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Debt-ridden homeowners get a helping hand
By: BRADLEY J. FIKES - Staff Writer | ∞
OCEANSIDE ---- Working with lenders or filing bankruptcy could allow financially troubled homeowners to keep their property, real estate professionals, attorneys and counselors said Saturday.
The speakers and counselors came to Oceanside to see about 100 people who signed up for a clinic by the Housing Opportunities Collaborative. A nonprofit group, the collaborative encourages home ownership, especially among minority groups that have a low rate of home ownership.
"You are not alone in this situation," said clinic organizer Yamila Ayad, a mortgage broker and member of the National Association of Hispanic Real Estate Professionals. "We will do everything we can to help you keep your home."
The homeowners gathered in the courtyard outside the Oceanside Library in the City Hall complex to hear Ayad and other speakers. As their names were called for individual counseling, they filed into the library's community rooms.
Ayad said that in some cases, lenders will work with homeowners to make their loans easier to repay.
"Lenders don't necessarily want your home," Ayad said, especially when many other foreclosures are crowding the market. Oceanside's 92057 ZIP code has one of the state's highest rates of foreclosures, she said.
Each case is handled individually, Ayad said.
"Most of it is working out a loan modification with the lender," Ayad said. "Like, 'Please give me an opportunity to extend that fixed rate that I had for a long time, please remove this prepayment penalty, please get me into a loan where I'm actually paying interest and not having an negative amortization and continuing to lose my equity.' "
"Negative amortization" loans are extremely risky for the homebuyer. The payments do not fully cover the interest due, which is added to the amount owed. In other words, the total amount due increases every month.
Before contacting the lender, homeowners should first review their mortgage terms with a group like the collaborative, Ayad said. In addition, she said, homeowners should demand help ---- "yell and scream" ---- from their political leaders.
Attorney John Brady said bankruptcy may be the best alternative for those wishing to keep their homes.
A homeowner may have enough income to pay the mortgage alone, but not along with other debt. In that case, a Chapter 13 bankruptcy, which gives you an easier repayment plan approved by the court, may be the best course, Brady said.
"You have five years to pay back your debt, and at zero interest," Brady said.
A Chapter 7 bankruptcy eliminates most debts, while allowing the debtor to keep paying for a home or a car. But most other assets are given up, and sold to pay off creditors. However, the debtor must be able to show the debts are greater than the ability to repay.
"Under Chapter 7, there's no provision under bankruptcy law for a repayment plan," Brady said. "It's strictly whatever can be bargained between you and the lender. ... So if you're behind on the mortgage, the better choice is Chapter 13."
Filing for either Chapter 7 or 13 bankruptcy also gives the debtor time, Brady said.
"The moment the case is filed in the court, it stops the foreclosure," Brady said. "It not only stops the foreclosure, it stops every other levy. It stops IRS levies, car repossessions ---- everything."
For people with really bad credit, a Chapter 7 bankruptcy can even improve their credit score, Brady said. That's because the negative of having filed for bankruptcy may be offset by the removal of bad debts from the filer's credit report.
The Housing Opportunities Collaborative can be reached on the Web at http://tinyurl.com/36e9sq or at (619) 282-6647, ext 373.
Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com.
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Annoyed wrote on Aug 26, 2007 8:14 AM:Are you kidding me!!! So these people bought homes that they couldn't afford, probably hoping to ride the real estate bubble up, and now they realize that the bubble has popped. So if they do file for Chapter 7, who pays the creditors? Oh that would be me a TAXPAYER. People need to face the music that they are living WAY beyond their means.
Groundhog Day wrote on Aug 26, 2007 9:01 AM:I think that those who were prudent with their money and actually understood the terms of their mortgages are entitled to some special treatment too. A taxpayer bail-out of this mess is more likely, along with the printing presses at the Federal Reserve running 7/24.
Greg in Oceanside wrote on Aug 26, 2007 9:21 AM:Ok, we have these seminars with real estate "professionals" and attorneys. Glad to see they've come to the "rescue." Nonetheless, this whole credit fiasco is troubling, and isn't going to change much in the way a lot of people think. And this bankruptcy stuff is really only a 'band-aid' fix. Until people fall flat on their face financially, will some of them learn that this is the 'real deal' and that credit isn't something that you take on just because you want something and can pay for it over time. I certainly hope there isn't any kind of 'bail-out' in the works, because I don't think the rest of us hard-working taxpayers would stand for it.
Fred H wrote on Aug 26, 2007 9:33 AM:Check immigration status first. Financial assistance second.
