A new report from the New York State Governor’s Task Force to Halt Abusive Lending Transactions (HALT) is out. It shows just how toxic the subprime adjustable rate mortage has been, relative to other mortgage products.
New York is not among the hardest hit states in terms of foreclosures. As of the third quarter of 2008, 45,000 New York homes were in the foreclosure process. Still that’s a 43% increase from 2007. The report found that subprime adjustable rate loans were the primary driver of the foreclosures, with nearly one-third of such loans past due. That compares to just 1.3% of all prime fixed rate loans in the state, 5.5% of all prime adjustable rate loans and 10% of subprime fixed-rate loans.
The report also illustrates how geographically concentrated the foreclosure problem is. Queens, Brooklyn and Long Island account for 45% of the entire state’s foreclosure filings.
A new state law passed in July should help some. It requires that lenders send home owners in trouble pre-foreclosure notices that direct them to local foreclosure prevention services. It also requires settlement conferences, in court, between lenders and homeowners for all owner-occupied properties, so the two sides can try to reach an agreement before foreclosure.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.