Spitzer announces foreclosure grant program

crain'snewyorkbusiness.com

Spitzer announces foreclosure grant program
November 08. 2007 3:21PMBy: Kira Bindrim

The $2 million program would use money gleaned from past enforcement actions to match private grants to counseling and legal aid societies.

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New York Gov. Eliot Spitzer on Thursday proposed a series of initiatives, including a $2 million matching grant program, in an effort to stem the rising rate of foreclosures across the state.

Counseling groups and legal aid societies that are working to help struggling homeowners avoid delinquency or foreclosure will be eligible for funding. Money gleaned from prior enforcement actions by the state’s banking department will be used to match contributions made by private companies.

If private companies are “willing to take writedowns by putting together this fund, they can stabilize entire classes of mortgages,” Mr. Spitzer said at a news conference, noting that state and federal aid has not been enough to offset the mortgage market’s continued volatility.

Mr. Spitzer also said he would work to develop local legislation to address issues raised by the mortgage crisis, such as requiring more in-depth evaluations of a borrowers’ ability to repay loans and prohibiting certain loan practices.

The news comes one day after Attorney General Andrew Cuomo announced plans to subpoena Fannie Mae and Freddie Mac as part of his widening probe of alleged collusion between real estate appraisers and lenders. Earlier this month, Mr. Cuomo sued title insurer First American Corp. for illegally boosting home appraisals under a scheme hatched by Washington Mutual Inc.

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