NYLAG Launches Foreclosure Prevention Project
The NYLAG Board of Directors at its June meeting approved the launching of a Foreclosure Prevention Project. The Project’s goal is to help individual homeowners save their homes from foreclosure, preserve their lifesavings, prevent deed theft and fraud, and provide a place for tenants in multifamily dwellings. The new Project is receiving support from the New York State Division of Housing and Community Renewal with a two-year, $475,000 grant.
The establishment of this new Project represents NYLAG’s response to both the looming foreclosure crisis in New York City and the dearth of lawyers offering free legal services to low-income borrowers. NYLAG has a strong record in representing low-income families facing foreclosure and, through the Project, will expand its services by providing legal representation and court-based services to borrowers with subprime and unconventional mortgages facing foreclosure. The Project also will include outreach, community education, and financial counseling.
NYLAG expects to help over 1,000 low-income homeowners over the next two years to help them avoid foreclosure now and in the future. NYLAG will retain two additional lawyers and a paralegal to staff the Project. NYLAG will collaborate with four agencies that have extensive experience in housing counseling and that together cover the most affected communities citywide: Neighborhood Housing Services of Jamaica, Council of Jewish Community Organizations of Flatbush, West Bronx Housing and Neighborhood Resource Center, and New York Mortgage Coalition. Those areas that will receive priority will be hard-hit areas in Southeast Queens, South Central and East Brooklyn, Western Bronx, the Lower East Side of Manhattan, and areas of Long Island.
In New York City, homeownership began to climb this decade relative to rental rates due to the increase in subprime loans made to lowincome, minority borrowers who already pay more than half of their income on housing costs. The rate of subprime and high cost loans reached over 50% of all mortgage loans in some working class neighborhoods dominated by African Americans and Latinos.
Among the 10 New York community districts with the highest rates of subprime lending, seven are among those with the highest rates of foreclosure. In New York, more than 20% of subprime mortgages originated in 2005 will end in foreclosure, a loss of an estimated 29,000 homes.
In neighborhoods that are heavily low-income/working class and minority and redlined by traditional banking institutions, the problem is critical. By preventing future bad mortgage decisions, NYLAG and its collaborators will help to prevent destroyed credit ratings and a permanent descent into renter status or even homelessness. On a larger scale, the Project will help to halt a decline in property values in the neighborhood, the transfer of neighborhood wealth to outside investors, the decline in affordable housing stock, the loss of a sense of community due to high turnover among long-time residents, and a potential increase in crime.
For more information about the Foreclosure Prevention Project, contact Randal Jeffrey, Esq. at RJeffrey@nylag.org