National surveys show consumers’ mood is brightening, and it’s not just holiday cheer. The more positive outlook has a lot to do with the steep drop in gasoline prices since last summer. 2015 holds the promise of more price relief not only at the gas pump but also at grocery stores.
Franklin Co. Foreclosures Swell As Economy Stalls
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It’s common knowledge that home foreclosures have reached epidemic proportions in America. More than a million homes nationwide were in danger of foreclosure in 2007. Ohio has been among the states in the top-ten in foreclosure related filings. The number of homes in jeopardy in Franklin County is also high:
“In the last four years there have been 30,000 foreclosures filed in Franklin County,” says Amy Klaben, president and CEO of Columbus Housing Partnership. “How many ended up in the completion of the foreclosure we don’t know; the process takes a while. Our assumption is that this coming year we’ll have between 8,000 and 10,000 more foreclosures filed in this community.”
The Columbus Housing Partnership is a 23-year-old, non-profit that in part helps provide homeowners with foreclosure-related assistance.
“Five years ago we had 250 people come to us for help to save their homes,” Klaben says. “They were in default on their loans; many had already received a foreclosure notice. In 2008, 1,600 families came to us for assistance. That’s how much it’s grown for us over the past five years. This year we anticipate serving at least that many people.”
The sub-prime, adjustable rate mortgage meltdown has been the face of the foreclosure crisis nationwide. But foreclosures in Franklin County continue, Klaben says
” because of job loss. It cuts across income; it’s affecting lots of people in the community. And some people are not acknowledging that they have a problem. We know that people are making more use of the food bank. They may be paying their mortgage but not have enough money for food. They may be deferring other bills to try to save their home. Those are examples of why it’s so important to come in for help. Ignoring the problem is not a solution.”
So it’s important to get in contact with the loan servicer – the institution that made the loan — at the first sign of trouble. Tom Kelley is a spokesman for Chase Bank.
“The homeowner needs to start getting worried if they don’t have enough money to make their monthly mortgage payment,” Kelly says. “The foreclosure process can take up to a year but the sooner they raise their hand and say, ‘I’m not sure I’m going to be able to make this payment,’ or ‘I’m behind one or two months already, let’s see what we can do;’ that’s really the time to start thinking about it.”
Kelly says a loan modification may be appropriate for some borrowers. That’s a process where the bank lowers the payment amount – sometimes by lowering the interest rate. The bank, he says, simply does not want to own real estate. So it’s in the interest of both parties – the lender and the borrower — to try and work something out.
“Let’s say that you and your wife are both working and your hours are cut and your income is down, then you can go to your servicer and say, ‘Listen, here’s the situation. I still want to keep paying but can we work something out?’ So maybe your interest rate can be lowered from say 6.5 percent to 5 percent which would lower the monthly payment and then make it affordable.
The process is not an easy one. There’s a lot of paperwork involved. So Kelly says be prepared and be organized.
“The things that we will ask for, Chase and virtually every other mortgage servicer is, tell us about your income. We want to make sure what your financial situation really is. We want to see a hardship letter. And then we basically grind through the numbers and see if we can make it work. And what happens if you can’t make it work?
“We have a responsibility to say, ‘Can we modify this mortgage or is this home simply not affordable for this family.’ And if that’s the case we talk to the borrower and say listen you just can’t afford this house, do want to see if you can sell it and do a short sale where we accept less than what you owe on the house? Do you want to give us the deed or do you want to go through a foreclosure?”
For those who do qualify for loan modification, the Obama Administration’s Homeowner Affordability and Stability plan offers financial incentives to those who make timely payments once the loan has been modified.
“For every year that the borrower makes those modified payments they get $1,000 to pay down the principal on the mortgage up to five years. So if you get a modification, get lower payments and keep up with it for five years, you just got $5,000 free money,” Kelly says.