At the heart of the 2008 financial crisis were millions of mortgages that had been chopped up into tiny pieces and sold to investment banks around the world, who then folded the loans into mutual funds and other investment vehicles.
The problem was that a vast number of those mortgages were sub-prime, meaning the borrowers had poor credit and, by many accounts, should never have been granted the loans in the first place. Those loans, in essence, were destined from the start to end in default.
Compounding that was a new type of exotic financial product, called a credit default swap, that was essentially a bet that a borrower or group of borrowers would default on their mortgages. In many cases, the same banks that bought the risky loans were also the ones betting on them to fail.
When sub-prime borrowers began defaulting on their mortgages en masse in 2006, the real estate bubble burst and the country's mega-banks entered a tailspin that necessitated their $700 billion bailout by the federal government in 2008.
The banks have since recovered and, in fact, are posting record profits. But the resulting economic fallout sent the unemployment rate skyrocketing as home values dwindled - a perfect storm that created a second wave of foreclosures.
This time, however, most of the homeowners were not sub-prime borrowers; they had simply lost their ability to pay their mortgages and, in many cases, now owned homes that were worth far less than the outstanding balances on their mortgages.
In New York the situation is far less dire than in most other states, but foreclosure rates are still high. According to the state comptroller's office, New York's foreclosure rate is about 5 of every 1,000 homes. Some 44,000 homes around the state went into foreclosure in 2010, a decline from a record of slightly more than 50,000 homes in 2009.
Meanwhile, a dozen states are grappling with rates higher than 40 out of every 1,000 homes. Vermont leads the pack, with 50 out of every 1,000 homes in some phase of foreclosure.
But the lower Hudson Valley - due, in part, to the precipitous loss of income that resulted from the abrupt onset of high unemployment - is faring worse than the state as a whole. Putnam County in 2009 had the highest foreclosure rate - 15 of every 1,000 homes - in the state outside of New York City, while Rockland was close behind at 12. Westchester's rate is about 9 of every 1,000 homes.
And it seems to be getting worse.
"Every year I expect it to get better, but it looks like this year is going to be the worst yet," said Stephanie Rojas, who runs a foreclosure prevention program at the Rockland Housing Action Coalition, a nonprofit group.
In January and February alone, about 1,300 Rockland County homeowners fell at least 30 days behind on their mortgage, Rojas said. At that point, a state law requires lenders to send homeowners notices that foreclosure proceedings will begin in 90 days.
But the program Rojas runs, which is one of dozens around the state, is now at a crossroads. The slash-and-burn state budget that passed last week, which includes steep cuts to education, health care and social service programs, completely eliminates funding for foreclosure prevention programs.
The programs were funded to the tune of $25 million last year - money that is set to run out Dec. 31. In a nod to the state's $10 billion budget gap, the groups earlier this year asked for $15 million to continue their work, which revolves around mediation between lenders and homeowners. They got nothing.
"We still see many, if not more, people calling every day. They're having difficulty paying their mortgages, not because they choose not to pay, but because they've lost their jobs or they have illnesses," said Diane Chipman, the co-Executive Director of the Putnam County Housing Corporation.
The forecast for 2011 is not just anecdotal. Moody's Analytics, one of the most widely respected economic forecasters in the country, says that "housing will hit its bottom in 2011," with more than 4 million loans in default across the country.
Without the state money, Chipman and Rojas said, they'll likely be forced to cut staff and even begin turning away new clients. Rojas' office has a staff of 4.5 people, and she said they'll likely end up with only two people when the dust clears. That means the groups will rely solely on federal funding and be far less effective in convincing lenders to modify loans and keep people in their homes.
Morris Peters, a spokesman for Gov. Andrew Cuomo's Budget Division, said that the $25 million that was used to fund the groups last year actually came from the federal stimulus, but that money has run out.
"Closing a $10 billion budget gap is no easy feat and you have to make a lot of difficult choices to do that," Peters said. "When you're reducing aid to school districts and limiting Medicaid, it's really hard to take on expenses that weren't previously yours."
