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Editorial: Banks should help Sandy victims, not crack down

Streets of Ocean Beach on Fire Island were

Streets of Ocean Beach on Fire Island were flooded by superstorm Sandy. (Oct. 31, 2012) Photo Credit: Daniel Goodrich

Foreclosing on a house because otherwise reliable owners missed payments due to superstorm Sandy isn't just mean. It's stupid, too.

The storm struck four months ago. Banks approved payment holidays of three months for many mortgagees, but those periods of forbearance are about done. Many who took advantage of the break are getting a shock: When their three months end, the banks want the arrears in a lump sum, and the resumption of regular payments.

Calling these loans due now is mean because these owners have been living on the edge since the storm. Many are trying to repair their homes while they fight insurance adjusters and struggle to get by. Thousands of claims remain unpaid, and many more are being contested by homeowners who say the offers from insurers won't repair their houses.

Calling these loans now is stupid because it is not in the best interests of banks to own homes, particularly if they're storm-damaged. Foreclosing a home nearly always costs a bank money.

Homeowners who can't pay mortgages because of Sandy need more time. Extending the grace period to six months, as Sen. Charles Schumer (D-N.Y.) suggests, would be more benevolent, and the payments for those months should be added to the end of the loan, not demanded in a lump sum. Having seen their reputations crumble, banks need more common sense and flexibility. These are better attributes, in businesses and in community members, than meanness and stupidity.