Help for Struggling Homeowners

Help for Struggling Homeowners

The U.S. Senate plans to vote today on legislation that may offer some relief to homeowners worried about foreclosure. And the House is working on a more ambitious plan to free up money to allow risky mortgages to be refinanced into more secure, government-backed loans. Still, critics say the federal government’s been slow to act. And in that vacuum, some states like Illinois have started their own programs. Chicago Public Radio’s Ashley Gross reports.

Illinois isn’t offering its own bailout plan, but it’s trying to bring distressed homeowners together with people who can help. On a recent Saturday in Bolingbrook, about 50 homeowners munch on donuts and sip coffee as they wait to talk to a housing counselor or a mortgage lender. One of them is Jim Mullaney, who’s here with his wife and baby. They bought their Chicago condo two years ago with an adjustable rate mortgage. But then the price of their condo fell and now they owe more than their home’s worth. Their rate jumps in June and they haven’t been able to refinance.

MULLANEY: We’re paying on the mortgage, we’re never late with our bills, and we figure within two years, it shouldn’t be a problem to refinance but then the subprime thing happened and everybody bailed and the banks are scared to do anything. So we’re part of the casualties. That’s why this room’s filled right here.

Mullaney says he’s hopeful the mortgage lenders here at this state-sponsored outreach day will be more amenable to refinancing his loan. Illinois started holding workshops for homeowners in trouble as the foreclosure crisis deepened last fall. People here can meet with credit counselors or mortgage lenders to see about refinancing into fixed-rate loans. Mullaney says he’s satisfied the government’s tackling the problem.

MULLANEY: The government’s doing what they can – they can’t bail everybody out.

But one table over, Yolanda Farmer is more critical.

FARMER: These people in political power need to wake up to the situation. They worry about everything else, but then they don’t worry about the average people. If you ain’t rich and got no money, we don’t look at you.

Farmer says they got into trouble when they took out an adjustable rate mortgage to repair their leaky roof. Then a year ago, her husband lost his job with General Motors. Now they’re about to fall behind on their mortgage, and their interest rate goes up next year. Right now it’s already 10 percent.

FARMER: We knew it was going to jump, we thought it out and everything but Mr. said he could handle it, but he didn’t think he was going to lose his job. We used to make a good little penny in our household, but now we’re down almost half.

The Farmers’ story is like that of many people here – lost jobs, poor credit, unforeseen medical bills. That, combined with predatory mortgages spells financial distress. DeShana Forney is executive director of the Illinois Housing Development Authority. She says Illinois had to take matters into its own hands.

FORNEY: We know there’s a number of pieces of legislation moving through Congress, but it’s taking a long time and people in Illinois are facing foreclosure problems, they need help now.

And it’s not just a matter of dollars and cents. Each person here is emotionally tied to their home, perhaps no one more so than Carol Speigle. She’s talking with Bob Foss, a mortgage lender with Guaranteed Rate. He says even if she refinances, she’ll still be paying more than 70 percent of her income on her mortgage and other debts.

FOSS: Just because we can do the mortgage doesn’t mean that’s a good solution for you. It’s just you in the house though, right? Do you need a 4 bedroom, one and a half bath house?
SPEIGLE: I have been there so long, my mother died there.
FOSS: I just have to throw that out there.

Tears well up in Speigle’s eyes. She shakes her head emphatically no when Foss suggests she consider moving to a condo. She leaves the workshop shaken up. But the Farmers walk out wearing big smiles. Yolanda says the lender told her a 6-percent fixed-rate mortgage is possible.

FARMER: So I’m very impressed. I’m so happy the politicians finally got together as one to help the people in Bolingbrook.

Still, there are a lot more people like the Farmers out there in need of help. Some housing experts say foreclosures in the Chicago metro area jumped by a third last year. And they expect the numbers to continue to increase this year.

I’m Ashley Gross, Chicago Public Radio.

Music Button: Nobody, “The Free Design” from the CD Revisions Revisions: The Remixes 2000-2005 (Plug Research records)