Local Assistance Available To Homeowners Facing Foreclosure

Foreclosures are continuing at above normal levels in San Diego. More of the people being foreclosed on now are people who have lost their jobs or who have only been making payments on their mortgage's interest and now also have to pay down the principle. What are the things homeowners need to know about foreclosure and loan modification? What resources are out there to help them?

Guest

Vino Pajanor, president and executive director of Housing Opportunities Collaborative

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MAUREEN CAVANAUGH: We've talked a lot about the number of homeowners facing foreclosure, now some advice on what to to about it. I'm Maureen Cavanaugh, coming up on These Days, the group housing opportunities collaborative here in San Diego has been conducting seminars for distressed homeowners all over the county. This morning, the president of this group is here to take your calls on foreclosure, loan modifications and more. Plus some ideas of how to tap into the power of political populism, with the author of a new book called raising hell. That's all ahead this hour on These Days. First the news.

I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. Real estate experts keep telling us that we haven't seen the end of the fore closure crisis yet. They talk about a shadow inventory of houses on the brink of foreclosure that may be processed and put on the market in 2011. And they also tell us that many people struggling to stay in their homes by working on loan modifications may run out of time next year. With that kind of news in the offing, it seems lots of homeowners in San Diego are going to need some very good advice. Should they continue to pursue loan modifications? How can they get help dealing with lenders? And do they have any other options? My next guest spends most of his time answering questions like that. I'd like to welcome Vino Pajanor, he's president and executive director of housing opportunities collaborative. And Vino, good morning. Welcome to These Days.

PAJANOR: Good morning, Maureen.

MAUREEN CAVANAUGH: First of all, start out by telling us, what is housing opportunities collaborative?

PAJANOR: We are a nonprofit housing counseling agencies, fair housing, social service, and business associations, including the city and county agencies that work together to provide housing resources and counseling services in San Diego. We came together in 2005, and this is benefit the whole bust of the Rio Grande estate.

MAUREEN CAVANAUGH: Yes.

PAJANOR: Foreclosure crisis. We were there to provide educational resources regarding how doing, whether you're buying a home or in -- you're a homeowner issue we also provide a program that is known as the home clinic, the homeowner's [CHECK] clinic. Where we leverage resources with our partner agencies to provide counseling. All of the services are free. There are [CHECK] counseling agencies there who are qualified to do counseling as to your loan modification or where you are with your home ownership [CHECK]. There are legal professionals like the county bar, or the California state licensed county individuals, [CHECK] and there are lenders there to provide whether you can do a loan modification with them or not. But we provide the service to empower the individuals so that they can make a decision as to how they are going to sustain or provide for their home ownership.

MAUREEN CAVANAUGH: I want to invite our listeners, by the way, to join the conversation. Are you trying for a loan modification? What kind of response have you gotten from your lender? How much are you willing to go through to stay in your house? Give us a call with your questions and your comments. Our number is 1-888-895-5727. We're gonna talk more about how the collaborative can kind of help people through this process. But just to be clear, this is a free service, and the people who work as counselors, what is their training? What is their former line of work? I mean, do they know about the real estate business?

PAJANOR: Yes. Of just to add on before I go into the details as to the qualifications.

MAUREEN CAVANAUGH: Sure.

PAJANOR: If something is provided free, especially here in these times, it's always a question of whether it's qualified, whether the individuals are qualified enough or it's of good quality. Let me assure the listeners that our counselors through the collaborative have all been trained by national organizations. These agencies that are -- you know, where the counselors are working, are HUD approved.

MAUREEN CAVANAUGH: HUD approved, yes.

PAJANOR: Yes, so they had to go through a stringent process in order to be HUD approved in these counseling agencies. And then they have to have like any other professional, have to have stipulate education on the various other programs and others. And these counsels are themselves former bankers, former real estate professionals who have left their former lives to come and help the community here. To serve. And because [CHECK] big attraction in the nonprofit world, but to serve the community is the attraction, and these individuals are here, day in and day out, trying to help the only owners and only buyers and everybody who is having crisis with regard to their home ownership.

