More Info About the Loan Modification Program

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Cook County program works with lenders on loan modification

April 18, 2010 From the Chicago Tribune

BY FRANCINE KNOWLES Staff Reporter

Cook County homeowners facing foreclosure, it's in your interest to read your court summons. There you'll find information about a new free mediation program that could save your home.

Under the program being rolled out in the county, where foreclosures this year spiked 16 percent over the same period last year, homeowners will be able to meet with their lender to try to work out a modification or other agreement.

Here's a look at some Obama administration foreclosure prevention programs:

· Home Affordable Modification Program (HAMP) offers help to homeowners struggling to make their monthly mortgage payments due to their interest rate increasing, less income or other issues. The program provides the ability to modify mortgages to make them more affordable.

· Second Lien Modification Program offers homeowners a way to modify their second mortgages to make them more affordable when their first mortgage is modified under HAMP.

· Home Affordable Refinance Program gives homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments.

· Home Affordable Foreclosure Alternatives Program provides opportunities for homeowners who can no longer afford to stay in their homes but want to avoid foreclosure. It allows them to transition to more affordable housing though a short sale or deed-in-lieu of foreclosure.

Help for the unemployed. Eligible homeowners receiving unemployment benefits can get their mortgage payments reduced to no more than 31 percent of their monthly income for three to six months and may qualify for a loan modification that would permanently reduce their payments.

For more information, visit http://www.makinghomeaffordable.gov/.

DO YOU QUALIFY?

Homeowners who want to participate in the Cook County mediation program should appear in court on their case management date. They can participate in the program if:

• They are the owner and occupant of a one- to four-family residential property or condo

• They are the borrower

• The mortgage on their owner-occupied residential property is being foreclosed

• The property being foreclosed is their primary home and is in Cook County

For help, call (877) 895-2444 or visit the Chancery Division Advice Desk at the Daley Center, 50 W. Washington St., Room 1303

It provides homeowners with free legal aid and federally certified housing counselors to review their case and assist them in making proposals to lenders in mediation.

But homeowners must show up for their foreclosure case in Cook County Circuit Court, something most typically don't do, say program advocates.

For Markham resident Debra Beal, who is trying to avoid foreclosure and says she has gotten the runaround from her lender -- a complaint echoed across the country -- the program can be a lifeline, advocates say.

"It provides us with the leverage to get everybody to work in their own self-interest, and there are some mutual self-interests here," said Madeline Talbott, executive director of Action Now, which assists homeowners.

For instance, she noted, banks are often better off with a homeowner in the home making payments rather than a vacant foreclosed home not bringing in any money and losing value. So homeowners with a job or other income have an advantage that can get banks' attention.

"Once we get their attention, we'll get a lot of deals," Talbott said.

A Connecticut mediation program kept 60 percent of participants in their homes. Out of more than 5,600 cases that have completed mediation, 42 percent have landed loan modifications, said Roberta Palmer, program manager.

And a Philadelphia mediation program saved 2,000 homes from sheriff's sales. Another 3,500 cases are in discussions on ways homes might be saved, said Philadelphia County Judge Annette Rizzo.

Brian White, executive director of Chicago-based Lakeside Community Development Corp., which assists homeowners, says the Cook County mediation effort, which received $3.5 million in county funds, will save homes here.

"One of the biggest frustrations that borrowers are facing is just getting direct communication from somebody at the lender who can give you a binding answer," he said. "While they're waiting to get an answer, the foreclosure proceeded, and they ended up losing their home."

Beal, 50, a self-employed interior decorator, said she has been trying to work out a modification for more than a year with no success. She fell behind on her payments when her business dropped because of the recession. But she said her current income would enable her to handle a modified mortgage.

"It's very important that we have a mediator because [homeowners are] working with certain customer service representatives who don't know what they're doing," she said. "They don't have experience. I can call now, and they'll say I didn't receive your paperwork, and call back in five minutes and then someone is giving you a totally different story. That's what happened with me. My stuff kept getting lost in the system."

The mediation program will pressure banks and servicers to get their acts together, advocates say.