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CREDIT COUNSELORS SEEING MORE HOMEOWNERS FACING FORECLOSURE

By Amy Riggin/OF THE COMMERCIAL STAFF
Saturday, August 22, 2009 9:23 PM CDT

Though the Pine Bluff area hasn’t been hit as hard as Las Vegas and cities in California and Florida, local credit counselors have noticed an increase in those seeking help to avoid foreclosure.

There were 15 foreclosures on Jefferson County properties in July compared to eight during the same month last year, according to a national firm that tracks the data. California-based RealtyTrac reported 70 foreclosures in June compared to 17 in June 2008.

Foreclosures in the county for the first six months of 2009 increased 30 percent to 134 compared to the first half of 2008.

Two Housing and Urban Development approved counseling agencies in Pine Bluff, Family Service Agency’s Consumer Credit Counseling Service and Southern Good Faith Fund, are helping more and more people negotiate with mortgage companies.

“I have more (clients) than I wish I had,” said Family Service Agency counselor Henry Cameron, who occupies an office in the Donald W. Reynolds Community Services Center Tuesdays and Wednesdays. “It has increased dramatically ever since the recession hit.”

The unemployment factor

The primary reasons for local foreclosures are economic: People losing their jobs, or facing a higher cost of living and no increase in pay. Cameron said this differs from cities like those in California, where adjustable rate mortgages are more common and many simply borrowed more than they could afford.

The local unemployment rate increased from 8.5 percent in May to 9.6 percent in June, according to the latest figures available from the Department of Workforce Services.

The American Recovery and Reinvestment Act has implemented two programs, Home Affordable Refinance Plan (HARP) and Home Affordable Modification Plan (HAMP), the latter of which took effect Aug. 15. Both are aimed at helping people avoid foreclosure if they have lost jobs or faced other financial hardships.

Joe Holladay, Family Service Agency’s counseling supervisor, said HARP is geared toward homeowners whose mortgages were backed by troubled mortgage finance giants Fannie Mae and Freddie Mac.

Federal help limited

“We were kind of disappointed,” Holladay said. “If they’re not securitized by one of those two huge conglomerate government groups then they really weren’t eligible. What we found was the majority of people that we were helping didn’t have those type of bank loans.”

HAMP is similar but applies to Federal Housing Administration loans. Cameron said it is too soon to tell if it will be more helpful.

“But we’re probably going to see more FHA loans down here in this part of the state,” he said.

Lenders are only required to participate if they received bailouts through the Treasury’s Troubled Asset Relief Program.

Many clients are still using traditional methods like refinancing or deferring payments. But while counselors can act as an intermediary to negotiate with mortgage companies — and help prepare the mountain of paperwork that is necessary to complete the steps — the lenders have the final say.

“Normal loss mitigation options amount to basically whatever the mortgage company is willing to do,” Holladay said.

Don’t procrastinate

It’s difficult to determine which mortgage holders dominate the local market, Holladay and Cameron said, as they are scattered throughout the country. But some of the more common include Bank of America, CitiMortgage and Wells Fargo. Real estate agents typically arrange which lender is used.

Cameron said the best thing for homeowners facing foreclosure to do: Don’t wait, assess your options now. It typically takes mortgage holders 45 to 90 days to respond to a request, so the longer you wait the further you get behind.

“If a person is facing foreclosure and all those possibilities have been exhausted to save the home, the only other alternative is to file Chapter 13,” he said.

Frances Newsome with the Southern Good Faith Fund is available Tuesday through Thursday and also is located in the Reynolds center. Newsome was out of the office last week. Ramona McKinney, director of the Asset Builders program, said Newsome has been working with people to avoid foreclosure as well.

“I think lenders right now are trying to work with their mortgagees,” McKinney said, adding that Newsome recently helped a local family avoid having their home sold at auction.

To schedule an appointment with Family Service Agency, call 800-255-2227, or with Southern Good Faith Fund, call 535-6233, ext. 19. Services are free.

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