MAUREEN CAVANAUGH: Okay. So Vino, your organization, as you said, you host cleanics and workshops for homeowners who are facing foreclosure. Of when the economic downturn started, there were a lot of homeowners who came in who had those subprime loans. And we heard an awful hot about them. Perhaps they wouldn't have been qualified forward a tradition kind of loan, lots of sort of questionable things happened to qualify a lot of people for those loans. And they got into trouble quite quickly. Who are you seeing at these workshops today?

PAJANOR: When we saw in 2007, 2008, and 9 were the subprime borrowers. But what we're seeing how are those who have a 30-year fix or 40-year, who [CHECK] we are seeing those kinds of families and individuals of we're also seeing people who got into the option arms, the five years and 7 years.

MAUREEN CAVANAUGH: Tell us about that.

PAJANOR: The five-year and 7 years were given out in between the period of 2004 to 2011. They are basically a 30-year mortgage for the first five years or 7 years, interest only can be paid or principle too. [CHECK] and it goes through that. So home ownerships who got into, let's say 2005, into an adjustable rate mortgage, they most probably in most instances only paid interest up till now. They're gonna have a low interest payment, but the principle also becomes due. So add the principle and the interest, your payments on a monthly bases is going to increase. And that's what we're also seeing, and that according to critics and other projections, it's not going to peek until mid to late 2011.

MAUREEN CAVANAUGH: I see. Of.

PAJANOR: And San Diego is one of the prime areas where these option arms were promoted by the lenders a lot.

MAUREEN CAVANAUGH: I see. I want to tell our listeners I'm speaking with Vino Pajanor, [CHECK] and your loan modifications. 1-888-895-5727. So, okay, so someone finds themselves in a situation like that, either did this negative amortization loan, basically they're gonna have to start paying -- their monthly payment is gonna go up. Or some other type of loan modification, they're looking to have some type of loan modification. Of what kinds of frustrations and problems are you hearing from home ownershipses that they're trying to [CHECK].

PAJANOR: First and fore most what we hear is the lender, the bank, in the common situations, is not listening to the home ownership. They're saying you're not able to have the banks listen to our needs for our loan modification request. Then of course is the public opinion that loan modifications don't work.

MAUREEN CAVANAUGH: Right.

PAJANOR: And that's been the common media frenzy, that loan modifications don't work. It's about how and when you do your loan modification. Just like you're preparing for an exam or for any other marathon you're trying to do, you prepare for it. You just can't go and do it. So similarly when you're applying for a loan modification, you have to put in all the work. Like, do your budgets, you have to get a hardship letter or a program together, so that when you go to your lender, based on the lendero programs, whether they were the federal program or state program or their own private programs, you should have a package together. If you just go in, the lender is gonna go back and forth asking for documents that you're missing or if more additional documentation is required or if you don't qualify because you're not putting the proper terms ins in. So you need some qualified assistance in order to put in a package. If you just go by yourself, it's gonna be difficult. And that's what we're seeing. We're also seeing people coming in with negative equity. They're saying I'm under water, I don't know what to do. You can't walk away from a home. That's the least that you should do. Of but if you are having under water issues and you are having hard times making ends meet, for example, you have -- you're making $86,000. That's about 80 percent of [CHECK] in San Diego, and still you're not able to -- you're making more than 45 percent or 50 percent of your income to mortgages.

MAUREEN CAVANAUGH: Uh-huh.

PAJANOR: That's a situation that you're -- [CHECK] that's maybe a hardship because most of your income is going towards your mortgage payment.

MAUREEN CAVANAUGH: Right.

PAJANOR: So even if you're under water and you think, I cannot walk away, make there is a [CHECK] for you to, ply for a loan modification. And all of these services can be done for free, to analyze to find out whether you qualify for a loan modification, even applying for a loan modification with the lender. The housing agencies can do it for you [CHECK].

MAUREEN CAVANAUGH: Let's take a few phone calls because there are a lot of people who want to join this conversation. Our number here is 1-888-895-5727. And you can also go on-line, KPBS.org/These Days. Maria's calling from San Marcos. Good morning, Maria, and welcome to These Days.

