New York Politicians Make Mortgages Harder to Get
New York’s Governor Paterson just signed into law a bill that extends the foreclosure timeline on subprime mortgages. This law was intended to provide foreclosure relief to struggling homeowners, giving them more time to obtain a loan workout.
While the intent was noble, it didn’t take long for first of the “unintended consequences” to rear its ugly head. Freddie Mac announced that it will no longer buy subprime mortgages in New York, starting September 1.
Their reason was that this new law “”creates the potential for heightened legal and business risk exposures for the purchasers or assignees of these loans.”
And who could blame them? With defaults at an all-time high, falling real estate prices, and any half-wit with a law degree already filing suit, did they really need another reason to stop buying loans?
New York already has one of the longest foreclosure timelines in the country.The fact is, if you can’t get your act together in 10 months, how much difference is an additional 90 days going to make?
This is the kind of thing I’ve been talking about: legislative “solutions” that are poorly thought-out, and end up harming more people than they help.
More likely than not, borrowers in New York were already paying a premium on their mortgages because of the long foreclosure timeline. And now that a major buyer of home loans will no longer buy subprime loans in New York, the cost of owning the home will go up again.
This is another example of politicians (buffoons) doing more harm than good. If they’re really concerned about milking more good press out of this “solution” they’ve enacted, I’m sure they’ll eventually trot out ONE borrower who was “saved” by this program.
What won’t make the headlines is the tremendous price his neighbors throughout the state had to pay for his “success.” They won’t get so much as a “Thank you.”
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