Counselor Advises Homeowners In Need The ever worsening real estate crisis has people across the country taking all kinds of measures to save their homes. But what measures are smart and which ones are desperate? Host Cheryl Corley dives into the pages of this week's Washington Post Magazine and speaks with credit counselor Staci Rillo, and Washington Post finance writer Elizabeth Razzi about how to help people in the midst of the mortgage meltdown.
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Counselor Advises Homeowners In Need

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Counselor Advises Homeowners In Need

Counselor Advises Homeowners In Need

Counselor Advises Homeowners In Need

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The ever worsening real estate crisis has people across the country taking all kinds of measures to save their homes. But what measures are smart and which ones are desperate? Host Cheryl Corley dives into the pages of this week's Washington Post Magazine and speaks with credit counselor Staci Rillo, and Washington Post finance writer Elizabeth Razzi about how to help people in the midst of the mortgage meltdown.

CHERYL CORLEY, host:

And now our weekly look inside the pages of the Washington Post Magazine for interesting stories about the way we live now. This week, the real-estate issue.

In 2008, foreclosures increased a whopping 81 percent. That translates into more people desperately looking for relief, and homeowners in dire straits call on people like Staci Rillo, who works for a credit counseling center. She spends all day on the phone, talking to frustrated homeowners, and her job is to advise people struggling to pay their mortgages.

Washington Post finance writer Elizabeth Razzi shadowed Staci for a day and listened in on her phone calls. Now, both Elizabeth Razzi and Staci Rillo join me now. Welcome to you both.

Ms. ELIZABETH RAZZI (Finance Writer, Washington Post): Hello.

Ms. STACI RILLO (Credit Counselor): Hello.

CORLEY: Staci, why don't I begin with you? What type of stories are you hearing from these homeowners as they call in and say that they're in trouble?

Ms. RILLO: Generally, it can be anywhere from job losses to reduction of income because of medical issues. Also, it could be spousal issues to where people are going through separations, and there is only one income in the home now. Maybe they weren't prepared in their budget to deal with the rising gas costs or even the rising electric costs. So that, in fact, can impact their budget, as well as their ability to juggle their bills.

CORLEY: Well Elizabeth, as you listened in to a lot of the people's phone calls when they were calling in to her, did you get any sense that people are becoming more aware of how to handle personal finances or just really need to get much more information about that?

Ms. RAZZI: I did not get the sense that people were just reckless with their money, just wantonly spending and you know, the merry-go-round stopped. I got the impression from those cases that I heard that day that problem after problem would catch up with people, and you know, they had sort like a Jenga game going on, where they were able to pull - just stay standing when they pulled out one block, but then after a while, it's just starting to fall apart.

And then they were going to call the experts, call somebody like Staci, who could help them navigate, and they sounded very frustrated with their interactions with the lenders that they've been trying to do on their own.

CORLEY: It's interesting that you both talk about the frustration that people have when they call in and Staci, I was wondering, how important is it for these callers to know some of the lingo when they're talking to their lenders to get something done? I noticed in the article that you talked about, you know, calling the loss-mitigation department, and I don't know if I'm a homeowner in trouble if I know to say, I want to speak to the loss-mitigation department.

Ms. RILLO: Sure, and that's where we come into play, that's right. So let's say that the borrower does call in to customer service, and customer service might be limited to what they know about what the other departments can offer, not to say that they're not trying to help the homeowner.

They may recommend that they try to refinance through their refinance department. They may recommend a repayment plan. However, both of those options might not be the best solution for the borrower. So that's where we come in and say hey, if these solutions aren't working, what other solutions are possibly going to be entertained at this point in time? And that's where we go a little bit further and above and beyond to get to the appropriate area.

CORLEY: Well at one point, you have a caller who suggests it might be better for him to let his house go into foreclosure, and I liked your response because you said that you understood his situation, but you wanted him to know about all the options that were available to him before he and his family took that sort of course.

