Washington Informer, News Report, Benjamin Kokonis, Posted: Aug 05, 2010

Lulu Muze and Kirkton Kelly consider themselves lucky. One year ago, the Silver Spring, Md., couple found themselves in dire straits. Like millions of Americans nationwide, they were heavily in debt and at-risk of losing their home. But, on Sat., July 24, their circumstances took a turn for the better.
“We were struggling to pay, because our paychecks went down. We just couldn’t afford our mortgage,” Muze said.

Muze and Kelly counted among the myriad households to receive free aid from a traveling foreclosure assistance program, which made a 10-day stop in the District on July 23.

The Neighborhood Assistance Corporation of America (NACA), a HUD certified, nonprofit, hosted its “Save the Dream Tour” at the Washington Convention Center in Northwest to provide struggling homeowners with counseling, but more importantly, to put them into direct contact with their lenders. About 27,000 households from across the country showed up for the event.

Katina Fields, NACA’s communications and public affairs coordinator, said that “Home Save,” the main assistance program offered on the “Save the Dream Tour,” helps qualified homeowners with loan trouble get back above water.

“We ask banks to do three things: lower interest rates [for troubled clients], extend terms, if that’s what it takes to make their home affordable, or forgive and forebear money from their principal balance.”

Fields said, in order for clients to receive assistance, they must bring in the appropriate documentation, including mortgage statements, proof of income, a property tax bill, homeowners association statements, if applicable, and proof of insurance.

Only owner-occupancy, non-investors who are facing a hardship such as foreclosure, lost work hours, or reduced incomes, qualify for assistance, she said.

After a homeowner is qualified for a loan modification at a “Save the Dream Tour” event, a “Home Save” counselor will compile a budget, on site, and submit it to the client’s lender, who also has an in-house representative. The homeowner will then sit down with the lender in an attempt to strike a deal and prevent foreclosure.

“We do the work for the bank. We tell the banks, [these are the client’s] bills, this is their debt, and this is what they can afford to pay as a mortgage payment. Nine times out of 10 it’s a lot lower than [what] they are [currently] paying,” Fields said.

“When you leave here, your payment will normally include your taxes and insurance—it is one combined payment. We have an 80 percent success rate. A lot of people come in with a five, six or seven percent interest rate. We can get them as low as two percent,” she said.

Muze said their previous loan was nearly seven percent until they received NACA’s help to re-negotiate with Bank of America, who agreed to drop down to a 3 percent fixed loan, in addition to absolving their outstanding back payments.

“We are now saving $917 every month,” she said.

The “Save the Dream Tour” includes most major banks and lenders, including Freddie Mac, Fannie Mae, FHA, Wells Fargo, and Bank of America.

Angeanette Dowles, vice president of the Home Retention Division of Bank of America, who travels with the “Save the Dream Tour,” said the partnership between NACA and her bank is a strong one.

“NACA has a beautiful model that works well with the servicers,” she said. “Wherever NACA goes with the “Save the Dream Tour,” we are going to be right there with them to support the effort and to support our customers.”

Although many will benefit from “Home Save,” not everyone will qualify for assistance, Fields said. Several conditions will prohibit a participant’s ability to capitalize on the Home Save program: First, you can afford to pay your current bills. Second, you own more than one home. Third, you have been unemployed for longer than a year and have been granted two or more forbearance plans (a grace period where lenders forgo or lower mortgage payments for an extended period of time), or fourth, you have not received permission by a private investor (if you use one).

The success story of Muze and Kelly is uplifting, but not everyone who attends the “Save the Dream Tour” will save as much as they did.
James Townsend, a struggling homeowner from Upper Marlboro, Md., arrived at the D.C. event full of hope, but was exhausted after a long day of working on his loan.

“I came down here to save my home. I did okay, but it could have been better.”

Townsend said he saved only a small amount of money from the modification process, but was satisfied with the overall experience.

“They worked hard on it,” he said. “The main point is I saved my house. Like my wife always says, ‘everything is going up except for our salaries.’ Things happen. The car breaks down— it [costs] $1100. The furnace goes out—this goes out—that goes out, there’s a death in the family. Things happen.”
Although many people are content with the outcome of loan modifications, some remain skeptical, including attorney John M. Harrison, of Bowie, Md., who receives several calls a week from dissatisfied homeowners.

“It is my suspicion that modification applications are nothing more than de facto interrogatories, where lenders are gathering facts about the homeowner to determine whether or not it makes sense to modify. Banks wonder if it is in their best interest, but often decide they are going to continue to pressure the debtor for cash, to the point where they eventually become insolvent. The property often goes into foreclosure, or worse, the debtor has to file bankruptcy,” he said.

Harrison said that not all modification processes are devious, but cautions people to use their discretion.

“NACA is not the problem. I think the fault still lies with the note holder or the banks. I think NACA’s mission is a heartfelt mission— they are truly trying to help folks, but the problem is we’re dealing with a contract between a bank and the homeowner.”

According to RealtyTrac’s Midyear 2010 U.S. Foreclosure Market Report, released on July 15, “1.65 million properties received foreclosure filings in the first half of 2010… [and] 1.28 percent of all U.S. housing units (one in 78) received at least one foreclosure filing in the first half of the year.”
Muze said she is very happy to be on the other side of her loan difficulties.

“The only unfortunate thing is, when we were still current, we were trying to see if we could work with [the bank], but it wasn’t until we were behind—then we were listened to, which is sad.”