Mortgage modifications give hope of avoiding foreclosure (Daily Herald)

By Marie Wilson

October 3, 2010

Diane Keys and her husband, Tony, are not behind on their mortgage payments. But with Diane receiving disability payments, Tony in need of back surgery and three kids younger than 12, Keys knows her family is struggling.

"We're having a hard time with the mortgage payments," she said. "I've always kept it current because that's our greatest asset. We have great credit, we just have low income."

The Keys were among about 200 homeowners who attended a foreclosure prevention event Saturday in Elgin for help applying for loan modifications through a federal program started by the Obama administration.

"We're reaching out to as many folks as possible that are currently under distress and behind in their mortgages," Johnny Placeres, director of Neighborhood Housing Services of the Fox Valley, said.

More people in Kane County may be in need of mortgage refinancing, as the county saw a 60 percent increase in new foreclosure filings during the first six months of this year, compared with the first six months of 2009, according to the Woodstock Institute, a Chicago nonprofit that studies lending practices and financial systems.

Neighborhood Housing Services Fox Valley and Chicago branches partnered with groups including Kane County's Office of Community Redevelopment to sponsor the event, in which real estate attorneys and other volunteers helped homeowners prepare an online application for a home loan modification.

Working with a real estate attorney helps homeowners ensure their paperwork is correct, said Ed Jacob, executive director of Neighborhood Housing Services of Chicago.

"I don't think this is something you can do on your own," said Keys, who attempted to negotiate lower mortgage payments with her bank before coming to the foreclosure prevention event. "You just wouldn't get anywhere."

Using an online form as opposed to a paper application speeds the process, Jacob said.

"It shrinks the time period of uncertainty," he said.

The federal home affordable modification program attempts to bring mortgage payments down to 31 percent of a homeowner's gross monthly income by extending the term of the loan, reducing the interest rate or deferring past due payments, Jim Wheaton, deputy director of Neighborhood Housing Services of Chicago, said.

Once an application is filed, Placeres said it is the homeowner's responsibility to keep track of it.

"It's really important that we let the homeowners know they have to follow up," he said.

Suburban foreclosure prevention events began in 2009 when the federal home loan modification program became available, Jacob said. The Elgin event was the third and final suburban event of the year, Placeres said.

Keys left without knowing whether her mortgage payments would be lowered, but she said a loan modification has the potential to help her family.

"They seem to leave with hope. I think we bring down the stress level because a lot of them don't know what's going to happen tomorrow or the next day," Placeres said. "Once we convey this information to them, they can leave thinking they're not going to find their stuff in the streets."

*These clippings are provided for "fair use" not-for-profit, educational purposes (and other related purposes). If you wish to use this copyrighted material for purposes of your own that go beyond "fair use," you must obtain permission from the copyright owner. Please contact Woodstock Institute for more information.