Schumer Asks for Loan Limits
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Brandishing statistics showing foreclosures almost doubling in the city, Senator Schumer is ramping up pressure to add new limits to mortgage lending.
Mr. Schumer yesterday announced statistics showing that foreclosure filings in the five boroughs rose 80% between February and July, most of them from mortgages issued to people with poor credit, a category known as subprime lending.
Experts predict foreclosures will continue to rise both locally and nationally, as the real estate market cools and higher monthly costs take effect on adjustable rate mortgages, which make up a large portion of the subprime market. The financial turmoil has sparked a wave of anxiety — and market volatility — on Wall Street, raising fears about the health of both the housing market and the broader global economy.
A separate report on subprime lending released yesterday by state Senator Jeffrey Klein, a Democrat of the Bronx, showed that Brooklyn and Queens were home to the bulk of foreclosures in the past year, with neighborhoods such as East New York, Bushwick, and Jamaica each seeing more than 400 foreclosures since July 2006.
Mr. Klein, the deputy minority leader, has proposed legislation for New York State that would add limits on mortgage brokers similar to those proposed by Mr. Schumer.
Nationally, a rising tide of foreclosures has led to a collapse in the subprime lending market, with many lenders unable to sustain the high levels of defaults in the cooling real estate market.
Mr. Schumer called for legislation that would add to the regulations governing mortgage brokers, who he said deserve some of the blame for the recent problems in the subprime market because they are often insulated from the risks of the loans they negotiate.
Mr. Schumer’s proposed legislation would require mortgage brokers to be licensed by the federal government, and add liability provisions for brokers.
“There’s no incentive to offer people fair loans,” Mr. Schumer said.
Mortgage brokers have denounced aspects of the proposed regulations.