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March is Save Our Homes Month

If you may be facing foreclosure there are free available resources in our region.

Facing the foreclosure crisis: What happened and how communities are responding

A comprehensive document outlining Northeast Ohio’s foreclosure crisis during the past several years “Facing the foreclosure crisis: What happened and how communities are responding” was issued this month and has been provided here. WVIZ/PBS and 90.3 WCPN ideastream partnered with almost every community organization mentioned in the report for a Corporation for Public Broadcasting Economic Response Initiative entitled “Facing the Mortgage Crisis” in 2009 providing a multiple media effort through television and radio coverage as well as online information connecting Northeast Ohio with free foreclosure services.

ESOP Partners with Area Suburbs to Help Homeowners

Checking for Possible Fraud with Foreclosure Rescue Companies

Need to check to see if a foreclosure rescue company is being sued for possible fraud? This file compiles state and federal actions against foreclosure rescue companies.

Download the PDF to learn more.

Glossary of Mortgage and Foreclosure Terms

Adjustable-rate mortgage (ARM): A mortgage that starts out with one interest rate for a period of time and then “resets” to a new interest rate.
(What you should know: The starting interest rate is often enticingly low. The new interest rate will be higher — and your monthly loan payments will get bigger. That’s called payment shock.)

2-28 ARM: An adjustable-rate mortgage that has a fixed interest rate for two years. Then, the interest rate begins to float, based on an index, plus a margin. Typically, these adjustments increase interest rates every six months, which is why they are often referred to as “Exploding ARMs.” What you should know: 2-28 ARMs fall into the category of “creative financing” mortgages that were typically aimed at people with poor credit ratings. The idea was that in two years, these borrowers could fix their poor credit ratings and then refinance to fixed-rate loans. Often, the new variable interest rates drive monthly payments higher than borrowers can afford.

Balloon or reset mortgage: The total of monthly payments does not cover the entire loan balance. At the end of a balloon loan — usually three to seven years — the homeowner must either pay off the balance in a lump sum or refinance the loan. What you should know: Think of these as temporary loans. After three or seven years, you need to come up with the balance. Balloon loans have higher foreclosure rates than traditional mortgages because borrowers often can’t afford to pay off balances when they come due - and may be unable to find refinancing.

Conventional mortgage: The interest rate is locked in — and your monthly payments remain the same — for the term of the loan. Also called a fixed-rate mortgage.

Deed in lieu of foreclosure: If you can’t afford the mortgage payments and are unable to sell your home, a lender may accept ownership of your property in place of the money you owe. This is referred to as “walking away.”

Default: When a borrower has missed payments, the loan is in “default.” What you should know: The sooner a borrower takes steps to find a remedy, the more options there are.

Equity: The value of your home, minus what you owe on it. If you owe $80,000 on a house you mortgaged for $100,000, your equity is $20,000. What you should know: If property values decline, your equity will also decline. For example, if that $100,000 home drops in value to $90,000, you still owe the $80,000 you borrowed, but your equity is now only $10,000. When your house falls in value below what you owe on it, it’s called negative equity. On the bright side, if your home rises in value, so does your equity.

Fixed-rate mortgage: The interest rate is locked in — and your monthly payments remain the same — for the term of the loan. Also called a conventional mortgage.

Forbearance: A lender agrees to let a borrower postpone payments or pay a lower payment for a temporary period to give the borrower time to catch up on late or missed payments. What you should know: This remedy is more likely to be available to borrowers who seek help early, before they fall several payments behind.

Foreclosure: When a homeowner is unable to make the payments on a mortgage, the lender can legally seize and sell the property as stipulated in the mortgage contract. What you should know: Foreclosure is a worst-case scenario that will damage your credit and prolong your efforts to get back on your feet.

Foreclosure Rescue Scam: Be wary of anyone who guarantees that they can save your home from foreclosure for a fee.  Only an agreement between you and the lender will save your home.  However this agreement can be facilitated by a counselor from a HUD approved housing counseling agency.  No fees are charged for these services. Go to the HUD website for more information.