So a question to you both. Are people simply just giving up without knowing what their options are? Elizabeth, why don't we start with you?

Ms. RAZZI: You have had some people who've been giving up actually pretty early in the game and just walking away from homes, some of whom - who have been able to make the payments but decided that it was a bad investment because they'd lost tens of thousands of dollars of value in the home and they figure, why should I spend so much money every month on something that's not worth what I paid for it? Let the bank take it back.

CORLEY: And Staci, is that what you're finding, that people are giving up without knowing what they can actually do?

Ms. RILLO: I think people are more interested now into what alternative options could be offered rather than just walking away because a lot of people also understand that they're upside-down on their mortgage, but they might not necessarily really worry about that because of all the money that they put into it, all the blood, sweat and tears that are put into the home to get them to this point.

So it really just depends on how long and how much patience they have to really try to negotiate with the lender, and see what's going to best suit their needs.

CORLEY: Is there a broader reason why it's important to keep people in their homes? We know individually, a lot of people have a stake in this, if you know, they want to save their homes, they want to live in a home, but what's the broader reason? Elizabeth, why is this so important now?

Ms. RAZZI: Well sure, I mean, the reason that government is getting all involved in this is not necessarily because of the angst of a particular household. You know, that has come and gone over the years.

What's bringing the federal government into - and state governments and all kinds of charitable organizations - to a point on this is the concern about how this kind of poisons the broad-based economy, how foreclosures artificially push down prices in their neighborhoods, how that reduces the tax base for the community, how that causes teachers to be laid off and firefighters to be laid off, and things like that.

That's how it just seeps out through the whole economy, and that's why so much attention is being paid to try to stop it right now.

CORLEY: What about some of the Obama policies now? Are these going to be effective, you know, if we're talking about the big picture here?

Ms. RAZZI: You know, that's not for me to say, and I don't have a crystal ball. What will be key is whether it brings the lenders to participate.

CORLEY: And Staci, I guess that's where you come in. You deal with this on a day-to-day basis. How difficult is it for you to get these lenders to actually work with people and modify these loans?

Ms. RILLO: Well, I would always say that it's case-by-case scenario. They have guidelines that they need to work with, and the guidelines, believe it or not, are changing every three to four months, depending on the investor and depending on the crisis of the economy.

CORLEY: And I guess you hear all sorts of stories, as you mentioned, across the board. How difficult is it for you to deal with what you hear? Because I would imagine it's a very stressful situation for the people who are calling in and somewhat stressful for you, as well.

Ms. RILLO: Well, I do my best to always stay an outsider, looking in. That's my job, and I do think that overall, by the end of the phone call, I always say, nine times out of 10, they are thanking me for listening. They feel that they've achieved more than they have by being on the phone with customer service for a couple of hours. I hear that day in and day out.

CORLEY: And Elizabeth, how about that for you? I mean, you're listening to some of these phone calls, as well. Was it an emotional time for you at all?

Ms. RAZZI: It wasn't particularly emotional for me, but at the Post, we hear a lot of people who are just ticked off that anything is being done to stop foreclosures, and there are a lot of conflicting emotions out there.

You get a lot of people who are desperate, you know, just don't know what to do next, who are just trying to read the tea leaves and figure out, is the next program going to help me? Should I hold on a little longer and see what else comes along? It's not just the homeowners who are facing foreclosure who are upset about this. There's kind of broad-based discontent right now.

CORLEY: Elizabeth Razzi is a finance writer with the Washington Post and author of an article in this Sunday's Washington Post Magazine. She joined us in our Washington studios.

Staci Rillo is a mortgage counselor, and she joined us from her office in Freehold, New Jersey. To read the piece and other stories from this Sunday's magazine, visit our Web site at npr.org/tellmemore, and thank you both for joining us.

Ms. RAZZI: Oh, you're welcome.

Ms. RILLO: Thank you.

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