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Marin Independent Journal. Logo.
Jim Staats, News, Marin Independent Journal

December 27, 2008

San Anselmo homeowner Kathleen Moran thought she was having a bad year with her partner losing his job, renters on her property leaving after losing their jobs and her property taxes more than doubling. Things only got worse when she tried to get her bank to rework her home loan to prevent foreclosure.

Fight Foreclosure. Save Homes.

A month-long odyssey of frustrating phone conversations, reams of financial worksheets and late-night cold calls from law firms taught Moran what many people in similar predicaments in Marin and elsewhere have learned: help is needed, and assistance from public and private sectors often is too little, too late.

"It's the worst thing I've ever been through in my life," said Moran, 55, case manager for a Marin County social service program.

"The banks won't help you. I called when I saw the troubles starting and they won't even talk to you until you're 60 days behind (on the loan), and at that point I was in sheer panic. It's an absolute nightmare."

Losing half their income, Moran and her partner, John Allen, who last paid their $2,900 monthly mortgage in October, finally received foreclosure counseling from San Rafael nonprofit Marin Family Action. They awaited word from their lender on a request to spread their $550,000 loan over a longer period of time with lower payments, but just learned last week that paperwork faxed weeks ago was sent to the wrong department - despite instructions listed on the bank's Web site.

Moran was trying to prevent her home from joining the 2,223 properties in Marin this year in default or forced sales - double last year's figure and more than six times the total in 2005.

Facing a growing legion of distressed homeowners, lending institutions are becoming increasingly more receptive to loan alterations, but the process remains murky and arduous.

Sale of homes on the courthouse steps.

Buyers waiting outside the courthouse to submit bids on foreclosed homes. Santa Rosa.

This month, mortgage giant Fannie Mae began to allow borrowers facing imminent financial difficulties to request loan alterations, rather than having to wait until two or three months of payments were missed as Moran was told. To be eligible, owners must prove they can make mortgage payments with up to 38 percent of their monthly gross income and show proof of their hardship. If successful, borrowers can get sizable interest-rate reductions, deferral of principal payments or loan extensions . . .

. . . a frequent paperwork problem is that loans have been sold so frequently, homeowners "don't often have any clue who owns the loans on their home." Manny Fernandez, executive director of Marin Family Action, said regardless of changes, the process to help mortgage holders remained "a broken system" of unreceptive mortgage companies, improper dispersal of federal bailout funds and little real help.

A national hotline set up by the Department of Housing and Urban Development offering pre-foreclosure advice did nothing beyond instruct borrowers what to say to mortgage companies, he said. Moran said her advice from the hotline was to put together a list of expenses and carry a bag lunch to work.

Fighting to save homes.

Fernandez's office, which saw 15 families for loan modification help in the past couple weeks, was not one of the 30 Bay Area nonprofit agencies certified by HUD in foreclosure counseling, which officials said have the tools to help.

There are no such agencies in Marin; when homeowners call their loan service providers, the people who typically answer the phone don't have authority to help restructure a loan.

However, HUD-certified agencies have access to decision-makers and can help do the "true nitty gritty" work of negotiating lower interest rated or other loan options based on client paperwork, income and situation.

"The lenders are not required to be as responsive as we'd like to see, (but for borrowers) there is no panacea except working your way through it," Larry Bush said. Bush (a spokesman for HUD's regional office in San Francisco) . . . said that previously, with lenders only being insured up to $417,000 if a loan went bad, there wasn't much of a market for FHA-insured mortgages in Marin, forcing people to turn to problematic subprime loans.

"That's helpful to several people, but not as many as need help," he said. "You still have plenty of people whose loan is more than $625,000."

In addition to free counseling options, there are countless private agents who offer loan modification services for a fee. Bush cautioned homeowners to be selective. "Don't go to attorneys who cold call," he said. "They grow up like deadly mushrooms and it's easy to confuse homeowners."

Moran said she gets calls from law firms day and night who try to scare her into doing loan modification with them for fees of $2,800 to $3,400. "If I had $2,800, I would be able to pay a month's mortgage or most of it," Moran said.

Arlene Bradley, housing advocacy director for HUD-certified Housing Rights Inc. of Berkeley, said foreclosure counseling for each client took about two months of paperwork review, filing of a hardship letter, communication and negotiation with lenders and homeowner budgeting. Though her agency hasn't dealt with any Marin homeowners, Bradley said her firm has worked with about 225 distressed homeowners in the past three months, compared with 10 troubled borrowers in 2007.

"The banks have been notorious for not even communicating with the homeowner," she said, noting a lot of those owners were forced to miss payments just so they could get help. "It's silly." She said recent changes have yet to help those with troubled mortgages. "The whole idea is banks would redo the loan at market value," Bradley said. "We're not seeing anybody do that. Everything is still up in the air. The (federal) bailouts really have not trickled down to the homeowner. . ."

. . . Banks are not willing to help you, hear you out or do anything whatsoever that could benefit both of you . . . Moran, the San Anselmo owner working to avoid foreclosure, said she did not hire an attorney, but did find a private agent to help with her loan request. "It's too stressful to try to do this on your own."

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Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.

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