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Program fights foreclosure
State Home Foreclosure Prevention Project helps banks work with homeowners
AP File Photo
The program aims to prevent the damage foreclosure does to all concerned.
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Published: June 17, 2009
Derek Smith of Winston-Salem was three months behind in his mortgage payments when he first heard about the State Home Foreclosure Prevention Project.
He found out about the emergency foreclosure-prevention program through Consumer Credit Counseling Service of Forsyth County, a program partner.
"Honestly, I was a little skeptical because I had tried and tried speaking with my bank prior to that to see if we could work something out," he said.
Smith said he had tried from August 2008 through March 2009 to work something out in terms of his payments with his mortgage lender, Countrywide Home Loans, but got nowhere. In April, he started working with Consumer Credit Counseling Service and learned that Bank of America had bought Countrywide.
Now, Bank of America has his request for a loan work-out plan under review and Smith is optimistic that he will finally get some help to avoid foreclosure.
"Bank of America has been good to work with," he said.
Gov. Bev Perdue and the N.C. Office of the Commissioner of Banks said yesterday that the State Home Foreclosure Prevention Project has helped more than 1,000 North Carolina homeowners avoid foreclosure since the program's inception in November.
"North Carolina is committed to helping our citizens avoid foreclosure," Perdue said. "This program is critical to many families in our state as we continue to do all we can to help homeowners stay in their homes."
The state said that more than 3,000 homeowners have been connected to housing-counseling agencies for foreclosure-prevention counseling and estimates the economic impact of the program at $86 million.
The legislature enacted the program last year to reduce foreclosures on subprime loans, and it directed the N.C. Office of the Commissioner of Banks to develop and start the program.
The State Home Foreclosure Prevention Project requires mortgage companies to file notices with the state in advance of foreclosure on subprime loans and authorizes the commissioner of banks to delay a foreclosure filing by 30 days, if the commissioner believes a foreclosure can be prevented.
"The success of this program shows that foreclosures can be prevented if homeowners, lenders, counselors and the state work together," said Mark Pearce, the deputy commissioner of banks. "In these tough economic times, stopping unnecessary foreclosures not only benefits individual homeowners, but stabilizes property values for neighborhoods across the state."
The agency invested $1.5 million in the program in fiscal 2008-09. The money is from receipts from the agency's operations, not from tax revenues.
The N.C. Office of the Commissioner of Banks works with mortgage companies, nonprofit service providers and state agencies to notify homeowners nearing foreclosure proceedings early. The agency tries to make it easier for homeowners to access a network of over 150 housing counselors statewide.
Through the program, subprime loans can be reviewed for potential violations of law. The agency's staff also monitors the progress of loan work-outs to deal with communication breakdowns between housing counselors and mortgage companies.
North Carolina's foreclosure rate is the lowest in the South Atlantic region, according to the most recent National Delinquency Survey results released by the Mortgage Bankers Association. The state had the lowest rate of foreclosure starts as well as lowest rate of serious delinquencies. The state has had a 9 percent decrease in foreclosure starts compared with this time last year, according to data from the Administrative Office of the Courts.
Kathy Banks, the director of counseling for Consumer Credit Counseling Service of Forsyth County, said that the program has helped consumers and in particular made sure that people who got subprime loans from January 2005 through December 2007 could get help to avoid foreclosure.
"One of the most valuable features of the program is that it reaches a population of people who need assistance who may not on their own seek out a housing counseling agency to help them negotiate with their lender to try to get something worked out," Banks said.
Smith said he encourages others in trouble to check out the program.
Smith, who has a wife and three children, started getting behind in his mortgage payments after he was laid off from his job in the field of human resources last August.
"I was able to keep pace with savings, and my wife was working," he said, "but around February it started getting really, really tough."
His mortgage is $1,123 a month and because he is three months behind, he owes about $3,300. He has a fixed-rate mortgage at 8.25 percent.
He asked Bank of America to cut his interest rate or offer a plan to catch up on his delinquent payments and expects to hear a decision by early July.
In the meantime, things are looking up.
"It's still a struggle, but I'm hopeful because I'm working now," Smith said.
He was just received another job offer and plans to work two jobs.
He said that the emergency foreclosure prevention program helped make a believer out of him.
"When you think things are all ‘lights out,' there's help," he said. "It really felt like it came directly from God. "
■ Fran Daniel can be reached at 727-7366 or at fdaniel@wsjournal.com.
■ For more information on the emergency foreclosure prevention program, go to ncforeclosurehelp.org/StateForeclosurePreventionProject.aspx.
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