The percentage of nationwide calls to a homeownership preservation hotline from homeowners who are having a difficult time meeting their mortgage obligations has more than doubled this year. The Homeownership Preservation Foundation reports that calls to its Homeowner's HOPE™ Hotline from homeowners seeking counseling are up 70 percent this year, signaling a possible new wave of foreclosures.
The Homeownership Preservation Foundation (HPF) is dedicated to helping distressed homeowners avoid mortgage foreclosure through its Homeowner's HOPE™ Hotline at 888-995-HOPE™. While half of those counseled by the hotline this year report they remain current on their mortgage payments, they say mounting expenses could cause them to default. More than 75 percent of those current borrowers had credit scores well above the subprime threshold when they took out their mortgages, according to HPF.
"We are seriously concerned about the rise in homeowners who were classified as low risk when they took out their mortgages and, as a result of a combination of circumstances – job loss, healthcare crises, and various recession-related issues – have seen their economic situations severely deteriorate," said Colleen Hernandez, CEO of HPF. "This could result in the proverbial 'second shoe to drop' for the housing crisis, especially considering the limited options available to homeowners who are struggling but not yet delinquent."
Hernandez said only about 40 percent of HOPE Hotline callers who are current with their mortgage payments appear to qualify for the expanded Home Affordable Refinance Program (HARP 2.0), a federal program designed to allow homeowners with loans backed by Fannie Mae and Freddie Mac to refinance at a lower interest rate. The program is aimed at homeowners who are current on their mortgage payments but owe more than the value of their properties.
The Federal Housing Finance Agency recently reported refinance volume continues to rise with more underwater borrowers refinancing through HARP than ever before. HARP loans represented 20 percent of total refinance volume in May, the largest increase since the program was launched in 2009. During the first five months of this year, more than 78,000 refinances were completed, exceeding the total HARP refinances during all of 2011, the report states.
Suzanne Yost, president of the Silicon Valley Association of REALTORS®, says even as the local housing market appears to be recovering from the housing crisis, REALTORS® remain concerned about responsible homeownership and strongly advise homeowners who anticipate they are going to miss a mortgage payment to contact their mortgage company immediately to see if they can work out a solution.
"We urge homeowners to assess their situation, and if they feel they might be falling behind on payments, they should take action immediately," said Yost.
Below are steps recommended by the Homeownership Preservation Foundation to prevent foreclosure:
1. Take action immediately. If you are going to be late with a mortgage payment, contact your mortgage company right away. Your mortgage company may be able to refinance the debt, arrange a repayment plan, modify the loan by adjusting the interest rate, or extend the terms to make it more affordable.
2. Call the Homeownership Preservation Foundation at 888-995-HOPE to speak with a counselor about your financial situation free of charge.
3. Contact your credit cards and utility companies. Your credit card company may be able to reduce the interest rates on your cards. Utility companies often have special programs based upon income for families facing life-changing events. Making late payments or skipping them can seriously affect your credit score.
4. Prioritize your expenses. Cut non-essential expenses, such as cable, health club memberships and entertainment.
5. Beware of scams. Homeowners facing financial troubles are especially vulnerable because they are desperate to find a solution to their problems. The U.S Department of Housing and Urban Development has more information about avoiding such scams on their website at www.hud.gov.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.