New York Attorney General Increases Homeowner Assistance Funding
New Yorkers struggling to keep their homes are about to get additional help. State Attorney General Eric Schneiderman has approved $1 million in funding for nonprofit legal services organizations to directly assist homeowners facing foreclosure, according to a statement released Thursday by his office.
The money is leftover from a 2006 settlement between the Attorney General and Ameriquest Mortgage Company, in which Ameriquest paid $295 million to participating states -- including $22 million to New York -- as restitution for predatory and illegal lending practices. The funds will be provided to legal services organizations through a competitive application process.
"As our state faces another tight budget year, we must be creative and aggressive in our efforts to support working families who are struggling to stay in their homes," Schneiderman said in a statement. The last round of federal funding for New York state's foreclosure-prevention program ran out at the end of 2011. Statewide, roughly 10 percent of homeowners are at risk of foreclosure.
As the foreclosure crisis drags on, funding legal services has become another tool for helping struggling borrowers. In 2007, the hedge fund Paulson and Co. -- which made billions of dollars by betting correctly on the collapse of the housing market -- donated $15 million to seed the Institute for Foreclosure Legal Assistance. The mission of the nonprofit organization is to help meet the "growing need for quality legal services for families who are victims of a housing crisis created by reckless mortgage lenders."
The new funding will allow such legal services organizations to provide attorneys for people in foreclosure or at imminent risk of foreclosure, according to the State Attorney's office. In New York, court approval is required to complete a foreclosure.
"By funding legal services, we were able to build capacity around the country," said Ira Rheingold, president of the National Association of Consumer Advocates, and one of the people who helped to launch and manage the Institute for Foreclosure Legal Assistance. "You're working with the courts, changing the law, impacting the entire foreclosure process. One attorney who becomes a national expert in foreclosure defense, and can train other attorneys, is far greater than the amount of money that saves one home."
Meghan Faux, director of the Foreclosure Prevention Project at South Brooklyn Legal Services, a nonprofit organization considered one of the nation's preeminent foreclosure-defense groups, said her organization helped over 900 homeowners last year, with an average monthly savings of $1,100 per homeowner. She said they plan to apply for some of the funds announced Thursday.
"Each individual advocate can help dozens, if not hundreds, of homeowners," Faux said. "It's an excellent use of the money and we're really pleased."