Feb. 06, 2009

Jorge and Marina Schiefer of White Plains never expected that they would be at risk of losing the home they purchased in 2006. But they spent their savings on repairing flood damage, so they couldn’t manage the jump in their mortgage rate.

Melvin & Agnes G. refinanced their Yonkers home after the lender assured them they could refinance again in four months to lower the rate. When the lender later denied them a new loan, they knew they could lose their home.

Ana A. of Tarrytown, a mother of three, was facing foreclosure and then homelessness due to the loss of income from her husband who abandoned the family.

“The mortgage crisis has arrived in Westchester County,” said County Executive Andy Spano, who was joined at a news conference today at the Schiefer house by Board of Legislators Chairman Bill Ryan and Legislator Ken Jenkins. “But these stories – and some others – have happy endings due to the intervention of
Westchester County government and our non-profit partners who provide important counseling to people at risk of losing their homes.”

He added, “I want people to know that we are there to help, but we can only be successful if people reach out to counselors before it is too late. We also are applying for $7.2 million in federal money to revitalize neighborhoods most hurt by foreclosures. ”

In the three cases above, the county’s partner, Westchester Residential Opportunities, was able to get the mortgages modified and help the families with affordable payment plans. In these types of cases, the length of the loan may be extended or emergency funding provided or lent from a fund set up by the county legislature.

WRO’s ability to intercede with the banks holding the mortgages is due in part to a letter Spano sent to the major mortgage lending banks last fall asking them to make every effort to keep Westchester families in their homes by providing mortgage modifications.

“The Schiefer’s problem provides a perfect example of how this targeted county investment in foreclosure prevention can work,” said Ryan. “Helping these responsible homeowners through a rough time so they can stay in their homes demonstrates the effectiveness of the county partnering with non-profit agencies like WRO that have the expertise and tools to turn a problem around quickly and successfully.”

Commented Jenkins, who chairs the legislature’s Government Operations Committee, “Everyone knows that times are tough. The county board was the first to provide direct assistance in the foreclosure crisis in New York State. The $150,000 investment is a prime example of how county government provides vital resources to Westchester residents."

The WRO funding proposal was advanced by Ryan with Legislators Jenkins, Lois Bronz, Peter Harckham, Jenkins and Lyndon Williams.

Foreclosure rates in Westchester County have increased 104 percent since 2005 and default filings have jumped 244 percent.

Westchester County government is stepping up to the plate with a multi-faceted approach:

• Counseling services to prevent foreclosures continue through the “Don’t Borrow Trouble Campaign,” supported by the Spano Administration and the Board of Legislators. In 2008 the Westchester County Board of Legislators approved a $150,000 grant to WRO for mortgage default counseling and to create a rescue fund. Rescue funds can be used to pay mortgage arrears.
  
• At the behest of the county, three housing counseling agencies, certified by the U.S. Department of Housing and Urban Development, are available to help. They are Housing Action Council ( 914 332-4144), Westchester Residential Opportunities (914 428-4507) and Human Development Services of Westchester (914 939-2005 ). Contact information and other important links.
  
• In a separate initiative focusing on homes that are already abandoned or in the hands of banks, the county is applying to New York State for $7.2 million in Neighborhood Stabilization Program funding including Affordable Housing Corporation funds. The money would be used to purchase vacant and abandoned homes, repairing them and making them available to moderate-income families to purchase at an affordable price. The federal
  program was created when Congress approved the Housing and Economic Recovery Act of 2008 to address the rising number of foreclosures across the country. With the resale of these homes, the county will recycle the funds for subsequent purchases of homes for the life of the program through July 2013.
  
• To maximize the chance of the resale, counseling services for future homeowners – even those not facing foreclosure – are available now from the same three HUD-certified agencies listed above. The goal is to help people straighten out their credit problems now, so if they want to buy a house a few years from now they will be in top financial shape.
  
• The county government has launched a financial education initiative. Throughout the year, the county will be running various seminars and other programs to educate people about how to make wise financial decisions. A major conference is scheduled for May 12, with details to be provided later. In addition, you can visit www.westchestergov.com/managingmoney to read more about the kinds of financial education resources that are available.

Gary Brown, director of the Westchester County Department of Consumer Protection, said, “Don’t ignore a problem paying your mortgage – it won’t go away and will only get worse. The most important thing a homeowner in trouble with their mortgage can do is to have a housing counselor review their case as soon as possible – even before they receive the first default notice. The sooner families seek help, the greater the chance of saving the home.”

Case Studies

• Jorge and Marina Schiefer purchased their home in 2006. Their hardship began in 2007 when their home was flooded and they had to exhaust a lot of their savings to repair the damages. Then with the economy getting worse, business slowed down for Jorge. Their original mortgage was an Adjustable Rate Mortgage fixed for 2 years. In 2008, their interest rate was reset increasing to 9.25 percent, from 7.95 percent, increasing their monthly mortgage payments to $3,944, from $3605. Thereafter the rate would re-adjust every 6 months until the rate capped at 11.95 percent. When the Schiefers went to WRO for help they were three months behind on their mortgage. They contacted their lender for assistance but were denied. WRO was able to resubmit another request for a loan modification and was successful! The lender added 6 months arrears to the back of the loan and offered the client a “Step Fixed Rate” The rate on the first year was reduced to 5 percent, from 9.25% to 5%. The second year will be at 5.5 percent; the third year at 6 percent. After that, until the end of the 30-year-term, the rate will be fixed at 7 percent.
  
• Melvin & Agnes G. refinanced their home located in Yonkers after the lender told them they could refinance in four months to lower the rate. But the lender denied them a new loan and refused to modify the loan until WRO persisted with a complaint against the lender. Finally the lender offered a rate reduction that lowered their monthly payments to $2,856, from $4,279.55 and placed the arrears on the end of the mortgage.
  
• Ana A. of Tarrytown has two jobs, but when her husband left her and her three children she could no longer afford her home. Ana turned to WRO, and the agency was able to negotiate a loan modification. This lowered her interest rate and her monthly mortgage payments by almost a third for 5 years. As part of the modification, Ana was required to come up with $15,000 in cash to make good on some of the mortgage payments she had missed. WRO made an interest free loan for $5,000 of this amount to Ana out of its rescue fund money, which she will repay over three years.