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As
interest rates rise and home price appreciation slows in Vermont an
increasing number of homeowners in our area are falling behind on
their mortgage payments or find themselves on the brink of
foreclosure.
According to NeighborWorks® America, the nation’s largest
certifier of homeownership counselors, the foreclosure rate on
mortgage loans has increased by more than 50 percent since 2000.
How did this happen? Easier access to home loans, an increasingly
fragile economy, and mortgages that suddenly are
 beyond the
financial abilities of the borrower are causing a climb in
foreclosure rates in Vermont and across the nation. Over the last
few years, too often buyers rushed into or were tempted by loan
products that appeared to be low-cost. These loans actually had
short-term benefits and while they got many buyers into a home, when
their rates climbed as scheduled, thousands of homeowners were
shocked by payments they didn’t expect and can’t afford.
Fortunately, there are steps Vermont homeowners can take to avoid
foreclosure and keep their home equity. Because fast action is so
important in the early stages, homeowners at risk of entering
foreclosure should immediately call for help.
According to recent industry studies, more than half of homeowners
facing foreclosure do not call for help when they begin to fall
behind on their payments. The early stages of foreclosure are the
most crucial – studies show that homeowners who are one or two
payments behind are more likely to keep their homes than those
further behind on their payment schedule.
Counselors are often the first line of defense for homeowners facing
foreclosure, triaging them to determine whether the family needs
help to fill short-term or long-term income gaps, aid to repair
property damage, or assistance in budgeting and money management.
RACLT-NeighborWorks HomeOwnership Center of Southeastern Vermont, a
member of the national NeighborWorks network of organizations that
provide homeownership education and counseling, can deploy a range
of services to help southeast Vermont residents in danger:
face-to-face consumer counseling, rehab loans for repairs and
maintenance, and public education.
Homeowners facing foreclosure may also consider calling
1-888-995-HOPE to receive foreclosure prevention counseling from
U.S. Department of Housing and Urban Development (HUD)-certified
counseling agencies, including RACLT The nationwide toll-free
hotline is facilitated by the Homeownership Preservation Foundation,
a Minneapolis-based nonprofit dedicated to preserving homeownership
and preventing foreclosures by reaching owners as early as possible
to prevent them from reaching the point of foreclosure.
After
contacting a counselor, borrowers should immediately contact their
lender. Many borrowers may be hesitant to call their bank because
of embarrassment, fear, or lack of trust. Working with a counselor
may help alleviate this anxiety because a counselor has the ability
to serve as mediator between the borrower and lender.
With
the help of a counselor, a homeowner can work with his or her lender
to develop a reasonable plan that will offer temporary relief to the
borrower. More often than not, a lender is willing to work with his
or her borrower to develop a plan of action designed to put the
family back on the financial road to recovery.
Research and experience show it is much less expensive to counsel
and restructure loans than to foreclose. The cost to the borrower
includes a lost home, equity and ruined credit. The cost to the
community includes $30,000-50,000 in law enforcement services and
lost economic development, according to a recent PolicyLab
Consulting Group study. And, contrary to some common
misperceptions, banks and mortgage investors lose in foreclosure,
too – at least $30,000 on each foreclosed home.
We must
do all we can to ensure homeownership is not built on quick sand;
the earlier we can reach homeowners and make them aware of what
they’re facing, the more options they have in addressing their
financial issues, preventing foreclosure, and keeping their home
equity.
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Foreclosure
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