With mortgage foreclosures in Duval County nearing the 5,000 mark for this year, local losses are expected in the hundreds of millions according to one study.
“As the foreclosure crisis widens, property owners, local governments, lenders and investors alike stand to lose billions of dollars; estimated losses for the Jacksonville area alone exceed $185 million,” reads a report from the Association of Community Organizations for Reform Now (ACORN), the nation’s largest community organization of low- and moderate-income families.
In response to the local sub-prime mortgage lending crisis, Jacksonville Area Legal Aid (JALA) has begun work to get a program off the ground to assist homeowners who’ve become victims of high-risk, high-cost loans.
“You can’t turn on the news without hearing something about the sub-prime mortgage crisis,” said JALA staff attorney Lynn Drysdale, who has been leading the charge for a Pro Bono Homeownership Preservation Program. “If there’s a big enough problem that the President is trying to do something, then it’s a big problem.”
JALA offers help to defendants who have legal standing in civil matters but lack the necessary funds to mount a defense. And while the organization currently represents foreclosure defendants with at least one expert in consumer law, Drysdale said more pro bono attorneys versed in such matters are sorely needed to combat the crisis.
“We’re very blessed in Jacksonville to have a wonderful pro bono bar that cares about what’s going on in the community,” she said. “And everybody has been inundated with stories in the sub-prime mortgage lending industry – problems with the origination of loans, selling of bad products, and loans being securitized and turned over to collection companies that have been engaging in pretty harmful practices.”
Those practices include charging penalties for paying early, not properly crediting accounts and charging for extra insurance.
Drysdale said foreclosures are being “rammed” through the system by law firms not paying much attention to the details.
“There’s a whole multitude of things,” she said.
But to get an assistance program started, JALA needs a stable of qualified, pro bono attorneys, something lacking in the local legal community.
“There are not a lot of attorneys in the city that specialize in consumer law,” said Drysdale. “The idea is to get a group of attorneys willing to do it, notify people that this service is available for those who qualify, and then offer to train and mentor any attorneys that may want to participate.”
To qualify, defendants must have a good case but not the resources to hire an attorney themselves.
“It’s not our mission to create a method of delaying foreclosure,” she said.
Drysdale has requested an endorsement from the Jacksonville Bar Association (JBA) and support through the creation of a consumer law committee.
That’s something JBA board member Daniel Bean said is certainly needed.
“It’s obviously an outstanding project and very timely,” he said. “They should be commended for their foresight in putting a mechanism in place to help ensure the rights of the homeowners are preserved. As a member, it’s something we need to get behind and support as much as we can.”
While JBA is in the midst of developing a working plan, a committee has not yet been formed.
“We don’t have a team in place yet,” said Bean. “But that’s something we have to get done.”
In addition to meeting with local attorneys, Drysdale is looking to judges like Charles O. Mitchell Jr., who presides in the 4th Circuit’s Civil Division, for help.
“The discussion was that we might send out, subject to the approval of the chief judge, a notice with the mortgage foreclosure complaint to defendants, to get them some help through legal aid,” said Mitchell. “Not necessarily about legal aid representing them, but explaining that a lot of people are having trouble contacting large firms downstate and getting direct answers from them.”
Mitchell said he’s been told by foreclosure defendants in his court that they often get the run around when trying to contact law firms to get the repayment amount needed to reinstate their mortgage.
“They (the law firms) have a call bank and nobody has the authority to tell people what they need to do,” he said. “They have so many cases is the problem.
“It is our belief that if an attorney calls, they’ll be able to get a payoff number. We hate to see people who could avoid foreclosure not be able to do so because they can’t get a hold of somebody.”
With cooperation among JALA, the JBA and judges, Drysdale hopes to start the Pro Bono Homeownership Preservation Program as soon as possible.
“It’s a unique project, so it’s going to probably take a while to get it up and running,” she said. “But because of the sub-prime mortgage crisis now, the problem is even more dire.”