Fearing foreclosure: Long Island nonprofits ask Hochul to restore $40M to help homeowners

About a dozen Long Island nonprofits are asking Gov. Kathy Hochul to restore $40 million in funding for foreclosure prevention services, which was left out of the executive budget proposal she released earlier this month.

The local nonprofits were among 89 housing and legal aid organizations across New York that sent a letter to the governor Friday urging her to include the $40 million for the Homeowner Protection Program among the 30-day amendments to her budget she can make before mid-February.

The program, known as HOPP, was created in 2012 as foreclosures surged after the subprime mortgage crisis. It is overseen by the attorney general's office. The nonprofits that participate in HOPP, including Long Island Housing Services, Long Island Housing Partnership and Community Development Long Island, help struggling homeowners avoid foreclosure.

They also assist with mandatory foreclosure settlement conferences, which bring homeowners and lenders together for potential loan modifications before foreclosures cases proceed. 

It’s not the first time the nonprofits have been left in limbo about future funding for the program.  Money for HOPP has frequently been left out of the executive budget proposal over the past decade, including last year, only to be restored in budget negotiations with the legislature.

“As these are complicated, time-consuming cases agencies cannot in good conscience take on new clients when their continued funding after the expiration of current contracts on July 15, 2024 is in question,” the coalition of nonprofits wrote to Hochul.

Ian Wilder, executive director of Long Island Housing Services in Bohemia, said the lack of clarity makes it difficult to make decisions about taking on additional clients whose cases could last years.

“If agencies like mine don’t know they’re funded until April 1” — when the state budget is due — “they start cutting back on taking clients and hiring or replacing people,” Wilder said. “It’s very hard to hire somebody in January when you can’t even tell them if the position is still going to exist in July.”

The agencies involved in HOPP reported seeing an increase in demand for services after the pandemic, particularly after New York’s moratorium on lenders’ foreclosure cases ended in January 2022. From July 2022 to July 2023, the nonprofits served 20,564 clients, which was more than double the number from the previous 12-month period.

The nonprofits operate the state’s toll-free homeowner hotline, 855-HOME-456, and lenders are required by law to send homeowners the names of these local agencies before foreclosure filings.

While agencies across New York would be affected if the money isn’t included in the budget, homeowners on Long Island — where homes and property tax bills are among the most expensive in the state — are especially vulnerable, said Jacob Inwald, a co-author of the letter and director of litigation-economic justice at Legal Services NYC.

“Foreclosure is a huge issue across Long Island,” he said, “and taking away the resources that are available to prevent avoidable foreclosures is just counterintuitive.”

There is added disappointment, this year, Inwald said, because the governor has been vocal about protecting homeowners. In November, Hochul signed a law in Brooklyn to protect homeowners from deed theft, when New Yorkers are defrauded of their homes.

In a statement, Justin Henry, a spokesman for the governor, noted the governor's other proposals supporting homeowners. He did not respond to questions about the future of HOPP funding. 

“Governor Hochul’s Executive Budget continues her strong commitment to supporting New York homeowners with proposals to strengthen protections against deed theft and invest nearly half a billion dollars to support statewide resiliency effort," he said. "The Governor will continue working with the Legislature on ways to support property owners across the state.”

Wilder said funding the program before the April 1 budget deadline would be more cost-effective than dealing with the problems caused by foreclosures, such as homelessness and blighted vacant properties.

“One of the cheapest ways to deal with the housing crisis is to help people negotiate through the process to stay in a house,” he said.

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.