Article/Column

Protecting our homes during troubled times

by Congressman Elijah E. Cummings

As Americans lose jobs or have their working hours reduced, more homeowners are falling behind in their mortgage payments. They are faced with critical decisions about what - and what not - to do.

In my home State of Maryland, this challenge is widespread. Although our economic downturn is not as desperate as that in some other states, 90,000 more Marylanders are now out of work than last year.

“We went through the first wave of foreclosure, with sub-prime loans and other types of exotic products,” Maryland’s Housing and Community Development Secretary Ramond A. Skinner has observed. “Now we’re seeing the employment situation and lack of income really hitting hard.”

As a direct result, one out of every eight Maryland borrowers now is at least 30 days behind in their mortgage payments. Many relied on a second or third job in their households - and, now, that essential additional income is gone.

Adding to our neighbors’ plight, they may not even be able to sell their homes, as heartbreaking as that strategy would be. Real estate experts estimate that nearly three out of ten Maryland borrowers owe more on their homes than those properties are currently worth.

For the most part, these are not gamblers who rolled the dice during better economic times, making commitments that they could not fulfill. To the contrary, they more often are hard-working people who have been cast adrift in the economic storms that now grip our country.

They deserve our help in their struggle for more affordable mortgage terms. They also should be made aware that there is both a right and wrong way to seek that help.

Housing experts agree that it is critical for home owners to seek help as soon as a payment problem arises. As Linda Evans of St. Ambrose Housing Center has observed, “The worst option is just walking away without negotiating something with the lender first.”

At the same time, uninformed home owners may be tempted to seek help in the wrong places and - as a result - become easy prey for unscrupulous firms. They need accurate information about how to obtain help, as well as how to avoid the predatory schemes that are designed to exploit their plight.

In June, for example, I invited 19 major lenders (as well as loan counselors, attorneys and housing experts) to meet with families who were falling behind on their mortgages. More than 900 families showed up in an attempt to save their homes, and I was deeply gratified when a majority of them received some help.

Our success last June encouraged me to repeat our free Foreclosure Prevention Workshop this month on September 12.

Anyone in the Baltimore area who may be falling behind in their mortgage payments would do well to attend our free Foreclosure Prevention Workshop this Saturday, September 12, from 9 a.m. to 3 p.m., at Woodlawn Senior High School to speak with lenders’ representatives and housing experts face-to-face.

Contact my office at (410) 685-9199 or register on-line at http://www.house.gov/cummings.

Even if homeowners miss our September foreclosure prevention program, there are some key facts that everyone should know.

One of the most important elements of the federal government=s effort to save homes from foreclosure is the AMaking Home Affordable Refinancing Program@ that has been designed to expand access to refinancing for up to 4 to 5 million families who are current on their mortgages but who, otherwise, are unable to refinance because their homes have lost value.

Anyone interested in learning more about this major home preservation effort can obtain that information on the Internet at http://www.MakingHomeAffordable.gov .

The State of Maryland also is deeply engaged in the government’s home preservation efforts. Homeowners are encouraged to call the Maryland HOPE hotline at 1-877-462-7555 to get free assistance from a knowledgeable housing counselor. That information can also be obtained at http://www.mdhope.org.

Substantial free public help is available to borrowers in trouble. However, they also must protect themselves against predatory, for-profit loan modification firms that are exploiting the hardship of others.

Many of these companies, some of them unscrupulous, are demanding $2,500 or more to help people negotiate better home loan terms, a practice that is not legally permitted in Maryland.

In this devastating economy, with our neighbors facing work furloughs and layoffs, no one with a mortgage problem can afford to waste either money or time.

We should be wary of anyone who calls, out of the blue, pretending to be associated with the government. Reputable and certified home mortgage counselors do not act this way.

In addition, people seeking better mortgage terms should never pay an up-front fee, sign a deed without a lawyer’s advice nor agree to submit their mortgage payments to anyone other than their mortgage lenders.

These all are warning signs of mortgage modification “scams;” and Maryland home owners who have been victimized can contact the Maryland Commissioner of Financial Regulation’s hotline for help at (1-888-784-0136).

It would have been better still, of course, for these victims to have avoided the scams and obtained the free, competent help that our government provides.

Working together, we can protect our homes during these difficult economic times.

- The Honorable Elijah E. Cummings represents the 7th Congressional District of Maryland in the United States House of Representatives.