New York Attorney General Eric Schneiderman committed $60 million from the national servicing settlement to fund housing counseling and legal services for struggling borrowers.
New York received $132 million in the settlement over past foreclosure abuses and documentation problems by the five largest mortgage servicers.
Schneiderman began taking applications from some firms to submit ideas for using the money. State funding for the New York Foreclosure Prevention Services program was set to expire April 1. But the robo-signing settlement funds allowed Schneiderman to extend it for another three years.
Nonprofits can use the money to help borrowers during the required 90-day window a lender must provide in the state to consider other loss-mitigation steps before foreclosure.
Many states are using the settlement money to fill other budget gaps. Department of Housing and Urban Development Secretary Shaun Donovan said all states should use the money to help borrowers instead.
"Since the settlement was announced I have met with state attorneys general across the country to urge them to use these settlement dollars to help homeowners," Donovan said. "This program is a national model for how the settlement money should be spent."