The Counselor's Corner

From one missed payment to a critical response intervention...

by Toby Smith

Consider the phases of missed mortgage payments:

Phase 1: Okay, we missed this month’s payment because of the cutbacks, but we can catch up by juggling a few things.

Phase 2: Well, I thought we could catch up, but I didn’t plan on the alternator going out. The car has to get repaired so we can continue to go to work.

Phase 3: Oh my goodness! We are 3 months behind and the phone calls are driving us crazy. Why don’t these mortgage lenders leave us alone!

Phase 4: We’re in serious trouble, but still won’t talk to “them” or open the mail.

Phase 5: An attorney’s office sent us papers today. Maybe we better open the mail and find someone to talk to – NOW!

Phase 6: I have called that counselor 16 times! Why won’t anybody return my call?

Phase 7: The counselor and lender had another long conversation today. We have to come up with the money by next Friday. That’s it.

Phase 8: I can’t believe this is happening. What are we going to do?!?

Does this sound familiar?

It’s amazing how often this scene gets played out in the offices of The Homeownership Resource Center. Equally fascinating though – and less known – is that the situation can still be turned around; even in Phase 8, when things get down to the wire. My colleague, “California cool” Mary Regan is the coordinator of the Critical Response Unit and she often mentions that 3 things must be in place to save a home from auction: a solid budget showing a surplus, stable employment and some cash.

Okay, more than just some cash. Lenders usually will accept either a negotiated amount of the arrearages or the full amount of all past due payments. In Phase 8, there is no room for equivocation; either the home gets saved from auction (and the negotiating continues if the full amount to reinstate the loan is not paid) or sadly, the sale occurs. Fortunately, for many clients, Mary is in place and her saves are becoming the stuff of legend.

We, however, strongly encourage any homeowner in trouble to come see us now…in Phase I…before one missed payment ends up requiring a critical response.

The worst thing you can do is to do nothing. Contact us today. In North and South Carolina, call 888-320-0350.

Making Home Affordable Plan

Since the release of the new Making Home Affordable (MHA) Plan on March 4th The Homeownership Resource Center, a division of Family Services, Inc, staff has been pouring over the program guidelines and supporting documentation. The initial assessment is that the clear guidelines for modifying and refinancing home loans will level the playing field for homeowners. For example, we can cite many cases of clients with similar challenges being offered vastly different solutions to their problems. Now that the criteria are established, we can focus on moving forward. Additionally, we are encouraged that the counseling component includes the development of an action plan – this will go a long way toward maintaining stability.

The MHA Plan is focused on 2 areas, modifying loans for homeowners who can’t make their payments and offering an opportunity for homeowners who couldn’t take advantage of lower interest rates because of declining home values to refinance.

For homeowners who are in danger of losing their homes and haven’t yet taken any action, this is a good time to come forward. The Homeownership Resource Center has established procedures to ensure that all clients will be screened for eligibility. However, it should be stressed that lender participation in the MHA program is voluntary. We have heard that most of them are signing on to the program, but if some decide against it, The Homeownership Resource Center will continue to do everything we can to help clients balance their budgets and remain in their homes.

Since the March 4th announcement, our counselors have been fielding calls from homeowners about what the program means and information will be available at all of our mortgage default
clinics. The bottom line is this: Doing nothing is the worst thing you can do. If you are in trouble, call 888-320-0350, find the default clinic closest to you and go.


Criteria for the modification of a home loan (www.financialstability.gov)

• Property must be owner occupied.
• Balance must be less than $729,750.
• Loan must have been originated before 1/1/09.
• Mortgages, taxes, insurance and homeowner association dues must be more than 31% of gross income.
• A significant change in the expenses and income makes the mortgage unaffordable.

Criteria for a refinance – homeowner initiates this process with their lender

• Property must be owner occupied.
• Income of the borrower must be sufficient to support the new mortgage payment.
• The first mortgage must not exceed 105% of the current market value.
• Loan must be owned or securitized by Fannie Mae or Freddie Mac.

For more information, please call The Homeownership Resource Center toll free at 888-320-0350 or visit http://www.foreclosurehelpforsc.org/.