New Schumer Study Reveals: Despite 99% Surge in Staten Island Foreclosures in Past Year, Big Lending Companies Still Pushing Deceptive Mortgages to New York Consumers

With new numbers released today showing that Staten Island foreclosures have surged over the past year, U.S. Senator Charles E. Schumer today revealed that major mortgage lenders, some of whom are in bankruptcy themselves, are still constantly advertising and pushing on consumers the very same loans that have brought on the current crisis . Schumer said that banks should not be offering these loans and sucking more Staten Island homebuyers and homeowners in to taking on more debt attached to a sky high interest rate. Subprime loans, made to borrowers with poor and nontraditional credit histories, have wreaked havoc in the mortgage market as higher interest rates have led to rising defaults and delinquencies among borrowers. Schumer also discussed his Borrower's Protection Act of 2007 , whichwill create stricter standards within the mortgage industry to protect homebuyers.

"The mortgage crisis has created a perfect storm for homeowners on Staten Island and across the country," Schumer said. "It is inexcusable that lenders are continuing to advertise subprime loans as if everything was hunkydory. Unfortunately, instead of working with endangered homeowners, unscrupulous lenders are going out of their way to push high risk loans on unsuspecting homebuyers. We need all hands on deck to stem the rising tide of foreclosures."

Schumer today blasted major mortgage lenders for continuing to advertise deceptive and expensive home loans to homebuyers despite the current credit crisis and the collapse of the subprime mortgage market. Over the past few years, thousands of Staten Islanders and millions of American's have been suckered into taking out subprime loans, claiming to offer low interests rates, but actually attaching large hidden fees and unexpected interest rate spikes. Now, millions of homeowners are facing interest payments that far exceed their initial required payment and are struggling to avoid foreclosure.

However, as Schumer revealed today, despite the wave of foreclosures, lenders are still flooding television, newspapers, and the internet with advertisements pushing the very same loans that have caused the current crisis and cost millions of homeowners thousands of dollars and even their homes.

For example, on AOL.com this week, the Internetbased loan company LendingTree offered a "Refinance & Lower Payments" deal for a $400, 000 loan for only $1,875 a month. Schumer also said that constant television advertising by Countrywide and LendingTree makes no mention of the pitfalls and current dangers of taking out subprime, and variable rate loans, leaving unsuspecting consumers thinking that these loans are still safe to take out. According to the Washington Post, even though dozens of lenders have shut down their mortgage operations or laid off employees, many others are trying to generate interest among potential borrowers even if the companies ultimately cannot qualify them for loans.

Schumer today released a new report showing that the same subprime loans that are still being advertised have created an unprecedented surge in home foreclosure that has spread across the country and now reached Staten Island, which suffers one of the highest rates of foreclosure in the state. The new study, from Profiles Publications, Inc., a New York company, differs from previous studies in that it tracks individual households in forclosure proceedings, as opposed to tracking foreclosure filings, since one house can have multiple filings. The study found that:

• The number of mortgage foreclosures initiated against property owners on Staten Island increased 99% to 175 mortgage defaults in August 2007 from 88 mortgage defaults in August 2006.
• The average dollar amount of a mortgage in foreclosure on Staten Island increased 31% to $319,255.51 in August 2007 from an average dollar amount of $243,517.55 in August 2006.
• The total dollar amount of all mortgage defaults made on Staten Island increased 161% in August 2007 to $55,869,715.00 from a total dollar amount of $21,429,544.00 in August 2006.
• Five lenders accounted for 46% of all mortgage foreclosure filings on Staten Island in August 2007. In order, they are: Wells Fargo Bank (24), Deutsche Bank, NT Co. (23), The Bank of New York (12), U.S. Bank N.A. (12), Countrywide Home Loans (10).
• In August 2007, 69% of the foreclosures were in just 6 zip codes of the 14 zip codes on Staten Island: 10312 (29), 10303 (23), 10314 (19), 10306 (17), 10305 (16) and 10309 (16).

To protect homeowners and ensure that millions more potential buyers avoid getting scammed, Schumer today announced a twopoint plan to crack down on potentially false advertising by lenders:

·         FTC Advertising Alert - Schumer today called on the Federal Trade Commission to immediately issue a widespread consumer alert to help potential homebuyers avoid misleading advertising and loans. While the FTC is currently investigating subprime mortgage advertising, it has yet to issue a consumer alert/advisory and post information on their website to help the average consumer.  Schumer said that during the current crisis, consumers need as much information as possible to avoid trouble.

·         Legislation Creating First Ever Standards to Crack Down on Predatory Lenders: Schumer is also the author of the Borrower's Protection Act of 2007, which requires all lenders to register with the federal government and establishes a fiduciary duty for mortgage brokers and other nonbank mortgage originators. The bill also creates a faith and fair dealing standard for all originators and for the first time prohibits steering (i.e. brokers may not direct or counsel a consumer to rates, charges and principal amount or prepayment terms that are not appropriate or suitable for the them).

Schumer was joined by State Senators Diane Savino and Jeff Klein, as well as Legal Services lawyer Margaret Becker. Schumer was also joined by Ada Diaz, a Staten Island resident and retired hospital bookkeeper who took out a loan with an adjustable rate to finance repairs on her longtime home. Though Ms. Diaz is nearly legally blind, an agent convinced her to take out the loan without complete knowledge of its ramifications, and has since been evicted due to the fact that she was unable to make loan payments that amounted to 91% of her monthly income.