PLEASE NOTE: THE PROGRAM HIGHLIGHTED BELOW IS NO LONGER IN PROGRESS. Although there is no contact person available to discuss program details, the information in this report may still be helfpul to you and your organization.

The Portland, Oregon, Housing Center hosts a Mortgage Foreclosure-Prevention Program that helps preserve affordable housing and helps homeowners whose loans are in default stay in their homes.

Portland Housing Center has been in existence since 1991 and serves a population of about 1.3 million in the Portland metropolitan area. It became a NeighborWorks organization in 1998. Portland Housing Center’s mission is to provide education, counseling and financial services to help area families access affordable and stable housing.
 
The Portland housing market has changed dramatically over the past 10 years; home prices in city neighborhoods have appreciated substantially. The average selling price has more than doubled; in many neighborhoods, the increase has been even greater. Average incomes, in contrast, have not kept up, and the gap between the wealthy and the poor continues to widen. Inner-city neighborhoods are growing, and higher-income houseúholds are moving in, gentrifying Portland neighborhoods. Higher costs are making it difficult for lower-income residents to stay. Within the last year, foreclosure filings in the metropolitan area have doubled.

1.  Customers
Portland Housing Center focuses on homeowners who have had financial problems due to situations beyond their control, yet, with assistance, have the ability to maintain home ownership. People typically seek help because of divorce, disability or unemployment. In the last two years, the program has limited its services to homeowners who: (1) have an affordable mortgage through a private lender; (2) are case-managed by a senior-citizen or disability agency; or (3) have purchased houses through a community development corporation or Portland Housing Center. Few inquiries have come from homeowners who attended Portland Housing Center’s prepurchase counseling or education courses.

2.  Assistance Programs
Portland Housing Center offers three different foreclosure-prevention services:

• The first is default counseling. Program staff meet with homeowners who fall within the screening criteria to help sort through the issues that have led to default. Staff members explain foreclosure procedures and help the homeowner explore alternatives. The primary objective is to help the homeowner and the lender work out an arrangement to avoid foreclosure and allow the homeowner to stay in his or her home. Staff is very active in negotiating with lenders, both with their collections and loss-mitigation departments. Lenders often require extensive paperwork before they will provide meaningful alternatives to foreclosure. Portland Housing Center staff help homeowners put together this information.
   
• For homeowners who do not meet the screening criteria, staff offer telephone information and counseling. A typical call requires 10 to 15 minutes of staff time.
   
• The second is financial assistance. Portland Housing Center can provide no-interest loans and outright grants for homeowners facing foreclosure. It can contribute up to $3,500 in no-interest, no-payment loans for homeowners to use in bringing their mortgage current. Separately, the center receives grants through Multnomah County, as part of a network of rental-assistance and homelessness-prevention programs. If a homeowner meets income guidelines, the center can access up to $2,000 to use towards back payments. Portland Housing Center pursued the county’s homelessness-prevention funds after realizing that financial resources for preventing homelessness should be available to help at-risk homeowners as well as renters. Multnomah County agreed.
   
• The third is a system of ongoing educational opportunities. Financial information is presented as part of the center’s prepurchase classes. Then, as customers are about to close on a loan, staff hold a pre-closing meeting with the customer to review a postpurchase checklist. This checklist summarizes Portland Housing Center’s loan package and the buyer’s financial responsibilities as a homeowner. The center also provides a “New Homeowner Seminar” three times a year. The seminar covers such topics as property and school taxes, debt management, home-equity issues, home maintenance, and working with contractors. The seminar facilitator also offers several additional topics, including budgeting, weatherization, and crime and fire prevention, and participants choose which ones are most suitable. The class is 90 minutes long and takes place at a local community college.

3.  Oversight Committee
The Mortgage Foreclosure-Prevention Program has utilized an oversight committee from the beginning. The committee is responsible for reviewing and approving all financial decisions. The home-ownership counselor collects detailed information on each customer and presents it to the committee. Included are the loan application, the customer’s credit report, the homeowner’s budget, tax information, a loan summary and a recent home-visit report. Oversight Committee members include an attorney and representatives from local banks, the Portland Development Commission and other social-service agencies. The committee meets as needed and currently comes together seven or eight times a year. In addition to examining individual cases, the committee also reviews program-policy issues.

4.  Funding
Portland Housing Center implemented the foreclosure-prevention program after receiving funds from the Northwest Area Foundation. The center was one of seven different efforts in the Northwest to receive funding from the foundation for foreclosure-prevention programs. Portland Housing Center received the funds in 1992, shortly after opening its doors.
 
Unfortunately, the foundation’s funds were for only a pilot project, and no longer are available. Portland Housing Center has not found long-term outside support for the program, and, instead, is using money from its revolving loan fund to keep the program running. Because the program now depends on the center’s own funds, it is not able to serve all existing needs. Only customers most in need, who fit the program’s criteria, are being served.

