State News

Lawmakers consider options to address mortgage crisis

As foreclosures continue to rise throughout the state, lawmakers are taking a hard look at how they might provide solutions to the mortgage crisis. The Assembly passed legislation to impose a one-year moratorium on foreclosures. The Senate, however, does not back the Assembly plan and may offer more support to Gov. David Paterson’s program bill (A.10817/S.8143). The governor’s bill would require lenders to send notice to borrowers 60 days before beginning foreclosure, mandate lender and homeowner meet to attempt a settlement, establish a “reasonable ability to repay” standard for home loans, require registration of mortgage loan services and would strengthen the state’s anti-predatory lending law. The bill was the subject of a Senate Banking Committee hearing this past week where it received mostly positive reviews. The Banking and Mortgage Broker industries however oppose the measure and warned lawmakers to be aware of unintended consequences of the governor’s plan including the potential of banks becoming wary of lending in New York and extending the foreclosure process in New York, already the nation’s longest.

State Property Tax Commission to put forth recommendations

The seven-member State Commission on Property Taxes is expected to release its final report by next Thursday recommending ways to alleviate the state’s crushing property tax burden. Expected recommendations include capping school district property taxes increases at a rate of growth between 3 and 4 percentage points, and giving voters the power to override a ceiling. In addition, the commission is expected to recommend that state lawmakers distribute tax relief in the form of a “circuit breaker,” which would provide grants to homeowners when their taxes consume a certain percentage of their income. The report is certain to face resistance from lawmakers and powerful unions including the NYS United Teachers who stand opposed to a tax

Federal News

Cuomo successfully puts forth contentious appraiser code of conduct plan

In an effort to end inflated home values, New York State Attorney General Andrew Cuomo has successfully pushed a sweeping “home valuation code of conduct” that will apply nationally. The code, scheduled to go into effect January 1, forbids mortgage brokers from selecting or paying appraisers; prevents lenders from using appraisers they employ; and prohibits lenders from using appraisal management companies they own or control. Cuomo’s measure applies only to loans funded by Fannie Mae and Freddie Mac, which now account for about 80 percent of new mortgages according to an Associated Press report. The American Bankers and Mortgage Bankers associations oppose the plan. Some appraisers fear prohibiting mortgage brokers from hiring appraisers will lead lenders to route all appraisals through large firms to the detriment of smaller businesses. NAR has expressed concerns with the implementation of the newly created code of conduct and submitted comments to the regulator of Fannie Mae and Freddie Mac, the Office of

Federal Housing Enterprise Oversight (OFHEO).

Senate approves measure to extend national flood insuranceThe U.S. Senate passed legislation to extend the National Flood Insurance Program (NFIP) until 2013 and forgive its $17.5 billion debt from the 2005 hurricane season. The Flood Insurance and Modernization Act of 2008 establishes a commission to examine how to best manage catastrophic risks and an ombudsman within the Federal Emergency Management Agency to ensure the 93 participation insurers in the flood program pay for wind claims. The House bill however includes wind coverage for NFIP participants as an add-on. House and Senate leaders must reach a consensus or the NFIP will expire on September 30.