Helping Americans Keep Their Homes: Center for Responsible Lending Establishes New Institute to Help Homeowners Threatened by Subprime Lending Crisis

Institute to Provide Legal Assistance to Families Facing Surge in


Oct 12, 2007, 01:00 ET from Center for Responsible Lending

    WASHINGTON, Oct. 12 /PRNewswire/ -- As the nation's foreclosure
 epidemic continues to worsen, the Center for Responsible Lending (CRL) has
 formed the Institute for Foreclosure Legal Assistance (IFLA) to support
 groups giving legal representation to families facing foreclosure and
 financial ruin because of abusive subprime mortgages. The National
 Association of Consumer Advocates (NACA) will manage the project, which
 recognizes that one of the biggest barriers families face to avoid losing
 their homes is the lack of access to quality legal services.
     The Institute, launched with a $15 million grant from investment
 management firm Paulson & Co. Inc. (Bloomberg: 573991Z), will provide
 funding and training to organizations that help homeowners negotiate
 alternatives to foreclosure. The majority of the funds will be grants to
 support direct legal assistance to borrowers in 10 or more states to fight
 foreclosure, predatory lenders and abusive loan servicers. It will do this
 primarily by providing money to top non-profit legal-aid groups and law
 school clinics.
     Formation of the Institute comes as the rate of subprime foreclosures,
 already alarmingly high, is set to accelerate. Analysts have predicted that
 as many as 1.7 million foreclosures will occur in the next two to three
 years. Within the next eighteen months, up to four million subprime
 borrowers will see their monthly mortgage payments jump approximately 40%
 as initial "teaser" interest rates expire. Servicers and lenders have
 largely refused to modify these abusive subprime loans. According to a
 recent study by Moody's, only 1% of loans that reset to a higher interest
 rate were modified by servicers. Lenders and servicers are simply not
 modifying these mortgages in sufficient numbers to help homeowners.
     "Legal resources available to help struggling families fall far short
 of that needed to address the millions of abusive loans that have been made
 in recent years," said Martin Eakes, Chief Executive Officer of CRL. "By
 providing funding and other support for attorneys who can review loan
 documents and negotiate with loan servicers, we believe that many more
 homeowners will be able to stay in their homes."
     NACA executive director Ira Rheingold will manage the new Institute.
 "The only meaningful way to help families save their homes is to help them
 get access to quality legal assistance," he said. "In many cases, families
 need legal help to keep their homes. We hope to be able to help provide
 legal representation to at least 5,000 families with these funds so that
 families can keep their homes."
     John Paulson, founder and head of Paulson & Co. Inc., said he hopes
 that his firm's donation is just the beginning: "CRL and NACA both have
 long histories of working to ensure that homeowners get fair treatment from
 mortgage lenders. We are pleased to help them provide legal services to
 distressed homeowners, many of whom have been victimized by predatory
 lenders. We hope that our grant will spur additional funds for these types
 of efforts from public and private sources to help more homeowners avoid
     Willard Ogburn, Executive Director of the National Consumer Law Center,
 said, "We see every day the desperate need for quality legal help for
 families in financial crisis facing the loss of their home. Additional
 resources will mean more essential assistance for families in need. The
 Center will do all that it can to help address the current crisis in
     Wade Henderson, President and CEO of the Leadership Conference on Civil
 Rights, said, "Every day we hear about industry bail-outs from the
 foreclosure crisis they created, but homeowners trying to save the roofs
 over their heads have very limited options for getting help and industry
 does not seem interested in taking meaningful steps that would make a real
 difference. The Institute was created to help borrowers today who can't
 wait for tomorrow to try to save their homes. This initiative is an
 important step in the right direction to help provide effective legal
 assistance to those who desperately need it."
     Shanna Smith, President and CEO of the National Fair Housing Alliance,
 said of the announcement, "It's high time that Americans facing foreclosure
 got some helpful news. This Institute for Foreclosure Legal Assistance is
 critical because without it families will lose their homes. We can no
 longer wait on industry to fix the problem."
     The Institute should be up and running within a few months. It will be
 headquartered in Washington, DC at the offices of CRL and NACA.
     The Center for Responsible Lending is a nonprofit, nonpartisan research
 and policy organization dedicated to protecting homeownership and family
 wealth by working to eliminate abusive financial practices. CRL is
 affiliated with Self-Help, one of the nation's largest community
 development financial institutions. For more information visit
     The National Association of Consumer Advocates (NACA) is a nationwide
 organization of more than 1000 attorneys who represent and have represented
 hundreds of thousands of consumers victimized by fraudulent, abusive and
 predatory business practices. As an organization fully committed to
 promoting justice for consumers, NACA's members and their clients are
 actively engaged in promoting a fair and open marketplace that forcefully
 protects the rights of consumers, particularly those of modest means. For
 more information visit
     Paulson & Co. Inc. is a New York-based investment management firm, with
 $23.5 billion in assets across merger, event-driven, distressed and credit-
 focused strategies.
     For Center for Responsible Lending: Sharon Reuss, 919-313-8527.
     For National Association of Consumer Advocates: Ira Rheingold, 202-452-
     For Paulson & Co. Inc.: Michael Waldorf, 212-956-2472; or Armel Leslie
 of Walek & Associates, 212-590-0530.

SOURCE Center for Responsible Lending