 |
| Homeowner saved: Sylvia Figueroa nearly lost her Cleveland-area home to foreclosure, but the county and state stepped in with
emergency funds. David Ahntholz/Special to the Christian Science Monitor |
Ohio leads fight to stop foreclosures
Its formula: loan counselors, direct aid, and tear-downs of vacant homes beyond hope.
from the December 12, 2007 edition
Page 3 of 3
On the front lines of the foreclosure fight
Cleveland – Counselors are the foot soldiers in the war against foreclosure.
They listen to the stories of budgets squeezed, children moving to live with Grandma, and mortgage payments missed. They read loan documents and then call the mortgage companies to ask for changes in interest rates, forgiveness of penalties, and modifications of terms. They are often the ones to break the news: The home is saved; or, maybe, the borrower ought to start packing up.
States facing foreclosure issues are increasingly funding counseling to help residents cope. It's an approach that is likely to get even more traction: Legislation moving through Congress sets aside $200 million for counselors.
"There is a broad consensus ... that counseling has been a tremendous and important part of the solution to this problem," says Kenneth Wade, chief executive officer of NeighborWorks, a nonprofit organization established by Congress. "Even though they are poorly funded, the counselors are doing pretty heroic things to keep borrowers in their homes."
Here, at the Neighborhood Housing Services of Cleveland (NHS), three counselors are trying to cope with the flood of foreclosures. On a recent Thursday, which is orientation day for those in trouble, 13 people are seated in a classroom listening to housing counselor Mahria Harris outline how they might be able to save their homes. She describes the grants and loans. She tells them she will negotiate with the lenders to modify the terms of their loans. And she warns them about unscrupulous lawyers.
"You have a new guard dog," she tells them.
If they agree to return in two weeks, they have a more in-depth one-on-one with a counselor. Typical is a session with Claudia Lewis, a nurse, who fell behind on her home payments when she could not work because of an injury.
As counselor Elizabeth Sanchez goes through her paperwork, she frowns. Ms. Lewis has an adjustable-rate mortgage of 8.75 percent that will reset in 2009. Since the programs are reluctant to make loans to people with adjustable-rate mortgages, Ms. Sanchez makes it an immediate priority to call the loan servicer to see if the loan can be converted into a fixed-rate mortgage.
"It's critical to do the loan modification," says Sanchez, who adds that the banks are getting "a little better" at agreeing to mortgage adjustments. "Usually they have to show they can pay their loans for some months before the bank will agree to modifications."
Counselors at NHS comb through budgets. They look at bank statements to see if there are frequent trips to take money out of ATMs. One of Ms. Harris's favorite admonishments is, "You have to squeeze a dollar out of 15 cents."
At one counseling session, Harris queries a woman seeking $600 to pay her mortgage. "I think you have a leak," she says, looking at her water bill.
Sometimes, despite all the belt-tightening, the counselors just tell their clients to sell the house. "I tell people, 'Let this house go. In three years, you can purchase again,' " says Harris. "You have to show that you have learned your lesson, and they will lend to you again."
Lou Tisler, executive director of the Cleveland office, worries about his counselors. They are squeezing in so many clients to cope with the mounting foreclosures. "We're getting close to the burn-out level," he says.
How one community is fighting back
Maple Heights, Ohio – It's hard to tell that this bedroom suburb of Cleveland is in the middle of a foreclosure crisis. And that's the way the community wants it to appear, because no one wants to live in a neighborhood with a boarded-up vacant house next to them.
In a drive around Maple Heights, a working class suburb of Cleveland, Mayor Michael Ciaravino points to foreclosed homes that still have their windows intact – because the community has outlawed boarding up windows with plywood, a signal to thieves that the house is empty.
"We've had a few homes stripped and it destroys the marketability of the home," says Mayor Ciaravino.
Maple Heights also mows the front lawns of foreclosed homes to try to keep neighborhoods from becoming eyesores, again an open invitation to thieves or squatters. The city's bill for the maintenance will be presented to the owner.
This winter, the city is asking residents with more than one car to park in the driveway of an empty home so an unplowed driveway is not obvious.
But it's not just the outside that is a worry. Ciaravino is concerned that the lenders won't take care of the repossessed houses to protect them from the harsh northern Ohio winter. "The pipes will freeze if the water is not turned off at the main when it enters the basement," he explains, "and if the pipes burst, there is a real risk of mold by the summer."
The city council also passed a recent law requiring financial institutions to notify the city when they are foreclosing. The filing fee of $75 is tripled if the lender fails to comply. The legislation is needed, says Ciaravino, because he estimates about 1,200 homes out of 10,000 in the community are in foreclosure.
Despite the city's efforts, home prices are sinking. A year ago, the median house price was between $85,000 and $105,000. Today, he says, it is now about $10,000 lower.
Because of worries that foreclosed homes will remain vacant, further lowering property values, Ciaravino may be forced to use the bulldozer.
"My fantasy is to negotiate with a demolition company to do 100 parcels at a time, since a bulk bid is less money," he says.
RSS feed
){kind=link}