Gillibrand Fights To Prevent Foreclosure For Thousands In Hudson Valley Who Are Out Of Work And Struggling To Remain In Their Homes

Washington, DC – As families across New York and around the country struggle to find work after losing their jobs through no fault of their own, U.S. Senator Kirsten Gillibrand is advancing legislation to provide temporary mortgage relief for struggling families to stave off the threat of foreclosure. The Homeowners’ Relief and Neighborhood Stabilization Act would provide $4 billion in foreclosure mitigation funds – $3 billion for loans for up to 24 months for out of work homeowners so they can keep their families in their homes and $1 billion to the Neighborhood Stabilization Program.

“During these tough economic times, when thousands of New Yorkers are looking for work, but struggling to make their mortgage payments, we need to help prevent foreclosure and ensure the well being of our neighborhoods,” Senator Gillibrand said. “When a family is foreclosed on, vacancies rise, property values plummet, crime increases, and the entire neighborhood suffers. This amendment will help keep thousands of families in their homes protecting neighborhoods across this region.”

Unemployment, rather than accelerating interest rates from subprime lending or other causes, has increasingly become the leading cause of home foreclosures.  According to recent estimates from the National Foreclosure Mitigation Counseling Program, 58 percent of those receiving foreclosure counseling cited unemployment as the principal reason they could not hold on to their home.

Senator Gillibrand is working with her colleague Senator Bob Casey (D-PA) to ensure this provision remains in the financial regulatory reform bill which is now in conference between the House and Senate.

According to RealtyTrac, more than 50,000 New York homes were foreclosed on from 2008 to 2009. Nationally, foreclosures increased more than 20 percent, reaching a record of nearly 9 million foreclosure filings in 2009 alone.  In March, over 350,000 properties nationwide received foreclosure filings, their highest monthly total since RealtyTrac started reporting numbers in 2005.  And while foreclosure rates declined marginally at the national level last month, with unemployment still high, experts agree that the foreclosure crisis is far from over.    

In the Hudson Valley, over 8,500 homes were foreclosed on from 2008 to 2009.

 Modeled after an effective Pennsylvania-based initiative in, key provisions of the Homeowners’ Relief and Neighborhood Stabilization Act include:

• Directing $3 billion in TARP funds to a program established at the U.S. Department of Housing and Urban Development (HUD) called the Emergency Homeowners Relief Fund;

• Allowing homeowners facing a temporary loss in income due to unemployment, underemployment or medical condition to receive low-interest loans for up to 24 months to assist in their monthly mortgage payment.  Homeowners must be at least 3 months behind on their mortgage payments and have received a notice stating that the holder of the mortgage intends to foreclose;

• Instructing the HUD Secretary to take a homeowner’s ability to repay into account when establishing the terms, conditions and rates of the loan.  Interest rates shall be fixed for the life of the loan and capped at FHA rates and prepayment penalties may not be assessed;

• Providing $1 billion to the Neighborhood Stabilization Program, created in the Housing and Economic Recovery Act of 2008, to provide grants to state and local governments and eligible entities to purchase and redevelop foreclosed and abandoned homes and residential properties.  This program has been a key resource for hard-hit towns and counties tackling the challenges of foreclosure and blight.

Additionally, Senator Gillibrand is pushing a bipartisan provision with Senators Al Franken (D-MN) and Olympia Snowe (R-ME) as part of the tax extenders bill currently being debated in the Senate to improve the Administration’s existing foreclosure prevention program by establishing an Office of the Homeowner Advocate modeled on the successful Office of the Taxpayer Advocate program at the IRS. 

Many homeowners about to lose their home have struggled to receive assistance through the existing Home Affordable Modification Program (HAMP), facing unresponsive loan servicers with few resources to turn to.  The new Office of the Homeowner Advocate would have an independent director, charged with helping homeowners resolve difficulties with the HAMP program, identifying areas where the program is not effectively assisting homeowners, and proposing administrative and legislative changes to make it easier for struggling homeowners to keep their homes.