Legislation To Rein In Foreclosures About To Take Off

June 19th, 2008

Despite strong protests from the banking and mortgage houses, Governor Paterson and some legislative leaders are inching towards completion of an agreement on passing a law that will make it difficult for lenders to foreclose houses. A legislation to rein in foreclosures is about to take off.

The Democrats in the Assembly had tried to put into effect a one-year delay on foreclosures. The Republicans rebuffed it. They are now planning a toned down edition of the programme bill that had been submitted by Patterson’s administration and got passed by the Assembly.

The salient point of the bill was that this legislative package of Paterson would protect the borrowers by laying down certain rules. The lenders would have to notify the borrowers about the foreclosure at least 60 days before actually starting proceedings. This will prolong the judicial process of foreclosure in New York and allow for breathing space for the borrowers. This rule has already been brought into effect in many other states.

This bill of Paterson, in its preliminary stages, was the brainchild of Eliot Spitzer. It would enforce accountability among the mortgage brokers. By it they would be held responsible if loans were given to those who could not afford it. If the legislation saw the light of day, it would be a significant step passed by the law-making body before it adjourns till the next session.

The Republicans in the Senate have political interests at stake while they negotiate with the office of the governor. The banking industry is strongly lobbying against the legislation by arguing that it would jeopardize the mortgage-backed securities. In the long run it will make borrowing expensive and difficult.

The Republicans are struggling to guard their slim majority but are worried about some vulnerable members who represent areas that have high foreclosure numbers like the counties of Bronx, Queens and Suffolk.

Frank Padavan, Republican senator from Queens is due to face a closely contested primary contest this autumn. The key issue will be the Senate’s versions of the one-year hold on foreclosure bill. Taking advantage of the fix of the Republicans, the Democrats and liberal activist groups are honing in on Padavan and accusing him of thwarting the smooth passage of the bill in the Senate. As a fall over of this entire wrangling ACORN is planning to hold a noisy protest before the office of senator’s district office.