By Sam Baker, KERA Morning Edition Host
http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-975896.mp3
Dallas, TX –
When KERA's Economy Project began about two years ago, we focused on the mortgage crisis - homeowners struggling to avoid foreclosure and on the scammers attempting to take advantage of them. But despite much effort, that situation has not changed in an ongoing weak economy. Linda Davis is director of housing for Consumer Credit Counseling Services of Greater Dallas. She told 90.1's Sam Baker the key is to educate homeowners.
Linda Davis: The office of the Attorney General has actually been quite diligent in trying to shutdown many of these organizations, and they've been quite successful. Unfortunately, though, they're also very quick.
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Sam: Give me an example.
Linda: Most of the time you'll have a phone number, but often times we don't have a physical location for them. So, they could be calling you from the street, they could be calling you from pretty much anywhere. It's a challenge to find someone and then prove that it was fraudulent.
Sam: I assume your agency maintains education is the best defense to all this.
Linda: Making sure you have a trusted advisor read over anything before you sign it. And the reality is there are HUD-approved housing counselor agencies available to homeowners. You shouldn't have to pay to receive the service.
Sam: The counselors are there to help, but are the lenders always there?
Linda: Mortgage servicers are trying to do the best they can. Where they may be strapped in terms of they don't have enough manpower, that's where we (housing counselors) fit in. We'll go over the information with you, we'll help you to prepare that packet to be submitted to the servicer, and then we communicate with both of you to make sure there's a timely resolution, as best as possible.
Sam: When you're facing the possibility of foreclosure, what are your options.?
Linda: A new program just came out. Specifically, it can help Texas, in addition to other states. It's called the Emergency Homeowners Loan Program.
Sam: Briefly, how does this work?
Linda: It's an assistance program that may provide you up to $50,000 in arrearage and monthly mortgage payments. So there's going to be contributions from the homeowner, so it's not like they're going to be paying the whole mortgage for you. The fiscal agent in this case should be able to replace or essentially pay the difference. If your mortgage payment is $800 dollars, let's say, and 31-percent of your gross monthly income is $350, well then the remainder, which is $450 would essentially be paid by the fiscal agent from this program. So, there are some guidelines. It's for a very short time, though, so people have to be very pro-active. The deadline to receive the intake forms is July 22 and it just started on June 20.
Sam: Other options?
Linda: And then other options would be you may qualify for HAMP which the Making Home (Affordable) Loan Modification program. You may qualify, simply, for a special forbearance, let's say, if you have an FHA loan. So it's really going to come down to the loan that you have.
Sam: A number of options available, if there's the possibility of foreclosure, require you to have income and/or savings. What are your options if you don't have either one?
Linda: Let's say you don't have income coming in, you're on unemployment. This program, the Emergency Homeowners' Loan Program, could actually assist homeowners that are going through this process. There is a minimum contribution from the homeowner for the first mortgage of $150 each month. And then, as I mentioned earlier, the assistance program would essentially match the difference that's needed to match that mortgage payment. Or, if you don't participate in ELP, as we call it, the Emergency Homeowners' Loan Program, you can look at the Unemployment Program, which is actually called UP. UP is specifically geared to unemployed homeowners and looks at what's called a special forbearance. So that means that for a period of time you'd have reduced mortgage payments, and it's a great benefit to many homeowners. You may not even have a payment, so it just depends on the situation.
Sam: But should people ignore the possibility that it might be better just to part with the home?
Linda: If that is their choice, then we will definitely work with them on what we call soft landing options, something such as a short sale or some people call it a pre-foreclosure sale. Or a deed in lieu - that's where sign back the title to the property. What I would say though is the last thing you should want to do, and this is what no one should have to go through is an actual foreclosure, because there are options that can be done to avoid a full-out foreclosure.
Sam: When you realize there's a possibility of foreclosure, what's the first thing you should do?
Linda: The first thing you should do is call your mortgage servicer and ask to speak to the loss mitigation department. There the ones specifically tasked with looking at what options you may qualify for based on the loan criteria you have.
Sam: And I guess you should do that immediately?
Linda: You should that immediately. Be very proactive. The second call that I would encourage you to make is to a HUD-approved housing counseling agency.
Linda Davis is Director of Housing for Consumer Credit Counseling Services of Greater Dallas.
For more information on loan programs and foreclosure options:
http://www.cccs.net/