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NY commits $60M to aid at-risk homeowners

New York Attorney General Eric Schneiderman speaks with

New York Attorney General Eric Schneiderman speaks with Long Island homeowners Carlatta Roache and Sabrina Lacy, right, a retired nurse and Army veteran, in Hauppauge. (June 18, 2012) Credit: James Carbone

A new $60-million program will fund three years of counseling and legal help for homeowners struggling to pay mortgage bills, New York State Attorney General Eric Schneiderman announced Monday.

"You cannot protect your rights if you don't know what they are," Schneiderman said during a news conference at the Long Island Housing Partnership's offices in Hauppauge. The services funded could range from help applying for loan modifications or assistance with budgeting, to determining whether a homeowner is eligible for compensation for wrongful foreclosure, according to the attorney general's office.

Last year, 345,000 mortgages were either in default or delinquent in New York, Schneiderman said. "Long Island was particularly devastated by the foreclosure crisis," Schneiderman said.

"It's not just a matter of numbers," he said. "People are uprooted, children are pulled out of school, jobs are lost and lives are destroyed." And when a home goes into foreclosure, it also pulls down the value of neighbors' houses, he said.

The new program is funded by New York's share of a $25-billion settlement announced earlier this year between the five largest mortgage lenders, and federal agencies and 49 states, settling charges that banks foreclosed without proper documentation. New York's share includes $648 million set aside by banks for loan modifications and roughly $132 million paid into state coffers.

In addition to the new $60-million program, which will begin Oct. 1, Schneiderman said he used $15 million to fund housing and legal services from April to Oct. 1, after the State Legislature cut funding for those services. The rest will be used for "innovative" programs to help homeowners and for enforcement against lenders who violate the law, Schneiderman said.

Federal Housing and Urban Development Secretary Shaun Donovan, speaking Monday at the news conference, said New York's new program is "a very, very important investment." By comparison, Congress has approved $45 million for housing counseling for the entire country this year, Donovan noted.

New York's use of its settlement funds should be a model for other states, said Ira Rheingold, executive director of the National Association of Consumer Advocates.

Housing counselors and attorneys can make sure that homeowners' rights are protected, and that "the banks are complying with what they're supposed to be doing," Rheingold said.

Sabrina Lacy, 52, a retired nurse and Army veteran who served in Germany treating soldiers injured in Iraq, said she has struggled to make the mortgage payments on her Central Islip home, in part due to serious medical problems.

A counselor with the Long Island Housing Partnership, Carol Yopp, helped her get a trial loan modification, Lacy said. Starting July 1, her principal will be reduced by more than $215,000, to about $175,000, and her monthly payments will be less, Yopp said. The loan modification -- provided as a result of New York's settlement with lenders -- means Lacy's new payments will be affordable on her fixed income, Yopp said.

"That means I can stay in my house, I can stay in my community," Lacy said.


$25 billion. Settlement reached between five biggest mortgage lenders and federal agencies and 49 states

$648 million. money banks set aside to modify mortgages in New York

$132 million. cash payment by banks to New York

$60 million. portion of $132 million to be used for legal and counseling services for troubled homeowners over three years, starting Oct. 1

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