Interest-only loans: Loan payments, due at intervals, go only toward the interest on a loan. When the loan is up, usually five to seven years, the full principal is due. What you should know: This is a “creative financing” mortgage. Interest-only loans might work for people who are paid big bonuses once or twice a year — or, borrowers who expect a big inheritance. For most people, they are risky business.

Loan modification: A lender agrees to change the terms of a loan when a borrower has the means to make monthly payments but is not able to meet the current terms of the loan, often due to “resetting” interest rates. Modifications typically lower the interest rate of a loan, extend the length of the loan or switch the borrower to a different type of loan. What you should know: Act quickly; good lenders may be willing to work something out because foreclosures are costly to them, as well.

Loss-mitigation department: When contacting your lender, ask for this department. This is where you’ll find the people who can help you find a temporary remedy to your problem or work out a loan modification. What you should know: The collections department and the loss-mitigation department have different missions, so be sure you know to whom you are talking. Also, when working out a temporary solution or modification, get it in writing.

Making Home Affordable: Making Home Affordable is part of President Obama’s comprehensive strategy to get the housing market back on track. Through the Making Home Affordable Program, up to 9 million American families may be eligible to refinance or modify their loans to a payment that is affordable now and into the future. Call a housing counselor and your servicer immediately if you are in default or in imminent danger of default to see if you qualify for the program. More information is available at makinghomeaffordable.gov.

Mortgage broker: Brokers are not lenders; they find mortgage loans for borrowers. Brokers are compensated directly by borrowers — usually a percentage of the total loan, plus other fees. They have no legal obligation to work in the best interests of borrowers. Sometimes, brokers are paid a commission by lenders based on the profitability of the loan, which again works against the interests of the borrower. What you should know: The majority of sub-prime loans were originated by mortgage brokers.

Predatory lending: Loans that victimize borrowers with excessive or hidden fees, high-interest rates, steep prepayment penalties and other terms that trap borrowers in debt. What you should know: If it sounds too good to be true, it probably is. Get a second opinion — or consult an attorney — before signing on the bottom line.

Prepayment penalty: A fee a lender charges if the borrower pays off the loan before the agreed upon end of the loan. In other words: If you pay off a 20-year loan in 10 years, you must pay whatever you still owe on the loan (the principal), plus a fee that is specified in the loan contract. Steep prepayment penalties are common in sub-prime mortgages with high interest rates because borrowers try to pay these loans off as early as possible.

Repayment Plan: An Agreement to pay the overdue payments over a period of time by adding an extra amount to your monthly payment.
Reset: See balloon mortgages and adjustable rate mortgages.

Short sale: When the sale of your home brings less than the outstanding loan, lenders may agree to forgive the difference. What you should know: This may be a way to avoid foreclosure and protect your credit rating. Unfortunately, you still lose your home. It is very important when doing a short sale to have an attorney make sure that you will not have a deficiency judgment in which you would have to pay the difference between what you owe and what the lenders receives.

Sub-prime mortgages: The word “sub-prime” is applied to a wide range of mortgages that have a common characteristic: risk.  In general, sub-prime mortgages are aimed at borrowers with less-than-perfect credit histories and may offer “creative” financing approaches: adjustable rates, balloons, interest-only, no down payments, little documentation. Here’s the confusion: The word sub-prime does not refer to the interest rate of the loan, but to the borrower’s credit quality. In fact, the interest rates on these loans are almost always higher than the overall market rates.

Trial Modification: Generally used for the Making Home Affordable Modification Plan in which the homeowner agrees to make three months of a modified payment before it is modified on a permanent basis.  There is no grace period for these payments.

Facing the Mortgage Crisis Document List

For your first appointment, have the necessary documents ready - if you are prepared you can avoid delays.

