Long Island housing nonprofits seek funds for foreclosure aid

A coalition of New York housing and legal aid nonprofits want Gov. Kathy Hochul to restore funding they use to help people facing foreclosure, and state lawmakers Wednesday questioned why that money was left out of the governor's budget proposal.  

The funding supports nonprofits that carry out the work of the Homeowner Protection Program, which is known as HOPP. The group of 89 nonprofits, including 14 on Long Island, wrote to the governor Tuesday to request that she include $40 million for HOPP as an amendment to her executive budget proposal for fiscal 2024, which starts April 1. The governor can issue amendments to her executive budget for 30 days after its release date, which was Feb. 1 this year. Otherwise, it will be up to the state Legislature.

The state allocated $35 million for HOPP last year, but the program was omitted from Hochul’s budget proposal for the upcoming fiscal year that starts April 1. If the state doesn’t fund the program, the nonprofits’ contracts for HOPP are set to expire July 15. 

“There would be no foreclosure prevention services as we know it in the state,” said Lisa Milas, a staff attorney and program manager at Empire Justice Center in Central Islip, who oversees the grants to HOPP agencies outside New York City.

The state has funded nonprofits to perform foreclosure prevention services since 2008 and established the HOPP program in 2012 under the purview of the state Attorney General’s office at $20 million a year. Initially, the state used money from settlements with banks that engaged in abusive mortgage servicing practices. 

 State lawmakers questioned RuthAnne Visnauskas, commissioner of New York State Homes and Community Renewal, about the lack of funding during a budget hearing Wednesday morning. Visnauskas said the governor had not proposed funding the program because the state believed there was still money remaining from the $35 million it allocated last year. 

"We have not heard that funding is fully expended but happy to work with you on that," Visnauskas said in response to a question from Assemblywoman Linda Rosenthal, a Manhattan Democrat who chairs the Assembly's housing committee. Visnauskas said some questions would be better answered by the state Attorney General's office, which administers the program. 

Jacob Inwald, director of foreclosure prevention at Legal Services NYC, disputed that explanation later in the hearing, noting the attorney general's office has already committed $34.3 million toward its contracts with nonprofits. 

State Sen. Brian Kavanaugh, a Democrat representing Lower Manhattan who chairs the Senate's housing committee, said he supports restoring the funding. "As in past years, my colleagues and I will be pushing to add that money back," he said. 

How HOPP helps  

Following the 2008 housing crisis, the state passed several laws that aim to keep New Yorkers in their homes, and it relies on the network of housing and legal nonprofits to implement those reforms. State law requires lenders to send homeowners pre-foreclosure notices 90 days before they file a foreclosure case in court; the notices must include a list of five nonprofit housing counseling agencies in the borrower’s area.

There’s also a toll-free hotline run by the agencies, 855-466-3456, to help homeowners struggling to pay their mortgages, and mandatory settlement conferences between lenders and borrowers before foreclosure cases go to trial. The agencies help homeowners navigate the foreclosure process and represent them at the settlement conferences.

Leaving money out of the state budget for HOPP would essentially defund critical elements of those reforms, Milas said.

“That’s what HOPP provides,” she said. “If it’s not funded, the New York state toll-free homeowner hotline goes away, [and] mandatory settlement conferences, as we know it, go away.”

The governor’s office did not respond to Newsday’s questions about funding for the program.

Without that funding, some nonprofits would need to eliminate programs focused on foreclosure, said Madeline Mullane, director of pro bono attorney activities at the Nassau County Bar Association, which has four staff members focused on HOPP. 

“For an agency like ours, that is our sole source of funding,” she said, describing the association’s foreclosure prevention work. “We help hundreds, if not thousands, of homeowners by ourselves every year and act as a kind of intake process for the HOPP network.”

Hochul has identified housing as a key issue in her state budget proposal and crafted policies to encourage the building of 800,000 homes across New York.

HOPP aligns perfectly with those goals, and helping people stay in their homes is cheaper than building new ones, said Ian Wilder, executive director of Long Island Housing Services in Bohemia. 

“Since the program started the state has found a way to fund it every year. My hope is that pattern continues,” Wilder said. “But I can't count on that.”

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.