Eddie’s story: Foreclosure ends one chapter, starts another

By Pam Bailey, NeighborWorks America blogger

Below is the final story in our four-part series on “life after foreclosure.” Read the previous posts beginning here.

One of the lessons Eddie Hines has learned from his ordeal of the past four years is to seek professional help early.

Hines and his wife bought a house in Pittsburgh in 2000. It was their first, and he admits now that they did it “blindly” – without the expert counseling provided by organizations like NeighborWorks of Western Pennsylvania, which stepped in later to help, in much less happy circumstances.

Hines was in good company, unfortunately. A survey commissioned by NeighborWorks America last fall found that when asked where they would go first for advice before buying a house, more than a third of American adults (39 percent) cited family and friends who had already purchased a home. Distant runners-up were the Internet (17 percent) and real estate agents (16 percent). Far behind were housing counselors and (more specifically) non-profit homeownership advisers (3 and 5 percent, respectively).

“We bought directly from the owner, and he took advantage of our obliviousness,” recalls Hines. “We basically paid too much.”

Still, they lived in their home comfortably until Hines, a school counselor, lost his second job with the local newspaper when his shift was cut. The income on which the family of four had relied dropped significantly, and they didn’t make the necessary budget changes. “We had gotten attached to a certain lifestyle,” he admits now. “We didn’t face up to reality.”

A NeighborWorks America
survey found a widespread
lack of emergency savings.

Once again, Hines was part of a national “epidemic.” A 2014 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. A related poll conducted by the National Foundation for Credit Counseling documented that just two in five U.S. adults (39%) – a proportion that has held roughly steady since 2007 – say they have a budget and keep close track of their spending.

The resulting stress proved too much for Hines’ marriage, and his wife moved out, leaving him solely responsible for the house. When he became ill, forcing him to take extended sick leave from his job at the school, it was the proverbial last straw. Hines tried to apply for a loan modification while he was still paying, but was denied because he was current – a common Catch 22. When Hines eventually fell behind on his mortgage payments, he was denied once again due to his wife’s refusal to co-sign.

Eddie Hines and Devon March

Finally, he turned to Devon March, a counselor at NeighborWorks of Western Pennsylvania.

“I was extremely stressed at that point,” he recalls. “I had lost my family, and living alone. Devon assessed the situation and asked me a simple, direct question, ‘Is this house worth the cost to you to keep it?’ And I realized the answer was no.”

Since then, Hines and March have become more than just client and counselor, frequently emailing each other to keep in touch. Today, Hines is renting an apartment and is back at work. He is still meeting with March, this time to build a budget and action plan so that he can someday become a homeowner again. With her help, he is on track to achieve that – just not right now.

“Eddie has a very positive attitude,” March says. “It’s like he has begun a second life. Now that he has a plan, he can sleep at night.”

Hines agrees: “Overall, I can say now that the ordeal has had some positive effects. If you take this kind of thing too much to heart, it will destroy you. But I’ve discovered my own resilience, and learned not to take everything so personally. I can’t control the actions of everyone else, so I am focusing on me.”

Although he is happy in his apartment for now, Hines still values homeownership because “it teaches my children, for whom I want to be a role model, to strive for your goals. They look to see how you handle adversity, and I want to show them that you can bounce back.”

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.

Redefining ‘renters vs. owners’ to ‘neighbors’

By Pam Bailey, NeighborWorks America blogger

Surveys show wide disparities between perceptions of renters vs. homeowners – some based on reality, and others that are not. Many of the problems could be alleviated, however, if more programs encouraged neighbor-to-neighbor social connections, rather than owners to renters.

That’s the aim of programs like NeighborCircles, sponsored by Lawrence (MA) CommunityWorks. The concept is simple: Residents recruited as “circle hosts” invite five to 10 neighbors – ideally from homes they can see from their own yards – to a series of three dinners over the course of a month, designed to both connect them to each other and unite them in a common project to improve their community.

“In 2008, about 75 percent of the houses in our neighborhoods were at some point in the foreclosure process. A lot of people left the community,” explains Spencer Buchholz, director of network organizing for Lawrence CommunityWorks. “I’d say that today, about 80 percent are renters, mixed in with the original homeowners.”

At one NeighborCircles, participants trace on a
map their families' journey to Lawrence, MA.

The first dinner, led by two facilitators trained by Buchholz’ team, is designed to build common bonds. The facilitators lead the group in an ice-breaker in which each person literally traces on a world map their family’s journey to Lawrence, MA. More than 70 percent of residents come from Latino immigrant families, originally from places as far flung as the Dominican Republic and Puerto Rico. “They tell each other how and why they got to Lawrence and what keeps them here,” explains Buchholz.

