Foreclosure Victims Get Little Of Huge Settlements

The headline-grabbing civil lawsuit settlements against financial institutions highlight one solid trend: relatively little of the money goes to the actual victims, if we know how much at all. Take the story in the Atlanta Constitution-Journal about the $968 million SunTrust deal which reports “… it is unclear how much of the money will go to those who lost their homes. But in Georgia, 9,864 people will be eligible for checks to make up for some foreclosure abuses, said Nels Peterson, the state’s solicitor general.”

But, the paper adds, “… the bulk of the local money will be available for loan modifications or other aid for homeowners who are currently in default, are in imminent danger of defaulting or are underwater on their loans (meaning they owe more than their homes are worth).” Sooooo – not so much “cash” as “loan modifications.” Right.

There might be a better use of settlement money: how about allotting some cash for “civil Gideon” functions? How many of those 10,000 victims in Georgia alone would have dodged the wrongdoers if they had legal representation?

It’s an idea that’s bound to gain traction as CityBank eyes a $10 billion settlement.

Settlements A Source For Civil Gideon?

The idea of providing the civil-court version of “if you cannot afford one, a lawyer will be appointed without charge” – aka “Gideon” – usually runs into funding questions. But what about all these hundreds of millions of settlement funds being collected by the government over shady mortgage practices? There is certainly a connection since much of the need involves housing and foreclosures.
The most recent was this week’s $968 million settlement with SunTrust, which the New York Times notes”…  pales next to the multibillion-dollar pacts that the government has signed — or is seeking to sign — with the nation’s largest banks. But the SunTrust deal, announced on Tuesday, shows how state and federal authorities have been targeting banks beyond Wall Street.”
No kidding. The NYT also reports that “… the Justice Department is seeking a $10 billion penalty from Citigroup over its sale of defective mortgage investments, said people briefed on the matter, who spoke on the condition of anonymity because the talks are incomplete.”

Courts Running Out Of Interpreter Funding

Another place civil justice is getting rationed: court interpreters. The New York Times has a major story that many states are running out of money, in “… places like Ohio, Kansas and Illinois, where immigrants speaking many different languages have settled in recent years, the courts struggle within financial constraints to meet their obligations under the Civil Rights Act of 1964, which requires them to provide interpreters in all civil and criminal proceedings. In Ohio, for example, the most recent survey of local courts showed that spending on interpreters had increased to $1.1 million in 2010 from $55,000 in 1998, fueled by profound demographic changes.”

The NYT also reports that “Jocelyn Samuels, acting assistant attorney general of the Justice Department’s Civil Rights Division, said states had ‘a civil rights obligation’ to find the money to cover the growing costs of court interpreters. Pleading poverty, she said, “cannot insulate state courts systems from compliance.”
It’s interesting that much of the attention is given to criminal, but that civil cases are also part of the Act. Read the NYT story here: As the Demand for Court Interpreters Climbs, State Budget Conflicts Grow as Well


Civil Gideon Debated In Fla. Budget

The state that produced the landmark 1963 “Gideon” cases that guaranteed public defenders for poor criminal defendants is having a discussion of “civil Gideon,” according to the Tampa, Florida newspaper. “Just as the Gideon case led to public defenders for criminal defendants, proponents say public dollars should fund access to lawyers for low-income people in civil cases.” says the Tampa Tribune.

In a story about this years’ budget, the paper offers some background: “… llawmakers passed a law in 2002 to “enhance the availability of civil legal assistance to the poor.” But for the past four years, Gov. Rick Scott has decided against funding it — bringing to $7 million the total amount in legal aid he has cut from state appropriations.”

Read the story and how legal aid agencies are responding here: Scott’s veto cuts legal aid for civil cases

Budget Deadline Punts On Court Funding

How to handle an election-year funding issue involving the labor-intensive courts system? First, expand it to a “two-year” plan to avoid the hard questions in the election cycle and then tie any increases to “reforms” to be identified later. As this weekend’s constitutionally mandated June 15 California budget deadline expires, that’s the status of hard-hit courts in Gov. Brown’s budget. Not always noted is that one of the ways to “tighten operating costs” is increasing the amount workers pay into their pension funds.

The Courthouse News is a go-to source for following the issue, especially with the focus on Los Angeles, home of the nation’s largest trial court where cutbacks have closed courthouses and forced long journeys to court.

For this years budget, The Courthouse News reports that “… Department of Finance Director Michael Cohen said the $160 million for the courts is part of a two-year strategy to stabilize court funding while the Judicial Council and the chief justice look for ways to tighten operating costs. Most of the additional funds will go toward paying court-employee pensions and benefits and backfilling a shortfall in filing-fee revenue.”