Take with you:

• A photo ID
• Your most recent lender correspondence. Include your payment statement/history, the balance owed and the amount of delinquency, current mortgage payment, and if you have a written copy of any payment or workout plan already in place with the lender.
• Current utility bills (water, gas, electric)
• A list of all other monthly bills/expenses
• Proof of your most recent tax bill
• Proof of insurance on property include current policy date, amount of coverage and annual premium
• Proof of income (60 days) For Example: Your most recent pay stubs (a couple consecutive ones), W-2 forms (2008 and 2007), 2008 Social Security Income Letter, or 2008 Retirement Income Letter
• Your most recent bank statement (60 days) from a checking or savings account
• A recent statement (60 days) from your 401-k, CD’s, IRA’s or other investment annuities
• Your 2008 tax return
• If you are self employed –complete tax returns with all schedules for three years, a 1099 income statement and year to date profit and loss statement
• Foreclosure filings if applicable
• Your original closing documentation (if possible)

Facing the Mortgage Crisis Document List provided in cooperation with United Way of Greater Cleveland 211 First Call for Help, Cleveland State University, Cuyahoga County Public Library, Empowering & Strengthening Ohio’s People, Federal Reserve Bank of Cleveland, Foreclosure Prevention Program, Case Western Reserve University, Neighborhood Progress, Policy Matters Ohio, Cleveland Housing Network, Akron Urban League

Facing the Mortgage Crisis is part of CPB’s Public Service Media Economic Response Initiative.

Low-Cost Activities, Plus Week in Review (A Place of Our Own)

How can I create activities for my kids that won’t cost a lot?

The current financial crisis is impacting children, families and child care providers throughout this country.  A very special episode of A Place of Our Own focuses on providing tips and advice to help families and child care providers, not just endure, but thrive during these difficult times.  Also featured will be one of the most versatile toys available for kids: the cardboard box.  With paint, scissors, glue and tape, lowly cardboard boxes can be transformed into castles, cars, airplanes, or almost anything a child is able to imagine.

Resources, video and more are available on this topic from A Place of Our Own.

Caregivers Coping in Hard Times (A Place of Our Own)

Several of our parents have pulled children out of child care due to their own financial struggle. Do you have suggestions for providers trying to manage during these tough times?

The economic downturn has hit child care providers especially hard.  As parents face financial difficulties, many have been unable to bear the cost of paid child care, causing child care provider to lose business.  How can child care providers weather this financial storm without sacrificing the quality of care?  This issue will be explored on a special episode of A Place of Our Own.  With advice from child care specialist, Jocelyn Tucker and coping techniques from psychiatrist, Dr. Charles Sophy, A Place of Our Own will focus on practical solutions for child care providers - to help them reduce the costs associated with child care and explore alternative funding sources that may relieve some of their economic burdens.

Resources, video and more are available on this topic from A Place of Our Own.

Trimming Your Family’s Food Budget (A Place of Our Own)

I have three kids and my husband recently lost his job so we’re on a really tight budget. Do you have any ideas to make sure our kids are at least eating right during tough times?

Children need to eat healthy foods in order to grow and properly develop. But with many families’ food budgets shrinking during tough economic times, some parents might be tempted sacrifice nutritious and natural foods for lower cost processed food.  “Trimming Your Families Food Budget” will show you how to give your children the nutritious foods they require while cutting down your grocery bill at the same time.  Plus, poor nutrition and hunger can have a social and emotional impact on your family, so child psychiatrist Dr. Charles Sophy advises on how to weather the storm during an economic hardship.

Resources, video and more are available on this topic from A Place of Our Own.

Financial Tips to Help Families Cope (A Place of Our Own)

I’m the single mother of a 4-year-old and I’m struggling to make ends meet. How can I help make sure my daughter is not affected by our challenges?

The financial challenges many of us are facing today affect the entire family dynamic and can be overwhelming to manage.  This can be due to the inability for many people to pay for such necessities as rent, child care, utility bills, and more.  “Financial Tips to Help Families Cope” is about helping families discover new ways save money, cut costs and prioritize monthly spending to get the most for your dollar.  Plus, child psychiatrist Dr. Charles Sophy continues to lend his expertise on how to help children as we all learn to cope with new financial changes.

Resources, video and more are available on this topic from A Place of Our Own.

