Op-Ed Published in New York Daily
News
Daily News- Attacking the foreclosure crisis: New York‘s attorney
general pushes back on recent reports
BY ERIC SCHNEIDERMAN
In the last decade, the United
States experienced the biggest housing bubble in the history of the world. When
the bubble burst, Americans lost $7 trillion in household wealth, millions of
jobs disappeared and the nation was plunged into the deepest and longest
recession in 70 years.
There have recently been some
mischaracterizations of the mortgage-backed securities working group created in
January by President Obama to investigate the roots of this crisis — a working
group I am proud to co-chair.
Here are the facts.
My office — along with the Justice
Department, the SEC, the Consumer Financial Protection Bureau, the IRS and our
other partners — is working aggressively to provide accountability for any
misconduct that contributed to the bubble and crash in the housing market. More
than 50 attorneys, investigators and analysts have already been deployed to
support our investigations, with many more on the way. The President has
requested a congressional appropriation of an additional $55 million to ensure
that we have the resources to do a thorough job.
However, this is a law enforcement
exercise, not a public policy decision, and must proceed in a rigorous and
deliberate fashion. Like any ongoing investigation, the details about the scope
of our inquiry are confidential. But I remain committed to following the facts
wherever they may lead.
The reckless deregulation and
irresponsible conduct that brought down the American economy must be
systematically investigated. At the same time, we must deliver as much
immediate relief as possible to protect families whose homes are at risk now.
New Yorkhas a pretty good set of
laws to protect against wrongful foreclosure. But those laws are of little use
to the many New York homeowners — about half — who faced foreclosures in recent
years without a lawyer.
That’s why, when I joined my fellow
state attorneys general to negotiate a settlement with the five largest mortgage
servicing banks over abusive servicing and foreclosure practices, I made it a
top priority to get immediate funding for legal services for homeowners facing
foreclosure.
On April 5, our office received
court approval of a settlement that comprehensively reforms mortgage servicing
and the foreclosure process, and commits the banks to reaching out and working
with New Yorkers whose homes are underwater. Thousands of New York families
should receive reduced interest rates or actual reductions in principal owed.
And my office succeeded in obtaining
funds to expand legal services and housing counseling to help troubled New York
homeowners avoid foreclosure.
Services like this have a long
record of success. In one recent case, a grandmother and her five grandchildren
in Brooklyn were facing foreclosure until a legal services agency negotiated a
loan modification, reducing her interest rate from 9.55% to 2.13%. This made
the loan affordable enough for them to stay in their home.
Help like that is life changing, but
state funding for these programs was set to expire on April 1, leaving
desperate homeowners nowhere to turn. My office was able to provide $15 million
from the settlement to fill this gap in New York’s current budget. These funds
will allow lawyers and housing counselors to keep their doors open and continue
the work of keeping families in their homes.
And we will now fund these essential
services for three more years, ensuring that foreclosure prevention aid doesn’t
once again get caught in the crossfire of Albany’s annual budget wars.
Some have argued that the multistate
settlement is inadequate to address the problem of foreclosures and underwater
mortgages.
I agree that if this settlement were
the end of the story, it would not be enough. But it’s not the end. It’s a down
payment.
The most important part of the
settlement is what’s not included. When I joined the multistate negotiations
with the banks in January 2011, the banks wanted broad civil immunity from all
legal claims related to the housing bubble and crash. Along with several other
attorneys general, I took a very hard line against letting anyone off the hook
for conduct that took down the economy.
The final settlement preserves a
broad range of claims — both criminal and civil — for investigation and
prosecution, including all securities fraud claims. This allows the joint state
and federal task force to build upon existing investigations and launch new
ones.
We are now committed to moving
forward on both of these tracks: providing legal services, housing counseling
and loan modifications to homeowners who are at risk, and continuing our
investigations into the conduct that caused the foreclosure crisis. Both are
needed if we are to do justice and put our hard-hit communities on the road to
economic recovery.
Schneiderman is New York’s attorney
general.
SOURCE: http://www.ag.ny.gov/
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