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Homeowners becoming homeless can turn to Neighbor to Neighbor
Fort Collins Coloradoan
November 22, 2003
Columns

A new phenomenon is emerging in Larimer County. It’s a growing form of serious housing problems. We’re not talking about the homeless. Nor people struggling to pay rent. Now, we’re seeing a burgeoning subsection of homeowners who are running into grave difficulty.

In the last year, the number of people in our county requesting mortgage assistance has grown by 50 percent, to 90 requests. This points to a new group of people needing temporary assistance – people that probably never thought they’d need to turn to United Way programs for help.

"It’s been very discouraging during this past year to see the number of clients coming in for mortgage counseling," says Beth Cross, Director of Programs for Neighbor to Neighbor, a United Way-funded agency that offers both mortgage and rental assistance programs. "Primarily it’s because of job loss or underemployment, where people have had a reduction in hours or are making less in their new job than they used to."

The problem of lay offs and a tough job market are compounded by another factor that may seem surprising on the surface. Low interest rates have meant that many people refinanced their homes to take out extra equity – often to pay debts or keep afloat. But this short-term fix can have unfortunate consequences.

"A lot of people have refinanced and used up all the equity in their homes," says Billie Myers, Broker Associate for Remax First Associates in Fort Collins. "If they get laid off, then there’s nothing left to fall back on. There are so many houses on the market, and if they can’t sell and they can’t make their mortgage payments, the lender comes back for foreclosure."

Neighbor to Neighbor counsels such homeowners as to their best course of action.

"The problem is, options are very limited," says Cross. In some cases, house prices have dropped to below the level refinanced by lenders and so even if homeowners did succeed in selling, the settlement wouldn’t cover the mortgage debt.

The counselors at Neighbor to Neighbor take clients through a number of options to help them work out a way to stay in their home, or at least avoid foreclosure. They examine budgetary changes, ways to increase income and save money. They look at ways to recast loans or if necessary, sell the home and salvage any remaining equity. Failing that, they examine ways to avoid foreclosure by negotiating pre-foreclosure sales with the lender or agreements such as partial payments – so that clients don’t ruin their credit history.

If families get forced into foreclosure followed by eviction, the next step may be rental assistance or homeless programs. It is much more traumatic, time consuming and expensive to help people once they have become homeless. We need to focus on keeping people in their homes. Let’s hope the recent reports on the economy showing signs of recovery hold true. But in the meantime, we need all the help we can get from our community to support those about to lose their homes through job loss or underemployment.

- By Meg Brown a.k.a.: Sophie Waghorn

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