A More fair Foreclosure Process

Technically the Great Recession is over though for thousands of New Yorkers the fallout has not come to an end as the rate of unemployment is high and the result is foreclosure. New York’s chief judge, Jonathan Lippman, came up with a common-sense proposal that would help those who were facing loss of their most important asset i.e. their home because he didn’t have the power to do anything in the jobs market.

Lippman drew out a plan in his annual State of the Judiciary to ensure that New York was the first state in the nation where all those facing foreclosures were represented by lawyers. Legal Aid or a similar group would furnish a counsellor to any homeowner who didn’t have one. The first to test the new requirement would be Queens and Orange counties and by the end of the year the rest of New York would follow.

New York courts held 100,000 settlement conferences in foreclosure cases in the year 2010 out of which in almost two-thirds of the cases the State mandated the conferences, the homeowners had no lawyers. Ordinarily the parties without representation are overmatched and their largest investment is insecure.  Roughly 80,000 foreclosure cases are still pending in New York. Justice demands that there should be some fairness intervene due to the magnitude of fraud and misrepresentation uncovered in the lending process throughout the nation.

Lippman said, "not only are New Yorkers losing their homes in record numbers but the foreclosure process itself has been called into doubt- foreclosure forms robo-signed by personnel with little or no knowledge of the underlying facts, homes foreclosed on servicemen and women in violation of the law, mortgages whose owners cannot be confidently identified. These and other problems raise fairness questions that go to the very heart of the court process."

The weight of foreclosure is like an anvil on the sputtering economy. There are about 5 million borrowers who are behind on their mortgages by 2 months. The foreclosure filings have more than doubled in the last five years and in some countries it has tripled. Figures reveal that last year 2.3 million litigants appeared in New York courts without a lawyer. Keeping that number in mind Lippman asked the Legislature for a $100 million increase in legal services programs spread over the next four years. According to him the more homeowners keep their homes, the faster the housing markets and values will stabilize.