When NYLAG’s Foreclosure Prevention Project began in 2008, NYLAG was one of the first agencies in New York to offer full legal and financial counseling services to low income clients facing foreclosure. The program has dramatically grown in response to the need and today NYLAG attorneys regularly provide representation and advice in mandatory settlement conferences (pre-trial conferences where homeowners negotiate mortgage payment options with the banks’ attorneys). These conferences can sometimes continue for as long as a year and are often the last chance for a homeowner to get a mortgage modification from the mortgage servicer before the bank forecloses on their home. Daphne Schlick, the supervising attorney of NYLAG’s Consumer Protection Project, explains that when homeowners lack representation or legal advice these conferences are often fruitless because, “most of the banks are not willing to negotiate with homeowners.”

Homeowners enter this negotiation process after their mortgage modification applications, aimed at making the terms of their loans more affordable, have been rejected, or the banks have simply not responded. Sometimes a bank rejects a modification application for legitimate reasons, such as when the applicant cannot prove that they have sufficient income to make full and timely payments. However, according to Schlick, banks will often reject applications for inappropriate reasons as well. For example, the bank may fail to calculate a person’s income properly and will reject an application based on its own mistake. A bank may also claim not to have received the necessary documentation, despite the homeowner providing proof of mailing or fax.

“Banks can make homeowners’ lives very difficult and leave them feeling powerless,” Schlick explains. “The bank will often ask an applicant for multiple copies of the same documents, such as paystubs and tax returns, even though the homeowner has already submitted these documents multiple times. It’s frustrating for clients, especially because many believe that they are the only person going through this. Just letting them know what to expect and that they are not alone can help clients feel more empowered during this scary time.” NYLAG attorneys and financial counselors not only help clients navigate this grueling process, but they also help them enforce their legal rights and encourage banks to follow regulations they may otherwise ignore.

In a recent case, NYLAG attorney Rose Marie Cantanno assisted a single mother from the Bronx, Maria, in securing a permanent modification that lowered her mortgage payments to an affordable level by reducing the high interest rate of the loan. Maria bought her home years ago, ironically, when she had a full time job working in customer service at a bank. She lost her job in the recession and was without stable employment for more than six months, despite vigorous efforts to find a new job. When she did gain employment, it was at a much lower salary, and she quickly found herself struggling with her mortgage payments. The bank wanted to foreclose on her home, but with Cantanno’s assistance, they agreed to lower her interest rate from 7% to 2%, with payments to be made over a period of 40 years. “Maria was not looking to avoid responsibility in any way,” Cantanno explained. “She, like many others, suffered a great loss as a result of the recession and only needed a break to get back on her feet.” Millions of people throughout New York are still suffering the effects of the recession and NYLAG’s Foreclosure Prevention Project will continue to provide legal and financial services to those in need.