Fannie Mae is expected to announce today that it will buy $5 million of refinanced and restructured loans being made to New York senior citizens who have been victims of predatory lending.
Fannie is teaming up with the Parodneck Foundation for Self-Help Housing and Community Development, a New York nonprofit housing agency; South Brooklyn Legal Services; and several lenders to form the New York Predatory Lending Pilot.
The project will work with seniors who claim they were conned into taking out high-interest loans they could not afford. The lenders, including Bank of New York Co., Chase Community Development Group, North American Mortgage Co., European American Bank, FleetBoston Financial Corp., and HSBC Holdings PLC, will refinance the mortgages to give them lower interest rates.
Josh Zinner, coordinator of the Foreclosure Prevention Project for Seniors at South Brooklyn Legal Services, says he has spent much of the last year drumming up attention among lower-income, elderly homeowners.
With the use of this pilot initiative, we will be able to assist far more low-income homeowners who are facing the loss of their homes due to predatory lending practices, Mr. Zinner says in a press statement scheduled for release today. As the main legal services office in the city litigating these cases, we look forward to partnering with other groups to stop these abuses.
At a Nov. 10 public hearing sponsored by the New York State Banking Department to discuss Citigroup Inc.s bid for Associates First Capital Corp., Mr. Zinner said hundreds of New York seniors have come to his office after accepting high-interest refinancings or home equity loans from unscrupulous lenders that troll the citys outer boroughs.
Often the loans costs are so high that the borrowers risk losing their homes, he said.
The Parodneck Foundation will help in identifying predatory lending victims. For example, it will track the borrowers credit history to see if it was unblemished before the loan was made. The agency will also help the elderly obtain deferred loans from the New York City Senior Citizen Homeowner Assistance Program to rehabilitate their property.
South Brooklyn Legal Services will provide legal aid and help negotiate pay-downs for the original loans.
The Neighborhood Housing Services of NYC, Neighbors Helping Neighbors, and the Pratt Area Community Council have agreed to refer at-risk homeowners to the program. The groups will also help the borrowers assemble their refinancing applications.
Fannie said the program will help up to 75 borrowers.