The current crisis for the elderly and poor when facing foreclosure; some suggestions on making legal aide for them stronger, protecting them from creditors threatening them with the loss of their home, avoiding debt settlement and foreclosure scams that target the elderly and poor.
1
The Grim Statistics
We all know there is an economic crisis as people lose their jobs, fail to keep up with their mortgage payments and also are often unable to pay credit card debts. Just how bad is it? Have we reached the lowest point yet? In the third fiscal quarter of 2009 (July 1, 2009 through September 30, 2009) 940,000 homes received default notices, auction notices from the Sheriff, or were repossessed by the Lender. In my state of New York, such filings increased 11% over the second quarter (April 1, 2009 through June 30, 2009).
2
Will I lose my home?
This question is often posted on avvo from desperate people unsure what to do. Unscrupulous collection services often make such threats to people unable to keep up with their payments. On the other side are the dream merchants, who scam these same people by promising them the "debts will go away:" if they just fork over the last of their remaining money to them. Too often these scams promise a whole lot but deliver nothing but heartache. Keep in mind, only the Lender who holds a Mortgage on your property can file a foreclosure suit.. And that does not mean they take immediate possession of your home: there is a legal process involved and there must be a lawsuit, a judgment, a sheriff sale. Debtors only lose their home and all the money value in it if the sale value of the home is less than the mortgage and foreclosure costs. If it is not and there are no other major debts, the surplus must be returned to the owner.
3
Creditors who are not the Mortgage Holder
Other creditors will sometimes terrorize debtors into believing that if they do not pay their debt they will also lose their home. This is a gross and misleading statement. Keep in mind that a creditor who is not the mortgage lender must go to court, file suit, litigate, and obtain a judgment. A judgment is a court order which allows the creditor to attach an asset (wage garnishment), or bank account, or anticipate a payment when a home you own is sold. For the most part only a mortgage holder or a person with a legitimate claim to the property (another owner) can force the sale of a home. Creditors who are not Lenders do not legally qualify to force the sale of your home.
4
Lack of Legal Representation
Too often the poor and elderly when they face the legal complications of defending a foreclosure do not have the financial resources to hire a defense attorney. This means the poor are set up for a double loss. New York State and other states are now beginning to provide competent legal assistance to such defendants. What many people do not realize is they may have viable defenses against these lawsuits especially if they were given a subprime mortgage when they did not have the resources to make the more expensive payments later on, or there was a phoney appraisal done of their new home inflating its true value and deceiving the Lender..
5
The Legal Problems of the Poor and Elderly
in New York the Brennan Center for Justice reports that 84% of Queens defendants facing foreclosure because of a subprime mortgage (a loan given to borrowers who did not qualify or who bought a home whose value was less than the amount of the mortgage) went to court without a lawyer. In Staten Island the number was 91% and in Nassau (part of Long Island) 92%. Before the crisis 80% of the poor did not have access to legal help, one of the reasons such families were tricked into these mortgages in the first place. Another issue is that since the mid 1990's there are federal restrictions placed on Legal Aide. The rules require that federally funded lawyers in foreclosure cases cannot join in class action suits. Such lawyers also cannot receive fee awards that are given to private attorneys.
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