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NeighborWorks HomeOwnership Center of Southeastern Vermont
Urges Homeowners to Call for Help
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.
Downloadable Foreclosure Prevention Publications
Rockingham Area Community Land Trust
90 Main Street, Suite 1
Springfield, Vermont 05156