Annoyed wrote on Aug 26, 2007 9:44 AM:These people shouldn't have bought these houses in the first place!!!! If you can't afford it DON'T BUY IT!!
JSten wrote on Aug 26, 2007 10:10 AM:If this follows the model for the rest of this mess, 90% of the help will go to 10% of the people. Where were these guys when I needed them?
Live and learn wrote on Aug 26, 2007 11:10 AM:Ah yes, find a loophole for the innocent "victims". There has to be accountability on BOTH sides of the equation -- the greedy/predatory lenders AND the lendee who agreed to the terms of the contract. A tough lesson to learn, but maybe they'll be smarter next time -- if there is a next time.
Doug in Carlsbad wrote on Aug 26, 2007 11:25 AM:I agree with "Annoyed" at 8:14 AM. People need to be responsible for their own actions. As a renter, it infuriates me to think that my tax dollars may go to bailing out people that made bad financial decisions. These borrowers knew that they were playing the lottery with these risky loans and now they must deal with the fallout. My elected officials from city council to the president will hear from me that I do not want government money used to help people with their PERSONAL finances.
The last straw wrote on Aug 26, 2007 12:04 PM:If one penny of my tax dollars goes towards bailing-out these whining idiots, I'm leaving this once great nation. I know, I know, don't let the door hit me on the way out -- I won't.
resident wrote on Aug 26, 2007 1:41 PM:where ya gonna go ???? mexico??
American woman wrote on Aug 26, 2007 2:54 PM:LOL! "You are not alone in this situation," said clinic organizer Yamila Ayad, a mortgage broker and member of the National Association of Hispanic Real Estate Professionals. "We will do everything we can to help you keep your home." OK, America, are you starting to maybe see a PATTERN here? Remember the protests of B of A, Wells Fargo, WaMu, Citi, etc.? Those unscrupulous, greedy banks [and to be fair, credit unions and other traitorous mortgage lenders], are reeping what they sowed when the Matricula Consular id. became so attractive to them! Remember? I do. I was one who joined other American patriots in protesting outside those vile financial institutions begging America to WAKE UP! Now, it'll be alright...Ms. Ayad will move heaven & earth to keep certain lawbreakers in their illegally-obtained homes. Hail, GWB & CO.!!!
UKNWWHATITIS wrote on Aug 26, 2007 3:07 PM:What is the percentage of multi-family residences in defalt? Is this the new "coming of age"?
Sandy in San Marcos wrote on Aug 26, 2007 3:52 PM:I agree that people need to be responsible for their actions & financial obligations. I attended this yesterday to speak with someone about my loan. I've owned my home for over 2 years & have been trying to refinance. It's definitely tight out there. I'm being proactive, so that I'm not a statistic. Workshops like this are beneficial because they encourage people to get over being embarrassed about their crappy loans & ask for help & advice. Why do negative amortization loans even exist? Bravo to those of you that did it right. If you are a renter at least you aren't paying property taxes. The ideal is to try to help these folks keep their homes - foreclosure isn't good for anyone & could negatively impact overall property values.
taxpayershaftedagain wrote on Aug 26, 2007 3:55 PM:Oh Yeah...let's bailout the "poor" homeowner who cash-out refinanced so they could buy a brand new $50,000 Hummer and go on a Cruise to Mexico. If the government bails out these greedy idiots, it will just show how rigged the system is and how complicit the feds and Wall Street are protecting the billionaires who have their money invested in hedge funds. As usual the taxpayers of the future (our children) will get shafted. I wouldn't blame the next generation one bit for abolishing social security and medicare to pay for our greed. Why should they pay? If you want to start generational warfare, keep bailing out the boomers.
Oh Pleez! wrote on Aug 26, 2007 5:22 PM:These comments are so ridiculous and so negative. Basically this was credit counseling, which obviously these people needed, and provided a good service to help people keep paying their mortgages. Does everything have to be negative people? Sandy had it right. Get help if you need it.
Typical Americans? wrote on Aug 26, 2007 5:22 PM:These blogs are by what I characterize as typical Americans these days- it's all about them and the hell with the rest of the world. Step back a little, do some volunteering, get to know your neighbors, the shopkeeper, the teachers...and stop being so mean.
JSten wrote on Aug 26, 2007 10:19 PM:What "help" could there possibly be, really? Short of restructuring the loan, or reinstating the teaser rates, it seems that this story line is headed for forgiveness. I don't see anyone stepping up to forgive my debts. Its not meanness, but this situation was so predictable, and I had a bellyfull of lenders, and associates making it sound like the real estate game was a cant-lose proposition. I am sorry, but I am afraid that I have to go with the meanies here. Its a tough lesson, life is full of them.
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