In the second and third meetings, circle participants discuss the quality of life in their neighborhood, the improvements they’d like to see and how they could join together in a project to accomplish one of those goals – whether it be a street clean-up, a petition to the city council to repair sidewalks or a meeting with the police department on neighborhood crime prevention.

“Our goal is to build social capital,” says Buchholz, adding that his team coordinates an average of about 12 circles a year – approximately 130 to date. “Now participants know who is across the street, and they can watch each other’s houses when someone is gone. It’s all about connection...finding common interests across the divide.”

The NeighborCircle concept is easy to adapt to other locales and situations, and Buchholz’ team has trained groups in states from Massachusetts to Arizona to implement their own.

Block club members work to improve neighborhood
conditions for children.

Taking a similar approach is Neighborhood Housing Services of Chicago, which works with community leaders (some of whom serve on the organization’s advisory council) to form block clubs, with leaders specifically trained to engage renters. One recent survey, for instance, found that while 61 percent of homeowners know their neighbors’ names, that’s true for only 39 percent of renters.

“Renters are usually not there permanently, and fixing up the property is the owner’s or manager’s responsibility. And they’re often not really encouraged to feel involved in any case,” explains Janece Simmons, neighborhood director for NHS of Chicago. “It’s the job of local organizations and our block club leaders to take a holistic approach in their outreach; after all, the neighborhood is where renters’ children walk and play too. They need to be included in planning activities like planning block club parties and improvement projects. Plus, for us, outreach is a great way to connect renters to the information and resources that can help prepare them to become homeowners someday.”

NHS of Chicago has been helping organize block clubs since 1975, and there are currently about 100 active groups in the Auburn-Gresham community, says Simmons -- many of which have been active for years. Representatives from each of the clubs meet monthly, giving new members the opportunity to learn from the “veterans,” as well as hear about grant opportunities, etc.

“Through the block clubs, homeowners have come to welcome renters’ involvement,” says Simmons. “And renters soon come to see that their participation makes a difference, for them and the community.”

Is there truth to those renter stereotypes?

By Pam Bailey, NeighborWorks America blogger

The national “ethos” that values homeownership over renting has a long history. On Dec. 2, 1931, for example, President Herbert Hoover said in an address to the White House Conference on Home Building and Homeownership, “[There is] the high ideal and aspiration that each family may pass their days in the home that they own…There can be no fear for a democracy or self-government or for liberty or freedom from homeowners, no matter how humble they may be.”

A white paper from the National Multi-Housing Council observes that today, its members encounter so much preference for homeowners that, “When an apartment community is proposed… local activists respond with NIMBY (not-in-my-backyard) complaints so frequently that some have suggested a better acronym might be BANANA (build absolutely nothing anywhere near anyone).”

Every renter is different, of course, just as are homeowners. So some renters – whether they live in an apartment building or single-family house -- don’t take care of their living environment or interact with their community as much as is ideal. (The consensus seems to be that a critical determinant is whether the planned stay is temporary or longer term.) As for impact of rental housing on property values, it depends on a lot of factors, such as the number of units, the characteristics of the tenants and the nature of the owners and management. But the facts don’t support broad generalizations.

Most studies in this arena have focused on clusters of rental housing -- such as apartment complexes -- and on lower-income tenants, rather than on scattered, individual rental homes. But the findings offer plenty of caution about buying into negative stereotypes related to either quality of community living or property values.

For example, the Joint Center for Housing Studies found several years ago that apartment residents – who represent the highest-density renters – are almost twice as likely to socialize with their neighbors as homeowners, and are just as likely to belong to structured social groups and to closely identify with the town or city in which they live. (The one area in which apartment residents significantly lagged homeowners in this study was voting in local elections.) It’s true that other studies have produced data suggesting that homeownership is associated with a better social environment, such as a lower crime rate, improved educational achievements among children and greater involvement in neighborhood organizations. However, these studies typically don’t control for confounding factors such as chronic unemployment. The bottom line: The picture is clearly mixed, with data available for arguments on both sides.

As for property values, a Boston study by the MIT Center for Real Estate concluded that, “the introduction of large-scale, high-density mixed-income rental developments in single-family neighborhoods does not affect the value of surrounding homes. The fear of potential asset-value loss among suburban homeowners is misplaced.” A presenter to Harvard’s Joint Center for Housing Studies’ Revisiting Rental Housing summit agreed, writing, “The fear that housing density will hurt property values seems to be primarily based on anecdotes. By contrast, most research has come to a different conclusion: In general, neither multifamily rental housing, nor low-income housing, causes neighboring property values to decline.”

