Mar 26, 2015 — More than two years on and David Velez’s battle with Hurricane Sandy is far from over. But, thanks to some help from the Attorney General’s office, Velez’s fight with his mortgage lender may soon be coming to an end.
The first floor of the retired NYPD officer’s home in Gerritsen Beach, Brooklyn was destroyed by flooding during the hurricane, and without help from insurance he and his wife used their savings to rebuild.
Unfortunately, after the construction was complete an architect from the City’s Build it Back program deemed the residence structurally unsafe. Velez and his family moved out of the home this past October and were told that demolition would begin in November. Now March, Velez is still waiting for Department of Housing Preservation and Development contractors to begin construction of his home. While the program has gotten a shot in the arm under Mayor Bill de Blasio, the pace is still too slow for many.
Even living out of his home there is another reminder of the damage Sandy has done: Velez gets regular calls from Citibank representatives asking when he will catch up on his mortgage. “They even called me the day I had cancer surgery to remove a tumor,” said Velez who was advised like other Sandy victims that he could stop mortgage payments while his home was being rebuilt, only for his lender to demand missed payments immediately after the forbearance was over.
It is a call increasingly familiar to homeowners across the state who are behind on their mortgages, whether from unexpected disasters like Hurricane Sandy or thanks to the economic downturn of 2008 and subsequent recession. Even in 2014, New York City saw a 33 percent increase in first-time foreclosures compared to the year before, according to one recent study.
Many homeowners have watched as Attorney General Eric Schniederman won the state multi-million dollar settlements from major lenders like Bank of America, Citibank, and JPMorgan. Like Velez, many struggling homeowners expected that those settlements would go directly to help New Yorkers who are underwater with their mortgage.
In Velez’s case the AG’s office did offer help, through an initiative called the Mortgage Assistance Program, which makes up to a $40,000 loan for homeowners who face foreclosure to pay off mortgage debt, second or third mortgages, or tax liens. Eligible families must be able to keep up with their mortgage to qualify for the program. Thousands of New Yorkers face foreclosure and don’t qualify for the AG’s program – some New Yorkers are simply far too behind on their mortgages to qualify.
Groups like The Fair Share for Housing Coalition and New York Communities for Change say the State needs to commit all of the funds from settlements with major lenders over mortgage fraud to go to helping homeowners.
In 2013 Schneiderman won a $615 million settlement for “mortgage misconduct” and according to the settlement 85 percent of that money had to go to programs to help homeowners. Schneiderman announced he was going to parse the cash out to nonprofits across the state that help homeowners avoid foreclosures, but Governor Andrew Cuomo and the state Legislature cut a deal in the 2014 budget that swept the cash into their coffers. According to Crain’s New York, Schneiderman only ended up with $85 million of settlement funds.
Many advocates say they expected a number of “innovative” programs from Schneiderman’s office given his national prominence on the issue. They feel those programs were kneecapped by Cuomo, who has a searing rivalry with the attorney general.
The AG’s office currently works with nonprofits around the state to help homeowners avoid mortgage fraud through a program called the Homeowner Protection Program. A network of over 85 groups gets about $60 million in funding from the AG’s office. Homeowners are directed through that program to the Mortgage Assistance Program (MAP). The AG’s office expects to be able to give out “several hundred” loans through MAP. The program began last October and has given out 100 loans of up to $40,000.
The Fair Share for Housing Coalition lists a total of $492 million in settlements with Bank of America, Ocwen Financial Corporation, and Citigroup as directly related to mortgage fraud and it advocates that the State utilize, at the minimum, those funds to help homeowners. But the State actually has over $5 billion in settlements with banks and corporations that advocates would also like to go to homeowners’ cause.
Read the second half of the story by our partner Gotham Gazette.