HUD-approved housing counseling helps people avoid foreclosure

This past quarter, more than 895,000 foreclosure filings were reported on U.S. properties, and bank repossessions increased a record 5 percent. Delivering these statistics, James J. Saccacio, chief executive officer of RealtyTrac, noted: “The roller-coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market.”

Saccacio further projected that foreclosure filings may exceed 3 million before the end of 2010. For Delaware homeowners who are delinquent on their mortgages, this may seem like old news. What they may not know is that free, Housing and Urban Development (HUD)-approved housing counseling is available and may help them sort through options and find a solution to their problem.

“When people get behind on their mortgages, they often react with fear and desperation,” said Tom Simonton, manager of housing at local nonprofit Consumer Credit Counseling Service of Maryland and Delaware (CCCS). “They may have talked with their lender already but are frustrated, because they still don’t have a real course of action. HUD-approved housing counseling like we provide makes it possible for clients to fully evaluate their situation. During a counseling session, we help them determine where they stand financially and examine all available options. Our clients leave the session with a better understanding and a clear plan of action.”

Simonton, who has years of experience in the housing arena, acknowledges that the face of foreclosure is changing. “When the foreclosure problem first hit, most of the clients we saw here at CCCS were people of modest means who may have purchased more home than they could afford. Then as the economy got worse, we started seeing people who had solid careers and good incomes but who had lost their jobs or run into other economic hurdles. Now, we are seeing people from all sectors of society. Clients may have triple-digit incomes or be retired, but due to investment losses, they are now having trouble making their mortgage payments.”

Simonton’s observation parallels a recent online survey by Housing Predictor in which participants were asked, “Are you afraid of losing your home to foreclosure or have you already?” Eight percent responded they had already faced foreclosure, and 30 percent stated they are afraid they will lose their home.

Local residents who have fallen behind on their mortgages aren’t just fearful; they are vulnerable. Late-night cable is full of unscrupulous spots that make false promises and that may ultimately result in consumers losing their homes. Commercials for these scams may make reference to a government stimulus windfall but ultimately involve a large fee up front.

Simonton said desperate homeowners do fall prey to mortgage foreclosure-prevention scams. “If they automatically promise that they can save your home, it’s probably bogus and best to steer clear,” he said.

“There is no one-size-fits-all answer. It’s impossible to know what options are available without first analyzing a person’s finances and mortgage situation. Based on that assessment, there may be several ways to respond. For example, the homeowner may benefit from lender or government modification programs and initiatives. In some cases, it may be necessary to appeal decisions that have already been made. If the client is too far behind or has no viable income, it may even be necessary to sell the home,” said Simonton.