| FOR IMMEDIATE RELEASE: July 27, 2007 GOVERNOR ELIOT
SPITZER CONFRONTS SUBPRIME LENDING CRISIS BY ANNOUNCING $100 MILLION
“KEEP THE DREAM” REFINANCING PROGRAM TO HELP AT-RISK FAMILIES KEEP
THEIR HOMES Governor Eliot Spitzer today announced the $100 million “Keep the Dream” refinancing program that will offer homeowners with risky mortgages the opportunity to refinance and avoid possible foreclosure. The new program represents a major initiative of the multi-agency HALT Task Force (Halt Abusive Lending Transactions) that the Governor created in March to address the crisis in the subprime mortgage market. Through partnerships with Fannie Mae, mortgage lenders, and mortgage insurance companies, the State of New York Mortgage Agency (SONYMA) will offer at-risk homeowners the ability to refinance their current mortgages with 30-year or 40-year fixed-rate mortgages at competitive interest rates. “Homeownership is crucial to growing our economy throughout New York State,” said Governor Spitzer. “This innovative program will help address the foreclosure crisis by offering at-risk families mortgages they can afford, so they can keep their homes for years to come.” President and Chief Executive Officer of SONYMA, Priscilla Almodovar, said: “Our mission at SONYMA is to help working class families buy their first home and keep their homes. That is why our ‘Keep the Dream’ program is so important?it will give families in danger of losing their homes the ability to refinance their mortgages and remain as homeowners.” Banking Superintendent and Chair of the HALT Task Force, Richard H. Neiman, said: “By creating the HALT Task Force in March, the Governor was able to pull together the talent and resources from a diverse range of state agencies to develop and implement creative solutions to address issues facing consumers. With serious challenges remaining for both consumers and the mortgage industry, I am confident that this team will continue to make significant progress and lead much needed efforts in consumer protection and industry improvements.” Home Counseling and Education A crucial part of the “Keep the Dream” refinancing program will require eligible borrowers to complete a homeowner education course with a federally approved not-for-profit organization. Borrowers must also agree to participate in early delinquency intervention counseling should they become delinquent for 30 days or more on their refinanced mortgage. To promote homeowner counseling, the New York State Division of Housing and Community Renewal (DHCR) will dedicate nearly $400,000 in Urban Homeownership Assistance Program grants to eight non-profit agencies located in cities with more than 60,000 residents. The non-profits will use the funding to offer financial counseling to homeowners, helping them avoid the pitfalls of predatory loans and foreclosure proceedings. Deborah VanAmerongen, Commissioner of DHCR said: “Not all subprime loans are necessarily bad. In some instances, they are a valuable tool for individuals who don't qualify for a prime loan. Our goal in providing counseling is to help consumers qualify for and obtain the best possible mortgage loan available.” Assemblyman Vito Lopez, chairman of the Assembly Housing Committee who was the sponsor of the homeowner counseling initiative, said: “I am proud to partner with the Governor on this innovative project. The money we've dedicated will help families facing foreclosure and will go a long way in educating homeowners while also addressing the subprime loan issue all over New York State. I look forward to working on this issue with Governor Spitzer in the future and hope this is only the first step we take in protecting homeowners and their assets.” In addition, SONYMA will make available another $250,000 from its revenues to help finance counseling services for homeowners participating in the “Keep the Dream” refinancing program. Marian Zucker, Executive Vice President of SONYMA said: “Our goal in requiring counseling is to help homeowners increase their financial literacy and promote sustainable homeownership. We want borrowers to understand the risks and responsibilities of owning a home so they will remain homeowners.” “Keep the Dream” Refinancing Program The “Keep the Dream” refinancing program is designed for borrowers who have adjustable or interest-only mortgages where the interest rate has just increased or will increase in the near future. Eligible borrowers will have to demonstrate that they have experienced a mortgage payment hardship or will experience a hardship in the near future. Borrowers who are less than 60 days behind on their mortgage payments because of a payment increase may also be eligible for the program. Refinancing loans can be as high as $417,000. Financing will be available for up to 100% of the value of the borrower’s property. Proceeds of the mortgage can be used to pay prepayment penalties, closing costs and pay off most second mortgages. “Keep the Dream” is targeted for low-, moderate- and middle-income homeowners. Eligible borrowers can have incomes of up to 165% of the area median income in New York City, Long Island and the counties of Dutchess, Orange, Ulster, Westchester, Rockland and Putnam, and up to 125% of the area median income for the remainder of New York State. These income ceilings will range from $58,120 in Allegany County to $82,870 in Albany County to $93,720 in New York City to $158,560 in Rockland County. Lenders in New York State will begin to offer SONYMA’s “Keep the Dream” mortgages starting September 4, 2007. Creation of “Keep the Dream” was made possible through extensive public-private collaboration with several SONYMA partners. Fannie Mae, a federally chartered company, will issue mortgage backed securities that will be secured by these mortgages. Fannie Mae’s $100 million contribution is also an important part of the solution to the subprime problem. SONYMA has also secured the participation of private mortgage insurance companies who will provide insurance for mortgages originated under the program. And SONYMA’s Mortgage Insurance Fund (MIF) has agreed to provide mortgage pool insurance on all the mortgages originated under the program. The eight counseling agencies receiving funding from DHCR are:
