SEP 25, 2012 12:58pm ET

N.Y. Awards $20 Million in Settlement Funds for Homeowner Aid

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The state of New York announced plans to award $20 million from the national mortgage settlement to more than 90 legal services organizations and housing counseling agencies around the state.

More than three-quarters of the money will be used to provide New York residents free foreclosure prevention services, while the remaining funds will go to training, technical assistance and other support services, according to a press release from state attorney general Eric Schneiderman.

"This program puts homeowners first, and these organizations will help get our neighborhoods back on track," Schneiderman said in a statement. "Funding housing counseling and legal services is an essential first step to help more families stay in their homes and avoid foreclosure."

Schneiderman's office said that the funding addresses a critical need. Nearly half of Empire State homeowners facing foreclosure in recent years have not had an attorney, and more than half have gone unrepresented at settlement conferences, according to the press release.

New York has been funding legal services and housing counseling for delinquent homeowners through a separate program, but that program's funding expired this year. Over three years, the state said it plans to use $60 million it received from the settlement with the nation's largest mortgage servicers to fill the gap.

It is not clear, however, whether the funding will allow New York to expand the reach of its existing programs.

Some other states have drawn criticism for diverting funds from the nationwide settlement to purposes unrelated to housing.

For example, the $410 million that went to California and the $134 million received by Texas are going to those states' general funds.

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