Neighborhood Housing Services of New York City is helping homeowners preserve their investment through its Foreclosure Prevention Program, which provides education and one-on-one counseling for customers in danger of foreclosure.

Incorporated since 1982, Neighborhood Housing Service of New York City’s efforts have resulted in assisting nearly 100,000 residents, rehabilitating 6,000 housing units, and stimulating more than $950 million in public and private investment. NHS in-house architects and rehabilitation specialists have made 23,000 home inspections and conducted more than 1,500 home-repair workshops. Over the past six years, its HomeBuyers’ Clubs and one-on-one counseling programs have helped prepare residents for home ownership. As a result, NHS has packaged first mortgage loans that closed for $175 million.
 
NHS’s citywide office, its eight neighborhood-based programs, and the NHS NeighborWorks HomeOwnership Center provide residents with opportunities and skills for rebuilding and strengthening their neighborhoods. NHS targets traditionally underserved, minority neighborhoods such as Harlem and the Lower East Side in Manhattan; Bedford-Stuyvesant, East New York, East Flatbush, Red Hook and Erasmus in Brooklyn; West Brighton in Staten Island; the South Bronx; the North Bronx; and Jamaica, South Ozone Park, Richmond Hill, Woodside, Long Island City, Jackson Heights, the Coronas and Elmhurst in Queens.
 
NHS provides NeighborWorks Full-Cycle Lending services in house rehabilitation, pre- and postpurchase counseling and education, and down-payment and closing-cost assistance. Unethical (predatory) lenders make loans with an underlying goal of taking people’s homes away. Victims most often are senior citizens, female heads of household, minorities and people whose primary language is not English. Predatory loans are often larger than necessary, carry high interest rates, points and fees, carry unnecessary additional charges, and typically exceed the borrower’s ability to repay. NHS believes that awareness and financial education are the only long-lasting tools for preventing abusive, predatory-lending practices. NHS’s foreclosure-prevention program was initiated in 1995 to inform participants of the dangers of predatory lending and identify ways to prevent foreclosure without turning to high-price lenders.

The foreclosure-prevention program is comprised of several features: early-delinquency intervention, foreclosure-prevention orientation, a predatory-lending awareness orientation, one-on-one counseling, and a five-week foreclosure-prevention class. Customers are encouraged (but not required) to participate in each component.

Foreclosure-Prevention Orientation.  The 90-minute orientation is an overview of all options related to delinquency and loss mitigation, and emphasizes how delinquent borrowers can prevent the loss of their home by getting housing counseling and taking action. The orientation covers what to do when making mortgage payments becomes difficult, how to assess current finances and develop a budget, alternatives available to delinquent borrowers, and how to avoid becoming a victim of predatory lenders and home-equity fraud.

Foreclosure-Prevention Class.  The foreclosure-prevention class, which provides hands-on solutions for general delinquency problems, meets two hours a week, for five weeks. The course covers what homeowners should do when having trouble managing their income and debt and making monthly mortgage payments. Participants learn important facts related to mortgage delinquency, then assess their financial situation and develop a budget. The instructor discusses methods of bringing a loan current using several loss-mitigation tools provided by HUD and the secondary market, such as reducing the monthly payment, setting up a temporary deferment, modifying loan terms or refinancing.
 
There is also a class on how to lose a home with dignity, if the household is unable to continue paying off the debt because of its financial situation. The class goes into detail on how to avoid becoming a victim of predatory lending: recognizing unethical business practices, not borrowing out of desperation, and not using home equity to pay unsecured debt.

Foreclosure Alternatives Through NHS.  NHS helps a borrower find the best solution to remedy the default, including refinancing, loss mitigation or loan workouts, such as reducing outstanding balances or waiving late charges, legal fees and interest in arrears. Most often, the loans are refinanced through the existing lender, with support and assistance from NHS. If the lender is not willing to work out the problem with the borrower, NHS uses home-improvement programs for necessary repairs and seeks refinancing through member banks. The ultimate goal is to keep homeowners in their homes, and most lenders are willing to collaborate with NHS and the customer in finding a solution. For customers who have been victimized by unethical lenders, NHS helps with an investigation through legal services, while using HUD and the Banking Department as regulators, and investigating further if sanctions are in order for lending-rule violations.