Bernadette Orr, director of community building for NeighborWorks America, observes, “Most of our groups that work at the neighborhood level deal with these stereotypes and the resulting challenges in one way or another. That’s why our groups have gone in the direction of helping to support neighborhood associations instead of homeowners associations.”

Of course, anecdotes of the negative consequences of “the renters” abound. Even some of the nonprofit housing professionals interviewed for this series had such stories to tell from their own neighborhoods. Whatever your point of view or experience, however, renters are here to stay. The demand for affordable rental housing – homes or apartments – is growing. According to a December report from Harvard’s Joint Center for Housing Studies, American households are increasingly turned to the rental market for their housing. From 31 percent in 2004, the renter share of all U.S. households climbed to 35 percent in 2012, bringing the total number to 43 million by early 2013.  And they aren’t just young adults just out of college; a third are between the ages of 35 and 54.

So what can be done to bridge the divide between renters and owners? The next two installments of this blog will explore innovative solutions from member organizations. Check back daily to read the rest of the series, or sign up (see box, right) to receive new posts directly in your inbox.

Survey shows chasm between renters, owners

By Pam Bailey, NeighborWorks America blogger

Owning your own home is considered by many to be an essential element of “making it.”  In fact, a recent national survey commissioned by NeighborWorks America found that 88 percent of adults say homeownership is at least somewhat important to their definition of achieving the “American dream.”

However, according to Harvard’s Joint Center for Housing Studies, more than a third (35 percent) of all adults in the country are currently renters. And the NeighborWorks America survey found that slightly more than half (55 percent) of renters are not intending to change that status – at least not now. I am one of them (both out of choice and necessity), and sometimes, with the strong U.S. cultural bias towards homeownership, it can feel a bit like being a second-class citizen – especially if you aren’t a 20-something fresh out of college, in which case everyone knows it’s just a matter of time.

Perhaps no other story in the media best captured this public ambivalence about renters than an Aug. 28 article in The New York Times, headlined “As Renters Move In, Some Homeowners Fret.” Writing about a neighborhood in which a growing number of single-family homes were being occupied by renters in the wake of the foreclosure crisis, the author wrote: “The decline in homeownership is changing many neighborhoods in profound ways, including reduced home values, lower voter turnout and political influence, less social stability and higher crime.”

The New York Times ran a second such article ("Homebuyers are Scarce, so Renters Take Their Place") on Dec. 5, quoting Atlanta-area residents who were alarmed at the news that a number of houses in their neighborhood were being rented rather than sold: “I can see three or four or five rentals in this neighborhood, but the whole community? I’m worried about my property value,” said one.

In the NeighborWorks America survey, nearly half (47 percent) of homeowners agreed (somewhat or very) that “neighborhoods are hurt when people who rent move in.” However, only 32 percent of renters said the same, and 81 percent described themselves as being as committed to their neighbors and community as they would be if they owned their residence.

So…what explains the gap in perceptions? And, how can we build more of a community between the two groups, so that we’re all neighbors -- not owners vs. renters? The next three blog posts will explore those questions. Check back daily for the rest...or sign up to receive new posts directly in your inbox!

West Virginia group demonstrates big impact despite small staff, few resources

Imagine you lead a four-person organization that serves a city with a population of just more 7,000 people, 20 percent of whom are below the poverty line, and a lack of traditional funders like big banks. That’s the challenge John Elza, executive director of the HomeOwnership Center (HOC) of Elkins, WV, faces daily.

And then there is the additional dearth of communications channels. “Reaching customers is challenging. There’s not a lot of media and only one daily newspaper. Getting information out is hard,” Elza says. “A lot of folks don’t have a computer.”

However, the smallness in size and resources haven’t stopped HOC from working to achieve a big impact in the 15 years since its founding, despite the lingering impact of the Great Recession.

“Getting to 15 years after the recession was challenging,” Elza admits. “Production numbers were down, but are starting to come back.  We just ended Fiscal Year ‘13 with a 26 percent increase in production over the prior year.”

HOC grew out of the Randolph County Housing Authority, which Elza describes as the incubation unit for the group. “It decided to spin off a private nonprofit that could do different things.”

The organization became a licensed state mortgage broker and then a NeighborWorks charter organization in 2001. This transition was important for HOC.

