Preserving ‘home’ after break-up and illness: Angela’s and Winnie’s stories

By Pam Bailey, NeighborWorks America blogger

Below are the stories of two women who sought help from a professional participating in NeighborWorks’ National Foreclosure Mitigation Counseling (NFMC) program – with two different outcomes, but the same fighting spirit. The five stories told in this series offer a flavor of both the trauma that foreclosure inflicts on families, and the ability of the human spirit – aided by the practical support of a trusted advisor – to bounce back. Read the previous posts here and here.

Angela Hawthorne, Illinois

“Happily ever after” is one of those fairy-tale phrases that in real life, only applies to about 50 percent of marriages.  That’s what Angela Hawthorne discovered, nine years after she and her husband moved into a house in Flossmoor, IL, with their two children.

Angela Hawthorne

Suddenly, Hawthorne found herself responsible for a mortgage on her own, on an income that had dropped precipitously when she took a leave of absence from her job as an underwriter for professional liability insurance to care for her ailing father. She attempted to negotiate with the lender directly and received a significant modification that gave her some breathing room -- but for three months only.

“I would find myself crying in the shower in the morning,” recalls Hawthorne. “But I couldn’t show it. At home, I had two kids to look out for, a daughter going on 15 and a 6-year-old son. I had to keep up a good front so their life was as normal as possible, and they could concentrate at school. I didn’t want them to worry about what was going on.”

In April 2012, a county mediation service referred Hawthorne to the South Side Community Federal Credit Union, where counselor Wilane Boone reviewed and improved her application for a loan modification. Unfortunately, Hawthorne failed to meet Federal Housing Administration guidelines for her debt-to-income ratio, and a summary judgment was issued authorizing foreclosure. Nevertheless, Hawthorne credits Boone for helping her navigate through the confusing and jarring process.

“Wilane was very insightful, and was always very straightforward and honest with me,” says Hawthorne. “She explained everything to me step by step and kept track of all of the paperwork so it wouldn’t get lost in the system. I never felt in the dark – which was huge for me.”

There is a happy ending to this story, however. Despite declaring personal bankruptcy in July 2013, she is now renting a new home, with hopes of purchasing it one day, just 15 minutes from the house she lost. Her children didn’t even have to change school districts.

“I learned that sometimes you have to just let go, and rely on your inner strength,” says Hawthorne, adding that for her, that strength came from a re-discovered faith in God. “Once I did, I felt a calm come over me.”

Winifred Octave, Massachusetts

Unemployment, or a significant reduction in pay, is the trigger for more than 60 percent of families who seek help from advisers who receive support from Neighborworks’ National Foreclosure Mitigation Counseling program. “Winnie” Octave, a single mother of three, brings that statistic to life.

Octave bought her rehabbed home in Worcester, MA, in 2001 from a local community development corporation. All was fine until she suffered a serious break in her arm and could not work at her job as an administrative assistant with the city’s bankruptcy court. Octave was replaced, and now unemployed, she struggled to pay her mortgage.

“I called my bank before I stopped paying, but they told me I had to fall behind before they would talk to me! It’s like a trap,” remembers Octave. “So I paid my overdue credit card bills instead. When I couldn’t pay the mortgage any longer, the bank gave me six months forbearance. But when the time was up, I still hadn’t been able to get a job.”

Winnie Octave (second from right) and (from left) her
daughter Danielle; son Rohan; nephew Juddah; and
son Tarik. 

In 2010, when she had fallen behind on her mortgage for nearly two years, Octave attended a community-education forum at a local high school and heard someone speak from the Oak Hill Community Development Corporation.

 “It was the best thing that ever happened to me,” says Octave. “I’d been submitting and submitting paperwork, and getting nowhere. Thinking about it now is like torture!”

Janice St. Amand, a foreclosure counselor at the Oak Hill CDC, says that even today, many clients tell her they are advised, wrongly, to deliberately fall behind on their mortgages, and then are unable to catch up when they are turned down for a modification.

“What’s key is to determine your priorities,” says St. Amand, who describes Octave as her first “complicated” client. “For Winnie, it was very clear: She wanted to save her house, and that meant putting aside money for her mortgage before anything else so she could show her intent. Winnie is a wonderful listener. I told her that we had to work as a team; that we don’t work for our clients, but with them. She understood what was needed and followed through.”

