Housing Counseling Helps: HUD — Tuesday, May 22, 2012

Written by
Pamela MacKenzie

A recently released U.S. Department of Housing and Urban Development study said that with a counselor's help, nearly 70 percent of those who sought housing counseling obtained a mortgage remedy to retain their home and 56 percent cured their defaults and became current on their mortgages.

Conversations with local HUD-approved counseling agencies in North and Central Jersey indicate that this free counseling certainly can help homeowners in crisis and people who want to find their first home.

Sharon Clark, executive director of the Central Jersey Housing Resource Center in Raritan, said: "In Somerset and Hunterdon counties, I would say we have a 70 percent success rate if the household has a steady, reasonable income source that is reliable and that can cover their shelter costs and other living expenses."

She saw an increase of about 30 percent in requests for this type of counseling in 2011 over 2010 and another 10 percent increase in 2012.

She explained that in the HUD study, which was released in May, there are 14 possible outcomes for homeowners in trouble, ranging from modifying or recasting the loan to short sale (when the home is sold for less than the balance owned on the mortgage) to foreclosure. HUD counted short sales as a success in their study, while some homeowners would not.

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action in Highland Park, said that since the state attorneys general settled in February with the five top banks in the robo-signing scandal, many more homeowners who are facing the possibility of foreclosure are now coming to her agency and agencies like it for counseling. She said that each bank has its own guidelines for how it is implementing the settlement, and the HUD counseling can be very helpful in navigating through the process.

"At the end of the day, a lot of people are still going to lose their homes, but we do help many people," Salowe-Kaye said. "I recommend that people who have fallen behind on their mortgages due to unemployment or underemployment get to a free HUD-approved counseling agency as soon as they can."

Salowe-Kaye and Tracee Lilly, the foreclosure counselor at The Housing Partnership in Dover, Morris County, both spoke highly of the Homekeeper program for those who have been unemployed and are now underemployed. Lilly said that her agency has already administered about $2 million in direct mortgage assistance to help 50 households through this program.

There are several programs available, and homeowners should discuss their individual circumstances with a counselor to find the one they qualify for. Salowe-Kaye said HUD sets a priority on which programs must be considered first; homeowners can't pick and choose which programs they want.

Banks more cooperative now

Salowe-Kaye and Lilly also said banks are more responsive this year.

"Bank of America especially is being more proactive," Lilly said.

Salowe-Kaye said banks seem to be more willing to negotiate now than they were a year ago, and there are more programs to help.

Clark said that this year, banks seem to be handling pre-foreclosure situations more efficiently, probably because they now have enough trained people in place to deal with the paperwork and work with the clients who need help.

"You have to understand that if they are missing one piece of paperwork and the whole application gets delayed for 30 days, then all the paperwork the homeowner did may be out of date and we have to start over. A big part of the counselor's job is making sure everything is complete and that it goes to the right person," she said.

"I would say that if the bank can keep a family in a house and do a loan modification, they will, but the documentation and debt ratios have to make sense, regarding income and expenses," Clark added. "If they have a reasonable income source and there's a way for people to keep their house, I have never been turned down, but some people just don't have the income to cover their expenses."

To find a HUD counselor

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