“The Housing Authority couldn't go after private funding or foundations because it wasn't a 501c3,” Elza explains. “We wanted to become a licensed broker to be more effective. Initially, the focus was on pre-purchase counseling, since there were certain types of mortgages that didn't require a broker's license. When we received our broker's license, it opened the doors to assisting others.”

HOC assists a mostly rural population, providing education and counseling, financing and development primarily to low- and moderate-income households. “We serve an eight-county service area of 130,000 people,” Elza elaborates. “Randolph County is 146 square miles. We’re up in the mountains. Tourism is a big economic factor here. There’s not a lot of actual industry, and only one regional lender in the area. From a fundraising standpoint, that’s a challenge. We don’t have a big banking presence.”

HOC’s mission is to provide safe, affordable housing, focusing on sustainable homeownership, self-sufficiency, sound environments, healthy quality of life and communities that can sustain these values. To fulfill these goals, HOC provides homeownership education and counseling to more than 200 families each year, with more than 50 becoming home buyers. The organization has been so successful in stretching its resources to achieve its mission that its staff often works with individuals elsewhere in the state who want to offer similar services.

Elza recalls one particular family’s story that illustrates the impact that can be achieved, even on a small scale.

Heather Sackett-Scott, William Scott and their two
children in front of their new home.

Heather Sackett-Scott and William Scott have four children, including one with disabilities. They needed to find a home that was both affordable and accessible to a disabled child. HOC provided counseling and education for the family, helping them to become mortgage-ready. The organization then engaged several partners to provide affordable financing. Highland Community Builders provided a lot, CommunityWorks provided the first mortgage at a below-market rate and Woodlands Development Group constructed the accessible home and also provided partial subsidized financing. HOC processed the blended mortgage loan.

Sackett-Scott said afterward, "I’m just grateful that there are programs like this. And I’m pleased to know that there are people doing these things for other people. If it weren't for this program, my family wouldn't be able to get a house like this, a nice home. It just wouldn't happen."

Written by Lindsay Moore, senior media relations specialist for NeighborWorks America.

‘Families and friends’ good for social support, not housing advice

By Pam Bailey, communications writer for NeighborWorks America

It’s been five years since the full force of the Great Recession hit the United States, with a combination of risky mortgages and declining housing prices forcing approximately 4.6 million families into foreclosure. While more than 13 million households are still underwater, saddled with homes worth less than their mortgage loans, the crisis is losing steam. Foreclosures fell 3 percent in 2012, according to RealtyTrac, and this year is looking even better. In October, foreclosure filings were 28 percent lower than the same month in 2012.

Still, many families are still struggling, and making smart choices will continue to be critical for both the next wave of new house buyers and existing owners working to hold on to their homes. In the aftermath of the crisis, are people now equipped with the information they need to negotiate the right mortgage, as well as to make other pivotal choices? If not, do they know where to go to get help that can be trusted?

To learn the answers to those and related questions, NeighborWorks America commissioned a nationally representative survey of 1,000 adults, which was conducted by Widmeyer Communications, a Finn Partners company, Sept. 23-26.  Among the many findings: Seventy-five percent of adults describe the the home-buying process as "complicated," and a quarter (24 percent) admitted to not being knowledgeable about the different kinds of mortgages.

So where, then, do they turn for advice when buying a house or avoiding foreclosure – a decision that is usually among the biggest financial choices they will make in their lifetimes? More than any other source, “family and friends” are relied upon most often.

When respondents who said they are considering buying a house were asked where they go to first for advice, more than a third (39 percent) cited family and friends who had already purchased a home. Distant runners-up were the Internet (17 percent) and real estate agents (16 percent). Far behind were housing counselors and (more specifically) non-profit homeownership advisers (3 and 5 percent, respectively).

The patterns for seeking information on foreclosure prevention are similar.  Individuals are most likely to turn to family, friends and co-workers (30 percent), followed by the Internet (27 percent), real estate agents (26 percent) or mortgage lenders (23 percent). Just 17 percent of respondents reported they are “very likely” to consult with a housing counselor. The reliance on friends, family and co-workers is especially seen among adults under 55 (37 percent) – particularly women.

Advantages of nonprofit housing counselors

There is nothing wrong, of course, with calling upon your social network. In fact, much research has documented the importance of family and friends in helping individuals cope with all sorts of stress. However, rarely are they professionals in the field of housing or banking, and even when they have gone through the process of home buying or loan modification themselves, each family’s financial situation is unique, not to mention the fact that rules vary depending on the lender and the timing.

