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Cuomo: State To Probe Banks' Handling Of Sandy Victims' Mortgages

ALBANY, N.Y. (CBSNewYork) -- New York Gov. Andrew Cuomo on Wednesday announced a state review of banks and mortgage lenders who were allowed to delay payments as a result of damage from Superstorm Sandy, only to be asked to pay it all back in one lump sum.

The state Department of Financial Services has asked banks to allow homeowners more time to make back payments, and has been trying to determine whether banks have kept their promise not to use late payments as a result of Sandy to start foreclosure proceedings or damage homeowners' credit ratings.

Some homeowners have reported receiving demands for lump sum payments, as well as pre-foreclosure notices stemming from missed payments that the banks had agreed to defer for Sandy victims.

While a minority of homeowners have received such notices, it was enough to prompt an investigation, state officials said. State Financial Services Supt. Ben Lawsky said a computer problem appears to be to blame.

"A homeowner who could come up with three months in mortgage payments all at once probably didn't need forbearance in the first place," Cuomo said in a news release. "Everyone else needs more time to repay."

State officials said homeowners who receive a bill improperly asking for a lump sum payment should try to work it out with the banks on their own, and should contact the Department of Financial Services if that fails.

Last weekend, U.S. Sen. Charles Schumer (D-N.Y.) likewise asked banks to come up with a more reasonable repayment plan for mortgage holders impacted by Sandy, and also asked banks to extend their payment delay period.

"The banks should simply extend the forbearance period to at least six months and longer. Homeowners who lost everything in this storm should get a break from the mortgage payments while they're picking up and reassembling the pieces. It's hard enough to rebuild without having to worry about foreclosure," Schumer said this past Sunday.

On Saturday, Staten Island Rep. Michael Grimm (R-N.Y.) also called for banks to provide mortgage relief to Sandy victims.

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