Facing foreclosure

A Legal Aid attorney says that the companies holding the loans are ‘terrible to deal with.’

Statistics back up what many of us could sense about the number of homes locally and nationally that fell into foreclosure last year: The problem got worse.

The worst year the Mahoning Valley has had for foreclosures was 2006, with the rate rising more than 30 percent in Mahoning and Trumbull counties. There were hopeful signs in 2007 and 2008, as the foreclosure numbers eased.

All that changed, however, when the national economy soured part-way through 2008, setting up a 2009 that forced foreclosure rates to rise about 4 percent in Ohio, 9 percent in Trumbull County, 10 percent in Columbiana County and 21 percent across the nation.

Mahoning County’s foreclosure rate was the exception, dropping 5 percent.

Richard Cordray, Ohio attorney general, came to the Mahoning Valley in late 2007 when he was Ohio treasurer, and the foreclosure rate was on its way down. He predicted that the foreclosure crisis would abate by 2009 or 2010.

“Without the recession, we would have seen it decline,” he said recently.

Cordray now says Ohio’s foreclosure problems are likely to continue, with Ohio’s record number of foreclosures in 2009 — 3.8 percent higher than in 2008 — likely to grow even more in 2010.

Things could be worse. Nationally, because of states such as Nevada, Arizona and Florida, foreclosures increased by 21 percent last year. More than 10 percent of Nevada housing units received at least one foreclosure filing in 2009, compared to 2 percent in Ohio, according to the California foreclosure-tracking company RealtyTrac Inc.

Danielle Lazor, a debt counselor and program manager for the nonprofit Family Financial Education Services in Youngstown, said the local foreclosure numbers correspond with what she has seen in the past year or so.

The foreclosure problem is still serious in Mahoning County, but it appears to have “leveled off” more than in Trumbull and Columbiana counties, she said. She sees clients from all three counties at her office.

Lazor said it appears that joblessness explains why Trumbull County’s foreclosure numbers were worse than Mahoning County’s.

Lazor said she has talked to a lot of people in the past year who lost their job on the third shift at GM Lordstown or GM offshoot industries and wanted to get retraining.

Warren had the highest unemployment rate in the state through most of 2009, as the city reeled from the loss of jobs at Delphi Packard Electric and the layoff of 1,200 workers at Severstal Steel.

“We’re really hit heavy in this area,” Lazor said.

Marital problems and divorce are common problems among her clients, she noted, adding that she feels that job loss frequently results in financial trouble and communication problems in relationships. When a couple splits, sometimes one of the parties tries to pay the mortgage on his or her own.

“In some cases, when they get divorced, nobody can pay the mortgage,” Lazor said.

Lazor has also talked to a lot of low-income people from Columbiana County in the past year, especially those on fixed incomes. In many cases, such people are experiencing foreclosure because of health problems, she said.

If there is a positive in the tough economic times many local people face, it is that many Mahoning Valley residents have become more conservative in their spending, not using their credit cards as much, living within their means more and saving part of their incomes, she added.

Those who are behind on their payments seem to be more open to receiving counseling for their problems. The banks are still slow to work with their defaulted customers, but with federal incentives, they are improving, Lazor said.

She encourages anyone who is behind in their payments or afraid they soon will be to contact Lazor’s agency or another credit counselor regarding two federal programs that have begun to help people: the Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP).

HAMP is for people having a tough time paying their mortgage, Lazor said. HARP is for people who pay their mortgages on time but are not able to refinance through conventional means and, therefore, cannot take advantage of today’s lower mortgage rates, she said.

Lazor said predatory loaning and servicing practices are rampant among many of the inner-city homeowners she counsels, so she and other credit counselors urge such people — often to no avail — to attend workshops and otherwise educate themselves against such scams.

“We have seminars constantly where no one comes,” she said.

Rachel Nader, an attorney with Community Legal Aid in Warren, has had some success in using the HAMP and HARP programs in Mahoning and Trumbull counties. She’s worked out loan modifications for about 50 homeowners in the past year — almost every one of them with the big financial institutions. “Many of the local banks don’t participate,” Nader said.

Loan modification won’t work in every foreclosure case, Nader said.

“Some people don’t have any employment income. Some just want to leave” their homes or go to another community, she said.

For those who want to try to stay in their home, Nader is available without appointment every Wednesday in the Trumbull County Courthouse, where she has a fourth-floor office provided by Judge Andrew Logan, administrative judge of Trumbull County Common Pleas Court.

In many cases, Nader is working with people even before the foreclosure is filed, she said. A key is for Nader and Magistrate Beth Aurilio to be involved in the case early on, before the “adversarial part” occurs, Nader said.

Such a “proactive” approach has led to more loan modifications in Trumbull County than in any of the other counties where she works — Mahoning, Portage and Summit — Nader said.

By talking to people early enough, Nader has worked out modifications for some people even before the foreclosure is filed, she said.

Not everyone qualifies for help from the Community Legal Aid, a nonprofit law firm. Income guidelines apply, and her services are not available to landlords, only residential property owners.

Lazor and Nader agree that some homeowners have contributed to their financial problems by making poor decisions, but people facing foreclosure shouldn’t just blame themselves because the country is in the midst of a “tidal wave” of economic troubles that they did not cause.

“They’re $25-an-hour people in some cases, and now they make $7 an hour, and they can’t make the loan payment anymore,” Nader said. She said many are doing a juggling act to keep their finances afloat, hoping things will turn around, hearing from the banks and dealing with a frustrating banking bureaucracy.

“The banks are terrible to deal with, incredibly frustrating,” Nader said. “We [Community Legal Aid] make it less overwhelming. If I could give out one message, it would be, ‘Don’t give up.’”