2012-09-28 / Top Stories

AG Funds $6.9M In NYC To Prevent Foreclosure

Attorney General Eric T. Schneiderman has announced the grantees of the Homeowner Protection Program, his office’s commitment of $60 million over three years to fund housing counseling and legal services for struggling New York homeowners. Today’s announcement covers the first year of program funding at $20 million to aid struggling homeowners across New York State who are fighting to avoid foreclosure and remain in their homes. In New York City, 16 legal services organizations and 19 housing counseling agencies will receive more than $6.9 million to provide free foreclosure prevention services.

The funds awarded are the result of a competitive Request for Applications process and represent a portion of the millions of dollars that New York received as a result of the National Mortgage Servicing Settlement that was announced in February among the five largest mortgage servicing banks, 49 states, and the federal government over foreclosure abuses.

According to data collected by the New York Federal Reserve, one in ten mortgages in New York City is either in foreclosure or at serious risk of foreclosure because the mortgage is more than 90 days delinquent. In both Brooklyn and Queens, where the problem is most severe, the Fed estimates that 12 percent of homeowners are in foreclosure or at serious risk.

The Homeowner Protection Program funding announced by Schneiderman will benefit homeowners at risk of foreclosure within the five boroughs and across New York State. Direct service providers will use the announced funds to assist homeowners in navigating the long and often complicated process of applying for loan modifications and seeking other foreclosure prevention alternatives. In recent years almost half of homeowners facing foreclosure have been forced to navigate the process without an attorney and 63 percent of New Yorkers are unrepresented at settlement conferences. Many also lack access to housing counselors.

The combined 33 organizations in NYC that will receive funding under the Attorney General’s HOPP Program were notified in writing earlier this week and are expected to sign contracts to provide services in early October. According to Attorney General Schneiderman, this will ensure that there are no disruptions in services to homeowners who rely on these professionals as a lifeline during these very difficult negotiations.

A portion of the $20 million is also going to support a partnership between the Attorney General’s Office and the Center for New York City Neighborhoods (CNYCN), which will serve as an “Anchor Partner” in New York City to assist with grant management, and provide technical assistance and training to ensure that counselors and lawyers are providing the highest quality of services. CNYCN has a long history of grant management for government programs, as well as direct training, technical assistance, and support to direct service providers in the areas of housing counseling and legal services.

Legal services and housing counseling funded through New York’s Foreclosure Prevention Services Program have become an integral part of the foreclosure process in New York State. Funding for the program was set to expire on April 1 of this year, but the Attorney General provided $15 million from the national mortgage settlement to extend it until October 1. Schneiderman’s Homeowner Protection Program will replace the state’s Foreclosure Prevention Services Program when it expires and ensure that these critical services will continue to be funded for at least three more years.

New York’s comprehensive foreclosure prevention law entitles homeowners to a 90 day pre-foreclosure notice before a lender can begin a foreclosure action. This notice is required to include a list of at least five nonprofit housing counseling agencies that can assist homeowners at risk of foreclosure. These organizations can sometimes help homeowners obtain loan modifications from lenders at foreclosure settlement conferences. Without funding for the Attorney General‘s Homeowner Protection Program, most of these agencies would lose the resources necessary to fulfill these critical obligations to homeowners.

In addition to penalties for past abuses, New York’s share of the National Mortgage Settlement includes direct relief to victims of wrongful foreclosure conduct and billions of dollars nationwide for loan modifications, including principal reductions for struggling homeowners. The settlement, which imposes strong national standards for mortgage servicing, also fulfilled Schneiderman’s demand that he retain the right to bring legal action over misconduct that has not yet been fully investigated.

The announcement is the latest part of Schneiderman’s multi-pronged strategy to stem foreclosures, provide relief to struggling homeowners and hold accountable those responsible for the mortgage crisis. Earlier this year, Schneiderman introduced the Foreclosure Fraud Prevention Act, which would impose criminal penalties for knowingly filing false documents in a foreclosure proceeding, or overseeing employees who engage in such activity. Earlier this year, the Attorney General introduced the Foreclosure Fraud Prevention Act, which would impose criminal penalties for knowingly filing false documents in a foreclosure proceeding, or overseeing employees who engage in such activity.

In January, Schneiderman was appointed by President Obama to cochair the Residential Mortgage- Backed Securities Working Group. This joint investigation brings together the Department of Justice (DOJ), HUD, the Securities and Exchange Commission (SEC), the Consumer Financial Protection Bureau, several state law enforcement officials, and other federal agencies to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. It builds upon ongoing state and federal investigations, while also launching new ones.

More information is available online at: www.nysm ortgagesettlement.com/resources.ht.

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