By Rich Fowler
Staff Writer
Unfortunately for Miles Wright, CEO of Triangle Family Services in Raleigh, business is booming these days. His agency is one of 26 statewide that try to help owners save their homes as part of North Carolina’s Foreclosure Prevention Project.
“This is one of those bittersweet things,†Wright said. “The program has been going well, and you’d like the program to die because of lack of use. Our numbers are two to three times of what our projections are. It’s going too well.â€
The Foreclosure Prevention Project is targeted at homeowners who took out subprime mortgages between 2005 and 2007. It’s run by the North Carolina Commissioner of Banks (NCCOB), which works with counseling agencies and lenders to get homeowners in trouble to meet with a housing counselor to help renegotiate their loans and avoid foreclosure.
Communication is the problem
“Seven out of 10 people who are two payments behind on their loans are not involved in any kind of conversation with their mortgage company,†said Mark Pearce, deputy commissioner of banks for the NCCOB. “A lot of people just give up before they get to the right person who could renegotiate their loan.â€
The NCCOB has set up a website, ncforeclosurehelp.org, and a 24-hour hotline, (888) 995-HOPE, to give homeowners in trouble the help they need. When homeowners call the hotline, they get matched up with one of 26 nonprofit counseling agencies across the state. The two counseling agencies that serve Orange County are Durham Regional Community Development Group (688-3381) and Triangle Family Services (821-0790). Over 9,400 North Carolinians have already called the hotline and over 2,800 of them have gone in for free financial counseling.
“Hopefully, by working with the counselor, they can come up with a strategy to address all of their debts and problems, and hopefully avoid the foreclosure,†Pearce said. “The counselor can then work with the mortgage servicing company.â€
Once the counselor and the mortgage company start renegotiating the mortgage, the NCCOB can require the mortgage company to wait an extra 30 days before filing for foreclosure, allowing homeowners more time to negotiate.
Lenders have been receptive to the program.
“They know that we are reaching borrowers that they are not able to reach, and that if they can get those borrowers back to performing status, that helps their investors,†Pearce said. Many lenders aren’t set up to renegotiate mortgages in the volumes they’re seeing.
“I know that there are a couple of mortgage lenders that have special numbers for the consumer credit counseling departments. They don’t seem to work,†Wright said. “When you call over and over again, and nobody ever calls you back, and you think, ‘If this is the good service, I can’t imagine how the bad service would even work.’â€
In these cases, an NCCOB staff member facilitates contact with the lender.
Looking for illegal mortgages
As part of the program, the NCCOB checks subprime mortgages to make sure they don’t violate North Carolina law. Homeowners are encouraged to bring their loan documents with them when they meet with their counselor, who will then pass the information on to the NCCOB.
To deal with the high numbers, students from law schools across the state and legal-aid attorneys have been trained to screen the loans for possible red flags. Any suspicious loans are sent to Raleigh for a full check by NCCOB staff attorneys.
Blaine Schmidt, a second-year law student at UNC’s School of Law, is a student volunteer. He’s seen a lot of paperwork from unlicensed lenders and brokers making loans and doing business in North Carolina.
“It just kind of shocks you to see what kind of work was really done,†he said. “It blew me away, just because you read about it in the paper, you see it on TV, and you think to yourself … this can’t really be happening to the level that they’re talking about. And yet 90 percent of what I worked on had issues.â€
Even if the lender broke the law, the remedies available vary a lot depending on which laws were broken.
“If there are problems, then we’ll contact the homeowner, we’ll contact the mortgage company, and say, ‘We think there’s a problem with the loan,’ and hopefully that information will be helpful in resolving the situation,†Pearce said. “Sometimes we are able to work the loans out informally without a lawyer, because our goal is to avoid the foreclosure, not necessarily to resolve any legal claims.â€
If the violation is serious, and the homeowner needs to hire a lawyer, the NCCOB has a partnership with nonprofit legal-service providers across the state that can accept referrals.
Foreclosure filings down
Pearce says it’s too early to tell if the overall program is a success.
“Since our program started, foreclosure starts are down 9 percent,†he said. “That is due in some part to our program, but probably more so due to some big investors having foreclosure moratoria, which they started in late November, when they started cutting back on foreclosure filings.â€
What’s the most important thing homeowners who are in trouble should do?
“Don’t just wait for things to get worse,†Pearce says. “Go ahead and take action as soon as you know you’re going to have to struggle. Because it’s a lot easier to work these out before you get significantly behind.â€
Pearce says that if you don’t feel comfortable working with your mortgage company, or if your mortgage company doesn’t give you a good response, don’t give up.
“Go find a local housing counselor and try and schedule an appointment to talk about your situation,†he said. “Getting someone to help you through that situation is important.â€
I really wish that more states would follow suit and do something more the average homeowner who has had a rough time. Like Obama said, “It starts with every citizen being responsible” and it has sure started with this guy stated above. Thank you for sharing this information. Maybe the word will get out that it is possible for foreclosures to go down if you just give people the tools.