Courts to Hasten Efforts to Prevent Foreclosures, but Funding Issues Remain

New York State Courts will soon implement a new programmed design to alleviate delays in thousands of foreclosure cases. Under the program, judges would take over the
running of some settlement conferences from court attorneys, who lack
the power to impose punishments when banks violate the state's requirements that they provide representatives who are actually authorized to make decisions about settlements. 
Courts would also work to assure that homeowners who cannot afford
lawyers are represented, though some lawyers who handle such cases
questioned whether that goal was realistic. In a February 22nd New York Times piece, Legal Services NYC's Jacob Inwald discusses why the new program makes funding for foreclosure prevention services, which is zeroed out in the Governor's Executive Budget, even more critical.

From the February 22nd article:

Some homeowners’ lawyers said they welcomed the plan because thousands of settlement conferences had seemed nearly futile.

“We’re very encouraged by this idea, because one of the real problems at the conferences has been the lack of anyone meaningful to talk to on the lender side,” said Jacob Inwald, the director of foreclosure-prevention litigation at Legal Services NYC, which represents poor people.

But other lawyers questioned the court officials’ plan to provide lawyers for homeowners. The lawyers noted that, after years in which the government provided millions of dollars for legal representation for struggling homeowners, some of New York’s legal programs are now planning to lay off lawyers and housing counselors who specialize in foreclosure prevention.

They noted that Gov. Andrew M. Cuomo’s budget did not provide financing for the programs to replace federal funding that ended. Asked about that decision, Mr. Cuomo’s office did not respond directly. But it said in a statement that “another source of funding” for lawyers could be New York’s $136 million share of the recently negotiated $26 billion mortgage settlement with big banks, which is to be controlled by the state attorney general, Eric T. Schneiderman.

Mr. Schneiderman said in a separate statement that he planned to use a significant portion of the money for homeowners’ lawyers and housing counselors. A Cuomo administration official said negotiations with the Legislature were likely to find money for the legal agencies in the meantime.

But Mr. Inwald, the foreclosure-prevention specialist, said he was baffled by the governor’s response because the mortgage-settlement money was many months from being available.

As a result, he said, the new court program could face difficulty. “It’s going to be a lot less effective,” Mr. Inwald said, “if there’s nobody to represent homeowners in the process.”