Dear Editor:

In response to the dramatic increase in mortgage foreclosures plaguing our communities, I am urging the Comptroller and the City Treasurer to immediately suspend deposits to current Municipal Depositors until these financial institutions have satisfactorily responded to our requests for their proactive foreclosure prevention plans.

Recently, my City Council colleagues and I were asked to approve a list of banks that had been granted “Municipal Depositor” status. Each year, dozens of financial institutions, large and small, compete for this designation, which grants them the privilege of safeguarding our tax dollars. Our deposits allow them to lend more and thus increase their profits. Now, more than ever, banks rely on Municipal Depositor status to remain afloat.

I introduced a resolution that blocked the approval of this status designation until each bank presented the City Council with a proactive plan to help borrowers avoid foreclosure. The resolution was unanimously approved, and we sent each of the 25 eligible banks a list of questions related to their foreclosure practices. The questions we posed were simple. For example: How soon could a borrower go to their bank for help? If a borrower were given a 30-day layoff notice, would they be able to immediately go to the lender to rework their loan, or would the borrower have to wait until they were 60, 90, or 120 days behind on their payments to seek assistance? We feel that questions such as these are appropriate and not unreasonable. After all, isn’t a borrower doing the responsible thing by going to a lender as soon as they know they’re going to be in trouble, and not after? The system isn’t working if a responsible borrower can’t seek help until their credit has been tarnished. While we have received a few responses, the majority of these banks have not yet complied with our request.

President Obama has been proactive in bailing out lending institutions through the economic stimulus plan and assisting borrowers through the "Making Home Affordable" initiative; it is our responsibility, at the local level of government, to ensure that "Municipal Depositors" benefiting from our tax dollars are also being proactive and responsible in assisting those who pay these very taxes.

“Business as usual" must end for we are not living in “usual” times.



Freddrenna Lyle,
Alderman, 6th Ward