Foreclosures don't just affect the people losing their homes. They cause a ripple effect that keeps home prices low, meaning local governments and school districts collect less property tax revenue. According to the Rochester-based Empire Justice Center, the average home in New York stands to lose $38,000 in value while the state as a whole will lose an estimated $242 billion in home equity between 2009 and 2012.
Funding efforts to stave off a new wave of foreclosures is not only an issue in Albany, but in Washington as well. House Republicans on March 29 voted to eliminate a $30 billion program that provides financial incentives to lenders who agree to modify delinquent mortgages. President Barack Obama has said he will veto the measure if it reaches his desk. The program was designed to help as many as 4 million homeowners, but so far only 540,000 loans have been permanently modified.
Here's a look at what our local lawmakers were up to between March 25 and April 1:
Assemblyman Tom Abinanti (D-Greenburgh) did not introduce any bills.
Assemblyman Bob Castelli (R-Goldens Bridge) introduced one bill, which would require the state to set aside space in the Capitol for the Vietnam Veterans of America to conduct lobbying efforts and store records and memorabilia. A number of other veterans groups, including the Veterans of Foreign Wars and the Korean War Veterans, already have office space in the building. Castelli, a Vietnam veteran, said that the measure would help correct the misguided criticisms of Vietnam vets upon returning home from the war.
Castelli on March 30 gave a cautious thumbs-up on the state budget, which passed soon after midnight on March 31. While the spending plan represents "a compromise," he said, it promises to put the state on the right path to address outlying issues such as property taxes, unfunded mandates and pension reform.
The assemblyman lauded the decision to restore about $7 million in funding to state-run veteran's homes around the state. The restorations were made after Castelli and other veterans' advocates in the legislature sent a letter to Gov. Cuomo and key lawmakers arguing that cutting funding to the homes would actually cost the state money in the long run.
Castelli on March 25 attended the Westchester County Women's Hall of Fame Luncheon in Rye Brook in order to congratulate ten high school students from his district who won scholarships. Recipients included Isabela Albert Merrill of the NY School for the Deaf, Kayana Jean-Philippe and Laura Doherty of Harrison High School, and White Plains High School students Denise Santizo, Eboni Andre, Jessica Bedoya, Jessica Gonzalez, Markelin Moscoso, Diana Osorio, and Melissa Rodriguez.
Castelli is accepting applications for scholarships from Italian-American high school and college students. The New York Conference of Italian-American State Legislators will award four $1,500 scholarships - two academic and two athletic - later this year. Applications can be requested by calling the assemblyman's office at (914) 686 – 7335. The deadline is May 2.
Assemblywoman Sandy Galef (D-Ossining) introduced two bills, including a proposal that would create a task force charged with examining the feasibility of establishing a state-owned bank. In a memo accompanying the bill, Galef points out that North Dakota has had such a bank since 1919, and that the state is debt-free and was largely cushioned from the effects of the 2008 financial crisis. State-owned banks, she said, "operate more conservatively than for-profit banks, eschewing the riskier moneymaking schemes" that caused the global recession. She also claims that such a bank would work cooperatively, and not compete, with private banks in the state.
Galef's second bill would prohibit state agencies from claiming copyright protection unless the application involves artistic creation or scientific or academic research.
Galef and Sen. Jose Serrano (D-Manhattan) on March 29 penned an op-ed pushing for the adoption of a bill they sponsored that would overhaul the process of doling out member items, which are grants distributed by lawmakers in their home districts that generally total about $200 million in the state budget. The bill would require equal distribution of member item, or "pork," spending to all lawmakers, where the system currently favors senior legislators in majority parties. In an effort to curb corruption, the legislation also would require the Attorney General's office to verify that all groups applying for grant money utilize proper accounting practices. The fiscal year 2012 budget, which passed last week, does not include member item spending in a nod to the state's economic woes.
