FOR IMMEDIATE RELEASE
October 12, 2007
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 Foreclosures
WASHINGTON, D.C. (October 12, 2007)—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., 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 th