Despite recent declines, our borough remains at the heart of the foreclosure crisis. Numerous families in our district find themselves owing more for their home than it is worth, as they struggle to make mortgage payments in a tough job market.
I took a number of immediate steps to stem the tidal wave of foreclosures in our district when the crisis first erupted. One of my first actions was to hire a full-time staffer dedicated to managing the crisis in our community.
At the same time, I also led an effort to ensure that Bedford-Stuyvesant Legal Services remains in the district. This organization provides comprehensive services that have enabled hundreds of families in our community to stay in their home. Additionally, I organized several community town hall meetings to inform families in need of help about the Home Affordable Mortgage Program (HAMP), a Treasury Department program to help underwater homeowners refinance their mortgage.
As I continue to work diligently in Congress to help struggling homeowners in our community, we must prepare to combat a new crisis that has caught my attention. Banks are increasingly pursing deficiency judgments in court against former homeowners. A deficiency occurs whenever banks receive less money in a foreclosure sale than the amount the former homeowner owed. Courts typically allow lenders to go after former homeowners for the remaining debt.
Some states permit lenders to pursue borrowers for deficiency judgments up to six years after the date of the foreclosure sale. That means struggling families will have to pay tens of thousands of dollars years after the foreclosure--adding to their financial hardship.
Many experts anticipate a massive surge in deficiency judgments, as debt collection companies are now obtaining these accounts from lenders at pennies on the dollar. Experts also expect greedy investors, who do not care that they are making money on the misery of struggling families, to fuel the surge.
In anticipation of this next wave of the housing crisis, I introduced H.R. 3566, the Fairness in Foreclosure Act. It will standardize the length of time after a foreclosure that a mortgage company can bring a deficiency judgment against a homeowner. The bill will also prohibit lenders from bringing a deficiency judgment against low-income borrowers.
At a time when too many Americans are out of work due to the excesses of the financial industry, we must protect those struggling to get back on their feet after a foreclosure.
I am making every effort to alleviate the pain of homeowners and hold mortgage servicers accountable. Most recently, I initiated the effort to organize a congressional field hearing of the House Oversight and Government Reform Committee on March 19 at Borough Hall in Brooklyn. The hearing was about holding banks and mortgage servicers accountable and getting to the bottom of how we can help those who have been most severely impacted by this crisis.
At the hearing, we heard testimony from major banks and investigated how our community and others throughout our nations will be affected by the recent $26 billion settlement between the states and major banks. This settlement will provide relief to an estimated 2 million current and former homeowners harmed in the housing crisis. In New York, roughly 46,000 borrowers will benefit from the settlement.
I remain firmly engaged in this battle to enable families to stay in their homes. For those who cannot keep their home, I am working diligently to make sure they are treated fairly after a foreclosure. At the same time, we must hold lenders accountable for their role in the housing crisis and its aftermath.