Protecting Kids Emotionally During Tough Economic Times (A Place of Our Own)

My family has really been struggling financially since my husband lost his job. We’ve had to move to a smaller apartment & make many other changes. Can you give us any advice for getting our kids through the difficult times ahead?

The current financial crisis is impacting families throughout this country.  New economic realities are forcing many families to make changes, both big and small, which affect their children.  A very special, and timely, episode of A Place of Our Own examines how we, as adults, can help young children understand changing financial circumstances without scaring them.  This special episode of A Place of Our Own features child psychiatrist, Dr. Charles Sophy, helping the Sharp family explain to their 2 ½ -year-old son why they’ve had to move in with a family member after his father lost his job.  This show gives parents the tools to reassure and emotionally support their children, to help them cope during these sometimes frightening and unstable times.

Resources, video and more are available on this topic from A Place of Our Own.

U.S. Department of Housing and Urban Development

The U.S. Department of Housing and Urban Development (HUD) helps to increase home ownership, support community development and increase access to affordable housing free from discrimination. HUD contains information from buying, selling, owning a home to HUD-approved lenders and housing discrimination complaints. HUD has launched a new campaign to urge homeowners to seek free, HUD-approved housing counseling advice before they are at risk of foreclosure, Keep Your Home. Know Your Loan.

Visit the U.S. Department of Housing and Urban Development website.

The Housing Advocates

The Housing Advocates offer minorities, disabled, and the poor an opportunity for housing justice. The organization has emerged as a non-profit, and tax exempt public-interest law firm.

Visit the The Housing Advocates website.

NeighborWorks America

NeighborWorks America provides a network of local organizations who special in foreclosure counseling and solutions.

Visit the NeighborWorks America website,

Neighborhood Assistance Corporation of America

The Neighborhood Assistance Corporation of America is a non- profit advocacy and HUD certified counseling agency. They will also provide loans to low and moderated income people and those who are considered to be sub-prime borrowers. NACA is nationally recognized in permanently reducing interest rates to an affordable payment for thousands of owner-occupant homeowners. All services are free.

Visit the Neighborhood Assistance Corporation of America website.

Catholic Charities

Don’t know how to begin your search for help? Catholic Charities may be a good place to start.

Ashland County: (419) 289-1903
Cuyahoga County: (440) 843-5501
Geauga County: (440) 285-3537
Lake County: (440) 946-7264
Lorain County: (440) 244-9915
Medina County: (330) 723-9615
Wayne County: (330) 262-7836
Catholic Social Services of Summit County: (330) 762-7481

Visit the Catholic Charities website.

Neighborhood Progress Inc.

Wondering how your neighborhood and its value are affected by the mortgage crisis? Neighborhood Progress Inc. uses innovative programs to strengthen Cleveland’s neighborhoods and provides related information.

Visit the Neighborhood Progress Inc. website.

Neighborhood Stabilization Program

The Neighborhood Stabilization Program was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment.

Visit the Neighborhood Stabilization Program website.

Neighborhood Housing Services of Greater Cleveland

Neighborhood Housing Services of Greater Cleveland (NHSGC) is a trusted not-for-profit organization that has provided families in Northeast Ohio with the housing education and home repair loans they need to buy, improve, and keep their homes.

Visit the Neighborhood Housing Services of Greater Cleveland website..

Policy Matters Ohio

For those who care about democracy, education, taxes, energy, cities, and the economy visit or contact Policy Matters Ohio. They will assist your needs and prove that you can have an affect on the policies enforced!

Visit the Policy Matters Ohio website.

Federal Reserve Bank of Cleveland

Looking for information about the economy, the housing market, and foreclosures? The Federal Reserve Bank of Cleveland can provide you just that.

Visit the Federal Reserve Bank of Cleveland website.

Empowering & Strengthening Ohio’s People (ESOP)

Empowering & Strengthening Ohio’s People (ESOP) is on your side. They are providing information on how to keep your money safe and to detect a mortgage scam. Empower yourself and stay educated about the newest fraudulent agencies. Don’t pay money to anyone, free help is available at ESOP!

Visit the Empowering & Strengthening Ohio’s People website.

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