After offering homeowners protection for nearly two years, New York state’s moratorium on foreclosures expires Saturday, and data shows 14,500 Long Island borrowers are seriously delinquent on their mortgages. But with home prices near record levels, the region should be able to avoid the kind of financial pain that accompanied the 2008 housing crisis.
The Long Island real estate market has been inventory hungry during the pandemic as strong demand from buyers pushed home prices higher. Median home prices in Nassau and Suffolk counties hit records last summer – and remain close to those levels – and buyers have the smallest choice of homes in decades, giving sellers a strong advantage.
“It’s not going to be like the 2008-2010 period when we had a massive foreclosure crisis,” said Lawrence Yun, chief economist for the National Association of Realtors. “The reason is that property prices have risen so much that people who need to sell might not have to do foreclosure. They just sell normally.”
Nick Sakalis, a real estate agent at Coldwell Banker American Homes in Syosset, said while some homeowners may be able to pay off their debts through a sale, others who have pulled money out of their homes through refinancing and home equity loans may not have that option.
“This market will not help them,” he said.
The percentage of mortgages that are at least 90 days past due in Nassau County was 2.06% as of Nov. 30, according to Black Knight, a mortgage technology and data company based in Jacksonville, Fla. In Suffolk the percentage was 2.12%.
The November rates represent a significant improvement from each of the boroughs’ most recent highs – 6.44% on 31 August 2020 in Nassau and 6.28% on 31 July 2020 in Suffolk. But 90-day delinquency rates are still more than double what they were in the months leading up to the pandemic. State and federal delinquency rates have declined similarly since 2020.
“If you look at the last few months, everything has been positive,” said Andy Walden, Black Knight’s vice president of corporate research strategy, which tracks home loan data. The data includes borrowers on forbearance plans — temporary arrangements with lenders or service providers that allow payments to be suspended or reduced — but excludes those in foreclosure or those who have an arrangement with a lender, such as B. a loan modification, after a grace period has ended.
Even if some Long Island residents manage to avoid foreclosure, foreclosures could uproot families, and the financial damage caused by missed mortgage payments could make it difficult to find a new home on Long Island.
Local housing experts advised homeowners struggling financially to take immediate steps to contact their lender or local nonprofit agencies approved by the US Department of Housing and Urban Development to provide assistance.
“Everyone has to brace themselves for a difficult time for people,” said Ian Wilder, executive director of Long Island Housing Services, a nonprofit bohemian organization that helps homeowners. “I think the courts and not-for-profit housing companies will be overwhelmed.”
New foreclosure cases are likely to drag on once they come to court as homeowners explore options to stay in their homes, said Allison Schoenthal, a partner at Manhattan law firm Goodwin Procter, which has represented banks and lenders in foreclosure cases.
“Even when motions are made, the courts are behind, it takes months if not years to get some of those decisions from the courts,” she said.
Sale to avoid foreclosures
Charles Opperman, 49, faced the prospect of foreclosure three times after buying a home in Bellmore in 2007. Opperman was able to stay in his home in the years following the financial crisis by making arrangements with his lender, including one that added a $125,000 balloon payment to the end of his loan.
His debts grew due to penalties and fees for services such as home revaluations, including some that were later deemed improper. Opperman said he received a few hundred dollars when Wells Fargo Home Mortgage settled a class action lawsuit in 2016, agreeing to pay $50 million to homeowners who overcharged for third-party appraisals after they failed with their mortgages had defaulted.
Without the foreclosure moratorium beginning in March 2020, Opperman was prepared for the bank to sell his home after he defaulted on his mortgage. He’d lost his job at a check cashing service earlier that month and was more than two years behind on his mortgage payments. He said he suffers from emphysema and has a pacemaker to treat a heart problem, making it difficult for him to work. He believes his health problems are related to the two years he spent excavating at the World Trade Center after the September 11 attacks while he was a member of the 731 workers’ union.
