Pro bono project assists homeowners facing foreclosure

March 12, 2009Duke Law News

Feb. 16, 2009 — As the subprime mortgage crisis continues to take its toll on homeowners across the nation, those facing foreclosure in North Carolina have some help. In August 2008, then-Gov. Mike Easley signed the State Home Foreclosure Prevention Project (SHFPP) into law, tasking a partnership of government agencies, housing counselors, legal assistance organizations, mortgage servicers, and community groups with reducing the rate of foreclosures in the state. Students participating in the pro bono Duke Law Foreclosure Project are playing an important role in that partnership.

“We want every North Carolina homeowner to have good options when facing foreclosure,” says Will Corbett, staff attorney for the North Carolina Office of the Commissioner of Banks, the agency leading the SHFPP partnership. “When a home is foreclosed, everyone loses.”

In the fall, Corbett led training sessions for law students from Duke, North Carolina Central University, and the University of North Carolina, teaching them how to analyze mortgage documents and operate a computer program designed to identify “red flags” in the lending process of a homeowner facing foreclosure.

“We get several files on each person — the Housing and Urban Development form, the loan application, the truth in lending disclosure form, and the loan note,” says Elizabeth Hall JD/MA ’11. “We go through and make sure that the settlement agent, the lending company, and the broker are all appropriately licensed. We also check to make sure the forms are signed. And then we actually get into the nitty-gritty: who paid for what and how much did they pay?”

Troubling files are identified by the students as they are returned to Corbett who, with a team of volunteer attorneys, investigates the issues and works with the homeowners and servicers on loss mitigation or other modifications that might be made to the mortgage to avoid the pending foreclosure.

“The ultimate goal is to save people’s homes and benefit North Carolina by doing so,” Corbett says.

Hall and classmate Ashley Chan JD/LLM ’11 say the work has taught them invaluable lessons. “Personally this has made me a lot more aware of how thoroughly you need to be prepared to deal with lenders,” Hall says. “Professionally, it was interesting to have the initial review of the [relevant] laws in North Carolina.”

Chan says this is the first time she has encountered mortgage documents. “It made me reflect on the way that contracts are executed in general, and how I just signed away my student loans,” she says. “It does tell me to be more cautious about that and changes my perspective on people who sit and read a whole contract, even if it is 15 or 20 pages long.”

“This makes me very concerned for people without legal training,” Hall says. “Even if you do sit there and read all 15 of those pages, you may only understand half of it, at best. I think there should be more responsibility on the part of the people who do understand.”