Posted on Thursday, February 17, 2011
New York court officials outlined procedures Tuesday aimed at assuring that all homeowners facing foreclosure were represented by a lawyer, a shift that could give tens of thousands of families a better chance at saving their homes.
Criminal defendants are guaranteed a lawyer, but New York will be the first state to try to extend that pledge to foreclosures, which are civil matters. There are about 80,000 active foreclosure cases in New York courts. In more than half of them, only the banks have lawyers.
“It’s such an uneven playing field,” said the state’s chief judge, Jonathan Lippman. “Banks wind up with the property and the homeowner winds up over the cliff, on the street. It doesn’t serve anyone’s interest, including the banks.”
A lawyer for every defendant will also serve the courts’ interests, the judge said, by making proceedings more efficient.
Under the procedures, which will be put in place in Queens and Orange Counties in the next few weeks and across the state by the end of the year, any homeowner in foreclosure who does not have a lawyer will be supplied one by legal aid groups or other pro bono groups.
Legal aid groups are expected to have foreclosure offices in the courts to handle the influx.
After revelations last fall that several major banks had used improper methods to speed foreclosures, the courts are increasingly becoming a central battleground for people seeking to modify their loan and salvage their house. Simply responding to a foreclosure notice in court, homeowners have learned, can sharply delay the proceedings.
That is a change from when the foreclosure crisis began. A few years ago, most foreclosed owners in New York and everywhere else did not show up at court proceedings and simply abandoned their homes. It was a “paper process,” the New York court system concluded in a recent report, with lenders inevitably the winners. New York now mandates settlement meetings overseen by a judge and attended by the lender, a sort of court inside the court. Homeowners are participating in large numbers but most of those without lawyers have little idea how to defend themselves. The cases are also overwhelming the courts. In several counties, half of the civil cases in higher courts are foreclosures.
Legal aid groups will find the task of representing all foreclosure defendants easier if the State Legislature agrees to Judge Lippman’s request for a $100 million increase in legal services programs spread over the next four years. Current financing for legal services in New York is about $200 million a year drawn from a variety of public and private sources.
New York, which is one of the 23 states where foreclosures must be overseen by a judge, has been more aggressive than most in trying to reshape the flood of housing cases. Lawyers pursuing foreclosure in New York are personally liable for the accuracy of the documents they represent. It is a requirement that some lawyers find onerous, but has been credited with significantly slowing the pace of foreclosures in the state.
Legal aid organizations in the 23 states, which include Illinois, Florida and New Jersey, say that they do not have enough money or lawyers to help everyone who needs assistance. New Mexico and Connecticut have started classes to help train people to represent themselves. Legal aid groups in other states are forced to choose among families, helping some but not others.
New York’s action “will shift the debate,” said Donald Saunders, director of the civil division of the National Legal Aid and Defender Association. “Everything Judge Lippman is saying will be looked at closely elsewhere.”
Mr. Saunders added, however, that fiscal realities could trump other considerations.
Nationwide, 2.2 million households are in foreclosure, with another 2.1 million at least 90 days past due, according to LPS Applied Analytics. After the banks’ revelations about their procedures, the average number of days delinquent for a foreclosed property rose to 507 days in December, its first time above 500.
In New York, the two initial counties will serve as a model for the statewide program. Legal Services of the Hudson Valley will work with the court in Orange County to provide representation, while the Legal Aid Society, which assists people in New York City, will supply lawyers in Queens, a foreclosure hotbed.
According to court data, foreclosure filings in Queens have increased 217 percent, to 5,839 cases from 2005 to 2009.
“There’s a huge demand,” said Steven Banks, the society’s attorney in chief. While there are no specific statistics for foreclosure, he said that in general the group has been able to fulfill only one out of nine requests for help.
How then will it handle so many more foreclosures?
“Redeploying resources,” Mr. Banks said. It should help that the lawyers will “take more of an early intervention in the case rather than at the 11th hour when the sheriff is on the way,” he added.
Judge Lippman, who announced the new initiative in his annual State of the Judiciary address in Albany, said he hoped that the lawyers would reach out to defendants even before they appeared in court.
Citing the 1963 ruling by the Supreme Court that state courts are required by the Constitution to provide counsel in criminal cases to defendants who cannot afford their own, Judge Lippman said this was the right moment to extend that provision.
“Today it is an equally obvious truth that people in civil cases dealing with the necessities of life can’t get a fair day in court without a lawyer,” he said.
By DAVID STREITFELD, THE NEW YORK TIMES