Let's Call "Free" What It Really Is: "Taxpayer-Funded"
I saw this headline on Consumerist -- "New York State Guarantees Legal Assistance In Foreclosure Cases" -- and then this bit:
In the coming weeks, Queens County in NYC and Orange County will be the first locales to offer the gratis attorneys. The program will then roll out statewide.
It was a blog item off this David Streitfeld piece in The New York Times:
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 to save their homes....Criminal defendants are guaranteed a lawyer but New York will be the first state to try and 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 the cases, only the banks have lawyers.
"It's such an uneven playing field," the state's chief judge, Jonathan Lippman, said. "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.
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 funding for legal services in New York is about $200 million a year drawn from a variety of public and private sources.
I didn't gamble and buy a house because I couldn't afford one (as somebody who's dealt with the financial difficulties that come with getting a writing career started, I waited until my mid 30s to get a dog so I could be sure I could pay any medical expenses that arose). Why should the rest of us who were careful with our money and prudent with our spending pay for the legal fees of all the gamblers?
Sure, some people have fallen on hard times, but if others want to donate to help them, I'm all for it. To paraphrase Bastiat, just because we don't want the government to fund something doesn't mean we're against it being funded. But, it in this case, hey, O.P.P: Other People's Pockets. Those who open them voluntarily, 'kay?
Really, I love this, more welfare for lawyers. And how much do you bet this money goes fast. Some lawyers will really like to bill.
John Paulson at February 16, 2011 1:44 AM
I am just waiting for them to require us all to have insurance to cover the remainder of the loan.. I pay my own volentarily for about 300 a year. If they have to be included my cost will go up. It's part of our "should something happen to one of us" plan.. It's a part of us trying to be responsible. We are all goin to pay in more than one way for their irresponsibility. It's like when we were kids and the whole class lost recess because Johnny couldn't STFU and stop throwing thing.. Except now it money instead of enjoyment..
JosephineMO7 at February 16, 2011 3:07 AM
The lawyers could do this themselves. In fact, they would call it pro bono.
QEF'nD.
I R A Darth Aggie at February 16, 2011 8:43 AM
You know, until there are consequences for being stupid, nobody is going to wise up. Ever.
This is only going to get worse.
Daghain at February 16, 2011 9:39 AM
completely agree with all posts. People must feel the pain from their decisions. It sucks, but nobody told them to sign the papers while asking for the miracle to repay the obligation. As a group (and no thanks to idiot politicians and greedy CIOs) this group almost single handedly brought down the middle class in this country. Let them pay for that.
ronc at February 16, 2011 10:01 AM
This is the same NY State with the ten billion dollar budget deficit, right? I am not certain there aren't two, because I don't know all of the president's 57 states.
Wow, foolish me. I thought Andrew Cuomo would take at least six months to implode as governor. Same old, different day.
MarkD at February 16, 2011 10:02 AM
Amy Alkon
http://www.advicegoddess.com/archives/2011/02/16/lets_call_free.html#comment-1845124">comment from roncI, too, feel for the people going under. But, if they'd scored big on their gambles, they wouldn't be seeking to share the wealth with the rest of us, so they shouldn't be coming to us when their gamble didn't pay off.
Amy Alkon at February 16, 2011 10:18 AM
I've posted this before but its worth reapeating here
When I first got out of the Army I got a job as a loan 'officer' at a mortgage broker.
So, this is in the summer of 2004, I get this nice little old lady a loan. She has 20 yrs left on the term; I get her a 4.5% fixed rate 15 yr loan.
Using the increased equity in her house I roll in all her credit card debt and work in her car loan which still has 8yrs of payments @ $300 a month.
Her minimum payments on the cards were about $25 each and she had 5 of them, but with the outstanding balance at 24% she wouldn’t have paid them off before she died.
After wiping out ALL of her debt and reducing the term of her loan by FIVE years I still got her a monthly home loan payment in at $50 dollars LESS then she was currently paying.
Let that sink in a moment OK, $300 less each month on her car payment, $125 less each month in credit cards, with all of her balances wiped out, and $50 dollars less each month on her house payment.
I gave this lady a loan package guaranteed to save her nearly FIVE HUNNDERED DOLLARS a month, plus the thousands save by shaving five years off of her home loan, her car, and five nearly maxed out credit cards.
So after getting all the paperwork lined up I give her a call. It seems she was talking to her local bank teller the week before about her new home loan, so they made her an offer as well.
By the time I called her back she had already signed documents with her bank, who promised not
to charge her closing costs as a bonus for being a long time bank customer.
I tried talking her out of it not realizing she had already signed the documents with her bank. The deal she got from them?
A 6.5% 30 year loan
1 yr fixed 29yr ARM with a 3 yr pre payment penalty
Her house payment went up by $50 a month due to them rolling in the credit cards, but they didn’t roll in the car as they held the loan for that as well.
SO in order to save $2000 in closing costs (something which I was very upfront about and would have come out of her home's equity) she took a deal that cost her $4,200 dollars in the first year alone and $25,000 over the next 7 yrs after that on just her car - and who knows how many times her rates have adjusted since the fall of 2004.
So quite frankly I feel little sympathy for the people who wound up upside down in their homes.
And they certainly don’t deserve my money to pay for their lawyers
lujlp at February 16, 2011 11:24 AM
Damn lujip you can be my banker.. Don't have credit card loans or a car payment but I bet I could go work up some debt real quick.. All I owe is my house. And we don't have an adjustable rate mortgage..
