Property owners behind the more than 2 million foreclosure filings in the United States last year will find little comfort in the Bush administration’s latest initiative, “Project Lifeline.” The project will suspend foreclosure proceedings for 30 days while borrowers negotiate with mortgage servicers. The program comes too late for millions of people who have lost their homes, but maybe it can slow the foreclosure rate. Nationally, foreclosure filings rose 75 percent from 2006 to 2007. In North Carolina, foreclosures rose 9.4 percent.
Fortunately, families facing foreclosure don’t have to wait on Washington for help. There’s a different type of “lifeline” available locally. Since last spring, the Salisbury Community Development Corp. has helped about 300 families avoid foreclosure, and it stands ready to help many more, according to Chanaka Yatawara, the agency’s executive director. A grant from the Rowan County United Way has enabled the CDC to offer financial help to families who find themselves in this position because of the loss of a job or a reduction in working hours. And for those who have fallen behind on a mortgage for other reasons, the agency can arrange budget and credit counseling and give advice on other ways to get help.
Subprime loans with big jumps in interest rates have trapped millions. Yatawara says he knows of families facing a 4.9 percent jump in their mortgage interest rate in April, with the rate going from 7 percent to nearly 12 percent. One family has a house worth $180,000 with an initial mortgage of $190,000 and a second mortgage of $80,000. No lender should have allowed them to borrow $90,000 more than their house was worth. The Community Development Corp. can help the family financially, since a lay-off is involved, but it has also referred the case to Legal Aid in hopes the second mortgage can be wiped off.
Project Lifeline goes beyond the subprime mortgage crisis to help any mortgage holders who are 90 days behind in payments. On a pilot basis, it will involve six of the nation’s largest mortgage lenders ó Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., JPMorgan Chase & Co., Washington Mutual Inc. and Wells Fargo & Co. The Bush administration hopes more lenders will sign on. The six are also involved in Hope Now, which freezes rates on some high-cost subprime mortgages for five years to help borrowers whose teaser rates are jumping up.
A sad fact of the mortgage crisis is the embarrassment homeowners feel when they fall so far behind. More than half of foreclosed homeowners never contact their mortgage firm to seek an alternative, according to Freddie Mac. Such homeowners should know they have plenty of company and several ways to seek help. Nationally, there’s a Hope Hotline, 1-888-995-4673, that provides free counseling around the clock on foreclosure alternatives. Locally, the Community Development Corp. can be reached at 704-638-2154. You can also start with your own mortgage lender. Lifelines are there ó but you have to reach for them.