NYC Foreclosures on the Rise

by: Barry Ritholtz

Here's the latest slice of legislative brilliance: A one year moratorium on foreclosures:

The Bush administration recently announced a plan to delay foreclosures for some troubled homeowners for 30 days. Senator Hillary Rodham Clinton, in the race for the Democratic presidential nomination, has called for a 90-day moratorium on foreclosures.

But two state legislators have been quietly pushing for an even longer reprieve for homeowners in New York State: a one-year moratorium. Assemblyman James F. Brennan, a Brooklyn Democrat, and State Senator Frank Padavan, a Queens Republican, have introduced a bill in both houses that would delay foreclosure proceedings throughout the state for one year. The measure would allow residents to remain in their homes while granting them time to work with lenders to modify their mortgages.

The bill is one of the most far-reaching state proposals to address the crisis in subprime lending and foreclosures, and it recalls the long-term foreclosure moratoriums that provided relief to homeowners in the 1930s during the Great Depression.

Not to be too harsh, but I fail to see how preventing enforcement of contracts and property rights is going to help this situation.

If the government or private foundations want to get more involved, they need to understand what the problem truly is, and craft an appropriate solution (more on this topic later this week).

The charts below are quite interesting: Manhattan Real Estate has been rock solid throughout the entire Housing mess. But I was a little surprised to see how much pressure the rest of the city has been under:

Foreclosures, 5 Boroughs NYC

There has been no big uptick in NYC foreclosures -- mostly due to many high paying corporate and Wall Street jobs still here. That, plus a big influx of European money taking advantage of the weak dollar.

Note: Central Park (white area in red circle) remains foreclosure free!

Bill Would Set Foreclosure Moratorium
NYT, March 3, 2008