Programs offer help to prevent foreclosure
Sunday, March 01, 2009 By KATHY JUMPER Real Estate Editor
Help is on the way for homeowners facing foreclosure, starting Wednesday.
The $75 billion federal Homeowner Affordability and Stability Plan is aimed at helping families restructure or refinance mortgages to avoid losing their homes. The plan also gives lenders incentives to modify mortgages for struggling homeowners, in turn reducing the foreclosure inventory.
"I'm very hopeful and optimistic that this will work," Sandra Dunaway, director of Consumer Credit Counseling Service of Mobile, said last week. She said her office is seeing 40 to 50 homeowners a month for foreclosure prevention help.
"I'm hoping that consumers will come to us first," Dunaway said. "We don't want them to set themselves up to fail. We will do a budget for them, look at their assets and set up a realistic plan for this particular family right now." Consumer Credit Counseling works directly with lenders to help families through the process, she added.
Consumers can begin applying for the mortgage relief Wednesday, according to the federal plan.
There are two programs that offer help, according Dunaway.
No. 1: Homeowners current with their mortgage but who owe more on the house than its current worth can refinance. The government has provided incentives to lenders - for every dollar lost by reducing the interest rate, the government will pay the lender a dollar. And there is an incentive for homeowners - if the borrower stays in the house, the government will pay $1,000 toward the principal balance each year for up to five years, she said.
No. 2: Those struggling to make their mortgage payments or already delinquent may be eligible for a loan modification, she said. The same incentives are available for lenders and borrowers under this program.
There are no guidelines that dictate a specific reduction in rates or payments, according to Dunaway, who added, "With the rash of foreclosures, I'm thinking that the lenders are going to get on board with this."
Local lenders seemed to agree.
"No bank wants to foreclose," said Glynis Hyde, a vice president at Regions Bank. "We're not in the rental or selling business." Regions a year ago implemented its own mortgage payment hardship program to help customers find different strategies to prevent foreclosure, she said.
Banks don't want the real estate, said Karen Sullivan of BankTrust in Mobile. "That's not what's profitable for us. We try to work with the customer - some payment is better than no payment."
The foreclosure bill is geared for individuals in crisis, not for investors who bought to flip, according to Sullivan. Still, she said there are ways to restructure even those mortgages to help investors.
For more information, go to www.financialstability.gov or www.recovery.gov.
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