This month President Bush unveiled a plan with the mortgage industry that would freeze resets on adjustable rates for certain subprime mortgages and try to direct some homeowners into federally secured loans. It would help up to 1.2 million, Bush said.
Some critics say the effort doesn't go far enough, given the losses of large financial institutions that hold devalued subprime loans in their portfolios.
"It's already getting bad when you have writeoffs of your institutions that are totaling in the billions," said William M. Mooney Jr., president of the Westchester County Association, a business advocacy group.
"This is pretty serious stuff. I think the government has a responsibility to step in at a time like this. It doesn't sound to me like they're doing enough. Twenty years ago I would have said, 'Don't fool with this thing.' In today's paradigm, I'd say you have to. That's what a government is for."
Mooney said he is seeing other spillovers. Homeowners who want to sell houses are having a harder time doing so. And those who want to borrow via home-equity loans for holiday spending are finding it's tougher because of reduced house values.
Tighter credit standards slow business deals as well, Mooney said.
"Now the local banker is going to be a little more tough on lending money than he was last year," he said.
Observers of the real estate market in the Lower Hudson Valley say it is shaping up to be tougher for both homebuyers and the people who want to broker loans for them.
For people with less than perfect credit, the days of obtaining 100 percent financing on mortgages without income verification are largely over, they said. Financing is still available for borrowers with good credit, they said, although deals are taking longer.
"But again, they're getting done," said Drew Kessler, area sales manager for Rand Mortgage in New City. "We're definitely in an environment when time heals all and cures all."
For mortgage brokers, a more complex future looms.
A raft of legislation at the federal and state levels is seeking to prevent a recurrence of the conditions that have led to sharp increases in mortgage delinquencies and foreclosures across the nation.
One common denominator in many of the bills is greater regulation of the mortgage broker industry. Critics have accused brokers of recklessly drawing consumers into loans they couldn't afford in the interest of obtaining the higher commissions that subprime mortgages commanded.
"They clearly were steering people into the subprime market who couldn't afford to be there in the first place, or in any mortgage market," said state Sen. Jeffrey Klein, D-Bronx, whose district includes portions of southern Westchester.
Klein has introduced a bill that calls for mandatory consumer education for borrowers using subprime mortgages. The bill also calls for a fiduciary responsibility between brokers and consumers.
"When someone sits down with a mortgage broker, they should be able to breathe easy that that person has their best interests in mind and is going to put them into a mortgage that they can afford," Klein said. "I think that's key."
Gov. Eliot Spitzer last month directed his staff to work with lenders, consumer advocates and the Legislature, spokeswoman Christine Pritchard said. Among the goals was legislation that would require more in-depth evaluation of the borrowers' ability to pay and would clarify mortgage brokers' duties to borrowers, she said.
Fenton Soliz of Mortgage Experts Inc. of White Plains said he expects that bonding requirements and net-worth minimums for mortgage brokerages in the state will be pegged higher. Brokerages already must be licensed and bonded in this state.
The question of how the state would define the brokers' fiduciary responsibility to consumers is a concern to him. The bonding requirement in New York already serves as a powerful deterrent to misbehavior, Soliz said, because the inability to get bonded would put a brokerage out of business.
That lenders were willing to offer loans for 100 percent of the cost of homes, and without income verification, is overlooked when blame is being assigned to the mortgage brokers, Soliz said.
"This industry has been used as a scapegoat. They provided the liquidity. They provided the securities," he said. "If you don't have the product to sell, you couldn't have sold it."
For homeowners wondering about the future, panic is the emotion to avoid, said Kenneth Polin of Banner Mortgage Group in Scarsdale. The value of most people's homes in the region has not fallen dramatically, he said. The region has special market appeals, such as its proximity to New York City and well-regarded school systems.
"This is not like some area of the country where prices have dropped by 25 percent or more," Polin said.
But it is harder now for first-time homebuyers to enter the market, he added.
"I'm not saying people have to put 20 percent down. But certainly the days of putting nothing down are gone," he said.
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