“Having a supportive family is wonderful, and the Internet offers a wealth of information,” says Rose Marie Roberts, an advisor with the NeighborWorks Homeownership Center in Utica, NY. “But I wouldn’t go from there to action.” For example, when trying to prevent foreclosure, she notes, “rules and available programs, plus the related legal aspects, change almost daily. It’s a challenge to stay on top of them. But that’s the job of a housing counselor.” (Roberts talks about foreclosure counseling in a NeighborWorks America video.)

With the Government Accountability Office reporting that complaints about fraudulent “foreclosure rescue” schemes jumped from 9,000 in 2009 to more than 18,000 in 2012, it’s critical to have a professional advocate on your side. (Since 2007, NeighborWorks America has managed, at the request of Congress, the National Foreclosure Mitigation Counseling program. It funds more than 1,700 agencies that have assisted nearly 1.6 million homeowners struggling to stay in their houses – without charging a fee. In fact, one sure sign of a scam is an individual or program that attempts to charge for this service. Yet, the survey found that slightly more than a third – 33 percent – of people think that free help is not as good as counsel that you pay to receive.)

A nonprofit housing counselor can help head off
trouble during the complicated home-buying process.

While realtors and mortgage lenders are essential advisors as well, housing counselors with nonprofit organizations such as those that are supported by NeighborWorks America take a holistic approach to each client’s situation – helping them evaluate far more than how much a particular house is worth, which mortgage they can afford or whether they are eligible for re-financing.

“For example, some of the residents in our community are attracted to the less-expensive homes one county over,” recounts Letty Plasencia, a counselor with NeighborWorks Orange County (CA). “But you have to look at more than the sales price. How much time and money will it take to commute to your job, for instance?”

There is hard data showing that pre-purchase counseling by a trained counselor works. A study conducted of 75,000 loans originated between October 2007 and September 2009 showed that clients receiving pre-purchase counseling and education from NeighborWorks organizations were one-third less likely to fall behind on their payments during  the two years after receiving their mortgage.

It’s not surprising that most people don’t think first of turning to a nonprofit housing counselor. Most local organizations do not have the budget for extensive public education. (One of the most successful national campaigns was the “Nothing is worse than doing nothing” campaign launched by NeighborWorks America and the Ad Council, centered on a series of public service announcements for broadcast. Another is the Loan Modification Scam Alert website and hotline.) Instead, local organizations typically rely on referrals and word-of-mouth. The good news is that clients do spread the word to friends and family. And many states and organizations, such as unions, have institutionalized referrals to housing counselors for residents or employees who find themselves underwater.

“In New York, lenders are required to notify homeowners in trouble,” says Roberts. “The problem is that they often don’t trust the lender by that point, or they assume they are a lost cause and no one can help them. I’d say 75 percent of the time, we get these individuals late in the game, from a lawyer or Supreme Court judge who handles settlements.”

The challenge for housing organizations is to build and better leverage relationships with a diverse array of other community stakeholders, such as schools and health clinics, to spread the word about their services to people before they need it. (And of course, expanded demand would require increased staff.) It is clear, counselors agree, that the best time to see a housing adviser is early on, prior to any critical decision-making.

Kevin Washington, a counselor with Neighborhood Housing Services of New York City (NHS-NYC) who specializes in foreclosure intervention, gives this example: “By the time people get to me, they often have gotten advice from a neighbor down the block who has been through foreclosure before, and they end up getting further in trouble. For example, sometimes these clients close all of their accounts down to pay off their debts, but that’s very bad for their credit scores. Plus, you’ll need some money to cover down payment and closing costs (to buy a more affordable house). You don’t need to pay off your debts; you just need to make the required payments. If they get to us too late, and they’ve already made mistakes, they have to wait even longer (to buy) so they can build their assets back up again.”

But perhaps Ruth Pena, another counselor with NHS-NYC, sums up the value of a housing counselor the best: “We create an action plan, and then hold (our clients’) hands through the entire process. Who else will do that?”

Texas group profiled in local newspaper for protecting homeownership through tough times

NeighborWorks America is honoring our many creative member organizations this year by featuring in our blog those that are celebrating milestone anniversaries. We were pleased to discover that we didn't have to write a testimonial for NeighborWorks Waco, because the WacoTrib did it for us. Read for yourself...

Robert Jackson expected good things from NeighborWorks Waco.

Jackson was the treasurer of the newly formed Brooks Avenue Neighborhood Association in 1993, when the group decided to contribute $10,000 to help jump start the new housing organization, believing it could help more residents buy homes in the Greater Waco area.

But he didn’t expect that he would wind up being one of those residents who would need the nonprofit group’s help to buy his first home.

