foreclosure defense

There were two ways that money could have flowed to defense attorneys for foreclosure victims. One, the Treasury Department could have allowed Hardest Hit Fund grant money to the states to go to that purpose. Treasury said they couldn’t do that legally without legislative action, and the House couldn’t get the bill passed on suspension. So the other option was to use the money authorized in Dodd-Frank. That $35 million, a rounding error in the defense budget, never got appropriated, and with a continuing resolution from before Dodd-Frank passed, it never got into the stopgap.

As a result, more families will lose access to the courts, and eventually lose their homes.

It’s not like the continuing resolution wasn’t adjusted at all, by the way. Congress imposed that two-year wage freeze for public employees. They filled the shortfall in the Pell grant student aid program. And they restored funding to low-income heating assistance. But plenty of priorities were left on the table: Head Start, AIDS funding, meals on wheels, low-income child care, the list goes on and on.

In particular, funding for the signature goals of the Obama Administration is now under seal, and won’t be released until Republicans get their way on massive spending cuts, if at all. Fancy bill-signing ceremonies are important and necessary; so is the normal, everyday work of making sure those priorities actually work.

Boehner’s spokesman raised the spectre of “groups similar to ACORN”, which no longer exists, as a recipient of this money. What it will actually go toward is legal services, defending borrowers who would otherwise have no way to afford access to the legal system.

And this is a state’s rights issue. This bill wouldn’t mandate legal services money; it would allow states to elect, if they so chose, to use their Hardest Hit Fund dollars in the manner to which they see fit. In the typical conservative game, state’s rights mean a lot except when that goes against their ideological goals. Plus, it doesn’t cost a dime, as the money is going to the states anyway. They should get to decide how to use it.

It’s unclear that this legislation is even necessary. Treasury only reverts back to TARP rules when talking about how legal aid services aren’t allowable as recipients, though it showed wide latitude in handing out money to whatever bank wanted a piece previously. But Geithner is insisting on it. His “enthusiastic support” of the House measure belies the fact that there’s no Republican co-sponsor in the Senate, and moving the bill on unanimous consent in the dwindling days of the lame duck session is dubious. If Geithner supports allowing states to decide if foreclosure victims can have access to justice, all he has to do is sign off on it as Treasury Secretary.

The funding problem for foreclosure legal defense is “part of the banks’ strategy,” says Bubba Grimsley, a leading foreclosure defense attorney. Foreclosure defense lawyers have been extremely successful in uncovering robo-signing and a host of other irregularities in the foreclosure process, but they have to be able to sustain themselves:

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