Don’t Wait for Foreclosure Prevention Help

By Commissioner Koons

On October 13, I had the opportunity to meet with a group of neighborhood leaders at the second Community Connections meeting hosted by our Office of Community Revitalization (OCR). We chatted for about an hour on local and federal funding programs for revitalization programs and various Countywide Community Redevelopment Team (CCRT) projects in District 2.

This was followed by a workshop on foreclosure prevention by the nonprofit Housing Partnership, Inc. (HPI). Bonnie Conrad and Tanya Lawson provided a detailed analysis of the foreclosure crisis and offered some great advice on what to do if you find yourself in a fix.

When job loss or some other financial crisis forces a homeowner to walk away, it becomes the neighbors’ problem: Boarded up windows and doors, overgrown yards and slimy swimming pools are eyesores and public health and safety hazards that lower surrounding property values and make it difficult for any other homes to sell.

If you receive a notice of foreclosure, the first thing to do is respond to it in writing promptly. Failing to respond practically assures you will lose the home and your credit ruined. It is advisable to use a HUD-certified counselor, an attorney recommended by the Legal Aid Society, or a certified distressed-property Realtor to assist you. Do not hire someone who charges an up-front fee or “guarantees” a positive outcome. (Note: It is illegal for someone other than a licensed attorney to accept an up-front payment for foreclosure assistance.)

Next, you need to decide if you are going to stay in the home. If so, depending on your situation, HPI may be able to help arrange a mortgage modification to make the home more affordable. There are several types of mortgage modifications. The most common is extending the payback period, which lowers the monthly payment. HPI administers a federal program called the Home Affordable Modification Program which allows qualifying homeowners to get their mortgage payment down to 31 percent of their base income. This figure is important because statistics show people who spend less than one-third of their income on a mortgage usually do not default.

A loan modification is very much like the original mortgage process – it involves filing a lot of paperwork and can take several months. You should that know a modification will likely not be granted if you are unemployed, and do not expect the lender to reduce the loan amount. This happened in only two of the 114 modification cases HPI handled in the past year.

If you have decided to leave the home, HPI may recommend a short sale. This is when a home is sold for less than what is owed on it. How much less needs to be negotiated with the lender. A short sale isn’t as damaging to your credit record as a foreclosure; you would probably be able to qualify to buy again within two years versus seven years for a foreclosure.

There are many other things to consider if you find yourself behind the mortgage eight ball. Fighting foreclosure can be an expensive, nerve-wracking and time-consuming process, but failing to take action is a lot worse. For help getting started, contact the Housing Partnership, Inc. at 841-3500 or the Legal Aid Society’s Foreclosure Defense Project at 655-8944.

As always I welcome your comments and questions. Please feel free to contact me or my staff at 355-2202.