Elected Officials, MFY, and Homeowners Call on HUD to Suspend September 14 Sale of Mortgages

Elected officials representing the neighborhoods hardest hit by the foreclosure crisis were joined by MFY and homeowners today at a City Hall press conference to demand that the U.S. Department of Housing & Urban Development (HUD) suspend its sale of mortgages to private equity investors and hedge funds. The discriminatory impact of HUD’s Note Sale Program was revealed in a recent class action lawsuit against the agency by homeowners represented by MFY Legal Services and Emery, Celli, Brinckerhoff & Abady LLP.

In a letter to HUD, State Senators Leroy Comrie and José Peralta and eight City Councilmembers criticized HUD’s sale of mortgages to private equity and hedge funds, noting that while African Americans account for 35% of FHA loans, these communities accounted for more than 61% of the sales under HUD’s Note Sale Program. They also noted that many homeowners whose mortgages were sold by HUD without prior notice were in the middle of negotiating loan modifications as part of New York State’s court mandated settlement conference process. The sale of their mortgages ended the court process that gave them the best chance of saving their homes.

“The result of all of this is that predominantly African-American families do not receive the important anti-foreclosure protections that are enshrined in the FHA Mortgage Program and mandated through New York State law,” said the lawmakers in their letter. The officials specifically asked that instead of selling mortgages to hedge funds and private equity purchasers who have been unwilling to provide affordable loan modifications, the mortgages be sold to the Neighborhood Stabilization Outcome Pools and nonprofit entities at competitive prices so that homeownership and the stability of African-American communities in New York City are properly preserved.

Fearing that a continuation of HUD’s Note Sale Program will lead to a second, and more devastating, foreclosure crisis in African-American neighborhoods, elected officials and advocates vowed to continue to press for change until these sales are ended.