How to Manage Debt and Proactively Avoid Foreclosure

How to Manage Debt and Proactively Avoid Foreclosure

More than 100 homes in and around the Fillmore area are in foreclosure, as homeowners here and across the country continue to struggle with mortgage debt. Since 2007, more than 4 million American homes have been foreclosed upon, with millions more homeowners teetering on the edge of default. 

Losing one's home can be a devastating blow to families that, for one reason or another – job loss, medical emergency, other debts – are finding it difficult to meet their monthly mortgage payments.

However, being proactive can help avoid foreclosure, and there are steps delinquent mortgagees can take in order to either remain in their homes and communities.

 

Mortgage Modification

Today, many foreclosures are the product of the sub-prime mortgage crisis the country encountered the past few years. The sub-prime mortgages had adjustable rates, which have risen to alarming rates. There are steps however, for homeowners to modify their adjustable rates to low, fixed rates that can help relieve some financial pressure. In the first instance, a borrower can attempt to work out a mortgage modification with his or her lender. This can take the form of a temporary reduction in principal or interest rate, temporary forbearance — i.e. skipping a few payments — extending the term of the loan, or any combination thereof.

 

Help for Homeowners

Almost half of the mortgages in the country are held by five big banks — Wells Fargo, JPMorgan Chase, Citigroup, Bank of America, and Ally Financial. In a settlement reached in early 2012 among these institutions, the federal government and 49 state attorneys general, these lenders are required to spend at least $13 billion reducing the principal amounts of loans for at-risk borrowers, whose homes are under water – meaning they are worth less than what is owed on them.  Homeowners with loans serviced by one of these lenders should contact them to find out about a loan modification.

The other half of America's mortgages are owned or guaranteed by either Fannie Mae or Freddie Mac, the two large mortgage lenders that are now part of the Federal Housing Finance Agency, or the Veterans Administration, which backs VA loans. Currently, loans in this category are not subject to principal reduction, but under the government's Home Affordable Modification Program (HAMP), homeowners can apply to have their monthly payments reduced via interest rate reduction and/or forbearance. The aim of HAMP is to keep people in their homes by preventing default and subsequent foreclosure.

 

Bankruptcy

A final step a delinquent borrower can take to save a home from foreclosure is to declare a Chapter 13 bankruptcy. This path allows all debts, including mortgage payments, to be paid off over a period of several years. Filing a bankruptcy petition can temporarily delay, though not necessarily prevent, foreclosure proceedings.

Regardless of what path you choose, proactively avoiding foreclosure could be the best choice made. Avoiding foreclosure keeps Fillmore together by keeping families in the community. If you are having difficulties with paying down your debts, we recommend seeking professional help.

Jeffery Sterner is a contributing writer with America’s Debt Help Organization- Debt.org, educating Americans on to live life to the fullest through debt settlement.

Justice Denied at Fillmore Park Townhomes

Justice Denied at Fillmore Park Townhomes

Editorial by Jed Crawford

 

The land laid vacant for more than 20 years before ground broke in 2010 to build 32 affordable townhomes.  For many people this was a long time coming and seen as a new opportunity for people who lost their homes from “eminent domain” and to have something to pass down to their loved ones.  But through a technicality, money going unused and a Mayor’s Office of Housing program that favors outsiders, “Urban Renewal” is alive and well at Fillmore Park Townhomes. 

 

The Mayor’s Office of Housing through a technicality is determining which children can receive redress from the acquisition of their parent’s property and defining what it means to be displaced using the Property Owner and Occupant Preference Program (Certificate of Preference Program), as stated in a resolution by the Redevelopment Agency, which leaves out thousands of people.  During the 60’s and 70’s if a child was born after the parents homes were taken by the “Agency” their “Certificate of Preference” could not be passed down.  This doesn’t take into account people who were denied the right to buy a home, or were forced out of their apartments and businesses.

 

Another unfortunate situation is the City is sitting on 4 million dollars set aside to assist Certificate of Preference holders with purchasing a home.  The townhomes only cost $200K-$300K and 4 million dollars can purchase twelve townhomes, why isn’t the City loaning “Certificate of Preference” holders the money needed to get in?  At a meeting in July of 2012, Michael Simmons (developer of Fillmore Park Townhomes) explained “about 1000 people registered online at our website for Fillmore Park Townhomes and 32 are Certificate of Preference Holders.”   He continued, “Six of the 32 applied.  Three could not secure a loan and dropped out.  One dropped out because... only wanted a three bedroom… and didn’t have the house hold size to meet the program.  One dropped out because… felt the units were too small.   One is still active.”

 

In conclusion, the program of the Mayor’s Office of Housing is working against Certificate of Preference holders by not setting aside all or a portion of the townhomes for them which is in line with the very aim of the development to bring justice and healing to the community.  Instead the Mayor’s Office of Housing is using the same “debt” strategy that the SFRA used and creating a false sense of pressure and urgency to sell townhomes while ignoring the needs of Certificate of Preference holders and not taking the appropriate steps to define the meaning of “displaced”.   The Mayor’s Office’s is requiring the developer to borrow the City’s own money, borrow from a bank and then sell townhomes to pay everyone back; rather than using the City’s land and money to leverage and find grants to raise the small amount of money needed to build and sell.

 

Pamela Sims of the Mayor’s Office of Housing is the current contact person for the monitoring of this program.  According to Ms. Sims as of October 26, 2012 twenty-one of the units have closed, 9 are in contract and two units are remaining.  I sent an email to Ms. Sims last week Nov. 28^th and asked how many of the people that moved in our Certificate of Preference holders and requested a meeting with her to discuss setting aside the remaining two townhomes for Certificate of Preference holders.