Queens’ congressional members are pushing their U.S. House of Representatives colleagues to prevent financially strapped homeowners in the borough from falling into a deeper hole and exacerbating the housing crisis.
Rep. Gary Ackerman (D-Bayside) sent a letter last Thursday to leaders of the House Appropriations Committee to urge them to extend the conforming loan limits that are eligible for Federal Housing Administration and Government Sponsored Enterprise insured mortgages.
At the end of the month, an extension to those limits that was issued three years ago will expire and would result not only in fewer mortgages being eligible for guarantees from federal agencies and services such as Fannie Mae and Freddie Mac, but also force private mortgage lenders to assume risk for loans above the limits.
“Middle-class homeowners are enduring the most painful housing crisis since the Great Depression. In just a few short weeks the pain of the crisis is set to become more acute since mortgage credit for many eligible buyers will evaporate,” Ackerman said in a statement.
His letter was co-signed by a bipartisan group of 36 House members, including Queens members Carolyn Maloney (D-Astoria), Gregory Meeks (D-Jamaica) and Joseph Crowley (D-Jackson Heights).
Ackerman’s office said 4 million American homeowners are either seriously delinquent on their mortgage payments or in foreclosure and 11 million homeowners owe more on their mortgages than their homes are actually worth. The foreclosure crisis has hit southeast Queens the hardest over the last couple of years as neighborhoods such as St. Albans, Springfield Gardens and Jamaica lead the state in the number of foreclosures and thousands of homeowners are fighting to save their houses.
Many homeowners in those communities were tricked into taking out subprime loans by shady lenders and could not make their payments when their monthly interest rose.
If the limit is not extended by Sept. 30, it will fall from $729,750 to $625,500 in New York, according to Ackerman’s office. The congressman said that a nearly $100,000 reduction would be devastating to all homeowners, regardless of how much they owe, because private lenders would be unwilling to assume the extra risk and pass it down to their customers in the form of higher down payments and interest.
“We cannot — at this time — rely on private lenders to provide reasonably priced, long-term, fixed-rate mortgages when they have showed great reluctance to do so over the past few years,” he wrote in his letter.