One homeowner’s tale of foreclosure relief

Hundreds of homeowners sought help with mortgage relief at an event at the Philadelphia Convention Center today. The effort is not a government program. It’s run by a nonprofit that cuts deals with mortgage lenders.

Inside Hall F of the Convention Center, homeowners clutch folders of paperwork and await their turn with a mortgage counselor. Mary Ann Torres of Mays Landing New Jersey sits down across from Patricia Baez, a mortgage counselor with the Neighborhood Assistance Corporation of America, who takes her through her monthly expenses. Baez helps Torres come up with a budget that would convince a lender she can afford a reduced monthly payment in the long term.

Torres: “Out of this?”

Baez: “Out of this maybe not much.”

Torres: “Yeah, we can reduce that food.”

Baez: “How much?”

Torres: “Umm, a hundred?”

But that’s not enough.  She had to lower her dry cleaning and food expenses.

“My son’s not gonna eat as much as he eats, he can lose the weight believe me,” she said. “And buy no more brand names. And start using coupons, that’s for sure. I stopped using coupons because I didn’t have the time to do it but I will now, I’ll make the time now.”

Torres bought her house in 2004. She says as long as payments were below $1,000 a month she could afford it. But the interest rate increased, and she lost her monthly child support payments when her son turned 18.

Baez: “Do you believe your hardship is temporary or permanent?”

Torres: “Permanent.”

Baez: “Why do you feel that way?”

Torres: “Because I haven’t had a raise in three years.”

Torres’ son still lives at home while he goes to college. Her daughter and young grand daughter also live with her. The counselor makes a calculation.

“This is your net income, your gross income, car payment, total household expenses, the $200 dollars we take out for savings, and what we are expecting for mortgage payment,” said Baez.

Torres seems happy that the monthly payment would be lowered by $200 dollars. She moves to another section of the hall and waits to meet with a lender from Wells Fargo.

But that meeting never happens. Another staffer with the group, Darren Duarte realizes that because her loan is backed by the Federal Housing Administration, the interest rate cannot be lower than the current market rate. The Neighborhood Assistance Corporation of America has deals with various lenders allowing rates as low as two percent, but they can’t make those changes to FHA backed loans.

But Wells Fargo has already offered her a modification.

Duarte: “That keeps your payment basically the same but it makes you current if you accept that.”

Torres: “So you think I should do that?”

Duarte: “I do because its FHA. We’re fighting the government on that but FHA only allows you to go to the market rate.”

The group’s founder Bruce Marks says some leave the session a monthly mortgage payment that’s $500 dollars lower. He says he gets lenders on-board with what he calls “nonviolent bank terrorism.” Translation–noisy protests outside the homes of bank executives. He wishes the Obama Administration would take his lead.

“We were hoping to put ourselves out of business so the government could do the right thing,” he said. “But we know that President Obama is more interested in subsidizing bailing out the banks, than he is in helping the homeowners.”

The Obama Administration has created mortgage relief programs. But critics say they have not reached enough people, and have suffered from poor implementation.

Meanwhile, Torres will have to come up with $1200 dollars a month to keep her home.