Read the full article. 

Vermont quarry closing brings economy down; NeighborWorks affiliate rallies residents

It’s a story that’s been repeated across America: What builds a town up is also what, eventually, brings it down. In Detroit, it was the auto industry. In West Rutland, Vermont, it was marble quarrying.

When high-quality marble deposits were discovered in the 1830s – followed by the extension of the railroad into town – Rutland was suddenly put on the map. The simultaneous decline of the famous quarries of Carrara in Tuscany, Italy, transformed it into one of the leading marble producers in the world. (The name of the main “drag”? “Marble Street,” of course.)

The double-whammy of a large strike in the 1930s and the Great Depression, however, took a toll from which the town never quite recovered. In 1986 the quarry was forced to close, plunging the outwardly idyllic enclave of “cows and jeans” into economic decline.

West Rutland today

“At its height, the quarry alone employed 2,400 people,” recalls Ludy Biddle, executive director of NeighborWorks of Western Vermont. “Now, there are only about 2,500 people living in the entire town and the county is the second-poorest in the state. For all social measures, it’s in the red – poverty, unemployment, teen pregnancies and, recently, foreclosures.”

Another recurring theme in America, however, is the recovery from adversity that’s possible when residents come together in response to crisis. The disastrous year of 1986 also is when the organization was founded by a group of local citizens to help the remaining residents stay in their homes by keeping them in good repair.  By the 1990s, the area serviced by NeighborWorks of Western Vermont had expanded from four neighborhoods to the entire county and a homeownership program was added to help both first-time buyers and a trickle of newcomers – primarily artists and families looking for a semi-rural lifestyle.

This year, the organization is celebrating its 10th anniversary as a chartered member of the NeighborWorks Rural Initiative, which strengthens communities with small populations by helping them integrate into their regional economies. It now serves three counties, not only with its original rehab assistance and homeownership counseling, but also with “financial fitness” coaching and foreclosure prevention. In 2012:

• Two foreclosed houses were purchased by the organization; rehab was begun on another five, with two completed and put on the market.
• 24 individuals graduated from the homebuyer education program and another 25 completed the organization’s financial-fitness training.
• Thirty-seven families successfully negotiated foreclosure alternatives with their mortgage lenders. Another 12 received coaching as they made the decision to opt for a reverse mortgage.
• Nearly $800,000 in loans was dispensed to pay for 40 home repairs.

Joan Jackson

Biddle is particularly proud of her organization's participation in the NeighborWorks Green Organization. In fact, in 2010, it was awarded a $4.5 million grant from the Department of Energy for its H.E.A.T. squad (Home Efficiency Assistance Team) – which now boasts the highest penetration rate in the country among similar programs.

Joan Jackson, a retired librarian who has lived in her Wallingford home since 1959, is just one example of the 577 households that received an “energy check-up” in 2012, thanks to the program. Her roof had been damaged by winter ice, the house was so cold she was constantly bundling up to stay warm and the increasing cost of fuel was a persistent worry due to her fixed income. But with the installation of insulation in her basement and upstairs walls, along with air sealing around her doors, ceiling and attic hatch, she is warmer and her fuel bills are 34 percent lower. (Watch a video interview with Biddle, as she explains just how the program works.)

“Twenty-five percent of the people we’ve been able to help with our H.E.A.T. squad are below 80 percent of the area’s median income – individuals who usually aren’t able to participate in programs like this, even though they need it the most,” says Biddle, adding that the organization is now looking for additional funds as the DOE grant sunsets. “The average household we serve spends 3-8 percent of their already-low income on energy. With H.E.A.T, they save an average of 386 gallons of fuel a year – about $1,500 a year. It’s central to our mission to make homeownership affordable.”

Fulfilling the Dream of Homeownership in Paradise

This blog is part of our 35th Anniversary Celebration series, highlighting NeighborWorks member organizations which are celebrating milestone years marking either their membership in the network or their incorporation as an organization.

By Brittany Hutson, NeighborWorks
America Public Relations fellow

Hawaii is known for its tranquil waters and natural beauty, but the state is also one of the most expensive places to live and buy a home. For 10 years, Hawai‘i HomeOwnership Center (HHOC), based in Honolulu, has been a resource for providing education, information, and support for first-time homeowners. Since the average income does not mirror the high cost of living in the state, HHOC’s services are particularly helpful to low and moderate income households. The organization has assisted more than 930 families become first-time home buyers and this year, HHOC anticipates assisting their 1,000th homeowner.

