New York Mortgage Lender Closing, Practices Affect Borrowers
When Luveria Hazelwood refinanced her home with now-defunct American Home Mortgage in January, she was told her monthly mortgage payment would drop from more than $3,000 to just over $1,800.
The 75-year-old retired nurse could not afford payments on her property after her husband passed away in June 2006, so when an AHM representative called her with the offer, she accepted.
But Hazelwood said she did not receive the fixed-rate mortgage she thought she was getting, but an adjustable rate product. She now is having to accept financial assistance from her six grown children to pay the $2,204 bill.
“It drains me of everything I have,” she said. “The only thing I can do, if they don’t adjust it, I would have to sell the house. I wouldn’t stand by and let no bank take it.”
Hazelwood was one of four Long Island housing market residents who testified Tuesday at an Elmont hearing on alleged predatory lending practices and the wave of foreclosures sweeping Long Island and the rest of New York.
The hearing is the latest of a state-wide series of hearings held by state Sens. Jeff Klein and Craig M. Johnsonand Assemb. Tom Alfano. They plan to use the testimony to craft legislation to protect home buyers.
“AHM entered into this relationship without considering whether those borrowing have the ability to pay,” Johnson said of Havelwood’s situation. “Here you have lenders not recognizing that these loans may not be good for the customers.”
Although Hazelwood met with a salesperson at her home to go over the paperwork before closing the mortgage, she admitted she did not take the time to read all of it.
“I had so many papers, but I don’t recall signing papers for the rate they gave me,” she said.
Hazelwood said AHM told her she would receive a 7 percent fixed interest rate, but she received an adjustable rate that is now more than 8 percent. Additionally, her balance on the loan was $273,000, but it has risen to $278,000 in the last six months and she doesn’t understand why.
AHM representatives maintain that the mortgage plan is what she signed for, Hazelwood said, and that the rising balance is a result of “the type of mortgage she has.” A call to AHM seeking comment was not returned.
Johnson said he and others are working to implement laws that would prevent stories such as Hazelwood’s. “They’ve got telephone soliciters calling people to sell a product and really taking advantage of senior citizens and the less educated and not caring about the result,” he said. “Right now, there is no responsibility or accountability between the mortgage broker and the client.”
Johnson said he helped put forth a series of initiatives to address subprime lending in May, but the Republican majority in the Senate did not take up the bills. He hopes new legislation, using the testimony, will receive approval when the Assemby re-convenes in November.
According to a survey released by Sen. Klein in May, Long Island has the highest rate of subprime loan/bad credit home loan foreclosures in the state, with 22 percent of subprime mortgages issued in 2005 expected to end in foreclosure.
“This is a statewide and nationwide crisis,” Klein said. “This report shows just how broad these predatory practices have spread.”
SOURCE: New York Newsday