SBLS Client Fighting Foreclosure Shares Tale with The New Republic

South Brooklyn Legal Services (a program of Legal Services NYC) client Sandra Barkley is the focus of
an article on predatory lending
practices and “one-stop shop” companies in The New Republic. Barkley was referred to United
Homes in 2002, and ended up buying a house in Bedford-Stuyvesant from
them against her better judgments. The house’s price was later revealed
to have been jacked up more than $100,000 over its value by United
Homes, and Barkley fell into financial uncertainty.

She is
now one of six parties that are suing United Homes for financial
restitution. The tactics and operations of this “one-stop shop” are
detailed in the August 18th, 2009 article, which also provides a detailed overview of
predatory lenders and foreclosure.

Barkley is a plaintiff in one of six ongoing lawsuits that
charge United Homes with being at the center of vast and far-ranging
conspiracies–involving appraisers, lenders, lawyers, and major
financial institutions–to defraud low-income homebuyers. (This past
May, after a five-year court battle, Barkley's claims against Credit
Suisse, JP Morgan Chase, and Fannie Mae were resolved in an
out-of-court settlement, subject to a confidentiality agreement. Her
lawsuit with United Homes is still unresolved.) According to Barkley's
lawsuit, United Homes concealed damage in houses the company sold and
engaged in the very profitable (and collusive) practice of "property
flipping." Barkley's lawyers at South Brooklyn Legal Services say that
their clients in the United Homes case are entitled to have their
mortgages declared invalid, to receive compensation for their actual
financial losses, and to receive additional financial compensation for
the alleged wrongs they have suffered.

The piece also touches on the consequences of inadequate funding and unreasonable restrictions on legal services providers:

An offshoot of these cases being so difficult to litigate: They take
years, and are therefore usually beyond the financial resources of
low-income homeowners in or on the verge of foreclosure. An upcoming
report from the Brennan Center for Justice documents the troubling
number of homeowners who face foreclosure without the benefit of legal
representation. Of the cases where there is legal representation, many
end up being handled by financially strapped Legal Services
organizations, which depend on the federal government for most of their
funding. In addition to having limited financial resources, Legal
Services operate under so-called "poison pill" restrictions that were
an outgrowth of Newt Gingrich's Contract With America, which had sought
to eliminate Legal Services altogether. These restrictions, which the
Obama administration wants to overturn, include a prohibition on Legal
Service lawyers bringing class action lawsuits or collecting attorney
fees from the losing side when they win a case under consumer
protection laws that provide such fees.

For the full story in The New Republic, please click here.