Archive for Wednesday, January 30, 2008

Dennis Moore’s housing message: Get help NOW if you need it

Spectre of foreclosure overshadows Congressman’s housing summit in KCK

January 30, 2008

In 2006, the Wyandotte County Sheriff's Office auctioned 828 foreclosed properties, and last year the number grew to 929, according to spokesman Randall Henderson.

Last Thursday a group of local, state and national officials met with local residents at the YWCA in Kansas City, Kan., 1017 N. Sixth St,.to discuss the current housing crisis. Once finished with questions from the moderator, Rep. Dennis Moore, D-Kan.., they took questions from the the audience, showing that foreclosure worries were on many minds.

Besides Moore, the group included Larry Gilmore, a representative of the Hope Now Alliance, which is a consortium of lenders and credit counseling agencies; Jeff Fendorf, with El Centro; Doug Neff, with the Department of Housing and Urban Development; Kelly Edmiston, with the Kansas City branch of the Federal Reserve Bank; Tom Thull, Kansas bank Commissioner; and Judy Miller, Kansas City Regional Association of Realtors.

Moore started off the event by telling the crowd of about 70 that "no one wins" when a home is foreclosed, and that the cost of foreclosure to the lending institution can approach $50,000.

In answer to a question by Moore, Edmiston said what had caused the current crisis, in his personal view, was a "perfect storm" consisting of three factors: the state of the real estate market and the low equity many sellers had in their homes; the substantial growth in the number of subprime mortgages taken out - the number of such mortgages taken out in 2006 was seven to 10 times as much as the number taken out ii 2003, he said; and the number of adjustable rate and other nontraditional mortgages. In these mortgages the trigger for the crisis was the shock of payments when the interest rate jumped on homeowners' mortgages, he said.

Added to this, Edmiston said, was people refinancing their homes when the home's value had remained flat or even declined, causing a loss of equity for the homeowner.

Fendorf urged consumers to seek help, "the sooner the better" if they're facing payments they won't be able to make or are in default on already. There are four organizations offering credit counseling locally, he pointed out: El Centro, Community Housing of Wyandotte County, and in Missouri, Neighborhood Housing Services of Kansas City and Westside Housing, with in-house counseling provided at El Centro and NHS.

Fendorf gave an example of a retired couple who came to El Centro seeking help because the interest rate on their mortgage had gone from 6.2 percent to 9.65 percent, which meant their monthly payment went from $650 to $1200.

By working with the lender, Fendorf said, they were able to work out a solution and keep their payments lower.

The obvious next question might be, "why would the lender do that," as Moore asked.

The answer, Fendorf said, is the often-high cost of foreclosure to the lender.

Miller then spoke, and said for those who are looking for a new house, 2008 would be good year to buy a home.

For those homeowners wondering whether they have enough equity in their homes, Miller said if someone has owned their home for 18 months or less, the home probably hadn't appreciated enough, but if they had owned it for three years or more, then their equity was probably good enough to consider selling.

Miller said 60 percent of the average homeowner's wealth was in their home equity, and that Kansas City was a better housing market in terms of relative cost than most urban centers in the country, with housing costs on average costing 12 percent of income.

Miller said Kansas City was a "different market" without the highs and lows common to many other markets in the nation, and that "houses are starting to sell."

The room was nearly full at this point, with residents continuing to filter in, including one man in coveralls, apparently straight from work.

The panel next took the audience's questions, which were written on cards and collected by Moore's staff. Most of the questions dealt with specific situations, which the panel members answered generally and with the caveat that the homeowner ought to seek individual counseling.

"What are the greatest potential spillover effects for local governments?" was a question not of this kind.

Fendorf said that sometimes municipalities are left with the responsibility of caring for a vacated property, sometime even having to demolish the structure.

Thull, the Kansas Bank Commissioner said one possible effect of a large increase in foreclosures, due to the decline in revenue from property taxes, would be a tax increase.

Here's where to get help with credit and foreclosure concerns.

Following are resources for credit counseling and avoiding foreclosure:

¢ Neighborworks works with members of financial, mortgage, insurance and nonprofit institutions to help homeowners avoid foreclosure. The toll-free phone number is 1-888-995-HOPE, and the Web site is at www.nw.org.

¢ The Federal Trade Commission provides free financial education tools and works to prevent fraud and unfair business practices in lending. To file a complaint of get free information, visit www.ftc.gov, or call toll-free 1-877-FTC-HELP.

¢ The Economic Opportunity Foundation provides counseling services including for mortgage delinquency and default resolution, plus homebuyer financial education. The phone number is (913) 829-4584.

¢ Similar services are offered at Consumer Credit Counseling Services of the Midwest, phone number 1-800-355-2227. The Web site is www.cccservices.com

¢ El Centro provides credit counseling in Spanish can be reached at (913) 677-1100. The Web site is at www.elcentroinc.com.

¢ Community housing of Wyandotte County, Inc., provides credit and money-management counseling and can be reached by phone at (913) 342-7580, and online at www.chwconline.com.

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