April 7, 2008
Lending a hand | A conversation with Chet Randall, a staff attorney with Pine Tree Legal Assistance and head of the Foreclosure Prevention Project
By Kerry Elson
In early March, Pine Tree Legal Assistance in Portland received a three-year, $300,000 grant to launch its Foreclosure Prevention Project. The nonprofit was one of 27 legal aid organizations nationwide to receive part of a $6.5 million grant from the Institute for Foreclosure Legal Assistance, which is part of the Center for Responsible Lending in Washington, D.C.
As its title suggests, the new program is designed to prevent foreclosures by educating Maine homeowners about predatory lending. Pine Tree Legal staff and a group of about 30 volunteer attorneys also will offer legal representation for some homeowners facing foreclosure if their annual income is 200% below the federal poverty level, or $41,000 for a family of four.
The Foreclosure Prevention Project comes at a critical time: During the last three months of 2007, the percentage of Maine home loans in foreclosure rose to 2.36%, the eighth-highest foreclosure rate in the country, according to a new report from the Washington, D.C.-based Mortgage Brokers Association.
Pine Tree Legal attorneys have noticed an increase in legal aid requests from homeowners facing foreclosure. The nonprofit doesn't have long-term data because it began representing foreclosure cases just a few years ago, but last year, it received 175 requests for legal help from homeowners having trouble with mortgage payments. In 2008, it expects to receive at least 300 requests, says Chet Randall, a Pine Tree staff attorney who's leading the Foreclosure Prevention Project.
The Foreclosure Prevention Project will cost $1 million over the next three years, but the IFLA grant is "seed money" to fuel the project's launch, says Randall. With the funding, Pine Tree Legal will hire a full-time paralegal and staff attorney at its Lewiston office, and begin sending out foreclosure-prevention tip sheets to social service agencies statewide, among other efforts.
Randall recently spoke with Mainebiz about the goals of the project, how it got started and his views on Maine's new Homeowner Protection Act. The following is an edited transcript.
Mainebiz: Can you tell me about the goals of the project?
Chet Randall: Our goals are trying to provide client education, representation or advice. We are not going to be able to help all homeowners. But we're going to try to provide as many people as possible with the basic information about their rights and responsibilities, provide direct representation when we think we can either save a home or return a substantial amount of equity. The other piece of the effort is to try to identify bad actors to ensure that the statues and protections that are supposed to be available to homeowners are enforced.
We have created in the last year a bunch of client education materials called our Foreclosure Prevention Kit. We're trying to expand that project and do some outreach to help some homeowners if they feel at risk for foreclosure.
Then we've been very active in working with the Housing Counselors of Maine. When I talk about housing counselors I'm talking about certified housing counselors. That group has now coalesced itself into a network, the Maine Housing Counselor Network, and that's been an effort to try to expand resources to homeowners.
The other collaboration is with the private bar. And that collaboration has taken two forms. One is the development of a pro bono panel called MASH ˆ Maine Attorneys Saving Homes ˆ and MASH now has its own webpage as well, and there's a list of attorneys where homeowners can find referrals, and we're starting that process now. Right now we've got 30 attorneys involved.
What has the project been like until now?
Pine Tree itself wasn't doing much more than subsidized loans [from the U.S. Department of Agriculture]. So if a Rural Housing loan went into default, then we might represent the homeowner in that. But for the most part, prior to last year, we weren't doing private lending foreclosures.
What was your motivation to start working on private lending foreclosures?
The story of it is that two years ago or so Pine Tree obtained a small grant to do community outreach through HUD ˆ the Department of Housing and Urban Development. And it was focused on client education and outreach. We were trying to go to churches to spread the word about the problems associated with predatory lending. From what we began to learn about predatory lending, we thought that the need here was greater than we thought.
Right around the same time, Coastal Enterprises Inc. came out with its study [on predatory lending], and that really put the fire under us, and got us really thinking that it was an area of need that we didn't know about because our intake wasn't open to it.
So it began with a small grant through HUD. Then we joined with Coastal Enterprises Inc., we applied for a grant from the Maine Bar Foundation, we got that. We used our share of that money to do direct client service. Coastal Enterprises Inc. used their share of the money primarily to do policy work.
And then around the same time, the Attorney General's Office was interested in the issue and concerned about it, and knew that Pine Tree had begun to do some work on the issue, and offered us a small amount of money to do more client outreach and more development around educating the community and attracting the private bar to do the work in the form of MASH. And then from there, we continued to do more fundraising.
How did you decide what the outreach for the project would be like?