NEW SPEAKER: Good morning. Thank you for taking my call. My question is, I have -- I applied for a loan modification with Chase, I was denied because they said that my interest only payment was under the 31 percent of it's one of those option arms, and it switches over in May of next year. And at that point, I'm not even sure if I'm gonna be able to afford the principle plus the interest. Because I don't really know if there's gonna be a balloon payment due or anything.

MAUREEN CAVANAUGH: Okay. Vino?

PAJANOR: Maria, one of the solutions would be, did you when you applied for your loan modification, did you go through the process of getting the hardship letter together, doing your budgets and all of that?

NEW SPEAKER: Yes, I used that -- I think it was gnatta service, and frankly, I don't think it was that helpful. And they assisted me in completing the packet. I submitted it to Chase, Chase asked me for some other paperwork, and it was a complete packet with the hardship level and all of the required paperwork.

PAJANOR: If it has been more than like 6 or 7 months, I think you must have been in the process for quite a bit now. Assuming that, I think you could reapply. Of because once your situation changes even if a lend or denies your loan modification, let's say today, if three months' time, the situation changes. So you could reapply for it. So you can do a reapplication or you can do a new loan modification application with Chase. So just because you're coined once, doesn't mean you can't reapply, because situations do change. Even sometimes we are seeing that the person who gets [CHECK] over there at any other bank, the person who has done the writer there, or the specialist who is working with you could change. And according to that, you might have a better analysis of your situation, and you may be able to get a better offer or if not, better eyes to look at it.

MAUREEN CAVANAUGH: Thank you for the call, Maria, and good luck. Before we go to our next caller, if someone goes to one of your counselors and works up a loan package documentation and so forth to submit to a lender for a loan modification, do you -- do you help them follow that process? Do you ever contact the lend ors for them.

PAJANOR: Yes, we do that. Our partner agencies, the HUD agencies, what they do is the homeowner fills out a whole intack package, just like Maria four mentioned, a whole intake package. And that package does an authorization that allows the had you had operating counseling agencies counselor to contact the lend are on on behalf of the homeowner. Of and they can negotiate on behalf of the homeowner, but always keeping the homeowner in the loop. Because ultimately, you don't want to be blind sided [CHECK] so always our HUD counseling agencies discuss it with the homeowner, and whatever is the best situation or offer, that's what our housing counselors will tell the homeowner to take it on. Of and it's always advisable that even when you're doing it by yourself, you're well qualified, you need somebody to guide you. Because this is a complicate said process. You want to have everybody who knows the business to be in there to help you.

MAUREEN CAVANAUGH: We are taking your calls at 1-888-895-5727. My guest is Vino pagea nor, and he's president and executive director of housing opportunities collaborative. Nancy is calling us from San Diego. Good morning, Nancy, welcome to These Days.

NEW SPEAKER: My question was that -- I've been in a loan modification for almost a year and a half now. And at this moment, for about past our fore5 months, we have gotten a lawyer to take care of it. And we're having a really hard time with them because I lost my job and I started my own business, and then I didn't have any income for 5, 6 months. Of and it's just every single time we just get very conflicting news from our lender. So we got a lawyer. And my question is, for the balance that we've incurred so far, is there any way we can get a loan from HUD and start paying that off? Because we really don't want to lose our home. My question is, can we get a loan from HUD to pay off the balance? And is refinancing at this point an option? Or that wouldn't be an option? As in the lender.

PAJANOR: Yes, I mean, refinancing is an option provided you have equity in your home, and if you're already many months behind your first mortgage itself, it becomes difficult to get a refinance because the lender who's going through a refinance of your home if you have equity is gonna look at your situation and say, hey, you are already behind your mortgage and aren't being able to did it. Then for getting loans, right now, the only process is going through the loan modifications with the existing programs, like the [CHECK] and other programs that have come down from the feds. But there's a new program that is coming through the California housing finance agencies, you know, through the $700 million that was given by the Department of Treasury, that would enable homeowners who are under water hoar have an unemployment situation or who just need to crossover that line to temporarily they have maybe a 15000 or a $10,000, you know, back payment that you just want to catch up with your mortgage payments [CHECK] to the lender. There's a program that's gonna start out in January 1st, this coming year in 2011. But that depends upon who are the lenders. Remember that most of the lenders who are signing up to the program, whether it's a federal program or state program, it's a warranty program. It's not a law, it's not abiding on them that they can do it. [CHECK].

