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GOP criticizes Steve Israel's short sale

Rep. Steve Israel (D-N.Y.) chairman of the Democratic

Rep. Steve Israel (D-N.Y.) chairman of the Democratic Congressional Campaign Committee (DCCC) is interviewed by Roll Call in his DCCC office. (Feb. 11, 2011) Credit: Getty Images File

Rep. Steve Israel's Republican opponent Monday accused him of accepting "special treatment" on the short sale of his Dix Hills home, claiming that the lender allowed him and his estranged wife to sell the house for $93,000 less than the outstanding mortgage.

But Israel's spokeswoman Samantha Slater said the Democratic congressman, who is running for re-election to a sixth term, did nothing wrong and described the Republicans' outcry as a "cheap political attack."

The issue involves a three-bedroom colonial home that Israel and his estranged wife, Marlene Budd, sold for $460,000 in a deal that closed Friday, Slater said. The short sale was serviced by JPMorgan Chase. Israel identified JPMorgan Chase as the mortgage holder on financial disclosure forms filed in May. JPMorgan Chase could not confirm that Monday.

A short sale is when a lender allows the homeowner to sell their property for less than their outstanding mortgage and usually forgives the difference.

Israel and Budd, a Suffolk Family Court judge, are going through a divorce and had to sell the house because neither could afford to pay the mortgage and property taxes on their own, Slater said. The couple purchased the home in 2004 for $580,000. The mortgage and home equity loan amounted to $553,000, Slater said. Israel and Budd no longer have to pay the $93,000 balance.

Stephen Labate, a Republican who is running against Israel in New York's 3rd Congressional District called the short sale a "classic example of politicians getting special treatment and playing by a different set of rules than the average citizen."

"Many Long Islanders who face severe economic hardship due to unemployment or illness are losing their homes through foreclosure and are never afforded the opportunity of mortgage forgiveness from their mortgage holder," Labate said.

Edward Cox, state Republican Party chairman, said Israel took "advantage of his position to qualify for a debt reduction that is supposed to be reserved for hardworking families that are experiencing a financial setback."

Israel, who earns $174,000 a year, sought no special favors, Slater said.

"Steve and his wife conducted their sale the same way as all of those people," Slater said. "They hired a lawyer to negotiate the sale with all parties for a price consistent with comparable homes in the neighborhood. Additionally, Steve asked for Ethics Committee guidance and acted in accordance with their advice."

The story of the short sale was first reported Monday in the New York Post.

Israel owns another home in Washington with a mortgage of at least $250,000, according to his financial disclosure. Israel and his wife are also trying to sell that home, Slater said.

Currently, 13.5 percent of homes on the Long Island market are short sales, according to Redfin, a national brokerage company. Slater said the sale price of $460,000 on the Dix Hills property was comparable to other area sales.

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