Nan [Heald, Pine Tree's executive director] I think was doing some Internet surfing, and came across, or received some communication from one of the legal services programs from various places, a description of a program that it had begun to implement or had implemented. It talked about a multifaceted approach to foreclosure prevention, involving the private bar for referrals or co-counselors, and then direct [legal] representation.
And then the fall of last year, gearing up towards an effort to try to do more direct service to clients, I attended a two-day intensive foreclosure prevention workshop in St. Louis with the National Association for Consumer Advocates.
When you say community outreach, can you describe some of the ways that you do that?
I'll tell you about what the ideal ways would be. I don't know if we've capitalized on all of them yet. But I think churches appear to be an obvious resource for access to community. Public service announcements are another way. The Attorney General's Office is providing us opportunities do to some public service announcements with their office.
And then whenever we could, if we saw or heard about a group that might be interested in a particular aspect of predatory lending, we would ask if we could come do a presentation. So I ended up doing, for example, the Windham Shriners Club. They have a monthly or bimonthly meeting, and I went and spent an hour or so talking about predatory lending. And that was seniors, which is a very vulnerable population.
When you went to the Shriners meeting, did they find it relevant?
They're very concerned about things like their tax returns and rapid refunds, which is a form of predatory lending. And then they were very concerned about reverse mortgages and the implications of that.
At that point, when I was doing that presentation, there were very few reverse mortgage lenders who were not directly associated with or certified by HUD. And now there are beginning to be more and more. And it's actually probably the next horizon for potential consumer abuse. There are some great programs out there doing reverse mortgages. There are some out there who appear to think of it as a gold mine.
I know that lenders have their own side. When you take on a case, does a lender ever say that what you're doing isn't fair to them?
Yup. All the time. One of the things I hear from counselors or the bank is "All you're doing is prolonging the process." We try very hard to vet our cases. Most cases that we take, if they're not going to either save the home or return substantial equity to the homeowner, we might contact the lender, but typically we won't represent them in litigation.
When you get cases, how do you decide that it's worth taking on? Is it just a matter of looking at the numbers?
The process is sort of in the works. It takes a lot of experience to be able to just eyeball a case and decide whether or not it has the type of remedies or damages available. Sometimes it's a case where it appears, on the face of it, the client will have the ability to make the mortgage payment, and that they could have made the mortgage payment had they been sold a product that was affordable to them.
And then if we see something else that was wrong in the refinance that resulted in a place where they were no longer able to keep the home, then we can put that new loan under a microscope to figure out whether or not there's been anything done that was wrong.
So if the client was able to afford the loan in the first place, [but] then there was a refinance that wasn't a benefit to the homeowner, [we ask] who benefited from the refinance, and then look to the transaction to see if that benefit to that third party was fraudulent or resulted in misrepresentation. If that's true, then that's probably a case we'll take a very, very close look at.
What happens with the ones that you don't take on? You mentioned you might contact the lender.
That's right. Since we're hearing from lenders that they're willing to work with homeowners, if we have a homeowner we don't think has a lawsuit that's viable enough, we still may work with the homeowner to try to come to a resolution with the lender to try to save the home, to put the homeowner in a place where the home will become affordable in the long term, given the resources that they may have. We may be calling the foreclosure attorney and say, "Can you just hold off, give us five or six months," or, "Let us talk to your client directly," or, "Let us send you a proposal," or something like that.
Do you have an example of a case that you worked on that you felt was particularly rewarding?
Yeah, I do. I have one, and that was a disabled Vietnam vet, and he was very, very ill. And he saw an advertisement for Option One on television. Option One is one of the lenders that has issued a lot of sub-prime loans. And then he called them. And what ensued was a series of events, where he was illiterate and he got an interest rate other than what he was qualified for. And by the time he reached me, it had gone from 9% to 12%. And he was spending 60% of his household income on mortgage payments. So we got a fixed 6% loan and arranged to have his taxes and insurance included. My memory is that we reduced his debt by 30% to 40%. They were willing to work with us. We closed the deal in September 2007.
The state's Homeowner Protection Act became law this year. Do you think it will help reduce the number of foreclosures in Maine?
It's an important statute and it's probably going to do a lot to avoid future problems. The problem is that most statues that are passed are not retroactive. So [for] any conduct that took place before the act went into effect, we can't use that law to help us get remedies for those older loans.
