Foreclosure Hits Long Island Hard

Posted on November 18th, 2008 by saman

In the hay day of subprime lending thousands of people lined up for a piece of the easy credit pie, feeling like they had hit the jackpot. Many believed that being given a loan that they could not even afford was the good old American dream that more and more people were being handed. Now that those subprime loans have come due, thousands upon thousands of people are forming a new line: foreclosure court.

You can go to about any city in the United States and hear story after story of people who feel they were taken advantage of by lenders who just wanted to collect some money in the short term, not even caring that they would likely fall flat on their faces in the end. While lender’s were extremely loose on extending credit for a period of years, there is also some blame that must be placed on the people who took these loans, overlooking the future realities that the principal would one day come due.

Now this crisis has hit home in Long Island, New York as well. People are joining the line at foreclosure court, desperate to save their homes. In most cases the only hope of saving the home they love so much will be to cough up an extraordinary amount of money in a very short period of time. Like thousands of other people all across the country, for the majority of them it will be impossible to pay up before the home is foreclosed on.

Most of the residents of Long Island spend at least thirty percent of their income on housing, so it is not surprising that many of them took advantage of the easy credit offered during the subprime lending period. Many of the new homeowners who took these mortgage loans could not afford to buy a home, but wanted to do it anyway. They didn’t see the loan as a set up for failure, but as a chance to obtain something they formerly thought would be impossible in their lifetime.

It turns out it was in fact a set up, not a dream come true for most of these borrowers. Due to this crisis hitting not only New York, but all over the world, J.P. Morgan has called a temporary moratorium where they will hold off filing anymore foreclosures for ninety days. This is enough time to allow some homeowner’s to come up with the money to catch their loans up to date and prevent the foreclosure from being necessary in these cases.

The reality for many people is that ninety days is by far not enough time to get the money owed on their mortgage loans. For some, the entire principal is due and there is no way that the average American can raise that much money in just a few months. Regardless, it could help some struggling homeowners who are not so far behind, so some local politicians are now calling for other Long Island lenders to take on the same ninety day moratorium to help even more homeowners.