A Call to Albany: Restore Foreclosure Funding

Governor Cuomo got it exactly right in his State of the State address:

The financial crisis has taken a terrible toll on our state’s homeowners, forcing many out of their homes and putting many others at risk of foreclosure. Banks are unable or unwilling to renegotiate loans, and many of their foreclosure practices were questionable.

However, Governor Cuomo’s budget proposal failed to include a much-needed restoration of the $25 million appropriation for the Foreclosure Prevention Services Program that last year’s budget eliminated. This statewide network of housing counselors and legal aid lawyers has saved New York money by keeping families in their homes, and deserves the Governor’s support.

Foreclosures are devastating families and neighborhoods, particularly in low-income communities and communities of color. The foreclosure crisis is also dragging down our housing market. Financial analysts say that a strong response to help struggling homeowners is needed to lift our state and nation out of the current financial downturn. As Governor Cuomo declared, “We need to resolve this crisis so we can move on.”

Governor Cuomo’s budget proposal recognized that foreclosures are one of the critical issues facing New York State. Notably, he proposed the creation of a Foreclosure Relief Unit in the Department of Financial Services. This unit will focus on educating homeowners on the foreclosure process and its various rules and regulations, and will hopefully play an important role in mobilizing New Yorkers.

In addition, the governor should be applauded for proposing a judiciary budget that includes $25 million for civil legal services, a boost in state funding that will help ensure that general legal services are not further eroded due to sinking IOLTA funds and recent cuts to the federal Legal Services Corporation. Yet this $25 million is separate from what New York has been providing — and what is needed — to support the Foreclosure Prevention Services Program, which does not receive funding from the state’s judiciary budget, and which funds vital housing counseling in addition to legal services.

We have to tackle our state’s foreclosure problem on multiple fronts — by educating homeowners, but also by providing them with ongoing counseling and legal support. Since 2009, the Foreclosure Prevention Services Program has assisted more than 80,000 homeowners. The state’s $50 million investment in this program has saved New Yorkers billions of dollars by preventing families from slipping into homelessness, shoring up property values in struggling communities, and preserving our state’s property tax base. This is money well spent.

Restoring the program’s funding is absolutely necessary to ensure homeowners have a voice in the foreclosure process — a judicial proceeding that is full of legal complexities. We urge Governor Cuomo and the state legislature to heed advocates’ call to restore the $25 million dedicated to housing counseling and legal services for New Yorkers at risk of foreclosure. As the Brennan Center has stated, this is a much-needed investment that will pay off for all of us.