MAUREEN CAVANAUGH: You know, let me ask you a more general question, because you made the point, you know, that there is this -- we hear that the process of getting a loan modification is very difficult. And it takes a long time. And people are asked stosubmit documents over and over again. And they feel like they're being stalled by their lenders. And the number of loan modifications that have actually gone through and been successful is really quite low. These are the reports that we hear and we see in the media. Does your experience with homeowners seeking lone modifications bear that out?

PAJANOR: Yes and no. Let me say that, in the general sense, I agree with you. The loan modification, the number of loan modifications given as approved is low. But in our counseling, we found out within our partners the number of homeowners who have gone through the loan modification with HUD agencies is really high. The success rate is really high. Actually one of the leading agencies here in town has about 95 percent success with the loan modifications that were done a year ago, and who are current even now. We have also seen in the general, in the needs, as well as these stats that come down from other renalions and in California, that people go -- redefault after they've done the lone modification. But when you go through the proper process, remember that your loan modification is maybe a one time -- it's usually always a one time offer. You want to get it just lick when you got a mortgage, you want to make sure that all of what's in there is good for you, it'll work. Because if you get a lone modification that's temporary and you get into a situation again of defaulting again on that lone modification, it's gonna be very hard for you to get another one. Soap when you're getting into the loan modification process, you need to have all of your documents, make sure that you're giving all of the required terminologies and hardship letter or the -- it's kind of like a proposal that you're making to the lender. This is your best scenario, why you should do a loan modification for me. And once you do the package, we have seen through our collaborative that those who do it by themselves have a lesser chance. It's because the lenders are usually -- they have all their attorneys and others at their backing, they're gonna throw something at their homeowner, they're not gonna know what to do next. [CHECK] this makes business sense for the lender to do a lone modification for you.

MAUREEN CAVANAUGH: Let's take another call. A lot of people want to join the conversation. Benjamin is calling from San Diego. Good morning, Benjamin, welcome to These Days.

NEW SPEAKER: Hello?

MAUREEN CAVANAUGH: Oh. Hi.

NEW SPEAKER: I'm not Benjamin.

MAUREEN CAVANAUGH: No, are you Jennifer?

NEW SPEAKER: Josephine.

MAUREEN CAVANAUGH: Josephine. Okay. Welcome to These Days. How can we help you?

NEW SPEAKER: Well, I recently heard that there's been improvement in people making their payments. A lot of positive talk about it, something about a [CHECK] in people making payments or les people in delinks weakness, and I'm wondering if that recent turn around is because of the recent short sale purchases and bank owned purchases that are much more affordable for people in comparison to the bubble prices, you know, where prices were extremely high.

MAUREEN CAVANAUGH: Vino?

PAJANOR: You mean there's more affordability in San Diego? And the answer is yes, it's more affordability in San Diego than a few years ago. But regarding maybe -- people are making payments for their loan modification, that's true. People are becoming more and more from the tri mods into the permanent [CHECK] the lenders working toward getting that from the trial mods to the permanent modifications. But in the short sale area, yes, anybody can apply for a short sale. They can go and say I don't like my home or I just don't -- it's the person's call or the individual's call to ask for a short sale. But ultimately, it's the lender who's gonna come and ask, what's your hardship? You just can't walk away from your responsibility. Similar to Ia lone modification, when you're doing a short sale, you have to show what kind of a hardship you have to request a short sale from a letter. Onliar after that approval comes from the lender saying hey, aye analyzed your proposal, and now we're gonna give you a -- we're gonna approve your short sale request just like a loan modification. So yes, short sale is a good way to go, but even for that, many times issue even during the state programs, if you're going to go through a state program, you have to have done your lone modification first.

MAUREEN CAVANAUGH: I see.

PAJANOR: Before you go into a short sale.

MAUREEN CAVANAUGH: Let's take another call. I think Benjamin is on the line. Good morning, Benjamin, welcome to These Days.

NEW SPEAKER: Good morning, thank you for taking my call.

MAUREEN CAVANAUGH: You're welcome. Of.

