Foreclosure crunch targets LI

March 27, 2008 4:25:13 PM PDT
Those being hit the hardest in the foreclosure crunch are subprime borrowers, people who either borrowed more than they could afford or people with poor credit history. A new study claims a third of the subprime loans in New York were made on Long Island, where home foreclosures are soaring.

Eyewitness News reporter Emily Smith has more.

In an area with millions of people and homes,it's not a surprise to those in real estate that Long Island is now statistically at the top of the mortgage crisis in New York state.

"When you look at the number of loans that were done on Long Island, it's a percentage," said Mike McHugh, vice president of Empire State Mortgage Bankers Association.

New data from the Federal Reserve Bank of New York shows Nassau and Suffolk counties accounted for 33 percent of all subprime loans made in the state in 2006 that are now in foreclosure.

That's nearly 13,000 loans just on Long Island, making it the most in the state.

Subprime loans being those given out, until recently, to pretty much anyone, regardless of their credit or income.

But McHugh says what looks like trouble for Long Island is actually not when compared to most of the country.

"There's been really five states, being California, Florida, Nevada, Ohio and Michigan with major problems," he said.

Yet bold headlines drawing attention to the subprime issue in New York, specifically Long Island, seem to be playing mind games with potential buyers in a time when realtor and attorney Barbara Ford says real opportunity exists.

With so many houses for sale, it's certainly buyer's market. That, of course, means it's a good time for the buyer and bad for the seller, right? Maybe not. Ford says it might be good for some sellers too.

"If they're selling their house for 10 percent less, they're probably buying their next residence...for 10 percent less, too," she said.

Still, thousands of Long Islanders are painfully aware the area is at the top of an infamous list for foreclosures.

Ed Brightman is a housing counselor who says it's really a tough time on Long Island right now.

"My phones are ringing off the hook," he said. "I'm seeing a lot of people in trouble. Many hardships and loss of income."

And while Brightman says he tries to help prevent foreclosure, for many in Nassau and Suffolk counties, the process of losing everything seems to be the only way out.