Meanwhile, Octave had landed a part-time job, allowing her to save more money, supplemented by a letter from a tenant she had taken on as a renter as well as another from her oldest son, who moved in to help her financially after returning from a military deployment in Iraq. She also leveraged her community connections as a very engaged resident, appealing to her state representative. In October of 2011, Octave was granted her loan modification, and her home was saved.

A survey from NeighborWorks America shows
many Americans are like Octave and do not
have emergency savings. 

It hasn’t been easy since then. Octave was forced to file for personal bankruptcy to get out from under her crushing credit card debt, and today, she is once again unemployed. However, this time she is optimistic, confident she is in her home to stay.  Her family has come together in support and she is “working” her wealth of community connections – an asset that is a benefit of being an involved citizen.

“This experience has brought my whole family so much closer together,” she says. “My middle daughter, for instance, used to act only for herself. But now, she is my best friend and she takes me out for treats like a manicure. Even my youngest son in college sends me money once in a while.”

In turn, Octave wants to help other people in her situation, perhaps by going after absentee owners who neglect their property or cleaning up neighborhoods – but also by sharing what she has learned.

“One of my biggest lessons was to budget!” says Octave, who participated in the Oak Hill CDC’s financial-education classes. “I always paid my bills, but I didn’t put any away for emergencies. I didn’t think about what could go wrong. Today, I find a way to save some money every month, instead of going out to dinner, for instance, and I’ve got $10,000 put away now.”

Octave is not alone. A new, national survey commissioned by NeighborWorks America found that almost a third of adults have no emergency savings, and another 21 percent have only enough to tide them over for a month. The problem is particularly pronounced among African-Americans, Hispanics and households earning less than $40,000 a year.

Why is homeownership still important to Octave, despite the stresses?

“My house is important because it’s mine; it’s what I can leave my kids,” she explains. “If I rent, it’s like I am giving other people a part of me. I am not giving up my home for anything.”

Next post: Eddie’s story – ending one chapter to start another. To receive it in your inbox, subscribe in the box in the right margin.

‘Fixer-upper’ to foreclosure: Walter and Dorothy’s story

By Pam Bailey, NeighborWorks America blogger

Below is the story of a couple who sought help from a professional participating in NeighborWorks’ National Foreclosure Mitigation Counseling (NFMC) program – ultimately losing their house, but already laying the groundwork to become homeowners once again, with a bit more wisdom. The five stories told in this series offer a flavor of both the trauma that foreclosure inflicts on families, and the ability of the human spirit – aided by the practical support of a trusted advisor – to bounce back. Read the first post here.

When she and her husband first set eyes on their soon-to-be home on Oct. 25, 1995, “the house looked like a nightmare from hell,” says Dorothy James. With the house in Roxbury, MA, damaged by fire, the original owner no longer wanted to invest money or time in the structure.  However, with her flair for interior decorating, she saw a labor of love, and Dorothy and Walter James made it their own.

With a couple of re-financings and a healthy income from her job as a property manager and Walter’s in telecommunications, they were able to remodel the home in three phases. The couple ran into trouble, however, when James lost her job. The initially low interest rate on their last “creative” financing deal ballooned, and now that she was out of work, no one would offer a fixed rate.

Dorothy and Walter James with their son, Nathaniel (far left)

“Our mortgage payment jumped from $1,488 a month to more than $4,000,” James recalls. “There’s no way we could have afforded that. I looked for a job desperately, while I dipped into my 401k. We got a small modification that dropped the payment by about $1,000, but we were flat broke at that point and it wasn’t enough.”

In September of 2009, Walter James lost his job as well. It didn’t take long -- Dec. 2 to be exact -- for the bank to inform them that it was foreclosing on their home. By the following July, just two days after their 37th wedding anniversary, they were forced to leave. With no other recourse, James and her husband rented a room in the house of her sister-in-law, hitting rock bottom when she was diagnosed with breast cancer the same month.

“It was one of the most terrible experiences of our lifetimes, almost as bad as when one of our daughters died,” recalls James. “We went from a 10-room house into which we had poured our hearts and souls, to one room and having to tell our own son, who had been away at college, that he couldn’t come home. Everything we had saved was gone in a year.”

