Don’t walk away from mortgage; agency can help with debt issues

Published 12:00 am Wednesday, December 2, 2009

By Mark Wineka
Lou Adkins and Robbie Stevens man the front lines of the economic crisis.
Almost every day, they counsel individuals and couples who are scared, for lack of a better word.
For a variety of reasons ó slow time, lost jobs, overwhelming debt, predatory loans ó their clients are delinquent in their mortgage payments or realize they won’t be able to pay the next one due.
“A lot of people are in denial or don’t know they have an option,” Adkins says.
The Salisbury Community Development Corp. offers both mortgage payment assistance and free counseling aimed at saving people’s homes.
The CDC’s message is simple for people who can’t pay their mortgages: Don’t just walk away.
Alternatives exist. Lenders are more willing than ever to negotiate. Loans might be able to be restructured. Pre-foreclosure sales might be an option. And grant and loan assistance are available for people who have lost their jobs.
“A lot of time they don’t know it until they’re already at the courthouse (going through foreclosure),” Adkins says.
In Rowan County, foreclosures haven’t reached the numbers seen in 2003 and 2004 after Pillowtex closed, putting thousands of people out of work in Cabarrus and Rowan counties. But the 2008 numbers through September are troubling.
Rowan had its highest number of foreclosures for a September this year at 87 ó the last month recorded. It also had its highest number of foreclosures between January and September at 627, when that period is compared over the past 10 years.
“It seems to be picking up some,” Rowan County Clerk of Court Jeff Barger says.
Adkins believes it’s going to be the worst time ever for foreclosures, which set a record in North Carolina last year at 49,695. The state already has seen 41,932 foreclosures through September of this year.
“I’m afraid we’ve only hit the tip of the iceberg,” Adkins says.
In years past, the Salisbury CDC has had a strong emphasis on neighborhood revitalization by building and selling infill homes to first-time homeowners. That remains a goal ó providing affordable housing ó but the agency wants to keep people in their homes as well.
The CDC is not late to the game. After Pillowtex closed five years ago, Adkins began working with displaced workers and helping them negotiate with mortgage lenders while they sought new jobs or retraining at Rowan-Cabarrus Community College.
In 2003, First Reformed Church in Landis donated $3,538.72 to help the unemployed with their mortgage payments. It became the seed money for a mortgage assistance initiative by the United Way of Rowan County, supplemented by donations from the Foundation of the Carolinas.
Also, the N.C. Housing Finance Agency began a housing protection program providing no-interest, short- and long-term loans for laid-off workers needing help with their mortgages.
The CDC became the Rowan County conduit for the assistance programs and recently passed the $1 million mark in mortgage payments it has provided over the past five years, including the $3,538 from the church, $175,000 from United Way, $124,767 from Foundation of the Carolinas and $697,626 from the N.C. Housing Finance Agency.
Every penny of the money has gone for mortgage payments for people in Rowan County who were laid off, Adkins says. Nothing has gone for administrative costs.
To date, the CDC has set up 73 loans through the N.C. Housing Finance Agency’s home protection program, with at least seven more pending.
For laid-off workers who want to return to school for retraining, the program will pay their home mortgage for 24 months (or up to $24,000). It’s an interest-free loan that gives recipients 15 years to pay back.
“We have a whole lot of success stories on that,” Adkins says.
For those not going back to school, the program offers mortgage payment assistance loans of six months. The Salisbury CDC was one of the eight original agencies to offer the home protection program, which is available in all 100 counties now.
The local United Way impact grants provide a one-time, one-month mortgage payment, which is sometimes enough to give homeowners the extra time needed to negotiate with their lenders.
Beyond the financial assistance, the CDC has focused on the free mortgage counseling, hiring Stevens in May to assist Adkins. They meet people by appointment and are staying busy, but they express frustration that more people don’t know the counseling help is available.
“We’re the best-kept secret,” says Stevens, who joined the CDC after several years with Consumer Credit Services in Greensboro.
Foreclosure letters issued by the N.C. Banking Commission now tell homeowners of the counseling services available through 22 agencies, including the CDC.
“It’s not a quick fix,” Adkins says of negotiating with lenders. “Sometimes it can take three or four months because they are swamped.”
Stevens and Adkins say they don’t “beat up” the people coming to see them. They don’t fuss at anyone, but they do require budget counseling for each family. Some of the clients have “way too much consumer debt,” Adkins says.
Many people have become victims of hybrid loans that gave them a fixed interest rate for three years, but then increased their interest rate every six months. Adkins and Stevens also have clients saddled with second mortgages they’ve tried to use to pay off other debts.
Some second mortgage payments are as much or more than the first mortgages. The threatened homeowners have no remaining equity in their houses. Stevens says he has seen some families loaned 125 percent pf the value of their homes.
To come up with a loan modification takes a lot of paperwork and patience from both the homeowner and lender, Adkins says, but the CDC is finding lenders “much more willing to work with us than in the past.”
Part of that new cooperation is the government pushing them to do so, she adds.
Adkins credits Rowan County Clerk of Court Jeff Barger with being excellent to work with, “because he certainly doesn’t want to proceed with a foreclosure.”
When good reasons are provided, Barger grants additional time for the homeowners to acquire a mortgage assistance loan or work out a new arrangement with their lenders, Adkins says.
Sometimes, by the time Stevens and Adkins meet with a family, they already have contacted a bankruptcy attorney. Adkins says people should make going to a bankruptcy attorney one of the last resorts.
“There are a lot of solutions other than that,” she says.
To set up an appointment for free mortgage counseling to avoid foreclosure, contact the Salisbury Community Development Corp. at 704-638-5383 or 704-638-2154. The CDC office is located at 1400 W. Bank St., and the agency’s Web site is