Home Equity Theft Prevention Act Seriously Hurt Homeowners In Foreclosure By Scaring Away Investors – The Law Of Unintended Consequences

In the current foreclosure crisis, I am reminded of this article regarding the Home Equity Theft Prevention Act. I knew the New York Legislature had good intentions but they very badly hurt the people they were trying to protect. Most investors have been hesitant to buy property as part of a foreclosure bailout because of the law, as well as the restictions on available financing and the decline in property values.

More Foreclosures Than Ever Before

MSNBC.com is reporting that the first quarter of 2008 set a record for the number of foreclosures. Here is the link.

Billions In Home Equity Lines Suspended

The NY Times is reporting that home equity lines of credit are being suspended by major lenders nationwide. This is a continuing trend resulting from lenders’ fears about declining home values. Here is the article.

Resetting Rates and No Equity

I’m getting calls daily from people in foreclosure. They all seem to have similar situations – very little or no equity in their property and adjustable rate loans that are difficult to pay. For almost all, refinancing, even with hard money lenders, does not seem possible. I have been focusing primarly on forbearance agreement and modification negotiations, Chapter 13 bankruptcy and foreclosure defense litigation. Things have changed a lot since 2005.

Mortgage and Equity Line Money Harder To Find

For those in foreclosure, one traditional solution has been to find a new lender and refinance – to start all over again with a brand new loan. In today’s market, this has become extremely unlikely. The NY Times has a report on this in tomorrow’s paper: Mortgage Lenders Raise The Bar, 5/18/08 NY Times. To read about other ways out of foreclosure, click on “Soultions, Strategies & Alternatives” link in the right sidebar on this blog. All of the prior posts on this topic are available for viewing. Or, call or email me if you have a specific problem you’d like to discuss.

NYC Protesters Demand Freeze On Foreclosures

Here is a youtube video from the The Real News of a December 2007 protest in New York City. If you click on the link, a new window will open with the video. This blog window will still be open after you close out the video page.