A Close-Up Look At The Foreclosure Crisis

Broward County, Fla., has been one of the hardest-hit by the real estate slump. Phyllis Brown, a mortgage counselor who works for the Broward County Housing Authority, says her agency receives anywhere from 700 to 800 calls a week from families facing foreclosure.

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MICHELE NORRIS, Host:

One of the places hardest hit by the housing meltdown has been southern Florida. So, we turn there now to someone who has been on the front-lines of the battle to save people's homes. Phyllis Brown is a mortgage counselor with the Broward County Housing Authority. And she joins us now. Ms. Brown, welcome to the program.

NORRIS: Hi, Michele.

NORRIS: Now, we noted that Broward County is sort of in the bull's-eye of this problem - a spike in foreclosures there. Give us a sense of what you're dealing with. Just how bad is the problem down there?

NORRIS: Well, our agency encompasses all of Broward County, right now, as a report from the Broward County clerk. They receive a average of over 200 list pending of foreclosure each week. Our agency receives over - anywhere from 700 to 800 calls a week of families facing foreclosure. And they're seeking counseling from a HUD-approved housing counseling agency.

NORRIS: And how many people work in your office to handle all those calls?

NORRIS: Currently, it's a staff of four.

NORRIS: Okay. So, I'm doing the math; you spend a lot of time on the phone with a lot of people who are in a very bad situation.

NORRIS: Yes.

NORRIS: Is there some sort of protocol that you follow in trying to figure out how to help them?

NORRIS: Well, we do. When we are contacted by homeowners facing foreclosure over the phone, between myself and our staff, we try to do, like, a pre- application, just to see what has happened. What we look at is what has caused them to get behind with their mortgage? Is their situation curable? Has it been cured? Can they afford the mortgage going forward at the current amount - what the payment is and the interest rate, and all of those factors. And once we look at that, you know, then we pretty much go from there to see how we can direct them, assist them better in trying to resolve their issues.

NORRIS: What are they looking for from you when they make that call?

NORRIS: Well, they're looking to save their home from foreclosure. You know, there are a lot of people that we deal with, or people that normally will pay, have been paying their mortgage. We get a lot of people that was in the mortgage industry and the banking industry. We get a lot of calls from them now, because a lot of those people are unemployed. And so, to them, it's just something new they don't want to experience. They're frightened. They're scared.

They're looking for anything that we can do as far as directing them on how to resolve the issue. And basically, they want to save their home. So, they're looking for help to - what can I do to save my home from foreclosure?

NORRIS: Now, you say you're getting calls from people in the banking industry, also.

NORRIS: People that have lost their jobs, yes.

NORRIS: Also, they're experiencing this from both sides.

NORRIS: Yes, Realtors, we have a lot of calls from Realtors; people that's been in the banking industry, mortgage industry, they used to do mortgages. Now that - because of the market and the problems with homes and foreclosure, they're finding themselves in the same situation.

NORRIS: Sometimes, when people think the news is bad, they just stop opening their mail.

NORRIS: Yes.

NORRIS: How often does that happen?

NORRIS: All the time. Yeah, the first thing you ask them, have you contacted your lender? No. Have you opened up all your mail? Or when you do get them on the phone, and you call the lender, we'll do - when they announce it or we do it over the phone, and the lender will say, well, we sent you out a lost mitigation packet. Oh, I didn't open it up, because they think it's a bill.

And they don't have the money. So, they're not going to open it up, and they put it to the side. But a lot of lenders are being proactive, and they're automatically sending it out to them.

NORRIS: Phyllis Brown, your job sounds very stressful.

(SOUNDBITE OF LAUGHTER)

NORRIS: We have our moments but, you know, that's why you have to take a day here and there.

NORRIS: Do you have to take breaks during the day? Just...

NORRIS: Well, yeah, you do. You need to get up and get away from your desk because of the numbers of calls, our phones are just so overwhelming. And because you listen to everybody's problem every day. It becomes stressful and, you know, you're taking on their problems. You know, there's been many nights I tell people, I'll wake up in the middle of the night, oh, I forgot to help call somebody back, or I forgot to pay a mortgage, or I need to pay a mortgage.

So, you go home sometimes with these people on your mind, or you wake up in the middle of the night thinking about whose mortgage you got to do tomorrow, so, it is.

NORRIS: The president said he wants to help between 7 and 9 million families either refinance or restructure their mortgages. Does that sound realistic to you?

NORRIS: Unless they're going to hire additional housing counselors and people to do that. Because right now it's just, like I said, in our county, if my agency - and there's only four of us - getting seven, 800 calls a week, you know, I can only imagine what the other HUD-approved housing counseling agencies are receiving. And, you know, as far the staff is concerned, the ones that we know that we refer people to because we're overwhelmed, you know, they're at the point where, oh, don't send us no one else, we can't take on the workload.

