by Dan Krell
Daily reports of increasing unemployment, shrinking GNP, and increasing government deficits leave many worried about the economy. But it’s not just the economy; people are concerned about their jobs and finances as well. Needless to say, many are worried about losing their home.
The initial foreclosure wave we endured was mostly due to those home owners who had exotic and questionable mortgages. However, the next foreclosure wave, which has already started, will also see an increased number of home owners who are casualties of a deteriorating economy.
The Federal Government has taken steps to create programs and initiatives to assist those who can no longer afford their mortgage or are already in foreclosure. Among the initiatives taken by the Bush Administration and congress include refinancing options for those in foreclosure through FHA (HUD.gov) and the creation of the Hope Now program (hopenow.com), which is a collaboration of HUD and mortgage lenders to provide foreclosure prevention assistance and loan modifications.
Local officials have also been busy to address the foreclosure problem. Local initiatives include partnerships with federal programs, such as the Maryland Hope Now program. Additionally, collaboration with non-profit organizations includes the Homeownership Preservation Foundation (995hope.org). These programs offer home ownership counseling and assist in dialoguing with your lender to facilitate a solution (such as a loan modification or short sale).
Additional state resources include the Lifeline Refinance Program offered through the Maryland Department of Housing and Community Development (mdhousing.org/Lifeline). The refinance loan program is described as assisting those who may be facing “unfavorable” mortgage situations. The program requires good credit and a mortgage in good standing, so if you are already delinquent they may recommend seeking other solutions.
In Montgomery County, County Executive Isiah Leggett and the county counsel have made funds available for additional housing counseling through the Latino Economic Development Corporation and Home Free USA (both non-profit organizations). Another local program is the Bridge to Hope program, which is a short term loan (up to $15,000) to assist home owners who need a financial “bridge” during an uncertain time. More information can be obtained from the Montgomery County government (montgomerycountymd.gov).
Recent additions to local foreclosure relief efforts include Governor O’Malley’s new initiative (announced November 7th) with mortgage lenders and servicers. The program reportedly includes such companies as HSBC, Ocwen, GMAC, ResCap, Litton Loan Servicing, AmeriNational Community Services and Citi Mortgage. The plan is highlighted in five points that includes: adhering to timelines for loss mitigation (which may include short sales); designating a network of employees for Maryland residents, called “Team Maryland;” participation of collection and reporting of data to facilitate the loss mitigation process; creating loan modification guidelines; and participation in community outreach.
Even though government foreclosure relief programs exist, many home owners are unaware of these resources. Additionally, the emotional toll of facing foreclosure can leave home owners feeling helpless and without hope (especially when their lenders have turned them away). If you know you may be nearing financial challenges that may affect your ability to pay your mortgage, contact one of these resources as soon as possible; if you know someone who may be facing foreclosure, please help them by providing the foreclosure relief information. Be proactive by contacting your lender as well as contacting one of the local approved foreclosure relief programs.
This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of November 10, 2008. Copyright © 2008 Dan Krell.