Hawaii was not immune to the effects of the global economic crisis; HHOC had to develop new strategies to assist their clients. “We never thought that we’d see foreclosures on a high level since real estate has always been a finite commodity in our state,” says HHOC Executive Director Dennis Oshiro. “We have been compelled to deal with the rising number of families in danger of losing their homes dues to financial hardships, as well as educate the public about avoiding modification scams.”

Maria Stewart and Matthew Kriegler attended a Hawaii HomeOwnwership
Center orientation and thought, “homeownership is for other people.” 
They signed up anyway and realized homeownership was
possible. Now they enjoy meals in their own backyard.

After noticing a growing need from homeowners that wanted assistance in resolving their mortgage situation, HHOC added a foreclosure prevention counseling program in February 2009. Instead of hiring new staff, HHOC’s counselors were trained and became certified as foreclosure counselors. Since the foreclosure prevention program’s implementation, over 750 families have been assisted by HHOC. Although lower interest rates have helped create a sellers’ market, rising sales prices and tight credit restrictions for low down payment buyers have made it challenging for low and moderate income buyers to purchase homes, says Oshiro. “In the last four years, more of our clientele have been long-term clients that require additional support to purchase a home.”

For years, Mary Ellen Farias has kept her receipts in a zip lock bag as part of
her system for tracking expenses. Now Farias is a homeowner.
She says, “I did it for my son.”

Oshiro recalls a story about a client, whom he calls ”Keone”, who was able to purchase a home for his wife and four children after completing HHOC’s homebuyer education classes. Keone and his wife were both employed but could not afford to rent a home. The family alternated living with their friends and family members for at least a year. Keone and his wife took HHOC’s online education classes—through which they learned about money management, getting a mortgage, shopping for a home, and credit—and attended counseling sessions.

Oshiro recalls his staff commenting, “Keone was like a sponge soaking up every bit of information at his meetings. He is the only client we know of that read the entire 1-1/2 inch textbook from cover to cover!” Keone and his family now live in a home of their own. “Keone’s open attitude towards learning and his enthusiasm of working towards his dream of homeownership reflects what we have seen in many clients after they are equipped to make homeownership possible,” says Oshiro.

Oshiro says being a part of the NeighborWorks network has allowed HHOC to “operate at a high-level on behalf of our clients” because of the funding and technical assistance NeighborWorks provides. 

Learn more about HHOC at http://www.hihomeownership.org.

A Home for the Holidays

By Sonja Kalyani,
Homewise Marketing Associate

This Thanksgiving, Marvin, Sheila and their two children will be feasting with family and friends in a new home that Marvin built with his own hands.  Natalia, eight, and Diego, four, sit quietly munching on giant chocolate chip cookies as their parents explain why they purchased their new house through Homewise, a NeighborWorks member organization in Santa Fe, New Mexico.

Marvin has worked for Platinum Sky Construction for three years, and he helped frame the homes at Rincon del Sol, the Homewise subdivision in Tierra Contenta on the southside of Santa Fe, where the family is now settling in. “It’s the materials,” Marvin explains, when asked why they only looked at Homewise Homes™. “And, how well they’re built.” After all, when you’re part of the crew that builds a home, you know where the weaknesses are — or, in this case, where they aren’t.

Marvin first heard about Homewise through his employer, and the family has been so pleased with the support they received that they’ve recommended it to their friends.

“You [Homewise] take people by the hand to understand what a home purchase involves, what a closing is, what we need to do to achieve the steps to buy the house,” says Sheila. For them, this meant attending the Home Buyer Education class, saving money, and working on their credit over the course of a year and a half.

Marvin, Sheila, Natalia and Diego outside their new home

Their relaxed demeanor and smiles confirm they’re happy with their purchase decision. “Once we were ready, it happened quickly. From the time we decided on the home we wanted to purchase to the closing date was two to three weeks. Everything was explained so well and it all went smoothly.”

Prior to moving in, Marvin and Sheila lived with their family in a mobile home, but, surprisingly, the extra space isn’t the first thing they mention when asked about what they like about their new home. Instead, they mention the energy efficiency. In fact, Sheila lights up as she talks. “We turn on the tap and the water is already warm. We don’t have to let it run to heat up. We’re saving so much water.” Since Marvin is the primary breadwinner, seeing their water bill drop by $30 a month is no small thing for this family.

All in all, their new home is working out well for them. The extra space, additional income and pride of ownership are sure to make this a special holiday season.