NEW SPEAKER: Your first caller, Marie, had a loan from Chase, and I tried the lone modification and was also denied. But, you know, my property has decreased by more than half in the last two years, and I'm just wondering, you know, is it worth it to stay in it? I don't even know if a short sale -- is it better to go it a short sale or is it better to just walk away? I can't say that I'm having a hard time paying the monthly payments. I mean, it is high, but you know, I have -- my Christmas score is 850 or higher, and I'm just kind of lost as to what to do.

MAUREEN CAVANAUGH: Thank you, Benjamin, and I think if I may just did on Benjamin's question for a moment. This is a situation that a lot of people are facing in San Diego. You know, they may still be able -- struggle to make the payments, but they face the question of whether or not they're paying twice as much, perhaps, for their house than it's worth right now. And what kind of advice do you give people who can continue to make their payments on their home but the price -- the payments, the amount that they're paying for their house, their house is so much more under valued than it used to be?

PAJANOR: For people like Benjamin, the answer would be to have an analysis of your home ownership, where they are. Whether it's the financial situation, whether they are paying beyond their means just to sustain their home ownership. For example, as I said in the earlier instance of a caller, if you're paying 50 percent of your income to just sustain home ownership, that's not acceptable. That means you have it difficult. You have a hardship. Let's analyze what the hardship is. Maybe it's just that if you just your budget and your financial planning, maybe you would be able to afford it. Maybe not. So you need to have an analysis of that. So people who are under water, who are saying, hey, I'm just under water, I don't know what to do, whether I should have this home or sell it or whatever it is. You need to know analysis. You need an analysis from a professional individual.

MAUREEN CAVANAUGH: Is there any movement, however, to try to actually renegotiate the value of the loan itself based on the new value of the property.

PAJANOR: That's the principle reduction.

MAUREEN CAVANAUGH: Yes.

PAJANOR: We have as a group and our nationally we are joined with many entities to promote the philosophy of lendering doing the principle reduction. That has not been done so far in the three years plus of the crisis.

MAUREEN CAVANAUGH: Right.

PAJANOR: And if principle reduction happens, more people would be able to afford it, but very few of all the programs that are there, whether it's a federal program or state or other bank private programs of lone modifications, we have not seen much of a principle dereduction. That's when the whole negative [CHECK] might go, if they actually do a BPO, and the opinion comes down to, like, hey, this is the fair market value of the property if it is sold today. And according to that, we do a loan modification based on that value as the principle.

MAUREEN CAVANAUGH: Now, that would really help a lot of people.

PAJANOR: That would depend a lot of -- and that's what we are trying to push, but the lenders are pushing pack and saying, no, we can't do that. We have investors, and if somebody has to take a hit, we should all say, look at who are the investors of it's entities like CalPers, and other retirement pools that have invested in these properties in 2005, 6, and 7, and they're gonna be hit. So it's rather complicated. But the best scenario is where the principle reduction happens and we are promoting that.

MAUREEN CAVANAUGH: We are taking your calls, and Eric is on the line in San Diego. And good morning, Eric, and welcome to These Days.

NEW SPEAKER: Good morning. I just wanted to make a comment, and I just wanted to say, I am actually an attorney in San Diego, and I work with short sale clients. And the defense between a short sale and a foreclosure is huge. When you do a short sale, it puts you in the driver's seat, but basically deficiency judgement, and making sure that you're not liable for a deficiency judgment. After you complete the actual short sale, and it also allows you to make a settlement with the lender, which is a really good benefit to doing those. And I just wanted to give my opinion on the strategic default question. So many people who have invested in homes, they've done an investment, so when you look at basics and other businesses that are out there running issue they do strategic defaults all the time. So if someone's protected under the law, really, that's what matters of so if they're protected under the law, after they walk away from a property, that's what you use to negotiate it, whether or not they're gonna do that, you know, take that force of action so --

MAUREEN CAVANAUGH: Is there one --

NEW SPEAKER: I just wanted to make those statements.

MAUREEN CAVANAUGH: Eric, what's the defense between a short sale and a strategic default.

NEW SPEAKER: Well, a short sale would be a form of strategic default.

