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Help for troubled homeowners; State workshops try to facilitate mortgage modifications.

Byline: Paula J. Owen

FITCHBURG - Delores P. Walker, 63, has been struggling to keep her owner-occupied, three-unit apartment house while raising foster children, but since losing her tenants several months ago, the battle has become more difficult.

After her mortgage company lost the paperwork during a trial period for a loan modification and increased her monthly payment by $300 under a new modification, she said, she again fell behind on her mortgage and started to lose hope - until yesterday.

"Two things happened - I lost my tenants when they lost their jobs because of the economy, and the city put my water bill onto my mortgage," she said. "It all happened at the same time."

Yesterday, she attended a homeowner foreclosure prevention workshop at the Marriott Courtyard in Fitchburg. With documents in hand, she met with her lender face-to-face to apply for another modification. She also found out about a new federal program called the Emergency Homeowners' Loan Program.

The program provides help for unemployed or underemployed homeowners who are in danger of losing their homes, but who do not qualify for modifications.

There was only a one-month window to prequalify for the program, said credit and housing counselor Beata M. Chovance from the Credit Counseling Corp. in Cambridge. Tomorrow is the deadline for prequalification, which can be done at a local housing agency or online at

Administered by the U.S. Department of Housing and Urban Development, the program provides homeowners with loans of up to $50,000 at zero percent interest to help pay for monthly mortgages over the next two years. Part of the loan - 20 percent - is forgiven each year the homeowner stays in their home and is entirely forgiven at the end of five years.

Ms. Walker is hoping she qualifies.

"That would be so great," she said. "At least now I know they won't lose the documents, but I don't know if I need to send more."

Fourteen of the foreclosure prevention workshops have been held across the state since the foreclosure crisis started. They are organized by the state Office of Consumer Affairs and Business Regulation and area housing counseling agencies, including the Twin Cities and Oak Hill community development corporations. About 30 to 40 percent of the 3,700 people who attended past workshops have remained in their homes, said Barbara T. Anthony, undersecretary for the Office of Consumer Affairs.

Homeowners meet directly with lenders to work on loan modifications and other solutions that will help keep them in their homes, said Ms. Anthony. Counselors are also on hand to help with education on other alternatives.

"Ever since this (foreclosure crisis) started, banks and servicers have been overwhelmed," she said. "Papers get lost and people need to send the same documents over and over again. Until recently, lenders were not organized enough to handle the volume. Consumers were shuffled from one person to another and never dealt with one person. Today they can sit down face-to-face with their lenders to work something out."

She said part of the problem is that things have changed since the days when local banks knew all their customers and their customers knew their banks. Predatory lenders plus lost jobs have caused the economy to spiral downward, she said.

"Globalization of finance has cut out personal contact with consumers," she said. "The fallout is devastating with foreclosure rampant and the economy taking a nosedive."

Lenders are getting better, said Ms. Anthony, setting up modification centers and hiring people to handle delinquent mortgages that are more sensitive to consumers.

"Banks are opening up centers to deal only with foreclosure," she said. "Consumers just don't know it yet."

Sandra Clarke, chief of staff for the Office of Consumer Affairs, said that when the workshops were first held, many people who attended were victims of predatory lenders. Now, many people are seeking help because of the economic downturn and unemployment.

"We can't help everybody," she said. "We cast a very wide net at these events. People are in all different stages and some we just can't assist with modifications, but we put them in touch with housing counselors who discuss alternatives to modifications."

They also warn against foreclosure prevention scams. As foreclosures increased, she said, so did the scams.

"It certainly exists for people who are in foreclosure and are exploring every avenue - bad enough you're in foreclosure and may be losing your home," she said. "You're hoping everyone that comes to your assistance is looking to help you. Those scams offer false promises, but the fact is, there are workshops like this and other help that is out there that is free."


CUTLINE: Bank of America loan modification counselor Michael L. Rose speaks to a distressed homeowner during a workshop held by the state Office of Consumer Affairs in Fitchburg yesterday.

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Title Annotation:MONEY
Publication:Telegram & Gazette (Worcester, MA)
Date:Jul 21, 2011
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