State Trains Foreclosure Prevention Counselors

NJBIZ — Monday, February 23, 2009

By Beth Fitzgerald

Mortgage counselors who help homeowners avoid foreclosure and stay in their homes will get trained Wednesday in the details of New Jersey's new foreclosure mediation program, passed by the Legislature as part of Gov. Jon S. Corzine's economic stimulus package.

The New Jersey Housing and Mortgage Finance Agency will train its HMFA-certified counselors, who work in community groups across the state, including New Jersey Citizen Action in Newark, Isles in Trenton, the First Baptist Community Development Corporation in Somerset and Brand New Day in Elizabeth.

Marge Della Vecchia, HMFA executive director, said more than 50 such agencies throughout the state do mortgage counseling, and she's hoping to have about 100 counselors trained to implement the state mediation program, which she said is at the cutting edge of the nation's efforts to prevent foreclosures.

"This program works in the Office of the Courts, which is where the foreclosure actually occurs. What it does is interject another opportunity for someone who gets a foreclosure notice to contest that notice. And if they feel a need for assistance, they can contact one of our counselors, who will work with them for free and guide them in assessing their financing and figuring out their budget and trying to come up with an alternative," which can involve modifying the mortgage, she said.

"Governor Corzine really is the first governor to implement a program like this," she said. "The governor and the attorney general and the office of the courts banded together and said, 'this is a process that makes sense.'"

She said 200 mediation cases are pending, and several hundred are close to coming before a mediator. Lenders are not required to engage in mediation, but the lenders are coming to the table, she said.

The program also provides, for those who qualify, up to $20,000 per borrower for mortgage assistance "to catch the person up, modify the mortgage, lower the rate and rebuild a mortgage payment the borrower can afford." To take advantage of that financial assistance, the homeowner has to work through the counseling program.

Della Vecchia estimated the mediation program could help 17,000 to 20,000 homeowners facing foreclosure.

She said Corzine "has made a very committed effort to this crisis, and he has been at the forefront here and nationally, and he is giving us the charge to do absolutely everything we can do to help our homeowners our responsible borrowers an our neighborhoods."

Patrick Morrissy, executive director of Housing and Neighborhood Development Services, a nonprofit neighborhood development association in Orange, said it's essential to stem the tide of foreclosure filings, which totaled nearly 48,000 in 2008 — up from about 18,000 in 2005. Right now the state faces a housing vacancy crisis: homes are being left vacant as families are foreclosed and evicted, and these vacancies are dragging down entire neighborhoods.

"There are not enough housing resources at the local, state or federal level being devoted to rescuing properties that are being left vacant as a result of the subprime foreclosure mess," he said. "It's just an outrage what is happening.... Plenty of people who are still in their homes are being hurt because the homes next to them are being vacated. They are the collateral damage of the subprime crisis, and they really had nothing to do with it. They are not subprime borrowers; they are just trying to raise a family."

Morrissy said the federal stimulus law includes $2 billion for the Neighborhood Stabilization Program, to rescue vacant properties; that's is in addition to $3.92 billion appropriated to this purpose in the fall. But he said it's not enough money, as there already are million of homes in the foreclosure pipeline that will wind up vacant.

New Jersey Citizen Action in Newark, which provides mortgage counseling, is seeing 100 new clients a week, according to Phyllis Salowe-Kaye, executive director. They are among 20 housing agencies across the state that provide foreclosure mediation counseling under the auspices of HMFA.

Information about foreclosure mediation training and additional foreclosure prevention programs is available on the agency's Web site at www.nj-hmfa.com.

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