Over the course of the next year, James finally got a new job as a case manager in a drug-rehabilitation program, and they could begin to think about renting their own place.  However, the cost of paying lingering, past-due utility bills, moving costs for their furniture (then in storage), deposit on an apartment, etc. was still prohibitive. That’s when James’ mother, who was seeking her own mortgage modification at the time, told them about the nonprofit that was helping her -- Urban Edge.

“We were administering a fund to assist people who lost their homes and needed assistance getting back on their feet,” explained Bob Credle, director of community programs for the community development corporation who began working with the couple in June of 2011. “We paid to release their furniture from storage, moved it to their new apartment, put down the first month’s rent and took care of their past-due gas bill.”

A survey commissioned by NeighborWorks
America found an widespread lack of
savings.

The total grant from Urban Edge was about $7,000 – just enough to get the couple over the hump that had prevented them from moving out on their own again. “We couldn’t have done it without Bob and Urban Edge,” James says.

Today, James has completed her cancer treatment and is back in her original profession, working as an assistant property manager and rebuilding their savings. Her husband has returned to work as well, although with an inconsistent schedule. They continue to rent a three-bedroom apartment, which they share with their son, who has since graduated from college. He will move out, but James is relieved that it will be on his own timing, when he is ready.

“The experience of going through all this has changed me to be more compassionate to others,” says James. “When you hear about people who hit hard times, it’s easy to assume they were on drugs or doing something else irresponsible. But maybe they had health problems or some other challenge. Don’t be so quick to judge; find out how they got there. That could be you one day.”

Do they want to return to being homeowners? Yes, when the time is right.

“We will definitely own our own home again someday. In an apartment, we don’t have a yard for our grandchildren to play in, to have cookouts,” James says. “I’ve learned from this whole experience, and it won’t stop us. I’m not going to let anything be taken from us again.”

Next post: Preserving ‘home’ after break-up and illness: Angela’s and Winnie’s story. To receive it in your inbox, subscribe in the box in the right margin.

Life after foreclosure: re-discovering the meaning of ‘home’

By Pam Bailey, NeighborWorks America blogger

We all know the story in numbers. A total of 4.9 million homes were foreclosed in the wake of the Great Recession and even today, close to 1.9 million mortgages are in serious delinquency. In February alone, 43,000 families lost their homes – albeit down 15 percent from the same month the year before. Then there are the more than a million other families who barely saved their homes, but typically after months of emotional turmoil. What the media don’t report, however, is how these families are coping a year or more later. Are they in better financial shape today? What lasting effects did their crisis have? What lessons learned would they share with others?

Every individual is different, of course. But the stories of five persons who sought help from  professionals participating in NeighborWorks’ National Foreclosure Mitigation Counseling (NFMC) program offer a flavor of both the trauma that even a near-miss inflicts on families, and the ability of the human spirit – aided by the practical support of a trusted advisor – to bounce back.

Patricia Brown, Florida

Brown’s story is emblematic of many individuals and families who became victims of the Great Recession. One crisis has a nasty habit of being followed by others, and in Brown’s case it started with her divorce in 2011. Not too long after, she was laid off from her job as a nursing supervisor at an assisted-living facility, immediately causing her income to plummet. (She’s not alone. A loss of – or a significant reduction in – employment income was reported by 64 percent of persons seeking NFMC services.) Adding to the financial burden, her 43-year-old daughter became ill and moved in.

Persons seeking help from NeighborWorks America's
NFMC program often are struggling to cope with crises.

“The divorce wasn’t really a big deal, since I had always been the main breadwinner,” recalls Brown, who had lived in her North Lauderdale home for 17 years. “The biggest blow was the unemployment.  I was able to get some work as a private-duty nurse, but the pay just wasn’t enough and I fell behind on my mortgage payments.”

For a year, Brown tried to work with the mortgage company herself to negotiate a loan modification, but says she either received no response or kept getting the same forms to complete with no action. It didn’t help that her original lender sold her mortgage to another financial institution midstream. With foreclosure threats a daily worry, she remembers, “I was ready to just throw up my hands. I can’t even begin to tell you how stressed out I was.”

