Help is available for homeowners who need a fresh start
By Rick O'Dea richard@theacorn.com

As nature works its springtime magic throughout Southern California, it stands in stark contrast to the waning financial vitality of our urban, man-made landscape, where the local housing market seems to be hunkering down for a blustery winter storm.

Contributing to the stagnant housing market and high foreclosure rates are declining home prices, predatory lending practices and the higher interest rates that result when over-leveraged twoyear adjustable rate mortgage loans expire.

Homeowners, realtors, financial organizations and local government agencies are looking for ways to diminish the financial losses of an icy cold market.

Approximately 185 homes in Moorpark are currently listed as being in default, foreclosure, or up for public auction. And the worst may not be over. According to Irvine-based RealtyTrac Inc., the wave of adjustable loans resetting to more expensive rates will reach their highest levels in May and June, pushing even more homeowners into trouble in the third and fourth quarters of this year.

In addition, real estate agent Jeff Dabbs with Prudential California Realty in Camarillo says some homes are selling as short sales rather than going into foreclosure. A short sale occurs when a mortgage lender agrees to accept less than they are owed for an outstanding loan.

For some, the helplessness and embarrassment they feel when they get behind on their payments can keep them from taking action to resolve the problem. According to Pia Hahn with Wells Fargo Corporate Communications, 30 percent of Wells Fargo Home Mortgage customers who went into foreclosure in 2006 never contacted the company for help. Wells Fargo Bank has been a home mortgage lender and servicer in Moorpark since 1996.

Hahn passes along these four tips for avoiding foreclosure:

•Call your lender if you are having trouble or think you may have trouble making your mortgage payment. Don't ignore the problem. The further behind you become, the harder it will be to reinstate your loan. This is the single most important thing you can do. Lenders want borrowers, not properties- they would prefer to see you keep your home.

•When you call your lender, be sure to have account information handy and be ready to give a summary of the financial problems you are having. You should also have recent income statements and your household budget with you.

•Open and respond to all mail from your lender. The first notices you receive will offer information about foreclosure prevention options that can help you weather financial problems.

•Contact a person or agency, such as a housing nonprofit, that can give you financial advice.

Consumer Credit Counseling Service (CCCS) is a Camarillobased housing nonprofit approved by the Department of Housing and Urban Development (HUD). At CCCS, clients facing foreclosure can set up appointments for counseling sessions- over the phone or in the office- to discuss financing and alternatives. CCCS will contact lenders on their client's behalf and will become the client's advocate with the lender, helping them through a painstaking process that few homeowners can navigate on their own.

Counseling for troubled clients is provided free of charge. Other types of financial counseling are provided for a fee.

"Comparing first quarter 2007 to 2008, foreclosure counseling is up 50 percent," said CCCS counselor Patty Guertler.

For clients who have encountered predatory financing practices, CCCS will help the client contact the right agency, said Guertler. The state attorney general's office handles predatory lending; the Federal Trade Commission is responsible for credit practices, and HUD deals with predatory housing practices.

According to CCCS, one housing scheme involves homeowners being convinced to sign their grant deed over to a third party, who promises to pay off the mortgage. Payments aren't made, and though the homeowner no longer owns the property, he or she is still responsible for the loan.

Forbearance and loan modification can be used to keep clients facing foreclosure in their homes, said Guertler. Forbearance is a temporary solution in which lenders lower payments for a specific amount of time. For example, a borrower may be working overtime to make payments, but then the overtime becomes unavailable. CCCS counselors can work with lenders to have loan payments reduced until the borrower can bring in extra income again.

Loan modifications are most frequently used to provide a reduction in interest rates or to turn a two-year ARM loan that is transitioning into a variable rate loan back into a fixed rate loan.

For more information on HUDapproved housing counseling agencies, see www.hud.gov.