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Ground zero for the subprime lending crisis - Distressed area homeowners sound alarm at Flatlands Avenue town hall

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The middle-aged Canarsie man waited patiently to speak with a staff counselor from the Kings County District Attorney’s office and then turned to speak with this reporter.

“They [lender] cornered me into a deal where they will take my property from me,” said the man, who identified himself as Edward.

“They said it would be one thing, but when I got the papers in the mail they got a different kind of option. My payments started up at $2,000 and now they’re $4,481,” he added.

Edward, who has owned his home for 15 years, said he found the refinance company through an ad on the radio.

So it went following last Saturday’s town hall meeting on predatory lending at the Beraca Baptist Church, 9602 Flatlands Avenue in Canarsie.

The neighborhood, which includes the 11236 zip code, has the dubious distinction of holding the most subprime mortgages in the city.

Homeowners in this zip code had 1,930 subprime loans as of October 2007, with 12 percent of them in foreclosure, according to data put out by the Federal Reserve Bank of New York.

Another 19.1 percent of the loans were at least 30 days overdue.

“I am outraged with the pervasive practices of lenders who deceptively convince borrowers to agree to unfair and abuse loan terms,” said Rep. Ed Towns, who hosted the meeting.

“I want residents to be aware of the malicious, aggressive and deceptive tactics of predatory lenders that prey on the elderly, the poor and minority communities,” he added.

Following remarks by District Attorney Charles Hynes and Towns, mortgage fraud expert Jeff Ferguson from Hynes’ office had a lengthy question-and-answer session with the roughly 100 people who showed up.

Residents complained of being bombarded with phone calls and fliers left around their doors from mortgage and refinancing companies offering homeowner deals.

Ferguson responded that the DA’s office cannot prosecute unethical, but legal practices.

However, the information gleaned will allow the Legislature to enact tougher laws in the future against it, he said.

Neal Duncan, from the United Canarsie South Civic Association, asked Towns specifically what legislation he has introduced to stop predatory lending.

Duncan also asked Ferguson to name some examples of successful prosecutions of predatory lenders.

Ferguson admitted that thus far nobody in Brooklyn has been prosecuted through the recently passed ‘Home Equity Prevention Theft Act of 2007.’

The DA’s office, however, has been very strong in prosecuting any fraudulent deeds, contracts or other papers and documents, he said.

Towns said he has several pieces of legislation he is working on introducing in Congress, but wants to get more information from constituents first.

One of the problems in learning about the deceptive practices of predatory lending is that often citizens are too embarrassed to come forward to admit they’ve been duped, Towns said.

Towns said that is why he is reaching out to the local clergy to speak to parishioners and help them come forward if they are in danger of losing their homes.

It is crucial that the resident having problems come forward as quickly as possible because if they wait too long it might be too late for anybody to intervene, he said.

Following the meeting, about a dozen residents lined up to speak with the counselors about their individual cases.

“I’m having a situation where the bank every two years wants to refinance my home,” said one woman who has owned her home in Canarsie since 1991.

“They keep putting up the rate and I keep paying because I don’t want to lose my home. It’s not illegal, but it’s unethical. It’s a form of theft to keep raising rates,” she added.

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