Potential reprieve for homeowners facing foreclosure

Dozens of distressed homeowners facing exploding payments or foreclosure packed into a room at the Stroudsburg YMCA on Saturday to learn how to keep their homes.

Eileen Lappin, a single mother from Smithfield Township, might lose the home she's lived in since she was 6 years old. "I feel like I'm drowning. My mortgage is like a noose around my neck," she said.

Foreclosures in Monroe County and the rest of the nation are rising. At the same time, credit markets are disappearing and loan requirements are tightening in response to the failures of many financial institutions offering subprime and exotic loans.

A subprime loan is one made to a borrower with poor credit. An exotic loan refers to multi-part loans that offer low, teaser introductory rates, followed by a much higher long-term rate. When the long-term rate kicks in, borrowers often find they can't afford the higher payment. Many of these loans have high early repayment penalties, making them difficult to refinance.

Regulators have begun discussing the need to approve borrowers at the higher, long-term rates. But, it's probably a case of too little, too late. Funds for those loans have dried up as well. That makes refinancing deals more scarce.

Two activist organizations — the Pocono Homeowners Defense Association and the Philadelphia chapter of ACORN — were joined by real estate professionals at the workshop to offer assistance in several forms.

"I guarantee at least five of you in this room are victims of predatory lending," said Al Wilson, representing the Pocono Homeowners Defense Association. Wilson had a counseling office in Monroe County, but had to close it a couple of months ago because, he said, of a lack of state funding.

Wilson, who organized the workshop, made his intentions clear. "We're here to save your home."

He said the reason behind the current foreclosure crisis is that banks failed to follow banking regulations, and those regulations were not enforced.

"The banks took advantage of us because they didn't have police to enforce the rules," he said.

Sharon Bush of the New York chapter of ACORN, the Association of Community Organizations for Reform Now, told those gathered their situations were caused by lender tactics.

"It wasn't something you did, so don't blame yourself," Bush said.

ACORN is an international, grassroots community-based organization of low and moderate income people working together for social justice and stronger communities, according to its Web site. ACORN is involved in other activities like voter registration drives. Its expenses are supported by dues and fundraisers.

Bush explained her organization's participation in the workshop. "We are here to help you better yourself by making you aware of what you need to know to make change."

But, she warned, "You have to want to be a part of change."

PHDA and ACORN representatives worked with attendees individually to address their situations.

Sean Adams of New Beginnings Mortgage Broker LLC is a certified public accountant and former bank regulator. He said his programs can help those in foreclosure or looking to refinance.

Adams emphasized the importance of looking at all the details of a loan. "Never shop a loan on an interest rate only. You'll come out on the losing end," he said, adding, "The bank doesn't want your house. They want your money."

Duane Jones from Jones Home Realty said it was necessary to have expert representation when dealing with a mortgage. "The problem is you can't talk to the bank. You need someone who is knowledgeable about this. You wouldn't go into court without an attorney."

Applications were distributed for two loan programs offered by the Pennsylvania Housing Finance Agency designed to offer lower interest loans to qualified borrowers; REAL and HERO loans.

The REAL (Refinance to an Affordable Loan) program was created to relieve borrowers at risk of losing their homes because their interest only or adjustable rate mortgage payments have become too high, and they may not otherwise qualify for typical refinance programs.

To qualify, borrowers must meet several conditions. They include a $120,000 cap on household income and a minimum credit score of 620 unless several other credit-worthiness conditions are met.

The HERO (Homeowners' Equity Recovery Opportunity) loan program is designed to protect Pennsylvanians who, through no fault of their own, are financially unable to continue making their mortgage payments at the current terms and are in danger of losing their homes to foreclosure unless they can refinance to affordable terms.

Mortgage terms include a 30-year fixed rate with no prepayment penalty. A stable income is required. The program is for borrowers not eligible for the REAL program.

A second workshop for homeowners is scheduled for Sept. 8 at 1 p.m. at East Stroudsburg Presbyterian Church. To contact PHDA, call 350-0263.

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