As we commemorate June as National Homeownership Month, government and housing industry officials are trying to ensure that all homeowners continue to have a reason to celebrate.

Officials are worried about the surge in foreclosures caused by rising interest rates on adjustable-rate mortgages, especially subprime loans made to borrowers with poor credit.

The issue is so hot that a foreclosure program last week by the Federal Reserve Bank of Dallas and the U.S. Department of Housing and Urban Development sold out.

Throughout the event, one message rang loud and clear: Get to troubled homeowners before they’re so far behind on their mortgage that the only option is foreclosure.

“In the perfect world, I’d want to know what borrower is going to default before they miss their first payment,” said Jerry Durham, vice president of homeownership retention at Countrywide Home Loans in Plano. “We’re not there yet.”

Homeowners who have trouble making their mortgage payment often are uneasy about talking with their lender.

“Half of all people who lose their home don’t talk to their lender,” Mr. Durham said.

Freddie Mac

This is an important issue for Freddie Mac, the mortgage-finance giant. Government-chartered but publicly traded, Freddie Mac buys mortgages from lenders and repackages them for sale as investment securities, replenishing the supply of money available for making home loans.

“The longer you wait, you owe more money,” said Brad German, Freddie Mac spokesman. “If you call, it will give the lender and the investor time to take a fuller measure of the situation.

“Many people think that if they call their lender, it will accelerate the foreclosure process. That’s not true. There’s no reason we would want the house.”

Freddie Mac surveyed delinquent homeowners and found they’re generally:

•Younger than other homeowners, with a mean age of 47 years vs. 55 years.

•More likely to be married or living with someone.

•More likely to be employed than retired or unemployed.

•Less affluent than other homeowners, with a median income of $52,400 vs. $56,700.

•Less likely to have prior experience with homeownership.
In denial

Those who are delinquent on their mortgage often don’t like to admit it, even when records show they’re behind.

Freddie Mac’s study found some delinquent homeowners who claimed they never had difficulty paying their mortgage.

“For a lot of people, it’s a terrifying situation, and they kind of shut down and think that if they don’t address the situation, that it will get better,” said Reid Remington, housing director at Consumer Credit Counseling Service of North Central Texas. “They don’t believe they could actually lose their home.”

Some homeowners believe that “money will suddenly appear,” said Amy Emmatty, director of research for Freddie Mac.

Others said they would pray and have faith that God would provide, she said.
Lender’s role

Bottom line: If you’re having trouble paying your mortgage, you should contact your lender.

But lenders also must do their part by making homeowners more comfortable talking with them.

“It’s important that when people do call, that they have a comfortable experience,” Ms. Emmatty said. “It’s not rocket science. It’s customer service. If someone calls in with a problem, be prepared to help them.”

Mr. Remington said that many times, homeowners feel more comfortable opening up to credit and housing counselors such as his organization.

“That’s because when they called the lender, they talked to someone in collections who said there’s nothing you can do except a repayment plan,” he said. “Ninety percent of the repayment plans that are set up are going to fail because people can’t afford them. They already can’t afford their normal payment.”

Other options available to lenders include temporarily reducing or suspending the mortgage payment, or extending the term of the loan.

Source:
http://www.dallasnews.com/sharedcontent/dws/classifieds/news/homecenter/realestate/stories/DN-moneytalk_18bus.ART.State.Edition1.36d6599.html