New York State Attorney General Eric Schneiderman has announced that up to $15 million of the $132 million he secured in the national mortgage servicing settlement will be used to extend funding for foreclosure prevention and other related services. Up to $9 million of the allocation will be used to support the state’s Foreclosure Prevention Services Program, which was set to expire on April 1. And up to $6 million will support housing and community renewal activities statewide through not-for-profit community-based housing organizations.
“We have an obligation to provide assistance to the struggling homeowners across the state facing foreclosure, and this portion of the national mortgage settlement will ensure that families in New York State have the legal services they deserve to fight wrongful foreclosures and protect themselves in court,” said AG Schneiderman. “Funding for legal services is an essential first step in bringing relief to the homeowners and communities that have been devastated by the crash of the housing market. As we continue to investigate the mortgage crisis that has impacted communities in every corner of this state, we must ensure that justice and accountability prevail at every step of the way. I’d like to thank the Assembly, Senate and Governor for working with our office to make this happen."
Legal services funded through the Foreclosure Prevention Services Program have become an integral part of our state’s foreclosure process. 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. 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 lose the resources necessary to fulfill these critical obligations to homeowners.
The announcement comes weeks after Attorney General Schneiderman announced his office will fund an additional $3 million in foreclosure prevention services to aid New Yorkers struggling through the mortgage crisis from proceeds secured from two separate settlements.
In February, Attorney General Schneiderman announced a settlement of over $130 million for New York with the nation’s five largest mortgage servicers over foreclosure abuses, the fourth highest dollar amount nationwide as part of the federal-state settlement. In addition to penalties for past abuses, the settlement includes direct relief to victims of wrongful foreclosure conduct, loan modifications including principal reductions for struggling homeowners, and funds that can be used to support foreclosure legal assistance and housing counseling programs. The settlement, which imposes strong national standards for mortgage servicing, also fulfilled Attorney General Schneiderman’s demand that he retain the right to bring legal action over misconduct that has not yet been investigated.