House Dem calls for moratorium on NYC taxi loan foreclosure

NCUA is responding to oversight of taxi medallion loans. (Source: Shutterstock)

The NCUA should impose a moratorium on loan foreclosures on New York taxi drivers, MP Carolyn Maloney (DN.Y.) said Thursday.

“That would be moral and decent,” she said at a House Financial Services Committee hearing on debt collection.

Lots of cab drivers in New York City took out large loans based on their taxi medallions, which were once worth up to $ 1 million. Due to ridesharing services like Uber and Lyft, the value of these medallions has gone down.

However, it is New York Times reported in May that some lenders, including credit unions, engaged in predatory behavior to persuade taxi drivers, including many immigrants, to take out loans.

“This is criminal behavior,” said MP Alexandria Ocasio-Cortez (DN.Y.) during the hearing.

Several credit unions, notably Melrose Credit Union and LOMTO Federal Credit Union, have made large numbers of taxi loans and have been liquidated by the NCUA. They were merged into other credit unions, but the NCUA took over many of the taxi loans.

The agency’s inspector general said if the agency should have taken action earlier against credit unions, which had a large concentration of taxi loans.

The loans taken out by taxi drivers are to be refinanced, Bhairavi Desai, Executive director of the New York Taxi Workers Alliance, a union that represents taxi medallion owners, told the committee.

For example, she said that a $ 600,000 loan is now worth about $ 150,000 in real terms. Locket owners would likely be able to afford the payments for such a loan.

Desai said the drivers were “deep in crisis” and “handcuffed to the wheel” and worked long shifts seven days a week.

Meanwhile, lenders voluntarily extended loans to at-risk drivers even as the taxi medallion’s value fell, she said.

Desai, who is also a member of a New York task force set up to investigate the crisis, said the city’s taxi and limo commission continues to auction medallions.

NCUA Chairman Rodney Hood said the agency is trying to work with individual drivers to make their loan payments more affordable, in an August interview with the CU times.

“My heart goes out to all of these taxi drivers,” he said and later added: “We want to offer customized solutions to borrowers who want to work with us.”

“We at NCUA really didn’t cause the crisis,” he said, adding that the credit unions that specialize in taxi medallion loans have been well capitalized for years.

NCUA officials said in March that the failure of credit unions cost the stock insurance fund $ 792.5 million, with much of that cost attributable to taxi medal credit unions.

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