Then she was referred to Neighborhood Housing Services of South Florida (NHSSF) by the county legal aid service.  And that’s when she says she “turned an emotional corner.” Olga Cuadra, the homeownership preservation counselor assigned to her at NHSSF, recalls that Brown had no knowledge of the foreclosure process or what lenders look for when reviewing requests for modifications. “Many people under-estimate the value of their assets and over-estimate their expenses,” explains Cuadra. “A big way in which we were able to help Patricia was to paint a better picture (on her application) of her ability to satisfy the terms of a modified loan.”

Brown was approved last September for a loan modification, which will lower her payments by more than $500 a month once she secures new mortgage insurance – enough of a difference to allow her to remain in her home. Although her daughter is still unable to work, and she herself is now hindered by a combination of health problems, they receive disability payments that they supplement with income from renting two rooms. It’s enough to keep up with Brown’s new, lowered payments.

“I never want to go through that again,” says Brown. “I don’t think I could have without the support of Olga and her organization. I’d come into her office a wreck, and I’d leave feeling much calmer. I learned not to give up on yourself; now I know that you can get through just about anything. And I learned to ask questions – and for help – if you’re in trouble!”

Has she held on to her belief in the value of homeownership, despite the stress of the past and the uncertainties of the future? Unquestionably, yes.

“This house is everything to my family. It’s home to us and we want to hang on to it. I may not know what the future holds, but it was worth the fight and if I had to do it all over again, I would.”

Next post: From ‘fixer-upper’ to foreclosure: Walter and Dorothy’s story. To receive it in your inbox, subscribe in the box in the right margin.

How to move from financial education to behavior change? Consider coaching

By Pam Bailey, NeighborWorks America blogger

A new survey commissioned by NeighborWorks America found that nearly a third of all adult Americans have no emergency savings in place. Clearly, the education and resources offered by a myriad of organizations have not yet reached large numbers of people -- or resulted in the holy grail, behavior change. The first post in this two-part series explored why. In this second post, the story of Jesusita and Ruben Hernandez shows how financial coaching can help reverse that trend. 

When Ruben and Jesusita got married eight years ago, their love was enough to turn their lives around in so many ways. But when it came to their finances, they were a mutual disaster.

Ruben and Jesusita Hernandez

“I’m one of those guys who could never seem to pay back the money I owed,” admitted Ruben. “Jesusita was a little better, but had run up a lot of debt herself. In fact, when I first met her, she had declared bankruptcy. Neither one of us had learned those kinds of life skills.”

Their household grew to include three children, now aged 9, 11 and 16 -- two of their own and one from a previous relationship. Jesusita worked as a pension analyst and Ruben left his job as a roofer to earn an associate degree in sociology, with a goal of eventually helping troubled youth. He worked at Target to supplement Jesusita’s income. Their big dream was to own their own home, but they didn’t know how to make that happen. They were living from paycheck to paycheck.

That’s when they found The Unity Council in Oakland, CA, at a local seminar for first-time homebuyers. The couple was guided into a class on budgeting.

“We hadn’t been paying attention to the little things,” admits Ruben. “They had us write everything down that we spent money on, down to a pack of gum. We discovered, for instance, that we’d been spending about $800 a month on fast food!”

The class was the couple’s “wake-up call.” To convert their new-found awareness into a new way of living required something more – financial coaching.

'Financial coaching' can convert awareness into behavior change

Financial-education classes and counseling are vital – the former shares required information and the latter directs clients as they implement specific actions they need to take, such as improving their credit ratings. However, some clients can benefit further from coaching -- which picks up where education and counseling end and keeps the momentum going.

“Coaching is non-judgmental and client-directed,” explains Christi Baker, a faculty member for NeighborWorks America’s training program for financial-capability professionals, adding that the technique is often combined with counseling, such as during a time of crisis when a little bit of direction is needed as well. “It begins with clients exploring what is important to them and then taking accountability for doing what it takes to achieve it. The coach offers support and encouragement, but the client is clearly in the driver’s seat. ”

The biggest shift in orientation for professionals new to coaching is learning to resist the desire to provide the answers to clients’ problems. “After all, we entered this profession because we want to help,” she says. “But to really transform our clients’ lifestyles so that the benefit is lasting, they need to learn to take control. So, for instance, it’s still good to share a suggestion with clients, but you’d ask if they want to hear it, then back off after you put it forward and let them come to the ultimate decision.”

