Translating Foreclosure Plan Into Real-Life Aid

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President Obama announced a far-reaching plan last week aimed at preventing more foreclosures. Host Jacki Lyden takes a look at a housing counseling service to see how the president's words will translate into actual help for homeowners.

JACKI LYDEN, host:

Welcome back to ALL THINGS CONSIDERED from NPR News. I'm Jacki Lyden.

While the economic outlook is still stormy, there's one tiny ray of light breaking through. The number of people losing their homes to foreclosure fell by about 25 percent between December and January. And last week, President Obama unveiled a far-reaching plan that he says will keep 7 to 9 million at-risk families in their homes.

President BARACK OBAMA: And we're not just helping homeowners at risk of falling over the edge. We're preventing their neighbors from being pulled over that edge, too.

LYDEN: The president's aim is lofty, but how will it translate into real help for the people near that edge he spoke about? We visited a housing counseling office to find out.

When you walk into HomeFree-USA, a nonprofit based in Hyattsville, Maryland, the first thing you notice is the fragrance. Chocolate in one hallway, orange in another. Scented candles march up the stairway and cluster on tables beneath Chinese fans and African prints. The walls are painted a warm red. And the phones are ringing off the hook.

(Soundbite of telephone ringing)

LYDEN: The candles, the artwork, and the potted plants in every corner are designed to reassure nervous homeowners who come to this office hoping to stave off foreclosure. HomeFree-USA used to help 10 to 15 people a month. But in the past 10 months…

Mr. PEYTON HERBERT (Director of Foreclosure Services, HomeFree-USA): We've seen upwards, in our office here in Washington, D.C., 2,500-plus individuals or families having a need for our services.

LYDEN: For Peyton Herbert, a housing counselor at HomeFree-USA, this job has become all-encompassing.

Mr. HERBERT: When we open our doors in the morning and we stay open well into the evenings, sometimes that can be, you know, 8, 8:30 at night, we're open to service the client. We've not turned away a client if they've had a need.

Mr. CHRIS GALES(ph) (Homeowner): I didn't think I was getting in over my head when my wife and I bought our home.

LYDEN: Chris Gales has held a kaleidoscope of jobs over the years.

Mr. GALES: I've worked in the hotel restaurant industry for nearly 20 years. I've been retail store manager, cell-phone distribution warehouse, doorman, cook, manager, salesman.

LYDEN: But Gales' luck ran out last year. He lost his job and had to take a lower-paying position. His wife got sick, and they fell behind on their mortgage.

Mr. GALES: And while I understand Barack Obama has proposed helping a few - millions of homeowners, I hope that my wife and I will end up being two of the millions of people that they plan to help.

We feel that if we could get our interest rate lowered by just two or three points, that could save us perhaps $200 or $300 a month. That would make all the difference in the world to us. That would allow us to keep our home.

LYDEN: Chris Gales turned to HomeFree for help. Will the president's plan help him? Housing counselor Peyton Herbert says it's too early to tell.

Mr. HERBERT: In terms of implementation, I think a lot of the detail needs to be worked out as relates to the lender servicers involved.

LYDEN: Herbert says he's worried that banks may not have enough incentives to restructure troubled mortgages, especially when the homeowner is underwater, owing more to the bank than the home is worth. And he wonders whether banks will do enough to reach out to people who may not feel they deserve the help.

President Obama says the banks won't have a choice.

Pres. OBAMA: Any institution that wishes to receive financial assistance from the government, from taxpayers, and to modify home mortgages will have to do so according to these guidelines.

LYDEN: But the president promises that if banks play along and reduce interest rates on troubled mortgages, the government will step in to make up some of the difference between the old rate and the new one. And that could be good news for homeowners like Chris Gales.

Mr. GALES: I'm due to meet with one of the counselors here this week, and I'm looking forward to getting my interest rate lowered.

LYDEN: Here's another little ray of economic hope. HomeFree-USA's huge increase in clients means it's one company that's hiring.

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