Institute to Provide Legal Assistance to Families Facing Surge in
Foreclosures
WASHINGTON, Oct. 12 /PRNewswire/ -- As the nation's foreclosure
epidemic continues to worsen, the Center for Responsible Lending (CRL) has
formed the Institute for Foreclosure Legal Assistance (IFLA) to support
groups giving legal representation to families facing foreclosure and
financial ruin because of abusive subprime mortgages. The National
Association of Consumer Advocates (NACA) will manage the project, which
recognizes that one of the biggest barriers families face to avoid losing
their homes is the lack of access to quality legal services.
The Institute, launched with a $15 million grant from investment
management firm Paulson & Co. Inc. (Bloomberg: 573991Z), will provide
funding and training to organizations that help homeowners negotiate
alternatives to foreclosure. The majority of the funds will be grants to
support direct legal assistance to borrowers in 10 or more states to fight
foreclosure, predatory lenders and abusive loan servicers. It will do this
primarily by providing money to top non-profit legal-aid groups and law
school clinics.
Formation of the Institute comes as the rate of subprime foreclosures,
already alarmingly high, is set to accelerate. Analysts have predicted that
as many as 1.7 million foreclosures will occur in the next two to three
years. Within the next eighteen months, up to four million subprime
borrowers will see their monthly mortgage payments jump approximately 40%
as initial "teaser" interest rates expire. Servicers and lenders have
largely refused to modify these abusive subprime loans. According to a
recent study by Moody's, only 1% of loans that reset to a higher interest
rate were modified by servicers. Lenders and servicers are simply not
modifying these mortgages in sufficient numbers to help homeowners.
"Legal resources available to help struggling families fall far short
of that needed to address the millions of abusive loans that have been made
in recent years," said Martin Eakes, Chief Executive Officer of CRL. "By
providing funding and other support for attorneys who can review loan
documents and negotiate with loan servicers, we believe that many more
homeowners will be able to stay in their homes."
NACA executive director Ira Rheingold will manage the new Institute.
"The only meaningful way to help families save their homes is to help them
get access to quality legal assistance," he said. "In many cases, families
need legal help to keep their homes. We hope to be able to help provide
legal representation to at least 5,000 families with these funds so that
families can keep their homes."
John Paulson, founder and head of Paulson & Co. Inc., said he hopes
that his firm's donation is just the beginning: "CRL and NACA both have
long histories of working to ensure that homeowners get fair treatment from
mortgage lenders. We are pleased to help them provide legal services to
distressed homeowners, many of whom have been victimized by predatory
lenders. We hope that our grant will spur additional funds for these types
of efforts from public and private sources to help more homeowners avoid
foreclosure."
Willard Ogburn, Executive Director of the National Consumer Law Center,
said, "We see every day the desperate need for quality legal help for
families in financial crisis facing the loss of their home. Additional
resources will mean more essential assistance for families in need. The
Center will do all that it can to help address the current crisis in
homeownership."
Wade Henderson, President and CEO of the Leadership Conference on Civil
Rights, said, "Every day we hear about industry bail-outs from the
foreclosure crisis they created, but homeowners trying to save the roofs
over their heads have very limited options for getting help and industry
does not seem interested in taking meaningful steps that would make a real
difference. The Institute was created to help borrowers today who can't
wait for tomorrow to try to save their homes. This initiative is an
important step in the right direction to help provide effective legal
assistance to those who desperately need it."
Shanna Smith, President and CEO of the National Fair Housing Alliance,
said of the announcement, "It's high time that Americans facing foreclosure
got some helpful news. This Institute for Foreclosure Legal Assistance is
critical because without it families will lose their homes. We can no
longer wait on industry to fix the problem."
The Institute should be up and running within a few months. It will be
headquartered in Washington, DC at the offices of CRL and NACA.
The Center for Responsible Lending is a nonprofit, nonpartisan research
and policy organization dedicated to protecting homeownership and family
wealth by working to eliminate abusive financial practices. CRL is
affiliated with Self-Help, one of the nation's largest community
development financial institutions. For more information visit
http://www.responsiblelending.org
The National Association of Consumer Advocates (NACA) is a nationwide
organization of more than 1000 attorneys who represent and have represented
hundreds of thousands of consumers victimized by fraudulent, abusive and
predatory business practices. As an organization fully committed to
promoting justice for consumers, NACA's members and their clients are
actively engaged in promoting a fair and open marketplace that forcefully
protects the rights of consumers, particularly those of modest means. For
more information visit http://www.naca.net
Paulson & Co. Inc. is a New York-based investment management firm, with
$23.5 billion in assets across merger, event-driven, distressed and credit-
focused strategies.
Contacts:
For Center for Responsible Lending: Sharon Reuss, 919-313-8527.
For National Association of Consumer Advocates: Ira Rheingold, 202-452-
1989.
For Paulson & Co. Inc.: Michael Waldorf, 212-956-2472; or Armel Leslie
of Walek & Associates, 212-590-0530.
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SOURCE Center for Responsible Lending
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Related links:
http://www.responsiblelending.org
http://www.naca.net
CONTACT:
Sharon Reuss for Center for Responsible
Lending, +1-919-313-8527; or Ira Rheingold for National
Association of Consumer Advocates, +1-202-452-1989; or Michael
Waldorf, +1-212-956-2472; or Armel Leslie of Walek & Associates,
+1-212-590-0530, both for Paulson & Co. Inc.
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