New York sues mortgage lenders over foreclosure abuses

Foreclosure rates nationwide have been slowly but surely falling since their heights four or five years ago when the housing bust was wreaking havoc on the economy, but they are still relatively high in Long Island. Even as the real estate market appears booming in parts of Brooklyn and Manhattan, New York still has higher numbers of foreclosed homes than all but two other states.

Recently, New York’s attorney general said the state is suing mortgage lender HSBC, contending that it has violated state law by failing to hold foreclosure settlement conferences. Under New York law, mortgage lenders who file for home foreclosure must request the conferences with homeowners to discuss the possibility of loan modifications. These conferences are supposed to be supervised by the court, and they are intended to give homeowners a chance to save their homes from foreclosure.

Unfortunately, according to the attorney general, 25,000 such cases have been on hold for months in New York because HSBC has been delaying its paperwork. While delaying the conferences, the attorney general claims, HSBC has continued to charge interest, fees and penalties to these struggling homeowners. Among other things, the lawsuits ask HSBC to drop these fees.

Many homeowners in Long Island have struggled to keep up their mortgage payments. Even as housing prices have started to rise in some key areas, they have stagnated in others, and many homeowners have felt unable to sell their homes for decent prices. Meanwhile, the weak job market has continued to take a huge toll on many families, leaving them scrambling for ways to make their payments. Unfortunately, even though the current legal action may eventually bear some fruit, it is unlikely to come anytime soon. In addition to the loan modification settlement conferences, a good option for some might be Chapter 13 bankruptcy, which will stop foreclosure during the process and allow the owner to maintain residence.

New Yorkers who are trying to save their homes from foreclosure may feel like they’re all alone, but they are not. With reputable, professional help they may be able to find ways to save their homes with manageable payments.

Source: USA Today, “NY attorney general sues HSBC over foreclosures,” June 4, 2013