Sub-prime loans and foreclosures workshops

Congresswoman Barbara Lee (D-Oakland) called California the “poster child” of the sub-prime mortgage crisis. California has five of the top ten cities with the highest foreclosure rates in the country. Oakland ranks in the top five.

“Communities of color are being particularly hard hit,” said Lee, citing statistics showing over half of home loans made to African American communities have been sub-prime, and that two out of every five home loans made to Latinos have been as well.

Oakland mayor Ron Dellums called the crisis a “national epidemic.”

“It has the potential for becoming even worse, and unraveling our communities and our economy in ways that we, at this moment cannot totally contemplate,”

The gathering was put on by the California State and Consumer Service and the state’s Business, Transportation, and Housing Agency, which included a first of its’ kind workshop aimed at educating homeowners on how to avoid foreclosures.

Homeowner Marcus Totson from Hercules said when he attended a workshop there on loan modifications many people were complaining about lenders not responding to their inquiries.

“There’s a lot of people who are in trouble and it’s taking a while to get responses,” said Totson.

But Totson who is currently negotiating a loan modification with his lender, said the workshop was helpful in that he found resources in agencies that could assist him and people like him, should they have no others to turn to.

Executive Director Maeve Elise Brown, of the statewide, non-profit legal service called Housing and Economics Rights Advocates, says federal funds could be used to educate homeowners.

“I would like to see money made available for people to get counseled properly, for people to be able to avoid being pulled into risky scams, and for people to get reputable advice from folks who aren’t going to be charging them a bunch of money for it,” said Brown.

Her group conducted a study showing most foreclosures in Alameda County last year occurred in areas that are predominately people of color with high homeownership rates.

“The reality for some people is going to be that they can’t afford to keep that house. They need to be able to get advice.”

James and Eleanor Warren of Oakland say a relationship with a housing counseling agency saved their home from a foreclosure.

In 1994 they moved from Berkeley to live with Eleanor’s mother at her home in North Oakland because she had fallen ill. In 2005 her mother passed away and James and Eleanor inherited the house. When they refinanced the home under a new sub-prime loan, with three children living at home, James says they paid their mortgage on time. But when their family business slowed down, they were late on one payment, which led towards a foreclosure.

“The grace period was over on the 11th,” said James. “We told him [the lender] we would get a check on the 15th. But he said if we don’t pay by the 11th they’re going to bring back the foreclosure. My heart hit my feet. I was just shocked that they didn’t care.””

James says a friend referred he and his wife to NID-HCA (National Association of Real Estate Brokers-Investment Division, INC. Housing Counseling Agency), a HUD approved housing counseling agency in Oakland. The group intervened. And. although the agency has not been able to change the payment date by just a few days, they were however, able to negotiate with the lender to temporarily hold off on the foreclosure.

State Assemblywoman Lonnie Hancock said “a little goodwill on the part of the lenders” could “fix” much of the sub-prime crisis.

“Can the mortgage industry step up to the plate and show the goodwill and concern for the future of the state’s economy, and the individual mortgage holders, and negotiate some of the flexibility that we need?” asked Hancock.

She said Congress and the state’s legislatures have been working on bills that could give more government oversight over lending practices, and that workshops like this, which includes lenders, offer a chance to see whether voluntary efforts on the part of lenders will work.

“We’re all watching to see what can be done without legislation. But if there isn’t voluntary action to ease the situation, it’s going to be incumbent on the state to step up and pass those bills.”

Workshops are scheduled throughout California in new locations each week until late February.