Cook Co. pairs with housing group to avoid foreclosures
Friday, September 12, 2008
by Rob Olmstea
Cook County Board President Todd Stroger has recruited a national nonprofit housing organization to try to help homeowners facing foreclosures renegotiate their mortgages.
The Neighborhood Assistance Corporation of America has a long track record of helping low- to moderate-income buyers secure below-market interest rates to buy first-time homes, but the group has only recently moved into helping homeowners renegotiate their loans.
In conjunction with the county, the group will conduct workshops for homeowners in crisis. The workshops will be in Rolling Meadows, Skokie and other locations around the county.
The neighborhood group was founded in Boston and grew into a national organization after aggressive protests at banks' board meetings and even at bank officers' homes and their children's schools. After four and a half years of ceaseless protests, Fleet bank agreed to funnel millions in low-interest loans through the neighbohood group's agents for first-time buyers, and other national lenders such as Citigroup and Countrywide followed suit.
Critics call it blackmail, but NACA CEO Bruce Marks says it's just bringing attention to banks' exploitation of the poor and middle class and doing something about it.
"Yes, we are very confrontational because we don't accept that the lenders didn't know what was going on (when the subprime mortgage crisis was being created)," said Donald Meadows, regional director of the neighborhood group.
For Chicago homeowner Carmen Donaire, the organization was a lifesaver. She bought her North side two-flat about five years ago with her then-husband at a reasonable interest rate, 5.5 percent. But she then had to take an adjustable-rate mortgage a year ago when she divorced in order to pay her husband his half. After one year of a fixed rate, the loan changed to a variable rate ranging from 9 to 15 percent. Her monthly payment was nearly $5,000 and the lender's "break" was to let her pay $3,600 a month, but it charged the difference to her principle.
"My balance went up every single month," she said.
NACA stepped in and renegotiated her loan with Countrywide, getting her a fixed 30-year loan at 3.25% with a monthly payment of about $1,900.
But what many homeowners don't realize, NACA and its devotees say, is that the process requires sacrifice on both the lenders' and the homeowners side. Participants must attend counseling and go through extensive financial questioning to get at what NACA thinks is a true affordable monthly payment. For Donaire, the process took five months, a $20 membership fee and a $10 credit check fee. And she admits she got an exceptionally good deal.
"Not everyone's going to get what I got," she said, noting that the group could do nothing to help an out-of-work friend of hers.
Meadows said homeowners need to be patient, prepared to listen, budget and work at the solution. But if they do, NACA boasts an average new interest rate of anywhere from 3 to 7 percent, Meadows said.
Workshops will be held Saturday, Oct. 4 at the Cook County courthouse in Rolling Meadows, 2121 Euclid Ave., from 10 a.m. to 1 p.m., and on Saturday, Oct. 25 at the courthouse in Skokie, 5600 Old Orchard Road from 10 a.m. to 1 p.m. Those needing more immediate help can consult the group's Web site at www.naca.com and click on the "home save" tab.