NY encourages banks to provide more modifications to consumers

Aug 26

NY encourages banks to provide more modifications to consumers

New York lawmakers may force banks to pay fees for failing to maintain foreclosures

As much of the country is facing the real estate crisis and Americans are in danger of losing their homes to foreclosure, lawmakers in New York are pushing banks to grant more mortgage loan modifications to struggling consumers. In an effort to steer banks toward providing more aid to delinquent borrowers, New York Senator Jeff Klein and Brooklyn City Council member Brad Lander plan to unveil measures that will make foreclosures more unappealing to banks and lending institutions, according to the Wall Street Journal.

The Journal reports that measures may include a mandate requiring banks to post bonds for vacant properties as well as a daily fee of $100 for institutions that fail to maintain foreclosed homes.

“Lending institutions aren’t taking this seriously enough,” Klein told the Journal. He also added that such measures that would take a chunk out of the banks’ profits may “force banks to be more willing to modify mortgages and keep people in their homes.”

Many other communities and cities across the U.S. have imposed legislation holding banks responsible for the maintenance and upkeep of real estate-owned properties. Some areas are seeing an increase in vandalism and crime in locations that are facing a high number of foreclosures as many young kids use bank-owned homes as a place to congregate or commit criminal activity.

Other cities have enacted the same legislation to stem off a decline in surrounding home values. A recent report conducted by the Massachusetts Institute of Technology and Harvard researchers revealed that foreclosed properties negatively impact the values of surrounding homes, dragging down the worth of properties by nearly 27 percent in some cases.

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