Foreclosure Counseling Helps Victims

Posted in Foreclosure, November 26th, 2007 |

East Side Organizing Project or ESOP is a community help group in Cleveland. It tries to work out deals with lenders. The sessions are usually well attended with about 150 attending. Darlene Stuzman was in trouble having fallen back on payments when her husband was ill. She called on ESOP at first doubtful about their efficacy.

The first step is answering certain basic questions like how far behind is the borrower, how much can be afforded per month towards the loan, has foreclosure proceedings started and the like. ESOP made it clear to Darlene and others like her what they could and could not do. ESOP has tied up with 25 lenders. They can immediately halt the foreclosure process and allow for a breather. Talks might then begin relating to reorganizing the loan taking into account how much the borrower can afford. The best option would be a short sale or deed-in-lieu. The house might be lost but the stain of foreclosure would not touch their credit history. It will give them a chance for a new beginning.

Talking with each individual follows the group session. Darlene and husband Michael had bought their house in April 2006 after taking a loan from Countrywide Financial. It was an ARM loan with an interest of 8.75%. They took another mortgage at 12.875% and found that they were paying $1,250 per month as interest. The bomb fell with an announcement of a substantial rise in interest. The timing coupled with Michael’s health problem. They fell behind in payments. At this point ESOP stepped in and was initially disappointed Countrywide’s attitude. But since October Countywide has thought it to be more prudent and beneficial to take a u-turn. Two programmes were launched – refinancing or reducing rates of ARM. At first it was thought to be mere publicity stunts but later to proved otherwise. Lenders had more to gain by coming to an agreement because the sheer number of foreclosures gnawed into their time and money. For Darlene it was good news. Her first loan was reduced to fixed 8.75% and the second loan was wiped out altogether. The best thing that Darlene had done was to keep continuous contact with the lender and kept records of the same. Ten other ESOP clients have also benefited from ESOP talks with Countrywide. Darlene’s case was the first instance of Countrywide responding to ESOP overtures.