What we're hearing is credit is drying up, people aren't making loans anymore. If that's true, then the wave of these refinances has happened and ended, and with them, just the sheer numbers of the foreclosures and those types of problems may have stopped because lenders aren't going to want to take the risks or they're going to be scrutinizing more carefully. I don't know if it is or if it isn't true that this wave is done. The act is now only in effect as of January first of 08 and there were bad actors before.
As its title suggests, the new program is designed to prevent foreclosures by educating Maine homeowners about predatory lending. Pine Tree Legal staff and a group of about 30 volunteer attorneys also will offer legal representation for some homeowners facing foreclosure if their annual income is 200% below the federal poverty level, or $41,000 for a family of four.
The Foreclosure Prevention Project comes at a critical time: During the last three months of 2007, the percentage of Maine home loans in foreclosure rose to 2.36%, the eighth-highest foreclosure rate in the country, according to a new report from the Washington, D.C.-based Mortgage Brokers Association.
Pine Tree Legal attorneys have noticed an increase in legal aid requests from homeowners facing foreclosure. The nonprofit doesn't have long-term data because it began representing foreclosure cases just a few years ago, but last year, it received 175 requests for legal help from homeowners having trouble with mortgage payments. In 2008, it expects to receive at least 300 requests, says Chet Randall, a Pine Tree staff attorney who's leading the Foreclosure Prevention Project.
The Foreclosure Prevention Project will cost $1 million over the next three years, but the IFLA grant is "seed money" to fuel the project's launch, says Randall. With the funding, Pine Tree Legal will hire a full-time paralegal and staff attorney at its Lewiston office, and begin sending out foreclosure-prevention tip sheets to social service agencies statewide, among other efforts.
Randall recently spoke with Mainebiz about the goals of the project, how it got started and his views on Maine's new Homeowner Protection Act. The following is an edited transcript.
Mainebiz: Can you tell me about the goals of the project?
Chet Randall: Our goals are trying to provide client education, representation or advice. We are not going to be able to help all homeowners. But we're going to try to provide as many people as possible with the basic information about their rights and responsibilities, provide direct representation when we think we can either save a home or return a substantial amount of equity. The other piece of the effort is to try to identify bad actors to ensure that the statues and protections that are supposed to be available to homeowners are enforced.
We have created in the last year a bunch of client education materials called our Foreclosure Prevention Kit. We're trying to expand that project and do some outreach to help some homeowners if they feel at risk for foreclosure.
Then we've been very active in working with the Housing Counselors of Maine. When I talk about housing counselors I'm talking about certified housing counselors. That group has now coalesced itself into a network, the Maine Housing Counselor Network, and that's been an effort to try to expand resources to homeowners.
The other collaboration is with the private bar. And that collaboration has taken two forms. One is the development of a pro bono panel called MASH ˆ Maine Attorneys Saving Homes ˆ and MASH now has its own webpage as well, and there's a list of attorneys where homeowners can find referrals, and we're starting that process now. Right now we've got 30 attorneys involved.
What has the project been like until now?
Pine Tree itself wasn't doing much more than subsidized loans [from the U.S. Department of Agriculture]. So if a Rural Housing loan went into default, then we might represent the homeowner in that. But for the most part, prior to last year, we weren't doing private lending foreclosures.
What was your motivation to start working on private lending foreclosures?
The story of it is that two years ago or so Pine Tree obtained a small grant to do community outreach through HUD ˆ the Department of Housing and Urban Development. And it was focused on client education and outreach. We were trying to go to churches to spread the word about the problems associated with predatory lending. From what we began to learn about predatory lending, we thought that the need here was greater than we thought.
Right around the same time, Coastal Enterprises Inc. came out with its study [on predatory lending], and that really put the fire under us, and got us really thinking that it was an area of need that we didn't know about because our intake wasn't open to it.
So it began with a small grant through HUD. Then we joined with Coastal Enterprises Inc., we applied for a grant from the Maine Bar Foundation, we got that. We used our share of that money to do direct client service. Coastal Enterprises Inc. used their share of the money primarily to do policy work.
And then around the same time, the Attorney General's Office was interested in the issue and concerned about it, and knew that Pine Tree had begun to do some work on the issue, and offered us a small amount of money to do more client outreach and more development around educating the community and attracting the private bar to do the work in the form of MASH. And then from there, we continued to do more fundraising.
How did you decide what the outreach for the project would be like?
Nan [Heald, Pine Tree's executive director] I think was doing some Internet surfing, and came across, or received some communication from one of the legal services programs from various places, a description of a program that it had begun to implement or had implemented. It talked about a multifaceted approach to foreclosure prevention, involving the private bar for referrals or co-counselors, and then direct [legal] representation.