Opperman wanted to sell his house before the end of the moratorium last year as the penalties he faced mounted.
He sold the home for $636,000 earlier this month and paid his lender about $544,000, including penalties and attorney fees, he said. He bought the house in 2007 for $440,000 with a $330,000 mortgage.
“I owed them more than I borrowed, and I’ve been paying them for 15 years,” Opperman said.
He used the proceeds to purchase a 5-acre property in Bainbridge State, Chenango County, for $87,000. Opperman hopes to develop the Bainbridge property, raise chickens and crops, and pay fewer bills — albeit without conveniences like a sewage system and city garbage disposal.
“If we weren’t in this upswing that we’re in, I wouldn’t have gotten away with anything,” Opperman said of the real estate market.
But moving to a lower-cost area isn’t an option for everyone, said Sakalis, Syosset’s real estate agent.
“It’s not a common situation for people who have so little equity in their home,” he said. “Most people want to stay in the general area of their home, and they’re priced cheaper.”
Federal aid available
There are federal funds for homeowners who are behind on their payments, but they will not be enough to help everyone in need. The $539 million Homeowner Assistance Fund, a state-administered federal program, can help people at risk of default or foreclosure due to financial hardships related to the pandemic.
The aid is “a big drop, but it’s a drop in the ocean,” said Kirstin Keefe, a senior attorney at the Empire Justice Center in Albany.
Applications for the relief fund opened Jan. 3 for people who meet certain income requirements and are in arrears on mortgages, property taxes, water or sewer bills. Individuals who are in default on a reverse mortgage, are in arrears on their living expenses in a cooperative or condominium, or are in arrears on payments on a manufactured home can also apply.
The state has warned that it expects to receive more funding applications than it can accommodate and plans to review applications in the order in which they are received.
“I hope the federal government will see the program as a success and put more money into it,” said Long Island Housing Services’ Wilder. “There’s no guarantee of that.”
The Long Island Housing Partnership, a Hauppauge nonprofit, hadn’t received many Homeowner Assistance Fund inquiries during the first week of January, but was expecting an inflow related to the end of the foreclosure moratorium. The agency can help homeowners manage the documentation needed to apply for loan modifications from a bank, said Peter Elkowitz, its president and CEO.
“It’s really important to reach out and not give up,” he said.
Homeowners shouldn’t assume there aren’t ways to help them, said Tricia Gleaton, vice president of the homeownership center at Community Development Corp. of Long Island that can help homeowners apply for help.
“When people are unable to make a mortgage payment, it’s a scary time and they’re not sure who to turn to,” Gleaton said. “Because they receive communications that could be confusing from their lender or in some cases courts, it’s important they try to get in touch with a non-profit organization that is a neutral third party and is there to offer help.” afford – or possibly links to get free legal advice.”
- Get free help from a state-licensed housing counselor or attorney through the state-funded Homeowner Protection Program: 855-HOME-456 or homeownerhelpny.com.
- Find out if you qualify and apply for help from the Homeowner Assistance Fund: 844-77-NYHAF or nyhomeownerfund.org.
- Find a licensed housing counselor: bit.ly/34MFA8R.
- Learn more about state mortgage relief opportunities and find out who owns your loan: bit.ly/3FsTPMt.
- Find out if your lender is regulated by New York State: nwsdy.li/statereg.
- Contact your lender to discuss your hardship and learn more about your options.
- Keep all documents showing financial hardship and take detailed notes of phone calls, including dates, names, and extension numbers.
- Nassau County Bar Association (516-747-4070, nassaubar.org).
- Nassau Suffolk Law Services (516-292-8100, www.nslawservices.org).
- Open all mail from lenders, courts, and attorneys.
- Beware of scams. It’s free to apply for the Homeowner Assistance Fund, and homeowners should be wary of anyone charging a fee for applying or promising a money guarantee. According to the attorney general’s office, it’s illegal to charge up front for mortgage assistance.