NORRIS: Phyllis Brown is a mortgage counselor with the Broward County Housing Authority. She spoke to us from Lauderdale Lakes, Florida. Ms. Brown, thank you very much.

NORRIS: You're welcome. Thank you.

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Obama Sets $75 Billion Plan To Stem Foreclosures

President Obama discusses his plan to deal with the home mortgage crisis. i i

President Obama discusses his plan to deal with the home mortgage crisis Wednesday in a speech in Mesa, Ariz. Jim Watson/AFP/Getty Images hide caption

itoggle caption Jim Watson/AFP/Getty Images
President Obama discusses his plan to deal with the home mortgage crisis.

President Obama discusses his plan to deal with the home mortgage crisis Wednesday in a speech in Mesa, Ariz.

Jim Watson/AFP/Getty Images

In Depth

The Obama administration says its mortgage-assistance program could help up to 9 million families. But analysts say the plan has potential problems and won't necessarily help all homeowners.

Obama's Plan

Following are highlights of President Obama's plan to reduce mortgage foreclosures.

  • Allow an estimated 4 million to 5 million currently ineligible homeowners who get their mortgages through Fannie Mae or Freddie Mac to refinance at lower rates.
  • Create incentives for lenders to work with borrowers to modify the terms of subprime loans at risk of default and foreclosure.
  • Take "major steps" to keep mortgage rates low for millions of middle-class families seeking new mortgages.
  • Pursue reforms designed to help families avoid foreclosure, including allowing bankruptcy judges to reduce mortgages on primary residences to their fair market value.

Source: The White House

Graphic: Tracking Foreclosure Filings i i
Graphic: Tracking Foreclosure Filings

President Obama on Wednesday unveiled an aggressive plan that aims to help up to 9 million homeowners avoid foreclosure, a major cause of the nation's financial crisis.

The president announced details of the plan in a speech in suburban Phoenix, where massive foreclosures drove down the median price of an existing home to $136,000 last month — a 49 percent drop from 2006, according to The Arizona Republic.

The plan is designed to help homeowners whose mortgages exceed the value of their home and those who are on the verge of foreclosure. It includes $75 billion to cut the home payments of some homeowners and $200 billion from the Treasury Department to purchase preferred stock in Fannie Mae and Freddie Mac — double what was originally pledged.

"Through this plan, we will help between 7 and 9 million families restructure or refinance their mortgages so they can avoid foreclosure," Obama said in remarks to a crowd at a Mesa, Ariz., high school. "And we are not just helping homeowners at risk of falling over the edge; we are preventing their neighbors from being pulled over that edge too — as defaults and foreclosures contribute to sinking home values, failing local businesses, and lost jobs."

The announcement came shortly after the Commerce Department released even more bad news about the housing market. The government report showed that housing starts fell nearly 17 percent in January to a seasonally adjusted annual rate of 466,000 units, a record low. Applications for building permits, an indicator of future activity, also dropped.

The president's initiative calls for allowing 4 million to 5 million ineligible homeowners with mortgages through Fannie Mae or Freddie Mac to refinance their home loans at lower rates. To accomplish this, Obama said he would remove restrictions that prevent Fannie and Freddie from refinancing mortgages valued at more than 80 percent of a home's worth.

Housing Secretary Shaun Donovan stressed that homeowners don't need to be delinquent in payments to get help.

The plan also offers financial incentives for lenders to reduce the mortgage payments of as many as 4 million homeowners who are at risk of losing their homes. Under the $75 billion Homeowner Stability Initiative, lenders would cut mortgage payments to no more than 31 percent of the borrower's income.

"My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders to modify mortgages on primary residences. Any institution that wishes to receive financial assistance from the government, and to modify home mortgages, will have to do so according to these guidelines — which will be in place two weeks from today," Obama said.

The plan is designed to aid homeowners and entire communities where double-digit foreclosure rates have led to declining properties and a shrinking tax base. Last year, there were nearly 3.2 million foreclosure filings — including default notices, auction sale notices and bank repossessions — on more than 2.3 million properties during 2008, an 81 percent increase in total properties from 2007, according to RealtyTrac, which tracks foreclosures.

The president stressed that the plan would not rescue speculators who made risky investments on homes to resell, dishonest lenders who distorted facts to get loans approved, or people who bought homes they knew they could not afford.

In addition, the Treasury Department announced it would provide up to $200 billion to Fannie Mae and Freddie Mac to stabilize the markets and hold down mortgage rates. In 2008, almost three-quarters of new home loans were financed or guaranteed by Fannie Mae and Freddie Mac.

"The increased funding will provide forward-looking confidence in the mortgage market and enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners," said a Treasury Department statement.

The president announced his housing initiative just one day after he signed a $787 billion economic stimulus plan that aims to create or save 3.5 million jobs. On Wednesday, he said part of the economic stimulus included $2 billion in competitive grants to communities looking for innovative ways to avoid foreclosures.

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