And then the fall of last year, gearing up towards an effort to try to do more direct service to clients, I attended a two-day intensive foreclosure prevention workshop in St. Louis with the National Association for Consumer Advocates.
When you say community outreach, can you describe some of the ways that you do that?
I'll tell you about what the ideal ways would be. I don't know if we've capitalized on all of them yet. But I think churches appear to be an obvious resource for access to community. Public service announcements are another way. The Attorney General's Office is providing us opportunities do to some public service announcements with their office.
And then whenever we could, if we saw or heard about a group that might be interested in a particular aspect of predatory lending, we would ask if we could come do a presentation. So I ended up doing, for example, the Windham Shriners Club. They have a monthly or bimonthly meeting, and I went and spent an hour or so talking about predatory lending. And that was seniors, which is a very vulnerable population.
When you went to the Shriners meeting, did they find it relevant?
They're very concerned about things like their tax returns and rapid refunds, which is a form of predatory lending. And then they were very concerned about reverse mortgages and the implications of that.
At that point, when I was doing that presentation, there were very few reverse mortgage lenders who were not directly associated with or certified by HUD. And now there are beginning to be more and more. And it's actually probably the next horizon for potential consumer abuse. There are some great programs out there doing reverse mortgages. There are some out there who appear to think of it as a gold mine.
I know that lenders have their own side. When you take on a case, does a lender ever say that what you're doing isn't fair to them?
Yup. All the time. One of the things I hear from counselors or the bank is "All you're doing is prolonging the process." We try very hard to vet our cases. Most cases that we take, if they're not going to either save the home or return substantial equity to the homeowner, we might contact the lender, but typically we won't represent them in litigation.
When you get cases, how do you decide that it's worth taking on? Is it just a matter of looking at the numbers?
The process is sort of in the works. It takes a lot of experience to be able to just eyeball a case and decide whether or not it has the type of remedies or damages available. Sometimes it's a case where it appears, on the face of it, the client will have the ability to make the mortgage payment, and that they could have made the mortgage payment had they been sold a product that was affordable to them.
And then if we see something else that was wrong in the refinance that resulted in a place where they were no longer able to keep the home, then we can put that new loan under a microscope to figure out whether or not there's been anything done that was wrong.
So if the client was able to afford the loan in the first place, [but] then there was a refinance that wasn't a benefit to the homeowner, [we ask] who benefited from the refinance, and then look to the transaction to see if that benefit to that third party was fraudulent or resulted in misrepresentation. If that's true, then that's probably a case we'll take a very, very close look at.
What happens with the ones that you don't take on? You mentioned you might contact the lender.
That's right. Since we're hearing from lenders that they're willing to work with homeowners, if we have a homeowner we don't think has a lawsuit that's viable enough, we still may work with the homeowner to try to come to a resolution with the lender to try to save the home, to put the homeowner in a place where the home will become affordable in the long term, given the resources that they may have. We may be calling the foreclosure attorney and say, "Can you just hold off, give us five or six months," or, "Let us talk to your client directly," or, "Let us send you a proposal," or something like that.
Do you have an example of a case that you worked on that you felt was particularly rewarding?
Yeah, I do. I have one, and that was a disabled Vietnam vet, and he was very, very ill. And he saw an advertisement for Option One on television. Option One is one of the lenders that has issued a lot of sub-prime loans. And then he called them. And what ensued was a series of events, where he was illiterate and he got an interest rate other than what he was qualified for. And by the time he reached me, it had gone from 9% to 12%. And he was spending 60% of his household income on mortgage payments. So we got a fixed 6% loan and arranged to have his taxes and insurance included. My memory is that we reduced his debt by 30% to 40%. They were willing to work with us. We closed the deal in September 2007.
The state's Homeowner Protection Act became law this year. Do you think it will help reduce the number of foreclosures in Maine?
It's an important statute and it's probably going to do a lot to avoid future problems. The problem is that most statues that are passed are not retroactive. So [for] any conduct that took place before the act went into effect, we can't use that law to help us get remedies for those older loans.
What we're hearing is credit is drying up, people aren't making loans anymore. If that's true, then the wave of these refinances has happened and ended, and with them, just the sheer numbers of the foreclosures and those types of problems may have stopped because lenders aren't going to want to take the risks or they're going to be scrutinizing more carefully. I don't know if it is or if it isn't true that this wave is done. The act is now only in effect as of January first of 08 and there were bad actors before.
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Anonymous
November 16, 2020
Great work, Chet! Proud of you. - Stephanie H. Coleman
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