And on the clients’ part, coaching is not how they are used to receiving assistance, Baker notes. “Usually, they are told what to do and that can be comforting. Dealing with finances can be very emotional, and the resistance to change very entrenched. Our relationship with money is formed over a lifetime, after all.”

Baker says that while some clients drop out, all of those who stick with it (generally for three to six months) achieve the goals they have set for themselves. She estimates a third of the clients she has counseled or overseen have dropped out, with many of those returning later. Sheri Powers, director of The Unity Council’s Homeownership Center in Oakland, CA, says only three of the organization’s first group of 60 coaching clients did not complete its program.

In fact, an analysis of the results from the 30 organizations (including The Unity Council) participating in the NeighborWorks America/Citi Foundation demonstration project found that 54 percent of clients with no savings at the beginning had accumulated a median of $668 by the end, 55 percent had decreased their debt by a median of $3,005, and 47 percent had increased their credit scores by an average of 59 points.

“It’s not uncommon for clients to feel uncomfortable, depressed and even angry in the beginning, as they confront the many mistakes, on their part and others’, that got them to where they are,” says Powers. “But we help them discover that there is a way to get to where they want to be.”

That certainly was true for Ruben and Jesusita Hernandez.

Their educational classes evolved into a coaching relationship, leading to the couple’s realization that before taking on the financial obligations of a house, there were other priorities that were more important to them: Ruben wanted to finish school, and the family needed a new car. To get there, they needed an action plan. Their financial coach from The Unity Council helped them sort through their priorities and identify both how to decrease their expenses so they could save, and what they could do to improve their credit scores. For example, they began cooking at home most of the time, leading to the unexpected side benefit of feeling healthier. And in addition to creating their first savings account, their marriage strengthened.

“We used to argue all the time about finances, or we’d make decisions without consulting the other one. But now, we decide together what we need to do. In that way, coaching was a bit like therapy,” Ruben laughs.

Saving money has even become a family affair. “I learned that I can nurture my children and make them happy, without buying them things all the time,” says Jesusita. “Now we talk to the kids about what we are doing. They know we want to buy a house, but have a few goals we have to achieve first. We are very open with them about that.”

Today, their credit score has increased significantly, and they have savings built up to cover an emergency. Ruben has completed his associate degree. The couple has decided together that before going on to earn his bachelor’s degree, he will return to his work as a roofer on a traveling construction crew – a job that pays enough to allow them to save the necessary money for a down payment.

“I figure all I need to do is work that job for about a year or a little more,” says Ruben, adding that in the meantime, he will take his prerequisite courses online. “I’ve missed out on family time before for bad reasons. This time it will be for our future, and we’re both pulling together.”

Four reasons why Americans' ‘financial capability’ is so low

By Pam Bailey, NeighborWorks America blogger
With the insecurities of the Great Recession still fresh, and continuing to bite for others, the need for each of us to be savvy managers of our personal finances is obvious. Yet, 11 years after the U.S. Congress first declared April Financial Literacy Month (changing to “Financial Capability Month” in 2012), it’s clear that too many Americans -- whether college-educated or not -- lack the knowledge, skills and attitude needed to get the most value they can from whatever financial resources they have.

NeighborWorks America commissioned a survey this spring that documented the size of the problem: Chief among the findings is the alarming fact that approximately 70 million (29 percent) of adult Americans have no emergency savings in place, and another 53 million (21 percent) have only enough money saved to get by for a month or less. Those findings are not surprising in light the results of another survey, conducted by the National Foundation of Credit Counseling, showing that 61 percent of U.S. adults -- the highest percentage in six years -- admit to not keeping a budget.

Clearly, all of the education and resources offered by a myriad of organizations and businesses have yet to reach large numbers of people -- or result in the holy grail, behavior change. So, what’s holding back our progress? I asked a few experts, both in the classroom and in the trenches, and here are four dynamics they say must be overcome through innovative outreach, education and programming:

1) Misconceptions about who can benefit 

The NeighborWorks America survey found that more than half of families earning less than $40,000 (52 percent) have no emergency savings. Yes, it’s a no-brainer conclusion. But the problem is bigger than their low incomes. Too many people – including funders, practitioners and potential beneficiaries -- believe that those with low incomes and few assets cannot be helped with financial education, counseling or coaching.

