Latest Foreclosure Aid: Free Lawyers

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Lots of government officials have promised to help homeowners facing foreclosure, but New York City is finally offering homeowners something of real value: free legal aid to help them negotiate a fair deal from their banks.

"No family facing the loss of their home should be without representation," says New York City Mayor Michael Bloomberg.

The city plans to train 300 new volunteer lawyers over the next three months, through an organization called NYC Service Legal Outreach. One hundred lawyers will be stationed at courthouses to screen homeowners, while the other 200 will be matched with individual homeowners and represent them through the foreclosure settlement process, according to a story in Crain's New York Business.

The lawyers will represent homeowners during the mandatory "settlement conference" now required under New York City law, when the homeowner and the bank meet to negotiate alternatives to foreclosure.
The government has been overflowing with new ideas to help homeowners faced with foreclosure, but many banks appear to be deliberately subverting its foreclosure prevention programs, in particular the Home Affordable Modification Program (HAMP).

For example, here's a link to a story on Fannie Mae's latest idea to stop foreclosures -- followed by hundreds of comments from readers sharing their personal horror stories about dealing with banks like JPMorgan Chase that seem determined to drive homeowners out of the HAMP program and into foreclosure. Tales of banks losing paperwork faxed or sent via FedEx and putting homes into foreclosure without properly informing residents who have applied for loan modifications are rampant.

"I just fight another day every day with Chase," says one commenter named Linda.

Yet, most homeowners in that position don't have the wherewithal to wage a sustained legal battle, unlike the deep-pocketed banks.

New York is in a good position to provide legal help to homeowners in part because the city has so many lawyers -- 90,000, according to Mayor Bloomberg, who could potentially volunteer. The services in New York will be provided by Empire Justice Center, Legal Services NYC, The Legal Aid Society, and the City Bar Justice Center.

Foreclosure filings in New York City have increased rapidly in the last five years, from under 7,000 in 2004 to over 20,000 last year. That might not be much compared to the foreclosures in Los Angeles, Detroit, or Las Vegas -- but foreclosures are still having a devastating effect on the neighborhoods where they are concentrated like Jamaica, Queens.

Hopefully other local governments will find their own ways to provide legal help to families facing foreclosure. Homeowners like Linda could use the help in their struggle with the banks.
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