To learn more about the “Keep the Dream” program, information is available at the SONYMA Homebuyers Hotline: 800-382-HOME (4663). Potential applicants who need immediate assistance can also contact the national HOPE line run by the Homeownership Preservation Foundation at 888-995-HOPE (4673). ____________________________ SONYMA was created in 1970 with the mission of helping low- and moderate- income families become homeowners. It offers a variety of low down payment mortgages that provide below-market fixed interest rates, as well as closing cost assistance through a network of participating lenders across the state. The Division of Housing and Community Renewal is one of America's oldest affordable housing agencies. Originally created within New York's Department of State in 1926, the Division of Housing administered the first Limited Dividend program and the first state-subsidized public housing program in the nation. Today, DHCR is responsible for the supervision, maintenance and development of affordable low- and moderate-income housing in New York State. |
| ALBANY — Over the next two years 50,000 New York homeowners may lose their homes as a result of “predatory” mortgage lenders who target minorities and middle-class families, state Senate Democrats said Monday. The senators called on banks and other lending institutions to implement a voluntary six-month moratorium on home foreclosures of sub-prime mortgage loans while legislation addressing the issue can be drafted. “The crisis has exploded in the last few years and is a significant problem in every region of the state,” said Sen. Jeff Klein, D-Bronx, who also represents part of southern Westchester County. “These lenders are giving people loans they simply cannot afford.” According to Klein, 136,000 sub-prime loans totaling $28 billion were written in the state in 2005. The Center for Responsible Lending, a Washington, D.C.-based think tank, predicts a foreclosure rate on these loans of about 21 percent, or more than 28,000 homes, this year alone. The number could rise above 50,000 over the next two years, said Senate Minority Leader Malcolm Smith, D-Queens. Westchester, Rockland and Putnam counties, New York City and Long Island are all facing predicted foreclosure rates of more than 20 percent, Klein said, with most other areas of the state looking at 15 percent or more. New York last year had the fifth highest sub-prime foreclosure rate in the country. Coupled with planned public hearings, a six-month moratorium on foreclosures “would allow an opportunity to hear from the banking industry and from victims of predatory lending and hopefully provide sufficient time to devise a solution that helps victims without hurting ethical lenders,” said Sen. Liz Krueger, D-Manhattan. But banks have been taking “aggressive” steps to aid sub-prime borrowers already and a moratorium is not the best solution, said Michael Smith, President of the New York State Bankers Association, which represents several of the largest banks in the world. But he wouldn't say specifically why the banks oppose the moratorium. “We have been aggressive in our response to predatory lending and the problems in the sub-prime market, including multi-billion-dollar programs aimed at refinancing loans,” he said. “We are not supporting a moratorium; our individual institutions have responded in the ways they believe to be most meaningful.” In addition to refinancing programs, several banks have offered grants to lenders and are supporting financial literacy programs and new fair-practice standards, Smith said. He added that the proposed public hearings would be a good opportunity for lawmakers and industry officials to come up with more solutions. The sub-prime loans can take several forms, but one of the most common is the adjustable-rate mortgage, or ARM. These come with low interest rates for the first two or three years that then balloon, often beyond what homeowners can pay. Compounding the situation is a recent decrease in the value of homes, which is hurting people relying on home equity to pay off their loans. In April, U.S. Sen. Charles Schumer, D-N.Y., suggested the federal government intervene nationwide to the tune of tens of billions of dollars. He also advocated a crackdown on lenders whom, he said, often deceive people into believing they can afford the loans. “The sub-prime market is the Wild West of mortgage loans and it's time we bring a sheriff into town,” Schumer said in a statement. “The first step is making sure that borrowers are protected from these usurious lenders.” The senators Monday also announced proposals that would bar the state from doing business with banks that practice predatory lending and would provide education and assistance to potential borrowers. But the prospects for passage are questionable, since the Senate Democrats have only 29 of the 62 Senate seats. There was no immediate response from the Senate GOP to the idea. daniel_wiessner@hotmail.com |
