Last year Brooklyn had the dubious distinction of being the New York City borough with the highest number of notices of foreclosure, at 4,772. This year the borough faces an additional problem: more homeowners could lose their homes to foreclosure if the state budget does not include funding to provide them with legal advocacy.
In Brooklyn more than 20 non-profits that provide foreclosure education, counseling, and legal representation are at risk of losing their funding. They are part of the statewide Subprime Foreclosure Prevention Services Program, a network of nonprofits that started in 2008 with $25 million from the state budget. The money runs out in April.
Without these legal advocacy, outreach, and educational services, advocates say more New Yorkers could lose their homes, and an already clogged foreclosure court system could become even more congested. “It could throw a monkey wrench,” said Catherine Isobe, a lawyer at the Bedford-Stuyvesant Legal Services.
While initially funded through the state budget, in 2009-2010 $21.8 million in federal money was given to the program as part of the American Recovery and Reinvestment Act, money that, after an extension, took the program through March. However as April swiftly approaches, advocates are running out of options to find funding for the upcoming fiscal year.
During the 30-day state budget amendment period, in which changes to Governor Andrew Cuomo’s budget can be proposed, homeowner advocates and state representatives requested that $25 million be apportioned to the Subprime Foreclosure Prevention Program, budget office spokesperson Morris Peters said that there were no current plans to add new amendments that would provide funding.
The resulting financial uncertainty has already rippled through the non-profit organizations and caused at least one foundation to institute changes.
In Brooklyn, the Erasmus Neighborhood Foundation has provided a preview of what might happen to other organizations across the state. The East Flatbush-based foundation originally took on cases in a manner of a law firm. Each homeowner was given a lawyer to work with throughout the foreclosure process. Late last year, as funding became uncertain, the foundation shuttered this branch of its services.
Paula Heaven, the senior foreclosure attorney at the foundation, said she is concerned for the homeowners that the foundation had to turn away. Heaven explains that homeowners without legal counsel often miss key information that can make the difference between saving or losing their home. “They’re so full of emotion that things that they should be able to see clearly, they don’t,” said Heaven. “They think they’re going to lose their home the next day.”
Heaven recalled one case in which the bank had miscalculated the amount the homeowner owed. The bank’s attorneys were pushing for foreclosure, even though the homeowner owed only $215. Heaven not only had to point out the miscalculation to the homeowner, she had to officially challenge the calculations in order to get the loan modified. “When the calculations are that intense, the lay person [often] will not see them,” said Heaven.
In addition to turning away new cases, the Erasmus Neighborhood Foundation had to turn over 50 pending cases, some over three years old, to a different non-profit organization. Heaven says that this kind of turnover can hurt a homeowner’s situation, since his or her new counsel has to learn the entire case from the beginning. “There’s a relationship and trust built between the attorney and clients,” said Heaven, who had to talk one former client into accepting their new counsel. “It’s hard to transfer that relationship.”
In addition to affecting homeowners, the loss of foreclosure attorneys and counselors could also affect a backlogged court system. The average New York foreclosure case started in the fourth financial quarter of 2011 will take an estimated 1,019 days to resolve. And some homeowner advocates believe that bank attorneys sometimes stretch out the proceedings as a tactic to discourage the homeowners, so that astounding number of days could grow even larger.
Without legal assistance, homeowners will have to represent themselves and attempt to file and decipher legal documents that frustrate even veteran attorneys. Mark Ladov, council for the Brennan Center for Justice at New York University Law School, explained that if fewer attorneys participate in foreclosure courts there will be less oversight of bank attorney’s actions. “There’s been a lot of concern how bank attorneys have been handling these cases,” said Ladov, who explained that foreclosure attorneys were often the first to call attention to any suspicious legal practices. “Bringing a lot of these questions to light, that has an impact system wide.”
Many in the legal services cite homeowners, who have recently received foreclosure notices, as the most at risk for losing their homes.
Heaven says that if there is no funding for non-profit legal services, the same homeowners who fell victim to predatory lending could fall victim a second time to people who claim they will be able to end their foreclosure hardships. “You’re going to see a lot of fraud,” said Heaven. “You’re going to see the same mortgage brokers that got them into this mess, resurface as mortgage modification specialists.”
One bright spot for the non-profit organizations is the $26 billion dollar settlement brokered last month between representatives of the 50 states and the five of the major foreclosure service banks. New York State is expected to receive $136 million from the settlement, although it remains unclear how exactly the money will be apportioned between homeowners, victims of improper foreclosures, and foreclosure prevention programs.
Heaven said she is optimistic that the settlement money will eventually reach the Erasmus Neighborhood Foundation and replace the lost funding.
“It’s seems to be out there in the cloud in the universe and we’re waiting for it trickle down,” said Heaven of funding. “We hear things and it has yet to be manifested.”
Leave a Reply