Legislators Challenge Treasurys Refusal to Allow Use of TARP Funding for Foreclosure Legal Aid
Legal Services E-lert
Bibliographic Info:
Author: Katrina vanden Heuvel
Source: The Nation, “Treasury Blocks Legal Aid for Homeowners Facing Foreclosure”
Date: December 9, 2010
Katrina vanden Heuvel writes on The Nation blog: “Consider this: the recent Fed audit revealed over $3.3 trillion in emergency assistance to the banks and other corporate behemoths during the financial crisis—no strings attached . . .Then consider the 19 states which are recipients of the Hardest Hit Fund (HHF)—a portion of TARP money set aside to help homeowners in states struggling with the highest unemployment rates and steepest declines in the housing market. Some of those states, including Ohio, let Treasury Secretary Tim Geithner know as far back as this past spring that they wanted to use some of those funds to assist legal aid groups that help individual homeowners. . . . Treasury solicited the opinion of an outside law firm, . . . The firm said, in essence—sorry, no can do on the legal aid. Not permitted under the TARP. . . . Congresswoman Marcy Kaptur wasted no time in challenging Treasury's interpretation. . . . Senator Sherrod Brown also wrote Secretary Geithner on June 1 questioning Treasury's refusal to allow states to use TARP money to help homeowners obtain legal aid services. ‘The purposes of [TARP] are restoring liquidity and stability to the financial system and using TARP funds in a manner that, among other things, protects home values, preserves homeownership, and promotes jobs and economic growth. Both legal services and homeowner counseling would seem to fit squarely within these purposes.’. . . .
Receiving no indication that Treasury would budge on the issue, Representative Kaptur introduced a bill in June to amend the Emergency Economic Stabilization Act of 2008 so that TARP money could be used ‘to provide assistance to nonprofit counseling intermediaries and nonprofit legal organizations to provide legal assistance to homeowners.’ It is limited to single family homeowners who occupy the house and it prohibits use of the funds for class action lawsuits. Senator Brown introduced a companion bill last month.. . .‘Legal aid lawyers are on the front line of the housing crisis, and their hard work is often the only thing helping homeowners understand their rights in foreclosure,’ Senator Brown told me in an e-mail. ‘Unlike many of the foreclosure prevention programs already in place, providing legal services with adequate resources is a simple, straightforward way of helping families keep their homes without providing a windfall to the banks.’. . . Kaptur also related how critical legal representation is for people currently going it alone. ‘Even in a judicial foreclosure state like Ohio—where the foreclosure has to go through the courts—the property owner is distraught, really at the end of their rope, and generally doesn't even think that they have a right to legal representation,’ said Kaptur.. . . Urge your representative to cosponsor the Kaptur bill (HR 5510) and encourage the Democratic leadership to move it before recess. Tell your senator to cosponsor the Brown bill (S. 3979). And while you're at it, tell Treasury to get on board and allow states to use the Hardest Hit Funds as they see fit.”
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