Sustainability

Lawyers offer foreclosure support

For at least one Yellow Springs homeowner, the past year has been unforgettable. In the fall of 2008, his mortgage company granted him a three-month forbearance on the monthly payments for his home in the village. Having no steady income due to an ongoing health issue, the homeowner received a second forbearance in early 2009, and then was told in the spring that unless he could begin making his monthly $1,000 mortgage payments, the lender would begin foreclosure proceedings on his house.

Last month he received a notice from the courts that a Greene County judge was rendering a final decision on the future ownership of his house.

“That freaked me out, and I went to the courthouse to see if I could contest the foreclosure,” the homeowner told the News in December.

For people across Ohio who have increasingly found themselves dangerously close to losing their homes this year, the state organized a Foreclosure Prevention Task Force aimed at connecting homeowners on the brink of foreclosure with the agencies and attorneys who might be able to help. And this winter a group of local attorneys who are part of the Yellow Springs Bar Association are offering their services through the program, known as “Save the Dream,” to residents who fear they may be in danger of losing their homes.

“It’s a state-wide program that we decided to participate in, and six of us agreed to take cases through the program,” local attorney Ellis Jacobs said. “It was an opportunity to do some good in the community.”

The program is administered through a state-wide screening process and begins when a resident calls the “Save the Dream” hotline, 888-404-4674. Homeowners are then connected within 24 hours to a service provider in their area that can help with their particular situation, be it a housing counselor, a legal aid agency or a lawyer, who will attempt to either help them negotiate the payment agreement with their lender or represent them in court. The solution would hopefully be a loan modification that both the lender and the homeowner can agree on, Jacobs said.

As an environmental and utility and voting rights lawyer without specific expertise in property law, Jacobs was able to help a resident in Beavercreek six months ago to reduce her mortgage payment to a level she could afford. The homeowner held a variable interest rate loan, which escalated dramatically around the time her husband lost his job, Jacobs said. The courts had already filed a loan default judgement against her when she enlisted Jacobs’ help, and together they were successful at reaching a solution and enabling the woman to keep her home. The case was not assigned to him through the Save the Dream program, but it gave Jacobs a sense that mortgage companies and banks are willing to work with clients if it’s done through the proper channels.

And as the recession has dragged on and more housing has flooded the market, banks and mortgage companies have become more open to negotiating the terms of their loans, according to local attorney Chris Peifer, who has also volunteered with Save the Dream.

“Banks are more willing now to work it out because they don’t want to buy the property,” he said. “That’s where we come in — we attempt to negotiate on behalf of the client to lower the interest rate or agree on an installment schedule to make it work.”

The early part of the recession hurt largely businesses, according to Peifer, who worked in commercial bankruptcy in 2008 and represented many regional companies in financial straights. But now the economy seems to have come down on the residential market more. According to an article in the Yellow Springs News last summer, in Yellow Springs between January 2008 and July 2009, seven houses were sold at sheriff’s auction, and another four had started down the foreclosure path but were able to be refinanced or sold by the owner. Jacobs also estimated that there have been about a dozen homeowners in Yellow Springs who have at least started down the path toward foreclosure in the past two years.

Local attorney Barry Reich, another Save the Dream volunteer, believes that foreclosures are only going to increase. People are still losing jobs, and many are still strapped with mortgages with teaser rates that could become unaffordable if the rates increase or the family’s financial situation changes.

Peifer can relate to the shifting financial picture of many of his clients. Last year he lost his job when his firm in Dayton downsized, and he had to adjust his lifestyle by starting a private practice out of his home in Yellow Springs. While he hasn’t received any referrals from the Save the Dream program yet, he encourages homeowners in need not to lose hope.

“I can identify with clients who are under fire and facing hardship,” he said.

While mortgage companies often put off having to negotiate with their customers until it’s clear they are in default of their payment agreement, Peifer advises home-owners to be up front with the lender on what they think they can afford to pay. The earlier they can begin to discuss a manageable payment plan, the better, and getting an attorney to represent them in that effort can be helpful. According to the Ohio Foreclosure Prevention Task Force, consumers who seek help early “have a much greater chance of avoiding foreclosure.”

But even if the loan is already in default or the lender has taken the issue to court, it’s still never too late to get help from attorneys and other experts who are familiar with the system and can offer solutions homeowners might not be aware of, Peifer said. But help won’t come on its own. The homeowner has to seek it out.

“Attorneys are out there and are more than willing to assist, but you have to take that first step and make the call,” he said.

The statewide foreclosure support program has so far received requests from 14,000 people across the state since the program began in mid-2008. According to the 2009 annual report, through consultation services offered free of charge, the program has been able to help 3,500 people, most of whom were able to stay in their homes by either modifying their mortgage or refinancing their home. Just 3 percent of those who have requested assistance have been forced to foreclose or declare bankruptcy, and the rest are currently receiving counseling in an attempt to resolve their housing problem.

The program can’t help everyone. The Yellow Springs resident who was facing foreclosure last month got in touch with a Save the Dream housing counselor, he said. But because his savings had been depleted and he didn’t have a regular income, there was no way to save his house. He is now searching for an affordable apartment in the village that will accommodate a pet. That search is not an easy one, either, he said last week.

Reich has also had mixed success with the handful of clients he has attempted to represent outside the Save the Dream program. Most had signed onto mortgages over the past five years with teaser rates and had subsequently lost their jobs. Unemployment compensation helped some of them to live, but that level of support was generally not enough to feed and clothe a family, in addition to paying even a small mortgage, he said.

“It’s difficult when people are unemployed trying to come up with a payment schedule,” Reich said. “It’s difficult to work with a bank unless you’ve got something to propose to them because there’s no leverage to start with — you’ve got to show where the money is coming from.”

But homeowners can still try to get help navigating a complicated system, and Reich advises them to use the support that’s there for them.

“As long as there hasn’t been a sheriff’s sale, there’s still time,” Reich said.

The Save the Dream hotline is available from 7 a.m. to 7 p.m., Monday through Friday. For additional information go to www.savethedream.ohio.gov.

Contact: lheaton {at} ysnews(.)com

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