MAUREEN CAVANAUGH: Okay. That's what I thought. But I just wanted to be cheer. Eric, thank you so much. Okay. So walking away from the home or basically turning in the keys, how many people that you speak with make that kind of decision, Vino?

PAJANOR: Let's start off -- I want to double up on what Eric had mentioned. Yes, strategic default, short sale is part of the process. But if you're just going to walk away, Maureen, you ask make that decision, it's yours of you got into this mortgage, it's your choice. You make the decision. That's what the collaborative and all of our partners do Say. But look at the long-term repercussions, you're going to have this on your credit past. Let's say 5, 6 years down the road, you want to pitcher a car, or you want to purchase another home, they're gonna look at it and say, you were not a responsible homeowner of you just walked away from your responsibilities. And they will not be able to give you a good offer or offer you a mortgage. So you have to look at the long-term consequences of strategic defaults. There was many companies out there that say you just walk away from your home, and some of the homeowners decided to do that. But remember, this could be their -- for example, you do a short sale too. The money that's been, you know, short sale is where you sell your home below the price of what you got the mortgage for. The difference could always be there. Of the bank or the lender could if I have it to a collection agency, if you don't properly negotiate about your lender, they could go to a collection agency that could come back in 1, or 3, 3 years, and say, you know what? Here's the difference, you owe the bank X amount of dollars, you bought the particular difference on the loan, and we're gonna collect on you. And they're gonna Harris you and they're gonna -- why do you get into those troubles? You have to do it the proper way, negotiate with your lender, make sure you get all of the tax documents and everything, and insure that you are secure in the long run. Upon because this will come back to haunt you if you do a strategic default.

THE COURT: If you do it the wrong way.

PAJANOR: Yes.

MAUREEN CAVANAUGH: What do you think that 2011 holds for San Diego in terms of foreclosures and people are not being able to make their payments or searching or really struggling to get some loan modification? What are you anticipating in the coming year.

PAJANOR: I hope it gets better. Less foreclosures. But just like the first caller, Maria, we are seeing individuals coming in saying that I had an option arm, and you know, it's gonna be readjusted in 2011, 2012, and they are looking at those situations, we are also seeing prime borrowers who have 30, 40-year fixed, who are saying my income employment has gone down, I have an unemployment situation. We are also seeing homeowners who, you know, are under water. The negative equity individuals and family. And Maureen, just to put numbers in, about 1-third of the homes in San Diego are under water. Over 1-third. So they are going to, like just Eric had mentioned, the attorney, they're gonna do the strategic default. So that could be strategic defaults, that could be people who just can't afford the payments because they are -- the mortgages are resetting along with the principle. And there is this whole unemployment situation and family situation that are not enabling homeowners to make the monthly payment. So [CHECK] into 2012, the foreclosure crisis to continue, and San Diego is among the top 15 metropolitan cities in the country with regard to foreclosures of and [CHECK].

MAUREEN CAVANAUGH: Just my last question, if someone wants to hear more from you and perhaps go through your services to try to get a loan modification, how do they contact housing opportunities collaborative?

PAJANOR: Yes, they can go to our website, which is my housing for all. It's much more easy -- of course we have thehousingcollaborative.org. But sometimes people get it wrong. If you go to my housingforall.org, and click on San Diego, we have contact information. If not, you can call us at our offices, the collaborative, which is downtown San Diego, 619-283-2200. Or e-mail us at info at housingcollaborative.org. Come to our home clinics. We have two home clinics going on every month. We have partnered with the county of San Diego library system, they have 33 locations all the way from Vista to Jacumba. And we travel the whole county to do it. So we have it at these locations at the county library system. You can go to one, if you misone this month, you can always come to the next one. The next home chinic is in January. Because lenders are not going to do many foreclosures [CHECK] or website has all of the links to our up coming home clinics. You can go sign up on line, send us an e-mail, send us a note, or just drop by our offices.

MAUREEN CAVANAUGH: Vino, thank you so much.

PAJANOR: Thaw Maureen.

MAUREEN CAVANAUGH: I appreciate so much your being here. Of and [CHECK] if you'd like to go and place your comment on line, we also will have all of that contact information on line as well. KPBS.org/These Days. Coming up, a political activist tells us how to raise some hell. That's as These Days continues here on KPBS.