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More New Yorkers Getting Help on Their Mortgages

By Julie Haviv

February 11, 2008

NEW YORK, Feb 11 (Reuters) - An increasing number of New York home owners have been responding to a government-backed effort by the mortgage industry to stem delinquencies and avoid foreclosures, an industry group executive said on Monday.

A large number of New York homeowners have reacted to a direct mail initiative to borrowers who are behind on mortgage payments and have not had contact with their servicer, said Kieran P. Quinn, chairman of the Mortgage Bankers Association, which is a member of the Hope Now Alliance.

"Loan modifications and repayment plans are continuing to increase in New York and other states," Quinn said in a written statement.

Hope Now is an alliance between counselors, mortgage market participants and mortgage servicers to create a unified, coordinated plan to reach and help homeowners.

Quinn, speaking on behalf of the MBA and Hope Now to a House Financial Services subcomittee hearing in New York, said New York is generally experiencing fewer loan problems and delinquencies than the national average.

"Nevertheless, there are significant numbers of home owners in New York who need assistance," he said.

Rep. Nydia Velazquez, a New York Democrat, in a press briefing before the hearing, cited estimates that New York state stands to lose $9 billion of housing wealth through the end of 2009 due to expected foreclosures.

She noted a concentration of subprime and abusive lending in some neighborhoods. "Clearly, certain populations and areas within our state are targets of faulty lending practices.

"Last year, in at least 10 communities across the city, more than 34 percent of all loans were subprime," she said.

With the promise of an eroding tax base, federal help is desperately needed in New York, New York City Council member Lewis Fidler said at a press briefing.

"New York is going to suffer a double bang on this, with not only home owners suffering but Wall Street and financial institutions," he said.

Loan modifications in New York by Hope Now servicers increased by 138 percent from 1,662 in the first quarter of 2007 to 3,960 in the fourth quarter of 2007.

Repayment plans increased 27 percent from 4,871 in the first quarter to 6,171 in the fourth quarter of 2007.

"In all honesty, in certain neighborhoods you had a higher percentage of predatory loans, a higher percentage of 100 percent loans, and there are neighborhoods now that are showing declining values," Quinn told Reuters after the hearing. "That's a tough combination, to be very candid."

Nationally, 1.8 million loans were scheduled to reset at higher interest rates in 2008 and 2009, Quinn said. "If we modify a quarter of a million in a quarter, I think we can handle a good chunk, especially for the people that still have jobs that want to remain in their home."

A recent Freddie Mac study showing 57 percent of late-paying home owners still don't know that their lenders could offer a solution was cited often during the hearing as reason for more lender outreach. (Additional reporting by Lynn Adler; editing by Leslie Adler)