effective, but we want more New Yorkers to take advantage of it. For the 12 months ending in March, more than 13,000 homes in our City were reported at risk of foreclosure. Many of them are eligible for loan modifications and refinances but either don’t know it or don’t have the help they need to negotiate with their banks. Our new public campaign addresses fear, confusion and frustration that the threat of foreclosure can bring by promoting free, confidential, one-on-one assistance. While we want to link distressed homeowners to counselors, but we also have to do more to bring lenders to the table. A strengthened settlement conference process between lenders and homeowners would mean more modifications and faster resolutions for homeowners.”
“Mayor's Bloomberg's approach of bringing both homeowners and lenders to the table is absolutely the right combination to address this problem,” said Mayor Nutter. “Through an extensive public information campaign and requiring lenders to negotiate settlements in good faith, we have helped over 1,200 individuals and families in Philadelphia stay in their homes.”
“ACORN has been sounding the alarm that New York State’s existing foreclosure diversion program has failed to get homeowners the modifications they need,” said NY ACORN President Pat Boone. “The successful program we helped design in Philadelphia last year has helped thousands of families reach settlements with their lenders and avoid foreclosure. We are thrilled to stand with Mayor Bloomberg today to get one step closer to bringing mandatory housing counseling – one of the critical elements of Philadelphia’s program – to New York. We have championed counseling because we have seen firsthand the power of giving families the knowledge and tools to negotiate a plan to keep their homes. Combined with ensuring lenders come to the table willing to use all possible foreclosure prevention tactics, we can prevent thousands of New Yorkers from losing their homes to foreclosure.”
Mayor Bloomberg and Speaker Quinn created the Center for NYC Neighborhoods in December 2007. It has distributed grants to more than 30 nonprofit service providers to help homeowners at risk of mortgage foreclosure throughout the five boroughs. From July 2008 through March 2009, Center for NYC Neighborhood partner organizations provided foreclosure prevention services to 1,900 people. The City and City Council provided $2.8 million for the first year of operation of the Center, which relies heavily on private donations for ongoing operations and grants. The City recently committed an additional $2 million for fiscal year 2010 to support the Center, and the Council committed $1.25 million in fiscal year 2009.
The City’s new campaign urges New Yorkers to call 311 to access the free services. In February 2009, the Center launched a dedicated call center that serves as the primary point of contact for all New York City homeowners in distress. 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. In addition to traditional, targeted media placements, including subway, bus and bus shelter placements, campaign materials will be distributed to churches, local stores and individual homes and buildings in the most affected neighborhoods, including Jamaica, Queens, the Northwest Bronx, the North Shore of Staten Island and Central Brooklyn. The materials will be in both English and Spanish.
“With Southeast Queens being at the epicenter of the City's foreclosure crisis and with unscrupulous foreclosure rescue scam artists preying upon families and individuals who are in dire situations, the Center for NYC Neighborhoods has been providing free foreclosure legal and counseling services to hundreds, of families and homeowners throughout my district,” said Council Member White.
“Foreclosure is bad for homeowners, bad for lenders and bad for neighborhoods,” said HPD Commissioner Cestero. “Our goal is to keep families in their homes, support those in transition and preserve and stabilize neighborhoods. There are many ways to do this, and we are exploring every option. At the simplest level, that means putting people in face-to-face touch with legal and housing experts who will help them for free. But we can’t help people if we don’t know who they are and if they don’t know where to turn for help. That is why we are launching this public service campaign, targeting placement to neighborhoods where we know we have the greatest need. People need to know in the clearest possible way that, by calling 311, they will be connected through the Center to experts who know how to help. Time is of the essence – the faster someone asks for assistance, the greater the likelihood that we will be able to get them the help that they need. Mortgages are complicated financial instruments – but they can be fine-tuned.”
“In a final moment of desperation, I was forced to file bankruptcy without a lawyer in order to try to save my home from foreclosure,” said Queens homeowner Aoah Middleton, who received help from the South Brooklyn Legal Services, one of the Center for NYC Neighborhoods’ nonprofit network members. “Determined to fight for my home to the bitter end, I began to search out all possible sources that could lend a helping hand. Once in contact with South Brooklyn Legal Services, hope began to shine its way through. I would describe South Brooklyn Legal Services as the hero on the Hudson – they saved my children and me from drowning in foreclosure and potential homelessness; they rescued us and pulled us out of a seemingly hopeless situation. I hope that anyone in a similar situation will use the City’s free assistance so as not to have to go through the search for help alone.”
Current New York State law provides homeowners in foreclosure an opportunity to negotiate loan modifications with their lender through a settlement conference. But to date, fewer than half of the homeowners in foreclosure have taken advantage of the opportunity, and few loan modifications have been achieved. Notices from lenders about settlement meetings are often difficult to understand and get treated as junk mail. Further contributing to the problem is that occasionally representatives sent by lenders to the meetings are not authorized to approve modified loans.
The program piloted in Philadelphia ensures homeowner notifications about mediation are clear and understandable, gives representatives of lenders in settlement meetings the power to modify loans, and links distressed homeowners with housing counselors. As a result, as many as 80 percent of households eligible for mandatory settlement in Philadelphia have appeared at their conference, and to date 1,200 households, or 35 percent of those who showed up, have reached a settlement. Another 1,500 households are in negotiation. Mayor Bloomberg and Mayor Nutter will today join a conference call hosted by the US Conference of Mayors and ACORN urging states to enact stronger laws requiring mandatory settlement conferences between lenders and borrowers prior to foreclosure sales. On the call with Mayors Bloomberg and Nutter will be US Conference of Mayors President Miami Mayor Manny Diaz and Executive Director Tom Cochran, ACORN CEO Bertha Lewis, Los Angeles Mayor Antonio Villaraigosa, and Oakland City Administrator Dan Lindheim on behalf of Oakland Mayor Ronald V. Dellums.
Mayor Bloomberg also today urged participating loan servicers and banks to make sure to determine whether homeowners are eligible for the federal Making Home Affordable program prior to initiating foreclosure actions. Economists at the Federal Reserve Bank of New York estimate that between 500,000 and 600,000 loans in New York City may meet the criteria for loan modification under the Making Homes Affordable plan, with homeowners that pay more than about a third of their income toward monthly payments able to qualify for help.
The City’s Five Borough Economic Opportunity Plan is a comprehensive strategy to bring New York City through the current economic downturn as fast as possible. It focuses on three major areas: creating jobs for New Yorkers today, implementing a long-term vision for growing the city’s economy, and building affordable, attractive neighborhoods in every borough. Taken together, the initiatives that the City has launched to achieve these goals will generate thousands of jobs and put New York City on a path to economic recovery and growth. To learn more about the plan, visit nyc.gov. Recently, the City has announced: