New York Reinstates $15 Million Counseling Fund

New York attorney general Eric Schneiderman

New York attorney general Eric Schneiderman’s efforts to carve $15 million out of the state’s $132 million national mortgage servicing settlement fund to provide foreclosure prevention assistance to New Yorkers came to fruition only a few days shy of the fund’s expiration date.

The state is allocating $9 million of the extended funding to support its Foreclosure Prevention Services Program which provides legal and housing counseling assistance. The remaining $6 million will be distributed to not-for-profit community-based housing organizations engaged in community renewal development throughout the state.

After getting the green light from the state’s Assembly, Senate and governor the fund will expand counseling opportunities for another six months beyond April 1.

Funding for legal services through the Foreclosure Prevention Services Program “is an essential first step” in fulfilling the promise of a fair deal to homeowners in the state of New York, Schneiderman said, so they can fight wrongful foreclosures and protect themselves in court while investigations of the mortgage crisis continue.

Known as one of the toughest in the country the New York foreclosure prevention law entitles homeowners to a 90-day preforeclosure notice before a lender can begin a foreclosure action. The notice is required to include a list of at least five nonprofit housing counseling agencies homeowners at risk of foreclosure can choose from to get the assistance they need.

Organizations funded by the Foreclosure Prevention Services Program have also made possible the courts’ successes in negotiating loan modifications from lenders at foreclosure settlement conferences. Without funding for the Foreclosure Prevention Services Program, most of these agencies would have lost the resources necessary to fulfill their obligations to homeowners, he said.

The loss of these counseling funds, “coupled with gaps in regional funding,” argued Christie Peale, executive director of the Center for New York City Neighborhoods, would have been devastating to struggling homeowners and communities throughout New York State.

In February Schneiderman reported that the state had reached a $132 million settlement with the nation’s five largest mortgage servicers over foreclosure abuses, the fourth highest dollar amount nationwide as part of the federal-state settlement agreements.

It includes penalties for past abuses and direct relief to victims of wrongful foreclosure conduct, loan modifications including principal reductions, and separate funds for foreclosure legal assistance and housing counseling programs.

The New York settlement requires strong national standards for mortgage servicing and in addition honors Schneiderman’s demand that he retain the right to bring legal action over misconduct that has not yet been investigated.

Also in February the Department of Financial Services set up a website homeowners can use to obtain information and file complaints, a foreclosure hotline that is open from 8:30 a.m. to 4:30 p.m., Monday through Friday. Plus it is in the process of developing an extended schedule for visits from mortgage foreclosure relief specialists to communities most affected by foreclosures through a foreclosure prevention initiative announced by Gov. Andrew Cuomo and undertaken by the Department of Financial Services.

Following that initiative the state recently sent mortgage foreclosure relief specialists to Rockland County to provide direct assistance to homeowners in need.

The goal is to help distressed homeowners understand the options available and if necessary these specialists interview lenders “to make sure that homeowners are treated fairly,” said the state’s superintendent of financial services, Benjamin Lawsky.

Five foreclosure prevention specialists assigned to the Department’s Foreclosure Relief Unit were meeting with homeowners from Rockland and Westchester counties during two separate events that helped counsel approximately 150 homeowners.

Foreclosure prevention specialists who staff the Department’s Mobile Command Center will assess where homeowners are in the preforeclosure or foreclosure process, provide information about loan modification programs and contact lenders.

Lawsky noted, however, that homeowners need to take advantage of the toll-free hotline and website.The objective is to provide direct help to homeowners, get the word out and educate them about mortgage rescue scams. “Beware of anyone who asks for an upfront fee in exchange for getting you a loan modification, saving your home from default or stopping a foreclosure or tax sale,” he said.