New York Lawyers Offering Foreclosure Defense

Published: June 1, 2008

THE best way to avoid a foreclosure — calling a good lawyer — is often the least affordable option for those in danger of losing their homes.

A group of altruistic New York lawyers hopes to change that. And while these lawyers may not be able to keep borrowers in their homes, they may help homeowners avoid financial ruin.

The Nassau County Bar Association, with the New York Banking Department and Attorney General’s Office, recently began an effort to train lawyers to offer free help to homeowners struggling with mortgages.

The program is in its nascent stages, said Martha Krisel, a lawyer with the Nassau County Attorney’s Office who is leading the effort. But early signs indicate it will help to counter a severe shortfall in affordable legal help for people facing foreclosure.

“It’s a no-brainer,” Ms. Krisel said of the program. “There are attorneys who really want to help, and who feel terrible about this. And by 2009 there’ll be an even greater need for this.”

Ms. Krisel said nonprofit housing counselors often encountered situations in which lenders might have engaged in illegal practices. In the overheated mortgage market of 2005 and 2006, for instance, mortgage officers and brokers sometimes fabricated income statements and other documents to help otherwise-unqualified borrowers get approval for loans.

When housing counselors find evidence of such activity, their advice is often to get a lawyer. But legal services are typically too expensive for such borrowers, and Legal Aid organizations have been overwhelmed with foreclosure-related cases.

Ms. Krisel worked with the Nassau County Bar Association, private lawyers and state representatives last month to arrange continuing education credits for lawyers who perform pro bono work for people facing foreclosure (such credits are mandatory for practicing lawyers).

She also convened the first of a series of training sessions for lawyers to get up to speed on housing-related laws. About 60 Nassau County-based lawyers attended the initial training session, and Ms. Krisel said similar initiatives were under way at the Federal Reserve Bank of New York. (Similar programs are also under way in neighboring states, through Statewide Legal Services of Connecticut Inc. and Legal Services of New Jersey.)

Because so many borrowers who have fallen behind on their mortgages were unqualified for their loans, Ms. Krisel said, even a good lawyer may not be able to keep them in their homes. But at the least, she said, the borrower may escape with their finances somewhat intact.

When the Nassau program, which has not yet been named, makes its debut, homeowners in the county may call the Nassau County Homeownership Office at (516) 571-HOME — (516) 571-4663 — to discuss eligibility.

The value of legal help is not limited to homeowners facing foreclosure. Neighborhoods with even one foreclosure can experience drops in home values. This is not only because such homes are often in poorer condition than occupied homes and therefore depress an area’s perceived quality, but also because the homes tend to sell at steep discounts to other houses, thereby softening the local real estate market.

According to Tara Twomey, a consultant to the National Consumer Law Center, which publishes books on consumer law issues, the Nassau County initiative is timely. Many borrowers will simply give up their homes and accept the financial consequences because they think they have no other alternatives.

“And I’ve seen a lot of cases from debtors who’ve filed suits themselves, because most of them have no money to pay a lawyer,” Ms. Twomey said.

“Bar associations from all the states are looking at this and trying to figure out how they can help,” Ms. Twomey added. “But the magnitude of the problem far outstrips any pro bono services.”

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