NHS Phoenix in the News

The Arizona Republic
MY TURN
Patricia Garcia Duarte, author
August 8, 2007

COUNSELORS CAN HELP HOMEOWNERS AVOID FORECLOSURE

As The Arizona Republic has reported, Arizona ranks seventh in the nation in the number of foreclosures. That number is up dramatically from just a year ago.

Nationally, NeighborWorks® America, the nation's largest certifier of homeownership counselors, reports that 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. Too often, buyers rushed into or were tempted by loan products that appear to be low cost. These loans have short-term benefits and they get buyers into a home. But when their rates climbed as scheduled, thousands of homeowners were shocked by payments they couldn't afford.

Fortunately, there are steps homeowners can take to avoid foreclosure and keep their home equity.

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 in payments.

Counselors are often the first line of defense against foreclosure. They can determine whether the family needs help to fill short-term or long-term income gaps. They can provide aid to repair property damage and find assistance in budgeting and money management.

Neighborhood Housing Services of Phoenix can deploy a range of services to help Phoenix-area residents, including those in danger of foreclosure. NHS Phoenix is certified to provide free budget and credit counseling and pre- and post-purchase counseling, creating savvier home buyers who can avoid financial traps. NHS Phoenix also helps qualified homeowners navigate mortgages, refinancing, home-improvement loans and debt-consolidation loans.

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 alleviate this anxiety because a counselor can serve as a facilitator 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. 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 to $50,000 in law-enforcement services and lost economic development. And, contrary to some common misperceptions, banks and mortgage investors lose in foreclosure, too -- at least $50,000 on each foreclosed home.

We must do all we can to ensure homeownership is not built on quicksand. 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 homes and equity.

Patricia Garcia Duarte is the executive director of NHS Phoenix, a member of the national NeighborWorks® network. For more information about classes offered at the NeighborWorks® HomeOwnership Center, contact NHS Phoenix at (602) 424-5340.

Copyright (c) The Arizona Republic. All rights reserved. Reproduced with the permission of Gannett Co., Inc. by NewsBank, inc. Record Number: pho173485330. August 8, 2007, Final Chaser Edition, Northeast Phoenix Republic Section, MY TURN Column, Page 19.