NYS AG puts up $1M to defend foreclosures

January 13, 2012 Updated Jan 13, 2012 at 10:31 AM EDT

By WKBW News
By Business First by Matt Chandler, Buffalo Business First Reporter

January 13, 2012 Updated Jan 13, 2012 at 10:31 AM EDT

State Attorney General Eric Schneiderman has announced his office will fund $1 million in foreclosure prevention services to aid New Yorkers struggling through the foreclosure crisis.

Schneiderman issued a Request for Applications (RFA) seeking bids from non-profit legal services and legal aid organizations to provide direct legal services to homeowners in foreclosure or at imminent risk of foreclosure.

"As our state faces another tight budget year, we must be creative and aggressive in our efforts to support working families who are struggling to stay in their homes," Schneiderman said in a release announcing the monies. "This funding will provide thousands of New Yorkers with the legal expertise they desperately need to defend their rights and avoid falling prey to unscrupulous mortgage servicers or foreclosure mill law firms filing fabricated or robosigned documents. My office will continue to use every tool available to us to protect homeowners and all vulnerable New Yorkers."

The $1 million will come from unspent dollars from a 2006 settlement between the Attorney General's Office and Ameriquest Mortgage, Co. The investigation found that Ameriquest engaged in predatory and illegal lending practices to sell and refinance mortgages, including misrepresenting and failing to disclose loan terms, charging excessive loan origination fees, and inflating appraisals to qualify borrowers for loans. As part of the settlement, Ameriquest paid approximately $22 million to New York.

Schneiderman ordered an expedited RFA process, which could result in awards for funding in as little as eight weeks.

"Homeowners across this state are struggling in these tough economic times. We owe a debt of gratitude for Attorney General Schneiderman's bold action that will give the working families in our community a fighting chance," said Buffalo Common Councilman Darius Pridgen. "By allocating resources for foreclosure prevention services, the attorney general has once again stood up for those who need our help the most."

Joseph Kellerman, the executive director of the Western New York Law Center, said funding cuts have made the work of representing people facing foreclosure more challenging, and he sees the earmarked cash as a step in the right direction.

"It is a good stop-gap measure but we hope that the program will be fully-funded in the executive budget in April," Kellerman said. He noted that the federal cuts for foreclosure work totalled $25 million over two years, so while $1 million is important, it isn't nearly enough to address the crisis hitting especially hard in Western New York.

"Erie County is probably sixth or seventh in the state in terms of foreclosure cases filed," he said. "But, given the size of our population, which is a lot smaller than a lot of the counties ahead of us, it means we have more foreclosures per capita than most counties in the state."

With the economy still in a state of flux and uncertainty looming over the housing market, Kellerman said unless a larger portion of the lost funding is restored, ultimately it is homeowners in Western New York and across the state that will continue to suffer.

"We have a very good success rate with getting our clients into a loan modification program," he said. We are at something like a60 or 65 percent success rate. The end result of the ongoing finding crisis is that we won't be able to take nearly as many cases as there is a need for in Erie County."

The guidelines for applying and the application will be posted in the New York State Contract Reporter, www.nyscr.org, and will also be available on the attorney general's website, www.ag.ny.gov/bureaus/budget_fiscal/procurement.html, later this week.

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