By Margot C. Lester
Staff Writer
As local unemployment ticks up (6.5 percent in Orange County and 8.5 percent in Chatham), home values remain low and stock portfolios hemorrhage, local foreclosures continue. According to Foreclosure.com, 34 Orange County homes are currently in foreclosure; in Chatham County, the number is 22.
But homeowners facing financial difficulties shouldn’t assume foreclosure is a foregone conclusion. By working directly with their lenders, many owners can find ways of staying in their homes.
“The Mortgage Banker’s Association recently reported that half the people who lose homes through foreclosure have never spoken to their lender,†laments Phil Greer, senior vice president of loan administration for the State Employees Credit Union (SECU). “They open the letters and throw them away. They assume, I guess, there’s nothing they can do.â€
The fact is, mortgage lenders want to work with homeowners to keep them in their homes. After all, with housing values low and properties staying on the market longer, banks don’t want to assume mortgages unless it’s absolutely necessary.
“Every lender has the desire to work with the borrower to keep the borrower in the home and structured or positioned to be able to make mortgage payments,†Greer says.
Homeowners experiencing any major changes in their abilities to make payments, or who see their bank balance sinking to untenable levels, should make an appointment with their mortgage holder.
Many lenders have a range of services and programs available to distressed homeowners. Staff counselors work with loan recipients to determine the duration and severity of the problem and show them how to stay in their homes by developing a plan of resolution.
“With a community bank like us, we have more flexibility,†says Larry Loeser, president and CEO of Chapel Hill’s Harrington Bank. “Larger lenders have policy manuals, but even they’ll have more options if you call them early.â€
Homeowners who wait until they are behind aren’t totally out of luck, but their situations are far more urgent. At that point, they’re on the bank’s radar as delinquent, and other credit reporting organizations will also begin taking note, possibly damaging their credit rating.
“We let you know right away when you go past due, and ask you why, and how we can help you,†Loeser explains. “We try to get them caught up before 15 days, because at 15 days you get a ding on your credit rating.†Harrington has never foreclosed on a home.
SECU recently began a program requiring branch staff to have face-to-face meetings with every member who is 30 days or more delinquent. As a result, SECU only had six homes in foreclosure last year, five in Orange County and one in Chatham.
One of the options available is extending payments.
“This enables loan recipients to skip a certain number of payments assuming that by catching them up they’ll have the ability to make payments going forward,†Greer says. “If you’ve got a $1,000 per month mortgage payment, it’s hard to pay $3000 to cure three months of delinquency. But if we make the delinquency go away, they can handle it.â€
Lenders may also be amenable to partial payments if the homeowner’s financial difficulties will last only for a short time. Rate modifications also are possible. With this option, the mortgage-holder may adjust the rate down to the current rate. This lowers the payment and may provide the homeowner a better opportunity to handle monthly payments.
But none of this is possible if homeowners are loathe to work with lenders.
Says Greer: “If you don’t sit down with your lender and fully investigate what’s causing the problem and what resolutions are potentially available, the lender is limited in what they can do short of foreclosure.â€
For more information on federal efforts to reduce foreclosures, visit MakingHomeAffordable.gov. For a list of approved foreclosure avoidance counselors, visit hud.gov/offices/hsg/sfh/hcc/fc/