Home / News & Publications / Michigan Catholic News / 2007 / New Hope offers help to those facing foreclosure
New Hope offers help to those facing foreclosure
Robert Delaney of The Michigan Catholic
Published December 14, 2007
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Robert Delaney | The Michigan Catholic
Mozelle Black stands in front of her house in the Warrendale section of Detroit. She says New Hope Community Development Nonprofit Housing Corp. helped her avoid foreclosure. |
Detroit — A Detroit non-profit group founded to help people achieve home-ownership is now helping people facing foreclosure proceedings keep their homes.
New Hope Community Development Nonprofit Housing Corp., co-founded by Fr. Donald Archambault back in the early 1990s to rehabilitate existing houses and build new ones in its northwest Detroit neighborhood, is now offering its services to negotiate with lenders in an effort to find alternatives to foreclosure.
As details are being worked out on a national plan to provide some relief for at least some embattled homeowners, practical help is already available for those facing the imminent loss of their homes.
Mozelle Black knows the value of such help. "They saved me from going into foreclosure," says the resident of the Warrendale neighborhood on Detroit's west side.
"We have so many people losing their houses daily, and the mortgage companies don't really want to help. It takes someone to go in and fight for you," Black says.
Black says she "got so far behind on my house note," and learned about New Hope from the United Way's 211 help line. "I met with them and they worked out a plan that got me straight," she says.
New Hope started its counseling program back in 2000 to advise people how to get their credit and financial affairs in order so they could qualify for a mortgage. They began counseling people facing foreclosures two years ago.
Foreclosure crisis
To get some idea of the scope of the foreclosure crisis, consider these facts:
• Four Detroit ZIP codes made the top 10 hardest hit by the foreclosure crisis in the United States for the first half of 2007 – 48228 (fourth place), 48205 (sixth), 48224 (seventh) and 48219 (10th).
• RealtyTrac recently reported Michigan sixth in the nation for foreclosures.
• A recent list of area foreclosures in the Detroit Free Press ran 122 pages.
• In Wayne County, RealtyTrac reports 22,670 properties are currently bank-owned, with another 6,598 in pre-foreclosure; Macomb County with 5,333 and 1,325; Oakland County with 7,212 and 1,079. | "When the bottom dropped out of the housing market and things started going crazy, we figured we had to get involved. We've helped 180 families since that time," says Ricki Peters, New Hope's executive director.
The service is free, and available to anyone in Wayne, Oakland or Macomb counties.
Depending on a client's circumstances, New Hope might get paid through a federal program, it might get paid through a state program, or it might not get paid at all. "Some are just freebies, on us," Peters says.
Up to a certain point in the process, it is almost always possible to negotiate with the mortgage holder, she says: "They can be anywhere from a month late with their payments, all the way to just before the sheriff's sale. Once they've had the sheriff's sale, there's not a whole lot we can do for them."
New Hope starts by working with a homeowner to see whether they can come up with a budget that allows for a monthly payment the lender might possibly accept.
"I want to hear their story first. I have to be aware of that before I call the lender," says Kimberly Groves, a financial counselor with New Hope.
"Most of the time, we will call the lender together that day. I'm going to go for a loan modification," she says.
If a sheriff's sale has been scheduled, Groves will try to get it postponed. "Once it's postponed, there is room for negotiation," she says.
It might take around 45 days for the lender to review the file and make a decision, but then the lender will contact the client and discuss their requirements, Groves continues.
Another possibility is called forbearance, which involves the homeowner catching up the arrearage by making larger payments for a specified period.
Sometimes, however, that budgeting process makes it clear there is no way the homeowner can possibly save his or her house; there would not be enough money left over after the mortgage payment for ordinary living expenses, and in those cases the homeowner is counseled as to the available options.
Peters says some homeowners facing foreclosure make the mistake of thinking they can save their house by declaring bankruptcy. "They've filed bankruptcy to stop the foreclosure, but once the bankruptcy has been discharged, the foreclosure process picks right back up. Typically, they'd be in a better position to negotiate with their mortgage company than to file bankruptcy, because the mortgage companies will work with you — it's just a matter of getting to the right people," she says.
Homeowners who try to work something out with their lenders themselves typically find their pleas falling on deaf ears because they are talking with the wrong people, Peters continues: They are calling the only number they know, and that means they are talking with the collection department, but most mortgage companies also have a loss mitigation department — and that's who they need to be talking to.
Even when a mortgage has been bundled with other mortgages and sold as a mortgage-backed security, there is still some firm that is "servicing" it, and she says it is possible to get a particular mortgage "unbundled" for the purpose of modification.
"The mortgage companies are trying to work with the homeowners and the counselors, because the mortgage companies don't want these houses — they just want their money," Peters says.
The national deal with mortgage lenders announced last week by President George W. Bush addresses the problem of rising payments on adjustable-rate mortgages. Groves says that is the No. 1 cause of mortgage defaults, based on the clients she has counseled. The second major cause for people getting behind is loss of income, as one or both spouses has experienced layoffs or cutbacks in hours or pay, she adds.
If the loss of income was only temporary, sometimes money can be found to help make up an arrearage, especially if children are involved.
"But if they just don't have any money, they will lose the house," Groves says. Alternatives might include surrendering the deed in lieu of foreclosure or a "short sale," with the lender accepting a sale for less than the total amount owned.
Because a fast and orderly transfer is in the lender's interest, some lenders will even come up with anywhere from $700 to $1,500 to cover the family's moving costs, in such cases, Peters says.
The impact on the people they help can be tremendous, she continues.
"They come in here crying or upset or mad, thinking they are in a hopelessly desperate situation. They walk out of here relieved, because they now know they are not alone – there's someone on their side," Peters says.
Even those who learn there is no way to rescue their house "walk away a whole person" and "understand their situation," she adds.
Fr. Archambault worked to get New Hope started as pastor of St. Gerard Parish just up Evergreen Road from the current New Hope offices. The parish has since merged with Immaculate Heart of Mary Parish and is now Corpus Christi Parish.
There are still parishioners involved with the group, among them Sr. Helen Wilson, OP, a member of its board since 1995.
She says she got involved because "I thought home ownership would be a good thing for more people to achieve. With home ownership, people have a stable environment, it helps them establish their credit, and gives them a good place to raise their children."
Helping homeowners stave off foreclosure is a worthwhile additional activity for the group, says Sr. Wilson, because, "with foreclosure they're back to square one, renting again, and then they don't have anything."
She points out that part of New Hope's program to prepare people for home ownership has also been encouragement to get involved with their community and actively work for neighborhood improvement.
"We're very proud of the work of New Hope, and think it has had a big impact on the neighborhood," she says.
New Hope Community Development Nonprofit Housing Corp. is at 19487 Evergreen Road, between Seven and Eight Mile roads, in Detroit. To set up an appointment, call (313) 255-6275.
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