| Schumer: ‘Liar loans' could cost many in Upstate their homes By Erin Kelly Gannett News Service WASHINGTON — More than 50,000 Upstate New York families are in danger of losing their homes because unscrupulous lenders sold them “liar loans” offering low mortgage payments that quickly swelled to as much as four times the original cost, Sen. Chuck Schumer said Wednesday. Nearly 9,000 families in the Rochester-Finger Lakes region and nearly 4,000 in the Southern Tier are at risk of foreclosure because of unregulated subprime loans offered by rogue mortgage brokers not affiliated with traditional banks or lending institutions, the New York Democrat said. Nearly 6,000 families could face foreclosure in Monroe County alone, Schumer said. “The subprime market is the Wild West of mortgage loans and it's time we bring a sheriff into town,” Schumer said. “The first step is making sure that borrowers are protected from these usurious lenders. It's long past time that we ensure that working people are protected from loans that promise them the world and instead give them a mountain of debt and leave them homeless.” The senator told the story of an elderly Queens, N.Y., man with diabetes who got a sales call from a mortgage broker offering to refinance his home and give him a $45,000 loan at a cost of $1,500 a month. Instead, the man received only $5,000 after the broker and others took their cut of the loan money. And the man's payments jumped from $1,500 a month to $4,000 a month after the first year. “He can't pay it, and he's going to lose his home because of this unscrupulous mortgage broker,” Schumer said. “You can say that people should know better than to take out these kinds of loans, but these brokers are real vultures who prey on people who desperately need money or are first-time homebuyers and don't fully understand the mortgage process,” he said. The problem was underscored earlier this month when the Mortgage Bankers Association announced the number of new foreclosures reported during the fourth quarter of 2006 reached the highest level in 40 years. Foreclosure and delinquency rates were the highest for subprime loans. “What I have seen of late troubles me deeply,” said John Robbins, chairman of the Mortgage Bankers Association in testimony this week before the House banking committee. “Responsible lenders only extend credit to borrowers who are willing and able to make mortgage payments,” he said. “They do not trick borrowers into loans that are unsustainable. And they do not hold out something that is only a mirage of the American dream. Yet bad loans were made. They were not made responsibly or with the best interest of consumers in mind.” New York Sen. Hillary Rodham Clinton, the current front-runner for the Democratic presidential nomination, recently called the subprime mortgage loan market “broken” and called for the Federal Housing Administration to issue more mortgages at lower rates to working-class families. |
| Back Article published Jul 20, 2007 M&T Bank buys Central New York bank in $555M deal By My-Ly Nguyen Gannett News Service Loyal customers of the old Binghamton-based BSB Bancorp will have to get used to yet another banking industry upheaval when M&T Bank acquires Partners Trust Financial Group, which bought BSB about three years ago. M&T Bank Corp. and Partners Trust Financial Group Inc. announced Thursday that M&T will acquire Partners Trust in a deal valued at about $555 million. The acquisition, which is expected to close in six months, will make Buffalo-based M&T the deposit market share leader in the Binghamton and Utica-Rome markets and strengthen its leading position in Syracuse. The transaction is subject to certain conditions, including regulatory approval and approval by Partners Trust stockholders. M&T said it will retain its current name and not create a new name reflecting both parties. Though M&T and Partners Trust executives stressed the positives of the transaction for customers and shareholders, those benefits — a wider array of products and services and a greater network of branches and ATMs — come with a cost. M&T said it will cut an undetermined number of Partners Trust jobs and close an undetermined number of branches in the name of efficiency. “For sure there will be some job elimination,” Partners Trust President and Chief Executive Officer John Zawadzki said. “But there will be opportunities for people to continue with a stronger organization that has a great future.” Utica-based Partners Trust has 33 branches company-wide, half of which are within one mile of M&T locations, M&T Regional President Glenn Small said. M&T will acquire the 33 Partners Trust branches, located in Broome, Chenango, Herkimer, Oneida, Onondaga and Tioga counties. M&T has about 700 branches total, including about 240 branches in Upstate New York, Small said. “We'll consolidate some of those branches” based on customer patterns, Small said. It's unclear which locations will be affected, he said. The job cuts will affect Partners Trust back office and administrative staff in Utica, Binghamton and Syracuse, M&T spokesman Chet Bridger said. The workers will be encouraged to apply for other jobs within the M&T system and be given preferential treatment in the hiring process, he said. Employees who do not secure other work with M&T will be given “generous” severance packages and outplacement assistance, Small said. He said M&T has committed to provide jobs for all Partners Trust customer service branch staff regardless of the consolidation of branches. Partners Trust employs more than 800 people, Zawadzki said. The branch and job reductions will not occur until after the deal is finalized, said M&T. Small, of M&T, said the transaction is expected to be transparent to customers, who will receive “welcome kits” with information on the bank and its offerings. “It's business as usual” until the closing, Bridger said. Small added M&T understands that “people are resistant to change. ... The objective is to make it as easy as possible.” As part of the deal, M&T will acquire about $2.3 billion in deposits and $2.3 billion in loans from Partners Trust. M&T has $57.9 billion in assets. Partners Trust has $3.7 billion in assets. Partners Trust stockholders will receive $12.50 for each share of common stock they own. They can opt to receive the consideration in shares of M&T common stock or in cash, although in the aggregate, half of the Partners Trust shares must be exchanged for M&T stock and half for cash. Those elections will be subject to allocation and proration if stock or cash is oversubscribed. |
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