5.  Staffing Cost
A mortgage foreclosure-prevention program requires a full-time staff person to fulfill all the program’s responsibilities. Currently Portland Housing Center’s home-ownership counselor spends roughly 20 hours a week facilitating foreclosure prevention. This is sufficient only if the administrator is well acquainted with program policies and procedures. The coordinator needs to be very efficient, and Portland Housing Center feels it is preferable to hire a full-time staff person to manage all program obligations.

• 68 households have received loans, totaling more than $200,000.
   
• 52 households have received grants, totaling more than $85,000.
   
• 226 foreclosures have been prevented.
   
• 741 people have received counseling in one-to-one meetings.
   
• Telephone counseling has been provided to over 2,000 individuals, according to staff estimates.
   
• Three “New Homeowner Seminars” have been held, with a total of 14 participants.
   
• Portland Housing Center has helped many families remain in their homes, which positively affects neighborhoods by keeping them diverse and stable.
   
• Portland Housing Center is highly involved in the general improvement occurring throughout Portland’s neighborhoods.
   
• Gentrification is producing problems for many residents in Portland. Portland Housing Center is helping lower-income residents stay in their homes despite the changing characteristics of Portland neighborhoods.
   
• A Portland Housing Center study found that 61 percent of its calls for foreclosure-prevention assistance were from subúprime loan customers, 27 percent from prime loan (FHA, VA or conventional) customers, 6 percent from land-contract buyers, and 6 percent from manufacútured-housing owners. The findings highlighted that subprime loan customers were having the most difficulty upholdúing their mortgage conditions.

• Be aware that foreclosure-prevention services can be very time consuming, and may not always lead to a positive solution. While many customers benefit from Portland Housing Center’s intervention, not all do. Time also is spent, for instance, with homeowners who ultimately do not need help, whose situations are ambiguous and difficult to remedy, and who, in fact, do lose their homes. No two customers or cases are alike. The center’s program is helpful and successful, but even that record is no guarantee that its services will save every homeowner in default.
   
• Define specifically what population the program will serve, as this type of project can quickly become overwhelming. It is necesúsary to identify a particular customer base, because it is virtually impossible for one organization to assist all default cases.
   
• Know the loss-mitigation programs and procedures of lenders. Every lender performs workouts for customers in need, but each is different, depending on the institution. Knowing the terms of each program makes it easier to collaborate with participating lenders. Obtain information from lenders regarding loss mitigation and carefully read the materials. The more an organization knows about lenders’ procedures, the easier it is to persuade them to work out a problem with a customer. In addition, training in loss mitigation is available through the U.S. Department of Housing and Urban Development (HUD). NeighborWorks America offers a similar course at its Training Institutes.
   
• Gather and organize facts by loan type. Portland Housing Center has learned a great deal about each loan package, which makes it easier when working with comparable loans. The center mainly works with FHA, VA and prime conventional loans, which have very different collection and loss-mitigation procedures. In addition, the center often works with subprime loans, manufactured-housing loans and private contracts. Being able to anticipate what to expect with each loan type is valuable and helps in understanding the various processes.
   
• Be aware that there are a number of ways to fight foreclosure. The increase in foreclosures in Portland appears to be linked to increases in subprime loans and predatory-lending practices. Finding ways to address this root cause of foreclosure is also critical.
   
• Network regularly with social-service agencies or other organizations that may be in contact with homeowners who are having financial problems. Several such agencies in Portland refer homeowners to the center. Networking is very important for identifying and supporting homeowners on a long-term basis. It is important to make your programs known to organizations throughout the community.
   
• Bear in mind that it can be difficult to engage loan officers in this program. Most lenders prefer to assist prepurchase counseling or educational programs, and are not interested in working on foreclosure prevention. Loan servicers, in contrast, are more inclined to help with foreclosure prevention, and Portland Housing Center recommends taking advantage of this resource when available.
   
• It may seem that relations between foreclosure-prevention programs and lenders would be adversarial, but not in Portland Housing Center’s experience. Lenders would rather see their customers resolve financial obstacles and avoid falling behind than undergo foreclosure. Be open and honest with lenders and communicate regularly with them about existing programs.
   
• Finding homeowners interested in attending a postpurchase class is difficult. Portland Housing Center has yet to develop a recruitment method to prompt growth in class attendance. It will continue to explore additional outreach techniques and attractive seminar topics.
   
• Use the expertise available in the community. The center’s oversight committee brings together bankers, social workers, housing experts, financial specialists and attorneys to review difficult cases. This group determines whether homeowners meet program criteria, have fallen behind for reasons beyond their control, but could maintain home ownership with assistance. This is often a difficult judgment, and having an independent committee to make it can help relieve pressure on staff.  Be aware that there is a potential conflict of interest when serving borrowers with loans from your agency. After much discussion, Portland Housing Center decided to provide counseling, loan workouts and advocacy — but no further financial assistance — for homeowners owing money to the center.
   
• Being a HUD-approved housing counseling agency can be helpful in terms of outreach. Lenders are required to notify delinquent homeowners of the availability of default counseling, and usually do so with a letter directing the homeowner to a toll-free telephone number. Portland Housing Center connects with a significant number of customers through this process.

Agency interview with: Richard Melling