“The perception that low-income people can’t save has persisted for years, ever since IDAs (individual development accounts) were first created in the 1990s,” observes Christi Baker, director of asset-building programs for the Mission Economic Development Agency (MEDA) and a faculty member for NeighborWorks America’s training program for financial-capability counselors and coaches. “But that is simply not true. With the right incentives, education and support, anyone with aspirations, no matter how meager their assets, can improve their personal finances.”

Sheri Powers, director of  The Unity Council’s Homeownership Center in Oakland, CA, adds that individuals with low incomes often think they have less money than they actually do. “We have our clients track every single expense for three months,” she explains. “Then we go through the data with them. They typically have no idea they were spending so much money on things like dining out and movies. But numbers don’t lie, and they discover that they actually aren’t too broke to save.”

MEDA and The Unity Council were among the 30 organizations that participated in a financial-capability demonstration project completed last year through a partnership between NeighborWorks America and the Citi Foundation. The project was designed to identify how to establish and sustain programs that result in positive behavior change, and the results were summarized in a report that offers specific suggestions for organizations looking to enter the field or improve their offerings.

2) Conflicting social signals

Powers adds that Americans live in a culture that stresses “living in the now,” with few immediate rewards for saving. As a result, budgeting is not a skill that is widely taught. “One of our instructors says that in China, people plan for 100 years, into their grandchildren’s generation. But in the United States, there are not a lot of messages in pop culture about the sexiness of saving,” she observes.

As a result, people resist thinking ahead to retirement or an unanticipated emergency.  One of her tactics, Powers says, is to pose direct questions that confront clients with choices and their consequences – in terms that relate to their personal priorities. In the NeighborWorks America survey, “saving for retirement” was the most commonly cited financial goal.

“Chances are good today that you’ll live to be 90 years old,” Powers says, citing a common conversation she has with clients. “Let’s say you retire at 70. That means you’ll need to support yourself for 20 years. How do you want to spend your last 20 years on earth?”

3) Resistance to asking for help

Both the National Foundation for Credit Counseling survey and a poll commissioned by NeighborWorks America last fall, focusing on how adults educate themselves before buying a home, found that rather than seeking financial help from professionals, many people simply consult with family and friends or the Internet.

“People often think they can handle it themselves,” observes Powers.  “They may also not want to admit to personal struggles or to share such intimate information with ‘outsiders.’ But we’ll challenge them and ask, ‘So, how’s that worked for you?’”

Women and single parents often feel selfish if they set personal financial goals, adds Powers. Her team reminds them of the instructions they hear on an airplane: “In case of an emergency, secure your own oxygen mask first, then assist the person next to you – in other words, your children. How can you help them if you don’t take care of yourself?”

The surveys also showed a lack of awareness that many nonprofit organizations offer this kind of assistance at an affordable rate, as well as reluctance to use them once they are aware.

“A couple of years ago,” says Baker, “a group in New York surveyed both clients and potential clients, and it was clear there is a stigma about going to nonprofits. They either didn’t identify as a ‘poor person’ who needed a ‘charity program,’ or didn’t think that nonprofits could employ really expert professionals. We need to dispel those myths. The reality is that nonprofits offer financial-management assistance to people in many income brackets. And the training they receive from NeighborWorks America is highly focused on demonstrating positive outcomes.”  

4) Predatory business practices

Of course, the problems cannot all be laid at the door of un-informed or time-starved individuals with conflicting priorities. As was evident in the recent housing crisis, there are plenty of examples of predatory business practices that prey on consumer weaknesses.

For example, Alex Anderson, one of the financial coaches who serve The Unity Council clients, worked with one “un-banked” client whose records showed a plethora of $8 fees. It turned out the client was using a debit card issued by a discount-store chain, and every time she tried to withdraw more money than she had available, she was charged the fee instead of just being notified of insufficient funds.

“The fees added up and eroded her disposable income by four percent,” recalls Anderson. “There’s a huge industry out there that takes advantage of these folks.”

Next post: The missing piece of the puzzle -- counseling vs. coaching, the story of Ruben and Jesusita Hernandez.