Two-thirds of legal service providers in New York that offer free counseling on foreclosure prevention for struggling homeowners could be forced to stop offering that aid in April if Gov. Andrew Cuomo and state lawmakers don’t set aside funds for them in the state budget.
That funding wasn’t included in Cuomo’s amended executive budget proposal unveiled last week and is scheduled to run out at the end of March after a series of major investments in the program over the last decade.
The Foreclosure Prevention Services Network, which was initially funded by the state in 2008 during the national housing crisis, is asking for $20 million to be added to this year’s state budget to keep its services fully operational.
Those services are currently offered at more than 85 organizations across the state and include free legal advice on avoiding foreclosure, help with loan modification and refinancing, credit assistance and other topics relevant to homeowners faced with those issues.
The number of families those organizations serve has gone down since the height of the recession, but attorneys involved in the network say there’s still a strong demand for those services statewide. Kate Lockhart, a foreclosure data manager at the Western New York Law Center, said the number of families the network serves has actually increased in recent years.
“I would say that while we are seeing fewer cases than at the height of these crisis, it’s still an incredible number of homeowners coming through the doors,” Lockhart said. “Since the beginning of 2017 we’ve seen more than 3,700 families come through our door [in Buffalo.] That number of people fluctuates but it is on the rise.”
Lockhart was one of several legal professionals who rallied in Albany earlier this month to call for renewed funding for the network, which would take a significant hit in Central New York and on Long Island in particular if they’re left out of the state budget, advocates said.
They’re currently overseen by the New York Attorney General’s Office, which has been given about $20 million each year from settlement funds since 2012 for the network, now called the Homeowner Protection Program. It was initially paid for out of the state’s general fund and managed by New York State Homes and Community Renewal, the state’s housing agency, through 2011.
Empire Justice Center, an organization with five offices statewide that offers an array of services, including those through the Homeowner Protection Program, would be one of few providers within the network that may be able to continue foreclosure prevention counseling in some capacity, thanks to other funding streams. But they’re the exception in this case, not the rule, said Kristin Brown, vice president for policy and government relations at the Empire Justice Center.
“We did a survey of our network and were able to come to understand that approximately two-thirds of the network would just have to shut down if this funding is not made available starting April 1,” Brown said. “Two-thirds of the providers would have to close down because they won’t have the funding to continue.”
Brown said the network of providers may be able to avoid being placed in a similarly vulnerable position in the future if the program is transferred back under the supervision of HCR, rather than the attorney general’s office. That way, they wouldn’t have to rely on settlement funds in future years, she argued.
“It would provide stability. Right now, being funded through the attorney general’s office, the attorney general can not direct settlement dollars to provide programs and services,” Brown said. “All the settlement funds that come in from the attorney general’s office and [the Department of Financial Services] go into the general fund. So, what we’re looking for is stability and to be part of HCR’s programming.”
They already have the support of several top lawmakers in the state Legislature, including Assembly Majority Leader Crystal Peoples-Stokes, a Democrat from Buffalo who was appointed to the position this year. Assemblywoman Helene Weinstein, D-Brooklyn, also backs the proposal. Her support is particularly important because she chairs the Assembly Ways and Means Committee, which is responsible for the chamber’s state budget negotiations.
There’s also support for the funding renewal in the State Senate from Sen. Brian Kavanagh, D-Manhattan, who chairs the Senate Housing Committee. Kavanagh said a number of his colleagues also favor the proposal, and that talks on where the money will come from for it have been ongoing.
“There are a number of members of the Senate who have made this a priority to get this done this year,” Kavanagh said. “We’re having conversations with the attorney general’s office as well as through the standard budget process as to how to identify funding for this.”
His counterpart in the lower chamber, Assemblyman Steven Cymbrowitz, D-Brooklyn, also supports the request.
Brown said the network of organizations has been in contact with officials from the Cuomo administration on working their proposal into the state budget, which is already strained. Cuomo has said in recent weeks that ripple effects from the federal tax overhaul passed in 2017 have caused an unexpected multibillion dollar budget gap going into the state’s next fiscal year, which starts in April.
“We have been talking with the governor’s office and they are aware of the need and the funding challenge we face in terms of being able to continue with providing these important services,” Brown said. “They’re fully aware and we’re continuing to have conversations with them and the Legislature about how to ensure the funding is in the enacted budget.”
If their $20 million request is not included in a final spending plan, homeowners can expect to lose free legal counseling on foreclosure in several locations across the state, Brown said. In areas where organizations can afford to continue those services, they could be significantly scaled back.
“Here in Western New York, we would lose at least 10 full-time attorneys that are doing foreclosure prevention work right now, which is their primary work,” Lockhart said. “I personally have heard people in our own offices calling and talking about other jobs because they have to.”
Without those attorneys, some families may have to turn to private representation, which can be expensive, or forego legal counsel when faced with foreclosure. Brown said allowing that gap in services to exist has the potential to snowball and cost the state more in the long run.
“The long-term cost of not providing what we’re asking for in funding for these services will be exponentially larger because we’re keeping people in their homes and out of homeless shelters. We’re keeping people in their homes and more economically stable in the long run,” Brown said. “This is a really smart investment that will have a substantial impact on state and local government revenues down the road because it’s incredibly cost effective.”
A spokesman for Cuomo’s office did not immediately respond to a request for comment on the funding proposal.