Legal Aid to Help Fight Foreclosure

Nonprofits To Provide Counseling Svcs.

Attorney General Eric T. Schneiderman announced his office has awarded $3 million in foreclosure prevention services to aid New Yorkers struggling through the foreclosure crisis, including $1.5 million for organizations serving New York City.

In January, Schneiderman issued a request for applications (RFA) seeking bids from non-profit legal services and legal aid organizations to provide direct legal services to homeowners in foreclosure or at imminent risk of foreclosure. In all, 31 organizations were awarded grants from the attorney general to help homeowners across the state.

The announcement comes only weeks after Schneiderman designated a separate $15 million of the $132 million he secured from the national mortgage servicing settlement to be used to extend funding for foreclosure prevention and other related services. Up to $9 million of that allocation will be used to support the state’s Foreclosure Prevention Services Program, which was set to expire on Apr. 1, and $6 million will support housing and community renewal activities statewide through not-forprofit community-based housing organizations.

“As our state faces tight budget times, we must be creative and aggressive in our efforts to support working families who are struggling to stay in their homes,” said Schneiderman. “Funding legal services is essential to bringing relief for the homeowners and communities that have been devastated by the crash of the housing market, and these grants will provide thousands of New Yorkers with the legal expertise they desperately need to defend their rights in court. As we continue to investigate the mortgage crisis that has impacted communities in every corner of this state, this effort will ensure that justice and accountability prevail at every step of the way.”

Two million dollars of last week’s allocation will be funded by an agreement with Steven J. Baum P.C., Pillar Processing, LLC, Steven J. Baum, and Brian Kumiega as part of a settlement with New York State related to abuses in their foreclosure-related legal work. Another $1 million will be funded by unspent dollars from a settlement between the Attorney General’s Office and Ameriquest Mortgage, Co.

That investigation found that Ameriquest engaged in predatory and illegal lending practices to sell and refinance mortgages, including misrepresenting and failing to disclose loan terms, charging excessive loan origination fees, and inflating appraisals to qualify borrowers for loans.

Statewide, an average of one in 10 mortgages is at risk of foreclosure. The approximate number of individuals living in homes that are either in foreclosure or at risk of foreclosure (based on typical household size for each distressed mortgage) exceeds the populations of Buffalo, Rochester, and Syracuse combined.

Civil legal services for homeowners have become an integral part of our state’s foreclosure process. New York’s comprehensive foreclosure prevention law entitles homeowners to a settlement conference in court within sixty days after a foreclosure action is filed with the court.

Organizations providing foreclosure prevention legal services have offered critical support for homeowners in negotiating loan modifications or other positive resolutions from lenders at foreclosure settleonly ment conferences. Without funding from the state, most of these agencies would lose the resources necessary to fulfill these critical obligations to homeowners.

While foreclosures come at a high cost for families and communities, Schneiderman said, preventing foreclosures through legal assistance is cost effective for taxpayers. The Empire Justice Center projects that if foreclosures of currently distressed properties continue unabated, they will cost local governments in New York State more than $5 billion. However, for every foreclosure averted, through legal assistance or other measures, counties would save an average of $186,695 in direct and indirect costs including losses in property value and tax revenue.

In February, Schneiderman announced a settlement of over $130 million for New York with the nation’s five largest mortgage servicers over foreclosure abuses, the fourth highest dollar amount nationwide as part of the federal-state settlement. In addition to penalties for past abuses, the settlement includes direct relief to victims of wrongful foreclosure conduct, loan modifications including principal reductions for struggling homeowners, and funds that can be used to support foreclosure legal assistance and housing counseling programs.

The settlement, which also imposes strong national standards for mortgage servicing, fulfilled Schneiderman’s demand that he retain the right to bring legal action over misconduct that has not yet been investigated.

More information on the national mortgage servicing settlement is available at www.nysmortgagesettlement.com.

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