From the Ithaca Journal:
More than 50,000 Upstate New York families are in danger of losing their homes because unscrupulous lenders sold them “liar loans” offering low mortgage payments that quickly swelled to as much as four times the original cost, Sen. Chuck Schumer said Wednesday.
Nearly 9,000 families in the Rochester-Finger Lakes region and nearly 4,000 in the Southern Tier are at risk of foreclosure because of unregulated subprime loans offered by rogue mortgage brokers not affiliated with traditional banks or lending institutions, the New York Democrat said. Nearly 6,000 families could face foreclosure in Monroe County alone, Schumer said.
Schumer, who serves on the Senate banking committee, is offering legislation to regulate all mortgage brokers, outlaw “liar loans” in which borrowers are not properly informed of escalating payments, and create a New York task force to try to help affected homeowners restructure their loans and keep their houses.
“The subprime market is the Wild West of mortgage loans and it’s time we bring a sheriff into town,” Schumer said. “The first step is making sure that borrowers are protected from these usurious lenders. It’s long past time that we ensure that working people are protected from loans that promise them the world and instead give them a mountain of debt and leave them homeless.”
“What I have seen of late troubles me deeply,” said John Robbins, chairman of the Mortgage Bankers Association in testimony this week before the House banking committee.
“Responsible lenders only extend credit to borrowers who are willing and able to make mortgage payments,” he said. “They do not trick borrowers into loans that are unsustainable. And they do not hold out something that is only a mirage of the American dream. Yet bad loans were made. They were not made responsibly or with the best interest of consumers in mind.”
New York Sen. Hillary Rodham Clinton, the current front-runner for the Democratic presidential nomination, recently called the subprime mortgage loan market “broken” and called for the Federal Housing Administration to issue more mortgages at lower rates to working-class families.