Saving your home from foreclosure is increasingly a do-it-yourself project.
Lawyers are scarce and free legal assistance is overwhelmed in New Mexico, so a community center here is offering an hourlong class in how to download the correct forms, decipher the lingo and mount a defense, however tentative and primitive, against a multibillion-dollar bank.
“I don’t see success for someone like me who doesn’t understand the law,” said Skylar Perea, a senior care aide who fell behind on her payments during the eight months she was out of a job. “But it’s better than nothing.”
In New Mexico, New York, Florida and the 20 other states where foreclosures require a judge’s approval, homeowners in default have traditionally surrendered their homes without ever coming to court to defend themselves. (In the 27 other states, including California, Nevada and Arizona, homeowners have a much harder time contesting a foreclosure even if they want to.)
That passivity has begun to recede. While many foreclosures are still unopposed, courts are seeing a sharp rise in cases where defendants show up representing themselves.
One factor driving the increase is the changing nature of foreclosure.
When people went into default in 2008, it was generally because of the exploding cost of a subprime loan. Unable or unwilling to handle sharply higher payments, the homeowner walked away with little protest.
Now many defaults are prompted by stretches of unemployment like Ms. Perea’s. These owners do not have the resources to come up with all their missed payments at once. But if they can persuade their lender to restructure the loan instead of seizing the house, they have a chance of staying put.
In New Mexico, this is where the hourlong workshops come in. “When you cannot pay, this is called ‘a breach of contract,’ ” Angelica Anaya Allen, director of the nonprofit Fair Lending Center, explained to a small but diverse group one recent morning.
Young and old, solo and in couples, the homeowners in Ms. Anaya Allen’s class were all in breach, clutching special-delivery packages from their lenders announcing that the machinery was now engaged to evict them. They took notes, asked questions — is the courthouse the building on Fourth Street with the blue roof? — and were resolute if not quite eager for battle.
“I’m not sure where I stand, but I just don’t want to let the house go,” said Ms. Perea.
The legal challenges that she and the other students will make are slowing the foreclosure process. Over the last year, the average delinquency for a foreclosed loan rose to 499 days from 406 days, according to the data firm LPS Applied Analytics. But they are also straining the courts and often encouraging unreal expectations.
Louis McDonald, the chief judge for New Mexico’s 13th Judicial District, welcomes the influx of homeowners defending themselves, known as pro se defendants.
“They really want to stay in their houses,” he said. “Some of them have fairly legitimate defenses.”
But the law grows more complex as the cases proceed, and foreclosure still looms for those who do not grasp its intricacies. “The system is failing those who can’t afford representation,” Mr. McDonald said.
"Many of the homeowners would do much better with an attorney.""
The 13th District surrounds Albuquerque on three sides and includes Sandoval County, which has the highest foreclosure rate in the state. Nearly half of the 100 new foreclosure defendants flooding the court every month are there on their own. There are so many of these defendants, and they need so much help understanding the law in a small, overburdened court, that last year Mr. McDonald instituted regular meetings overseen by himself and the district’s two other judges. Volunteer lawyers were on hand to advise the defendants, and the bank lawyers were required to attend.
It was, in effect, a court within the court. But the program used a lot of resources for an uncertain result, so it is being replaced by a less comprehensive clinic. The real solution, Mr. McDonald said, would be “more legal aid.”
That is a common refrain in court systems that have been successful in reaching out to the foreclosed. Before 2008 in New York, for instance, about 90 percent of foreclosure defendants never appeared before a judge. It was, a recent reportby the court system said, a “paper process” and not a people process.
Then the state legislature directed that the court system hold mandatory settlement conferences to encourage the bank and the homeowner to reach a resolution. More than three-quarters of defendants now come to court, about 32,000 in the first 10 months of last year. But only 12,000 had a lawyer. The rest were in charge of their own fate.
“We’re getting the people in here, getting them to the table with the bank, but I don’t know what happens to these cases long term,” said Paul Lewis, chief of staff to New York’s chief administrative judge. “Many of the homeowners would do much better with an attorney.”
The courts would be better off as well. In Suffolk County, foreclosure cases are 40 percent of the civil caseload. Upstate, in Schenectady and Wyoming counties, they are about half. The New York State Unified Court System is asking for an additional $25 million a year to pay for lawyers to represent the poor in civil cases, including foreclosure. The legislature has yet to approve the request.
In Albuquerque, the three lawyers for the Fair Lending Center — a legal aid group that is paid for by the state — would be happy to see their financing merely remain the same. But even if it does, they will not be able to handle all the demand.
Ms. Anaya Allen started offering the foreclosure workshops last spring, at a point when she and her colleagues simply could not take on any new cases.
“It was the only alternative: give people the tools to help themselves,” she said.
Other legal aid groups across the country have been forced to consider do-it-yourself classes. For the Legal Aid Society of Southwest Ohio, demand for foreclosure help rose 51 percent between May and November last year. “People realized they could fight back,” said Mark Lawson, a senior lawyer with the nonprofit.
Financing has not kept pace. At any moment, Mr. Lawson has a dozen or so files on his desk — people who qualify for help but will not get it from him. When he calls and says his lawyers are too busy to take on another case, some homeowners get angry. Others are grateful that at least someone cared.
Mr. Lawson is skeptical that self-help clinics are a solution. “We have overwhelmed judges and impossible lenders,” he said. “It’s hard enough for lawyers to deal with them.”
In the Albuquerque class, Ms. Anaya Allen does not promise a happy ending. “At the end of the day, unless you have major defenses, it’s likely the court will make a finding of foreclosure,” she said.
Norma Canales and her boyfriend, Saul Valdez, were merely hoping for a little leverage against their lender. They fell into default when Ms. Canales got divorced and her husband stopped making house payments.
“We were working with the bank, trying to work something out, and now suddenly we’re in foreclosure,” said Mr. Valdez, 39. The couple never realized they could represent themselves in court. “It gives you,” he said, “some sort of hope.”