Nuestra Comunidad (Our Community) Development Corporation of Boston developed a foreclosure prevention counseling program for homeowners of low- to moderate-income in the Roxbury and Dorchester neighborhoods of Boston. These two neighborhoods had experienced a high proportion of foreclosures.

Nuestra Comunidad promoted this service through a monthly post card mailer. When a homeowner approached the organization, Nuestra Comunidad took five specific steps to try to save the home of a person threatened by foreclosure. These steps were as follows:

1.  Getting General Information
Nuestra Comunidad met with the homeowner to get basic information, such as when the last payment was made and whether the owner had filed for bankruptcy. The counselor used this information to develop a general strategy for helping the owner save the house.

2.  Understanding Specifics
The foreclosure prevention counselor would explore reasons for a homeowner’s financial difficulties and whether any improvement in those circumstances. For example: If the cause was an injury that left the homeowner unable to work, Nuestra Comunidad investigated whether the individual was working again and, if so, whether the new income was comparable to previous earnings.

3.  Structuring a Payment Plan
If the troublesome situation had improved, the counselor determined a payment plan, based on the homeowner’s net income minus expenses, plus a small amount factored in for unexpected needs. At this point, the forecloúsure counselor would get the homeowner’s loan number from the servicer of the mortgage, for use in contacting the lender.

4.  Contacting the Lender
Nuestra Comunidad would contact the lender, explain the circumstances, and emphasize that working with the homeowner is the most likely way for the lender to receive the full amount of the mortgage, especially when a homeowner owes more than the building’s appraised value. When the value of the home exceeds the mortgage amount owed, the counselor may not be able to save the home.

5.  Work-Out Plan
Finally, the counselor would work out the details of the proposal by getting the lender to modify, restructure or refinance the loan. For example, the plan might extend the length of the loan or lower the interest rate. This lender also received documentation of the homeowner’s hardship and ability to pay in the future.

In its first five months, Nuestra Comunidad’s Foreclosure Prevention Counseling Program took on four cases and saved two homes. In one case, an 80-year-old woman had a $35,000 loan with adverse terms — an interest rate of 16.7 percent; 7 points; and, later, balloon payments. Before long, she had fallen behind in payments and was in danger of losing her home. Though it was not easy, Nuestra Comunidad was able to help her refinance the loan and save the home.

1.  Learning About Alternatives
Because many homeowners do not realize that they can renegotiate with lenders without resorting to a bankruptcy filing or other drastic measures, there is a need to educate homeowners that there is a way out of such financial difficulties.

2.  Making Assistance Known 
Because people in danger of foreclosure may hesitate to seek help, good communication from an organization that can help usually gives a homeowner courage. Nuestra Comunidad reached out to homeowners through its monthly post-card mailer and its friendly and convenient counseling services.

3.  Contacting Lenders
Foreclosure prevention counselors generally should work with lenders. Working with agents, such as mortgage servicers and attorneys, can be counterproductive, because they may have incentives to foreclose upon owners. Lenders usually are more willing to renegotiate a loan.
 
Agency interview with: Madelline Vega