Looking for a lifeline
Agencies help residents trying to keep homes or facing foreclosure
Laura Prada tells her clients that helping with their housing issues is like a new part-time job.
"You have to put some time into it to get the rewards," she said.
Certified credit counselors like Prada and Cindy Korus at nonprofit Consumer Credit Counseling Service of McHenry County work with homeowners who are facing foreclosure or trying to stave it off. The place to start, they say, is the part that many want to skip – the budget.
"We go over their budget, talk about what kinds of income are coming in, what expenses are going out," Prada said.
Before they can look at options, they need to have a good look at the financial picture.
"A lot of time, people think they know what they spend on things, but when they get down to it, it's 'Oh yeah, I forgot about that,' and all of their bills are outstanding," Prada said. "It's usually not just a mortgage issue."
Homeowners need not already be in foreclosure to get help. A counselor will go over a timeline of where clients stand in the foreclosure process, and many times the biggest issue is fear of the unknown, Prada said.
"Most people think they need to be way behind to see us," she said. "The earlier you get in here, the better, so you have an idea of where you stand. If you're trying to stave off foreclosure, all of that is going to be talked about."
Each counseling session lasts about two hours, and clients are asked to fill out paperwork and bring in several forms. These include a month of the most current pay stubs, statements from all creditors, mortgage statements for all properties, and bank statements for the past two months.
From there, Prada said she looks at the big picture and gives options based on it.
"It's a long list of options," she said. "Selling the house outright for profit, although that might not happen in this environment. Other options may be a short sale, deed-in-lieu of foreclosure, forbearance."
But the options do often change.
"Just because you didn't qualify for modification today doesn't mean you won't six months from now," Prada said.
In addition to working with the lender, there are some government assistance programs available. For example, the Hardest Hit Program offers temporary mortgage payment assistance to households that meet certain requirements, such as a documented income reduction of 25 percent due to unemployment or underemployment through no fault of their own. For more information or to apply, go to www.illinoishardesthit.org.
Making Home Affordable is another government-assisted option that helps struggling homeowners. There are several programs within it, such as the Home Affordable Modification Program, which reduces a homeowner's monthly payment to 31 percent of their gross income. More information is available at www.makinghomeaffordable.gov.
HUD-approved housing experts are also available at 888-995-4673.
Knowing what's available is a good place to start, Prada said.
"Sometimes, when you know what your options are, you have a clearer head," she said.