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A report released on 07/31/08 talks about existent loopholes in lending laws of New York, that unscrupulous characters of the mortgage industry have used to their benefit.
The New York State Commission of Investigations has found that it is the minority communities that are predominantly besieged by this trend. They found that there was double the number of Hispanic and African-American borrowers in the sub-prime market as compared to white borrowers.
Mary Biunno, speaking on behalf of the commission said instances have come to the fore where estate agents are doubling up as mortgage brokers, especially in minority dominated neighborhoods, managing to attract a fair amount of hopeful people. Bills are presented to clients for services rendered in the form of commissions and fees for loans or sales being organized. Also, they have on their side the attorneys and appraisers who the borrowers think are working for their benefit.
The commission also stated that there should be an increase in regulatory safeguards to protect New York’s lenders from preying lenders. Loans in the sub-prime market have been linked to growing menace of New York bank foreclosures. Speaking of figures, last year foreclosures on sub-prime loans was 59% of the total New York bank foreclosures.
The chairman of the commission, Alfred Lerner, said in a press release that the prime objective of the report was investigating mortgage fraud in the sub-prime market; however it was not possible to ignore the statistics in lending patterns. Greedy brokers pushing people of minority communities who qualify for prime loans into taking sub-prime ones which are high risk is catching on. A fair amount of conspicuously bad cases showed voracious practices on part of lenders where it was quite clear that the borrower couldn’t possibly pay the loan off.
In order to prevent similar problems in the future the commission made some recommendations. These include, brokers being banned from donning the dual role hat because when one person acted as both the agent and the broker, there was an increased chance of criminal behavior and conflict of interest.
