With New York’s moratorium on residential foreclosures no longer in effect, thousands of New York homeowners are at risk of losing their homes and many fear an impending foreclosure crisis in the Bronx.
At the end of 2020, 11.8% (533,313) of New York state homeowners were delinquent on their mortgages, according to census data. That rate was higher than 3.8% in January 2009, at the height of the Great Recession, and the 2.2% rate in January 2020 — prior to the onset of COVID-19.
“The impact of COVID is worse than what we saw during the Great Recession,” said Alexis Lorenzo, director of Bronx Legal Services’ Foreclosure Prevention Unit. “A lot of people are worried about being booted from their home. I have no idea how this is going to turn out, but I know the crisis is large.”
To avoid foreclosure and the dangers of foreclosure rescue scammers, Loreonzo encouraged homeowners to apply for the first in the nation $539 million Homeowner Assistance Fund (HAF), which launched in New York Jan. 3 through the American Rescue Plan Act. HAF will provide financial assistance for homeowners who have experienced a significant reduction or loss of income due to COVID-19, are behind on taxes, water or sewage bills, or have been unable to remain current with their mortgage payments.
Each household will have to provide proof of their loss of income and, if approved, will be given a maximum of $50,000; they must be at least 30 days behind on payments. Roughly, 8,000 New York state homeowners applied on the first day and since then, thousands have followed suit, according to Lorenzo. As of Feb. 14, 27,944 applications have been filed statewide for HAF.
“Without this program I don’t know how homeowners will be able to get bailed out,” Lorenzo said. “COVID has ravaged communities in the Bronx.”
Bronx Legal Services helps clients apply for loan modifications, which is when they work with the bank to adjust the length of the loan, switch from an adjustable-rate to a fixed-rate mortgage or lower the interest rate.
She added that only the courts can make homeowners leave, not the bank.
“Just because they got a letter doesn’t mean they have to leave in 30 days,” she said. “My advice is to get help and assistance.”
Lorenzo said since the courts are so backlogged because of the pandemic, the real impact of the foreclosure crisis won’t be seen for a few months.
As homeowners facing foreclosure look for help, Lorenzo said they need to be aware of scammers. She said that anyone that calls to offer assistance or knocks on their door should not be trusted. Too often, con artists target low-income neighborhoods, seniors, people of color and non-English speaking families. The scammer will do their research, know the homeowner is in foreclosure and have a “rescue plan.”
They tell the homeowner that a way to keep their home is to sign the deed over to them and a year later the scammer will sell the home back to them — that does not happen.
“The scammers do their homework, and they know who is in crisis,” she said.
The reality of the foreclosure crisis hits home for one Bronx resident, who didn’t want to provide his real name due to the stigma of his financial situation.
Due to severe health issues, the resident, who has been living in his Co-op City apartment since 1994, has been unable to work over the last decade and has been rolling through his savings to make ends meet. During the pandemic, he ran out of money and is three years behind on co-op fees and his mortgage.
The Co-op City resident, who is 62, came to Bronx Legal Services, and they helped him apply for loan modification, which has not yet been processed. In the meantime, he’s getting letters from his bank threatening foreclosure actions, even though they are barred from doing so because he has a pending loan modification application. the client has also applied for the HAF, but has not received it.
“Things are pretty tough,” the client said. “I’m worried about foreclosure.”
He applied for the loan modification Dec. 3, 2021, but the bank replied saying nothing was submitted. Then they asked for an additional form. Finally, on Jan.13, all of the correct forms were sent. Yet, the bank is requesting the same documents again, according to the Co-op City resident.
Michael Corcoran, a lawyer at Bronx Legal Services, said he has spoken with people from the bank and hopefully the homeowner’s issue is resolved soon.
“This is all too common when homeowners are seeking assistance,” Corcoran said. “I personally think it’s in the mortgage servicer’s best interest to work with us.”
With just an $812 a month mortgage, the Co-op City resident knows he could pay it if he was granted the loan modification. Needless to say, he’s stressed and angry while his living situation remains in limbo.
“I can’t sleep. I’m lucky if I get a few hours a night,” he said. “I don’t want to have to leave and get a single room apartment in the Bronx, which would cost me more than I pay for my mortgage.”
Reach Jason Cohen at [email protected] or (718) 260-4598. For more coverage, follow us on Twitter, Facebook and Instagram @bronxtimes.