The assemblywoman announced that her local-access TV program, "Dear Sandy," will air on Friday nights throughout April. The show will tackle a range of concerns, starting with the consolidation of local government services. The show will air on Cablevision and Comcast throughout northern Westchester and Putnam.
This is late, but worth a look: in February Galef hosted a discussion on a range of education issues, including a proposal by Assemblyman Kevin Cahill (D-Ulster County) that would implement a statewide system of public school funding and transform the current property tax system.
Assemblywoman Ellen Jaffee (D-Suffern) did not introduce any bills.
Jaffee introduced a resolution opposing the re-licensing of the Indian Point nuclear power plant when its current licenses expire in 2013 and 2015. The assemblywoman cites the disaster at Japan's Fukushima Dai-ichi plant as evidence that nuclear power is not worth the risk. Local lawmakers Tom Abinanti (D-Greenburgh), George Latimer (D-Rye), Amy Paulin (D-Scarsdale) and Ken Zebrowski (D-New City) have signed on to the resolution. Jaffee has sponsored a bill that would create a tax on the storage of spent fuel rods at nuclear sites; the revenue would be used to fund emergency preparedness planning.
Assemblyman Steve Katz (R-Yorktown) did not introduce any bills.
While lauding the restoration of funding for maritime patrols and schools for the blind and deaf, Katz criticized the overall budget process for its secrecy and haste - two of the hallmarks of the annual budget imbroglio. The freshman pointed out that lawmakers had less than four hours to review spending bills before they voted. Specifics on a $1.27 billion cut to education funding, for example, were not released until after 9 p.m. on March 30.
Assemblyman George Latimer (D-Rye) did not introduce any bills.
Assemblywoman Amy Paulin (D-Scarsdale) did not introduce any bills.
The Assembly on March 24 passed a bill, sponsored by Paulin, that would increase the length of time that a victim of domestic violence is covered by an order of protection, which bars suspects from contacting victims. Current law allows courts to issue temporary orders that stay in place until a suspect is convicted; a so-called "permanent" order, which usually lasts for two years, is implemented upon conviction but prior to sentencing, which can take place months after a suspect is found guilty. Paulin's bill seeks to extend temporary orders until sentencing, meaning the permanent order would not take effect until later on in the process.
Assemblyman Ken Zebrowski (D-New City) introduced 12 bills, including a measure that would increase, from 14 to 16, the minimum age at which a person could patronize a tanning salon. Another bill would allow college students and their parents to deduct the cost of textbooks from their taxable income.
Perhaps due to the arrival of spring, Zebrowski seems to have golf on the brain. One of his bills would allow veterans to play for free on public golf courses on Veterans Day and Memorial Day, and another would prohibit golfers from "bribing" public golf course operators for choice tee times.
Another bill would temporarily increase, from 24 to 36 months, the period a homeowner has to make delinquent property tax payments. The measure would expire at the end of 2013.
Sen. Greg Ball (R-Patterson) did not introduce any bills.
Ball is circulating a petition that he said would protect New Yorkers' Second Amendment rights by calling on state and local officials to reject proposals that would place restrictions on gun ownership.
Ball on April 8 will hold a hearing in Manhattan focused on the state's homeland security since the 9/11 attacks. He will be joined by Long Island Congressman Peter King, who recently held hearings on the radicalization of U.S. Muslims. The duo also will probe a recent Senate proposal that would to undocumented immigrants.
Ball will join Sen. David Carlucci and others on April 14 at a hearing on the safety of New York's nuclear power plants.
Sen. David Carlucci (D-Clarkstown) introduced 19 bills, including proposals to prohibit the unsolicited mailing of credit card applications and require banks to offer credit cards that do not allow cash advances.
Another bill would extend opportunities for muncipal consolidation to cities and counties with populations smaller than one million people. Current law applies only to towns and villages.
Carlucci also wants to make the onion New York's official state vegetable and create a tax credit of up to $25,000 for businesses that sell products that are grown or manufactured in New York.