NHS Partnerships.  NHS collaborates with other organizations to preserve home ownership in the five boroughs of New York City, including pro bono legal services, local and national lenders, the secondary market, employers and corporations, city, state and federal organizations, and nonprofit and faith-based organizations. Partners refer families to NHS or help with presentations and classes. NHS, in turn, serves as a liaison, according to the customer’s needs.
 
In addition, NHS participates in the Fannie Mae and Parodneck Foundation program, a Fannie Mae initiative providing relief to senior citizens who have been victimized by predatory lenders. NHS also participates in the home-preservation pilot sponsored by NeighborWorks America, Freddie Mac, and Wells Fargo, which provides funding for resources and staff training for participating nonprofits nationwide. NHS is also a member of the loss-mitigation team for HUD’s hot zones, which provides special loss-mitigation procedures to reinstate FHA loans facing foreclosure caused by loans originated by predatory lenders. A key partner in NHS’s foreclosure-prevention program is South Brooklyn Legal Services.

Target Population.  The program is geared toward borrowers in danger of foreclosure, but is also helpful for future homeowners. NHS encourages all customers to seek professional advice before accepting any loan offer.

Program Marketing.  The foreclosure-prevention program is advertised at corporations where NHS is part of their employer-assisted home-ownership programs, and is announced at homebuyer orientations, predatory-lending orientations and at meetings or special events through faith-based organizations.
 
Marketing is also done within public offices, as well as by member banks that conduct community outreach within NHS’s service area. GreenPoint and the New York City comptrollers office sponsor a monthly evening orientation at GreenPoint branches throughout the city. In addition, the city comptroller and the Council of Senior Centers sponsor weekly and/or biweekly orientations at various senior citizens’ centers. A similar program was developed by Chase/JP Morgan Community Development Group, which entails evening orientations at selected bank branches. Each business or organization is responsible for marketing the training to its employees or program participants.

• In 1999, NHS facilitated loan workouts for 43 homeowners in default, thereby preventing foreclosures.
   
• In 2000, NHS held 16 foreclosure-prevention orientations, with 1,075 people in attendance, and conducted 237 one-on-one foreclosure-prevention counseling sessions. (There were no foreclosure-prevention classes in 2000, due to limited staffing.)
   
• From June to December 2000, NHS facilitated the closing of 59 reverse mortgages, 60 percent of which were used to prevent financial hardship and avoid foreclosure.
   
• In the first quarter 2001, NHS held 11 foreclosure prevention orientations, with 475 people in attendance, and 152 one-on-one foreclosure-prevention counseling sessions. Fifty-four reverse mortgage applications were submitted and 38 closed, to remedy a delinquency on the first mortgage and avoid foreclosure.

• Include foreclosure-prevention information as part of the general home-ownership program. Inform participants at homebuyer orientations and homebuyer classes what to do in case of delinquency, and state the importance of communicating with lenders right away to solve the delinquency and prevent more severe problems.
   
• Staff must be well acquainted with local financial institutions, lending staff, local and national servicing staff, and, most importantly, the bank’s lending rules and methods. Since NHS serves as the liaison between the bank and the borrower, it is very important to establish good relationships and create uniform objectives and procedures. Keep lending partners well informed of program guidelines and goals, and be sure to get their support for the program. It is equally important to help homeowners and potential homebuyers build strong relationships with lenders.
   
• Make sure NHS staff are knowledgeable, well trained and committed. Depending on the individual organization’s goals and number of people served, this program may or may not require its own program manager. At a minimum, a counselor must be dedicated to the program, be well versed in loan workouts and loss mitigation, and be able to sustain strong, positive relations with lending partners. Good communication and mediation skills are important, as negotiating with lenders and loan officers is a substantial part of the program.
   
• If the organization does not facilitate reverse mortgages, be sure to partner with a lender that does. Reverse mortgages are the best and easiest solution for older homeowners who have owned their home for many years and need a loan. This segment of the population is most vulnerable and is easy prey to unethical lenders, especially if their houses need repairs and they do not have adequate funds.
   
• The key to a successful program is developing solid partners and collaborators. The organization will need financial partners to underwrite the program, assist with marketing, provide customer referrals, refinance loans, and provide their expertise in seminars and classes. Legal Services partners are needed to provide advice to customers and to assist with workouts if needed. Find nonprofit partners to help with low-rate loan programs and customer referrals.
   
• Stay aware of and open to funding opportunities from the public and private sectors, including but not limited to the secondary market.

Agency interview with: Marcia B. Vacacela