One Year Moratorium

President George W. Bush recently announced a 30 day moratorium on foreclosures. Sen. Hillary Clinton has expressed her approval for a 90 day moratorium.
But, recently, two state legislators have been pushing for a 1 year moratorium for the state of New York.
Assemblyman James F. Brennan (Brooklyn, Democrat) and State Senator Frank Padavan (Queens, Republican) have introduced a bill that would call for a statewide year-long halt on foreclosure proceedings.
The proposal gives homeowners the ability to stay in their homes and negotiate with their lenders to ultimately stop the foreclosure action.
This bill has been one of the more extreme proposals dedicated to stopping the foreclosure crisis and may remind many of the moratoriums instituted during the Great Depression of the 1930's.
It was introduced in December and has been gaining momentum steadily. Mr. Brennan claims that it has the support of over 60 assmbly members. A community organization group with more than 60,000 members, New York Acorn, has supported the bill as well.
The moratorium would be the longest such action since Gov. Herbert H. Lehmen instituted a one year moratorium in 1933; the moratorium was renewed every year until 1949.
Bertha Lewis, Executive Director of New York Acorn, says, "Some people say, 'Well, that's too crazy,' we say, 'Look, either we are in a crisis or we're not.' We have to do something in New York State. This crisis is real, just like it was real in 1933 during the Depression."
Mr. Brennan claims that the idea for the moratorium came from a 1934 Supreme Court case that he studied in Brooklyn Law School. The case, Home Building and Loan Association vs. Blaisdell, instituted a Minnesota moratorium.
Mr. Brennan says, "There's nothing wrong with giving people some time to see if better arrangements can be worked out."
New York's Superintendant of Banks, Richard H. Neiman has claimed he would review the proposal.
The Mortage Bankers Association has claimed that the moratorium is sometimes useful but not a long term solution.
After a civil rights group pushed for a national 6 month moratorium, John M. Robbins, Chairman of the Mortgage Bankers Association , said, "Each loan is an individual transaction and situation, one which needs to be addressed individually between the lender and the borrower."
Also, the bill could possibly reduce the lenders power over defaulted homeowners becuase it is thought that lenders will shy away from extending loans to prospective homebuyers. The bill has received the support of State Senators, James S. Alesi of Rochester, Martin J. Golden of Brooklyn, and William J. Larkin Jr. of Newburgh in Hudson Valley.
Mr. Padavan claims that the bill is a "common-sense solution" to national crisis. He says, "This is a freight train coming down the tracks and we're just trying to slow it down so people can deal with the underlying problem."
The bill is one of many proposals to help mitigate a crisis that is espcially harmful in New York.
According to an analysis of housing data by the Furman Center for Real Estate and Urban Policy at New York University, foreclosure filings in New York City for two to four family properites have increased from 3,461 in 2004 to 8,263 in 2007.
Foreclosures for two to four family properties in the Jamaica and Hollis section of Queens have increase from 233 in 2004 to 784 in 2007.
The Center for Responsible Lending predicts that in the near future, 2.26 million homes will endure foreclosure. Michael D. Calhoun, predicent of a congressional subcommittee dedicated to studying foreclosure predicts that in the 16th congressional district (South Bronx) one out of every five subprime loans will go into foreclosure.
Other states are proposing foreclosure moratoriums as well. Gov. Deval Patrick of Massachusetts instituted a case-by-case two month moratorium on qualifying homeowners. Activists in Michigan have been pushing Gov. Jennifer M. Granholm for an astounding five year moratorium.
Supporters are very clear that the proposed moratorium in New York would not be delivered on a case by case basis but would fully apply to all homeowners facing foreclosure. It would start the one year when the lender proves its entitlement to foreclosure and it would end the year with the court allowing the foreclosure proceedings to continue.
The bill calls for the lenders to fairly present the homeowners with viable solutions and repayment plans to continue paying their mortgage.
The homeowners failure to adhere to the repayment plan may institute a lift on the moratorium.
Mr. Padavan said, "This is not a giveaway. We're not paying these people's mortgages for them."
Until this bill has passed, homeowners should seek the help of licensed professionals to mitigate foreclosure plans with mortgage companies.