Legal Aid to help in foreclosure process

By CAITLIN SULLIVAN/Correspondent

Amid news items about the Federal Reserve and Treasury Department planning a rescue for troubled mortgage lenders Fannie Mae and Freddie Mac and the larger news of tanking housing markets around the country, Southwest Virginia Legal Aid Society began a counseling project to help homeowners here through the foreclosure process or to avoid it altogether.
According to the Virginia Department of Housing and Community Development foreclosures doubled in Virginia in 2006.  The counseling, based out of Legal Aid’s Castlewood and Christiansburg offices, will be done over the phone and through correspondence.
“All of Virginia’s rural areas are identified as in crisis,” said Director Larry Harley. “This is a crisis that won’t go away quickly.”
Harley said the lending world is no longer made up of would-be borrowers trying to talk a lender into giving them money, but lenders trying to talk would-be borrowers out of taking out loans.
Legal Aid attorney and specialist in consumer law Maria Timoney said “In the last five years such a large percentage of people getting home loans made no down-payment. There’s an incentive on the part of the lender to make loans and they don’t have to absorb the risk.”
Buckey Boone said subprime loans, which he said target low income people, are connected to increased foreclosures.
“We see a lot of people having to go into bankruptcy because of problems out of their control: Family break-up, illness, job loss,” Boone said.
Subprime loans are high-risk, meaning there’s no fixed rate, and are marketed to people who have bad credit or can’t qualify for fixed rate, conventional loan. Boone said subprime loans make up 14 percent of all loans, but 50 percent of all foreclosures.
“More and more working people are trying to reach out and grab that American dream and we’re trying to prevent them from losing that first house,” Harley said.
Harley said it’s important that people come as early as possible.
“If people who are just starting to feel the tension of making a house payment will come to us.”
Timoney said part of her work is helping people through Chapter 13 bankruptcy, which allows a debtor to propose a five-year payment plan, if the lender agrees, and the debtor can then have the potential to recover.
“A typical legal aide client 20 years ago didn’t have a job, was disabled or a mother with children drawing welfare,” Harley said. “Today (a typical client is) is a working mother with child or a family and they’re still poor.”
For more information Southwest Virginia Legal Aid Society, Inc. foreclosure counseling project call 1-888-201-2772. *
To contact Caitlin Sullivan e-mail

* CORRECTION: The original story incorrectly listed the Southwest Virginia Legal Aid number.