What We Do

Anti-Predatory Lending/Foreclosure Defense

Brooklyn A and its local partners are educating the community against consumer fraud. Here, Cypress Hills Local Development Corp. holds a seminar for first-time homebuyers.

Financial con artists have always targeted low-income communities, but the current surge of predatory mortgage lending and "foreclosure prevention" schemes is so prevalent and blatant it has become a national scandal and shaken the country's economy as a whole.

In these housing scams, lenders saddle low-income people with unsustainable mortgages on often faulty homes while other crooks, offering "foreclosure rescue," are stealing homeowners' deeds and equity.

In addition to predatory lending, the communities we serve are prey to a host of consumer frauds, such as payday loans, hidden credit card charges, cash advances for litigation judgments, high-fee credit counselors posing as nonprofit organizations, false promises of training and jobs by unaccredited trade schools, phony franchise deals, and illegal debt collection practices. Brooklyn A is aggressively litigating mortgage schemes, while seeking resources to expand our work against all forms of consumer fraud perpetuated against poor people.

Right now, Brooklyn is a "hot zone," rife with predatory lenders, according to the federal Department of Housing and Urban Development. HUD reports that these lenders particularly target the struggling communities of East New York, Brownsville, Bushwick, and Bedford-Stuyvesant, areas where Brooklyn A is leading the fight to stop them. In these neighborhoods, unchecked predatory lending leads directly to a wave of foreclosures, a situation ripe for phony "foreclosure rescue" schemes. The scams are aimed at families with the least amount of financial and legal literacy.

Even legitimate mortgage loan documents are "mind-bogglingly complex," the New York Times reports, with "nine out of 10 borrowers unable to specify upfront fees or the exact amount of their mortgage loans." Con artists trawl through public notices of impending foreclosure actions and go door-to-door in disadvantaged communities, offering their own lawyers to help debtors navigate the paperwork. What distressed homeowners later learn is that this paperwork has actually turned their deeds over to their supposed rescuers, who then strip equity from the property and move to evict their victims.

The success of these housing schemes is dependent upon the perpetrators' ability to isolate their victims from honest, independent professional advice. But with effective legal counsel victims have a good chance of obtaining redress. Brooklyn A is litigating many housing fraud cases in federal and state court, affirmatively suing all participants, including sellers, brokers and lenders, attorney in league with sellers, financial institutions that make bulk purchases of bad mortgages, HUD for its lack of oversight, and crooked appraisers and inspectors.

Brooklyn A is doing groundbreaking work in using all relevant claims to fight predatory lenders, including conspiracy to commit fraud, conspiracy to aid and abet fraud, violation of the Deceptive Practices and Equal Credit Opportunity Acts. We are challenging the large financial institutions that profit from the purchase of fraudulent mortgages by charging "willful ignorance" of the deception of sub-prime lenders. Brooklyn A is confronting HUD over its abdication of responsibility and facilitation of predatory lending that targets minority first-time homebuyers.

We are also collaborating with other public interest law groups and the private bar to increase the number of practitioners who see consumer fraud as a viable area of practice. Our goal is to increase the number of attorneys available to residents in targeted neighborhoods. Brooklyn A also partners with community-based organizations in North and East Brooklyn to educate residents about detecting fraud and obtaining redress.

We are proud of the many dynamic projects developed through our collaboration with community-based organizations. Learn more about these thriving institutions in our Community and Economic Development Docket 2008