Is Now the Time to Buy? Homeownership Re-examined

By Marietta Rodriguez
director, National
Homeownership
Programs & Lending

The boom and bust of the housing industry in recent years has fueled doubt about the value of homeownership and caused many to re-examine the long-held belief that homeownership is a viable path to a stable and successful financial future.

In a recent report, our network member, Homewise, makes a strong argument that homeownership is still a smart choice, and that current market conditions offer an unprecedented opportunity for Americans to advance to economic ladder. According to their research, the typical homeowner purchasing a $200,000 home today, will amass nearly $500,000 dollars more than a renter over a 30 year period. Homeownership also provides important non-economic benefits, like stability and security, which are important for personal happiness, child development and family unity.

At NeighborWorks America, we support homeownership as a goal for many families. Homeowners typically stay longer in one location and contribute to lasting neighborhood improvements which support higher property values. Homeownership also builds both confidence and long term wealth for families of all backgrounds. For many low- and moderate-income homeowners, a house is their primary financial investment, which is critical when they need to take out loans for their children’s education or to start businesses.  Currently, interest rates are at historic lows and there is far more affordable inventory on the market, even in high priced markets like Santa Fe, New Mexico, making this an ideal time to buy for those who are ready.

However, for the benefits of homeownership to be fully realized, the purchase must be sustainable and must be a good fit for the personal and financial needs of the buyer. The buyer’s stage of life must also be considered. For example, younger buyers must weigh the financial advantages of homeownership against the risks of needing to quickly relocate to pursue a job opportunity.

To help individuals understand which option is right for them, NeighborWorks America has dedicated substantial resources to training a network of HUD-certified counseling agencies and to establishing a network of NeighborWorks HomeOwnership Centers throughout the country. Every day the NeighborWorks Network members provide people across this country with services ranging from financial education to individualized homeownership counseling in preparation for making an informed homeownership decision. The homeownership counselors help customers decide what next steps are best for them and their long term happiness and prosperity —  sometimes this is a new house and sometimes it is finding an affordable rental or repairing credit.

My hope is that the economic crisis will leave us understanding the importance of a middle ground for homeownership. It is neither a fast track to wealth that some imagined during the boom years nor is it the folly its critics claimed after the foreclosure crisis had begun. Homeownership is an individual choice that when pursued with eyes wide open and focused on personal and financial goals could be the basis of a great future.

To read Homewise’s recent reports on homeownership, click here.

To find a homeownership counselor, visit www.nw.org. 

Communities Find Success with Nontraditional Forms of Homeownership

This thought piece was originally published August 7, 2012 on the Bipartisan Policy Center's website. The questions were: Do alternative forms of homeownership, such as shared equity models and rent-to-own programs, present viable alternatives for future homeownership? Can they be taken to scale in a way that can encourage stabilization of neighborhoods and housing markets?

By Eileen Fitzgerald
Chief Executive Officer
NeighborWorks America

NeighborWorks believes that community stabilization requires a comprehensive approach to housing opportunities, which employs strategies that support traditional and nontraditional forms of homeownership, as well as rental options. This approach includes providing affordable inventory and low-cost accessible mortgage financing.

We certainly support alternative forms of homeownership, like shared equity and rent-to-own, as part of the strategy. Alternative homeownership models benefit people and communities. For generations, families with the resources to do so have lent money so their children can buy homes prior to inheriting wealth. This is an informal shared equity model which can overcome the inheritance gap. Formalized shared equity models or lease-to-own programs provide a way for people with less privileged social networks to achieve homeownership, and provide for long-term affordability, benefiting future generations. Done correctly these models not only provide an affordable homeownership option, they come along with education and support to make sure they are a sustainable arrangement for residents.

A number of NeighborWorks organizations have had success with shared equity and lease-to-own models. For instance, Durham Community Land Trustees and Champlain Housing Trust in Vermont have effectively used the land trust model to build homeownership opportunities for lower income families. Beyond Housing in St. Louis, Missouri has had success with its lease-to-own program.

There are new opportunities for scaling up nontraditional homeownership approaches that face challenges, but are worth exploring. Sometimes these strategies are resource intensive, so it is important to develop the organizational and external (legal, financing) infrastructure necessary for success. Local market conditions can also dictate what resources are needed to achieve success. For instance, one of the best places to use shared equity is a community with an inclusionary housing requirement, as is currently happening in an Austin, Texas program run by Habitat for Humanity. In those communities, little or no additional capital is needed to undertake the model.

In closing, we believe the best way to further community stabilization is through multiple strategies, which support many different forms of homeownership, as well as rental housing. All of those elements of a successful approach require flexible resources that can sustain plans tailored to the needs and resources available in each community.