Back in 2007, foreclosure seemed inevitable for Jenie McCaslin, a 70-year old African-American widow, who was unable to maintain the high monthly payments on a loan agreement she entered to refinance the mortgage on her southwest Atlanta home.
Desperate to save the home she had lived in for nearly 40 years, Ms. McCaslin sought help from lawyers who took a look at the terms of her refinance agreement, including an interest rate that could adjust as high as 17.75 percent, and closing fees that totaled nearly 7 percent of the total loan amount. Ms. McCaslin’s lawyers identified potential violations of a host of state and federal laws protecting homeowners from predatory and abusive loan practices, and managed to negotiate a settlement with the mortgage company that allowed Ms. McCaslin to stay in her home, where she remains today.
What’s unusual about Ms. McCaslin’s story is not that she was the victim of abusive lending practices—the targeting of poor minority communities for abusive and illegal lending practices has been well documented—but that she was able to secure legal help, in this instance from a legal services organization providing free legal help for the poor.
As outlined in the Brennan Center’s new publication, Foreclosures: A Crisis in Legal Representation, most people facing foreclosure proceedings are not getting the legal help they need. Even before the economic crisis hit, over 80 percent of the legal needs of the poor went unmet. Today, increased poverty and the unprecedented number of Americans facing foreclosure actions have only exacerbated the chronic shortage of legal assistance for low-income citizens.
For over a decade, the legal services bar has been severely compromised in its ability to assist the poor first because of the failures at the state and federal level to provide sufficient funding to adequately meet the demand for assistance, and second, by restrictions on the use of federal funds for legal services that prohibit foreclosure victims and other vulnerable individuals seeking legal help from obtaining federally funded representation in class actions, in legislative advocacy efforts and in claims for attorneys’ fee awards.
The unfairness of such a system is clear: While lawyers for mortgage lenders and banks rely on a full arsenal of legal tools to pursue homeowners, homeowners on the receiving end of foreclosure proceedings often have no choice but to go it alone. And, when lawyers are available to assist homeowners, they often fight with one hand tied behind their back given the restrictions on the use of federal funds that impair representation of homeowners by lawyers in civil legal services programs.
When state and federal lawmakers fail to ensure that the victims of the foreclosure crisis have quality legal representation, mortgage lenders have little fear of reprisal in a court of law. As we have seen, allowing lenders to act with impunity affects not only individual homeowners, but society as a whole.
Melanca Clark is an attorney at the Brennan Center for Justice at NYU School of Law and author of Foreclosures: A Crisis in Legal Representation.