A sign of the times: even Manhattan District Attorney Robert Morgenthau has been caught up in the sub-prime mortgage crisis. During a press conference to announce a City Council resolution calling for changes in US bankruptcy law, the longtime DA said that his mortgage has been recently sold to Countrywide Financial. “It used to be that mortgages were between bank and borrower” he said, commenting on the lend-and-trade practices of lenders, practices which are blamed for the current ‘credit crunch’ in the financial markets.
Morgenthau attended the conference to support a City Council resolution to be introduced by David Weprin, chair of the City Council Finance Committee, calling for national action to change bankruptcy rules for individuals with mortgages, asking that they operate under the same obligations placed on corporations.
The resolution asks that individuals filing for bankruptcy be allowed to renegotiate mortgages for their primary residences under terms similar to those of corporations. Currently, corporate entities can modify the terms of loans and debts, while individuals are explicitly prohibited from re-negotiating the terms of loans for primary residences.
“Shame on lenders who argue against changes” Weprin said, pointing out that over 50,000 homeowners in New York City have sub-prime mortgages. He also said that 22,000 of those are currently undergoing ‘pre-foreclosure,’ having been given a notice of default and threatened with removal from their homes.
“Legislators need to do everything we can to keep homeowners in their homes” said Councilmember Robert Jackson. He pointed that that even though most of his constituents are renters, they have a stake in the subprime crisis, because it “impacts the economy, and so impacts us.”
Morgenthau concluded with a condemnation of current regulations. “The supervisor authority has been asleep at the switch” adding that “it’s un-American to say that we can change the terms for corporations but not individuals.”
More sub-prime and bankruptcy from around the web:
Battle Lines are Drawn on Bankruptcy Bill for Homeowners Facing Foreclosure [DMI Blog]
Morgenthau: Bankruptcy Laws “Unamerican” [Daily News]
NYC Housing Bubble [blog here]
Daily NYC Real Estate Hulaballoo [Curbed]