Most of the freshman's proposals are local bills, including a measure that would extend until Nov. 30, 2013 an additional one percent sales tax in Rockland County. Additional bills would allow the town of Ramapo and village of Montebello to exempt certain parcels from property taxes.
Carlucci on April 1 joined the family of the late Caroline Wimmer to push for the passage of a bill named in her honor. Wimmer, of Staten Island, was murdered in 2009 and a paramedic who was on the scene later posted a grisly photo of the woman on Facebook. The bill, known as "Caroline's Law," would make it a class E felony to publish or broadcast such images. The paramedic in Wimmer's case, Michael Musarella, pleaded guilty in December to official misconduct and was sentenced to 200 hours of community service. He was also stripped of his EMT license.
Carlucci will join a handful of his Senate colleagues in holding an April 14 hearing on the safety of the state's nuclear power plants. The hearing will be held from 1 to 5 p.m. at the Stony Point Community Center.
Sen. Suzi Oppenheimer (D-Port Chester) introduced two bills, one of which would allow for three-year motor vehicle registrations for drivers who have three-year leases on their cars. Current law allows only for the typical two-year registration, meaning those with three-year leases pay for an unused year.
Oppenheimer also introduced a bill that would require many health insurance providers to reimburse for human leukocyte antigen (HLA) testing, which is used to match bone marrow and tissue donors with recipients. Current law requires donors to pay up to $75 out of pocket for the tests. HLAs are proteins that help the body identify foreign cells, triggering a response from the immune system. The bill, which is sponsored in the Assembly by George Latimer (D-Rye), has failed to pass six times in the last 12 years.
Last week the DisPatch reported on a bill, sponsored by the senator, that would place safety restrictions on movable soccer goals at schools and parks. According to Oppenheimer spokeswoman Debra Lagapa, the measure was prompted by a 2002 incident involving an 8-year-old Rye Brook girl. On June 2 of that year, a 180-pound movable soccer goal that was not properly anchored fell on the girl, Julia Parisi, and crushed her femur. Julia required multiple operations and months of physical rehabilitation, but has since made a full recovery. Dozens of children across the country have been killed or seriously injured in similar accidents over the last 30 years.
Oppenheimer on March 30 announced that she had secured a $10,000 state grant for Staying Put in Rye (SPRYE), a local "aging in place" group that seeks to provide services to seniors that allow them to stay in their homes instead of moving into retirement communities or nursing homes. SPRYE will use the money as reimbursement for start-up expenses. SPRYE President Thomas Saunders said the group hopes to begin accepting members later this year.
Oppenheimer received Audubon New York's William Hoyt Environmental Excellence Award, which is awarded annually to an elected official who demonstrates a commitment to environmental issues. Oppenheimer was recognized for her work on the 2010 Smart Growth Public Infrastructure Policy Act, a state law that seeks to address suburban sprawl by requiring state agencies to consider "smart-growth" principles in public works projects. The term "smart growth" generally refers to concentrating development in population centers to avoid sprawl. Audubon also cited the senator's work on water quality and habitat conservation initiatives.
Sen. Andrea Stewart-Cousins (D-Yonkers) introduced two bills, including a proposal that would require at least one board member of the Westchester County Industrial Development Agency (IDA) to be a county legislator. The IDA is a quasi-governmental agency that provides tax breaks and other sweeteners to businesses looking to relocate or expand. The agencies are often criticized for having a lack of oversight and engaging in cronyism and corruption.
The senator's second bill would allow local governments to make purchases off of other municipalities' existing contracts. The practice, known as "piggybacking," is currently allowed only on county contracts.
Stewart-Cousins on March 26 issued a brief statement on the passing of Geraldine Ferraro, the former Democratic congresswoman and 1984 vice presidential candidate. Ferraro, who campaigned with Stewart-Cousins in the latter's 2006 Senate bid, "went boldly into a male dominated national arena and weathered political storms, and even defeat, with grace and resolve," Stewart-Cousins said.