A New York program that trains lawyers to provide pro bono counseling to homeowners facing foreclosure has attracted more volunteers than expected — and has secured the cooperation of some financial institutions that may be pursuing actions against the borrowers.

Thomas C. Baxter Jr., the general counsel of the Federal Reserve Bank of New York, said his counterparts at Citigroup Inc., Bank of America Corp., and U.S. Bancorp have signed a "limited waiver" of conflicts of interest, thereby permitting their lawyers to participate in the Lawyers' Foreclosure Intervention Network. So have several other banking companies that he could not identify, Mr. Baxter said.

The waiver lets employees of firms that represent the companies provide troubled homeowners with legal counseling, but not representation in litigation.

"It seemed to me that this prospect of keeping the individual in the home, modifying the mortgage, making it a situation where the borrower can repay and stay in the house — that is in the interest of the financial institution, too," Mr. Baxter said at a panel discussion this week during the American Bar Association's annual meeting in New York.

Banking companies' willingness to let their lawyers participate is necessary for the program to succeed, he said. "Every major law firm in the city of New York is either working for a large financial institution or praying" to work for one.

The program, which started in June, is co-sponsored by the New York Fed and the City Bar Justice Center, an arm of the New York City Bar Association.

Benjamin Seibel, a project coordinator at the justice center, said Thursday that 32 homeowners have met the program's requirements, and 22 of them have been placed with volunteer lawyers.

Given that the program "just opened its doors … it's a long process, and it's just too soon to have quantifiable results," he said. "Work is being done, and we're very pleased that volunteers are taking cases that are addressing the needs of homeowners."

In an interview after the panel discussion, Mr. Baxter said that even though the response from financial institutions and their lawyers "was good, I think we can do better."

When the program's founders started putting it together, "there were some of my colleagues who were general counsel at financial institutions who were a little skeptical" about waiving conflicts of interest, he said. "They worry about things" like having a junior associate at a law firm that represents the institution "taking on a class action against my institution, and it turns out that I was the one who authorized that" by signing the waiver.

The solution was to limit the waiver's scope, Mr. Baxter said. Though a participating lawyer may negotiate with a creditor on a borrower's behalf, "if there's a real reason to litigate," the lawyer "can refer that file back to the LFIN administrator, who will give it to a lawyer who can litigate."

Michael S. Helfer, Citi's general counsel, said by e-mail that it is "pleased to be able to work with the N.Y. Fed" on the program.

B of A and U.S. Bancorp did not respond to inquiries by press time.

The Fed had expected about 80 participants for the program's first one-and-a-half-day training session, in June; 130 attended. (The training is free. Another session has been scheduled for October.)

Mr. Baxter said the opportunity to get hands-on legal experience was a main draw for many lawyers.

"Most of these associates in these big firms, they're reading proxy material, they're proofreading. … It's pretty dull," he said. "Here's an opportunity to represent a person — a person who really needs a lawyer, a person who is at risk of losing their home — and a lawyer can contribute by helping that person in a very difficult situation and also help the community."

More than 50 participants in the first training session were solo practitioners instead of associates at major law firms, he said.

Though the program is still in the testing stage, Mr. Baxter said he hopes it can eventually expand to other markets.

"This model can be exported," he said. "We don't want to expand it yet. We want to see what the results are."

Originally published in American Banker.