Another Kind of Foreclosure Crisis

11 Oct

Posted 2 days ago by livinglies on Livinglies’s Weblog
October 9, 2009

The foreclosure crisis is being made substantially worse by a shortage of lawyers for people whose homes are at risk.

According to a new study, an overwhelming number of homeowners who face foreclosure do not have legal help in protecting their rights. As a result, people are losing their homes who do not need to.

In 2008, more than three million foreclosures were filed, and the number keeps growing. By one estimate, more than eight million families may lose their homes in the next four years. Having a home taken away is devastating for the families involved. This churning of people out of their houses, and in some cases into homeless shelters or out on the streets, is also expensive and disruptive for the nation as a whole.

The Brennan Center for Justice at New York University School of Law found that 86 percent of people facing property foreclosure last year in economically challenged Stark County, Ohio, lacked counsel. In Queens County, New York, 84 percent of defendants lacked full legal representation in proceedings involving foreclosures on “subprime,” “high cost” or “non-traditional” mortgages — ones disproportionately targeted to low-income and minority populations.

The law of mortgages and foreclosures is complicated even for many lawyers. It is hard to imagine what it must be like for a poor person with little legal knowledge to have to fight on his or her own to keep a home.

Homeowners often have legal defenses, but laypeople are unlikely to know what they are or how to use them. A lawyer can also persuade lenders to slow down foreclosure proceedings, or to renegotiate terms, by invoking the appropriate federal, state and local laws.

Foreclosures should not be allowed to go forward until, as the Brennan Center recommends, homeowners are at least given enough counseling to know whether they have viable legal claims.

Although budgets are tight these days, Congress and the states need to come up with more money for foreclosure legal assistance.

Class actions can be a powerful tool in challenging practices, like predatory lending, that affected large numbers of homeowners. Right now the Legal Services Corporation, which provides essential civil legal services to low income Americans, is barred by law from representing clients in class action suits. Congress should lift that and other unwarranted restrictions on legal service providers. Too many Americans urgently need help.

Your tags: mortgage meltdown, Eviction, foreclosure

Other Tags: bankruptcy, borrower, disclosure, foreclosure defense, foreclosure offense, Lender Liability, securitization, bubble, CDO, currency, GTC | Honor, Investor, Mortgage

Published: October 9, 2009 4:18 pm

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