JosephineMO7 at February 16, 2011 2:02 PM
At that time mortgage rates had fallen thru the floor and the 'value' of homes in the Phoenix metro area had doubled to quintupled in value so it wasnt really that hard to roll everthing into home equity back then.
lujlp at February 16, 2011 3:41 PM
a shift that could give tens of thousands of families a better chance to save their homes.
Is this actually true?
It may be that additional legal representation won't change the outcome of most cases. That may be why most foreclosees don't hire attorneys to represent them during the process. But if you subsidize legal representation, you risk subsidizing cases where the foreclosee would have hired an attorney on their own.
norm at February 16, 2011 8:20 PM
a shift that could give tens of thousands of families a better chance to save their homes.
Is this actually true?
It may be that additional legal representation won't change the outcome of most cases. That may be why most foreclosees don't hire attorneys to represent them during the process. But if you subsidize legal representation, you risk subsidizing cases where the foreclosee would have hired an attorney on their own.
norm at February 16, 2011 8:20 PM
I have to admit I get a laugh out of these people who sign up for their zero-down, no-doc, all-fees-rolled mortgates, then go out and get the 150% "equity line of credit", then promptly blow it all on cars and vacations and bling, and then they can't understand where all their money went or why they aren't getting thousands back on their income tax.
Cousin Dave at February 16, 2011 8:21 PM
I am just waiting for them to require us all to have insurance to cover the remainder of the loan.. I pay my own volentarily for about 300 a year. If they have to be included my cost will go up.
What do you think PMI is. Getting to the 20% is going to normally take 10 years.
I have always been ahead on my mortgage. It still sucks.
Jim P. at February 16, 2011 9:24 PM
I don't live in New York, but I tried to buy a house a few years ago. I will admit I was naieve and was persuaded by other people in my life trying to tell me that renting was a waste of my money. Well, being naieve about loan terms and the like, I didn't read through the 2,000 pages of paperwork the title people give you to sign at closing. So, in two years when the rate jacked up my house payment to $850/month ($300/month more than it had been), of course I was struggling to keep up on it. By then the housing market had tanked, I was upside down on the thing, and selling in my area was not an option. This was soooo much better than renting, thanks for the advice friends! Not to mention how much fun it was when I had to buy a new water heater and have a crack in my foundation fixed to keep my basement from flooding and molding. No lawyer helped me for free because I was smart enough to not wait til foreclosure proceedings started. My mortgage company retained the deed to the house and sold it themselves to an investor and the remainder of the debt was forgiven because I saved them the hassle of evicting me and having to drag me through court. I know people have their pride and no one wants to say "I'm in over my head here," but people need to start taking the initiative in solving their own problems. No wonder the government acts like a parent. They tend to bail people out like some parents do their kids, teaching them no valuable lesson in responsibility.
Jessica at February 16, 2011 9:29 PM
When I bought my house in 2006, I told the bank "30 year fixed. That is the only kind of loan I want to talk about."
The only reason my mortgage payment ever changes is because of taxes or insurance changing. I have those rolled into the monthly payment with an escrow account.
brian at February 17, 2011 6:55 AM
I have no problem with people losing their homes because they are irresponsible or lied on their applications etc.
HOWEVER...HOWEVER...HOWEVER, the banks (assuming the data provided by the customer is truthful) KNOW what an applicant can and cannot afford. Yet they still spend umpteen thousands buying homes knowing that in all probability the home will be foreclosed upon? That worked well when there was always another sucker lined up to buy...but we saw where that ponzi scheme ended now didn't we? Individuals are responsible for themselves surely, but the lone consumer can be blinded by hope, wishes, or even ignorance of probability or deceptive advertising by banks.
Remember, there is only one of you, but there are thousands of sources trying to get a piece of your income, it is impossible to be well armed to defend against all of it.
Banks and their individual employees must be held accountable for their decisions as well.
Robert at February 17, 2011 9:29 AM
I'd LOVE to ask a loan officer:
"How the hell did you think this 23 year old walmart stockboy with a high school education and 2 years of junior college making 23,000 a year, a student loan, a car loan, and two credit cards, was going to be able to make payments on that 238,000 loan once the ARM rates went up?"
Robert at February 17, 2011 9:32 AM
@Robert -
Their answer: "I don't care. I got paid."
brian at February 17, 2011 11:09 AM
I do have some sympathy for people who've found themselves trapped, unable to pay these mortgages. I could have been in the same situation. Everyone I know was pressuring me to buy a house a few years ago. Owning a house became a sign of your maturity for people my age, and the bigger the better. But I don't have any need for a house, so I didn't buy one. Then the market collapsed and many of these same people are screwed. Alot of them are in their early thirties with a kid or two and financially devastated. I guess that the mature thing to do now is declare bankruptcy.
lil buddha at February 17, 2011 11:16 AM
I see little sympathy or compassion, in this comment section, for situations that are clearly individual in their respective outcomes. The Banks will have made a killing when it's all said and done, the Government has basically washed it's hands of this mess, which they were one of the prime motivators, many of the homeowners have become collateral damage in a scheme that imploded our economy. Whether you were a responsible homeowner or not, we've all been affected in one way or another. If you want to point fingers, go look in a mirror.
jksisco at February 18, 2011 2:25 PM
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