(post by BT) The following news update was recently emailed to me by the New York State Association of Realtors (NYSAR):

“At The Capital

The following pieces of real estate-related legislation were introduced this past week in Albany:

Foreclosure Prevention Act of 2008 (S.8093/A.10083) - Senator Thompson (D-Erie/Niagara) introduced companion legislation to Assembly Speaker Silver’s Foreclosure Prevention Act of 2008. Some key provisions of the measure include: the creation of a $180 million state mortgage foreclosure prevention fund to assist homeowners facing foreclosure, authorizing the state division of housing and community renewal to enter into contracts with neighborhood preservation groups to provide temporary homeownership assistance and an education/outreach program. The Assembly bill remains in the Ways and Means Committee. See the Bill from NYS Senate to view the bill.”

My comment:

Prevention? What are they preventing? Too late. If they can’t make the payments than they can’t afford to keep a house they overpaid for, why would we give them the money? If they can’t handle it now, they will likely just lose it later. What’s the difference? We should help the people who ARE paying their mortgages on time but have bad loans that keep rising. I have clients who do everything they can to keep the house but because of predatory lending, they are having a hard time. These are the people who need help, not the ones who are going to loose their house anyway! Help those who actually ARE going to recover with a simple refinance. It will cost less, and have a real impact. Most homeowners I meet that are in foreclosure have had credit problems before, and will have them in the future. But there are many who make their payments on loans that are dragging them down.

If your best friend had no income and no realistic plan of making any more income soon, and asked you to lend him $100K to keep his house, and you knew that by giving him this money he will not be in any better situation but will only keep the house for now, would you lend him the money? Knowing he will be just as broke?

More about the Foreclosure Prevention Act.