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 Help for Unemployed and Underemployed Homeowners – in Oregon and Across the Country

By: Mark McArdle

Yesterday, the Administration announced new requirements for mortgage servicers to provide much needed assistance to struggling homeowners while seeking re-employment. These changes are intended to set a standard for the mortgage industry to provide more robust assistance to unemployed homeowners in the economic downturn, and build on other Administration initiatives to assist unemployed homeowners.

One of those programs is the Hardest Hit Fund, a program that provides $7.6 billion to 18 states and the District of Columbia to implement programs to help struggling homeowners avoid foreclosure. These areas represent those that have been “hardest hit” in the economic downturn, grappling with steep home price declines and unemployment. The funds are provided to each state’s housing finance agency (HFA) to design and implement programs to meet the needs of homeowners in their area.

In total, HFAs are dedicating approximately 70 percent of program funds to help homeowners struggling to pay their mortgage as a result of unemployment. Through the Hardest Hit Fund, states are experimenting with a variety of different models to help unemployed homeowners. In some states, HFAs make partial mortgage payments for homeowners until they become re-employed. Others continue assistance for a short period of time after homeowners become re-employed to provide them sufficient time to get back on their feet. Many states are also leveraging support from local housing counselors to help eligible homeowners apply for assistance.

In Oregon, Oregon Housing and Community Services (OHCS) partners with non-profit agencies throughout the state to deliver Hardest Hit Fund resources to eligible homeowners. One such partnership has been formed with the Neighborhood Economic Development Corporation (NEDCO). NEDCO is Oregon’s first Community Development Corporation and has provided foreclosure intervention counseling since early 2008. Foreclosure clients seen by NEDCO in that time have more than doubled annually reflecting Oregon’s continued struggles in the economic downturn. The demand for homeowner help in the communities NEDCO serves became clear last December when, in only six weeks, NEDCO screened more than 4,000 applicants for Mortgage Payment Assistance through Oregon’s Hardest Hit Fund program and submitted 1,500 eligible applications.

Emily Reiman has administered the Hardest Hit Fund programs for NEDCO and is excited about the opportunity presented to homeowners by the program. “Until now, our counseling staff has been able to offer information, advice and expertise, which goes only so far in the face of significant economic hardship and a very broken mortgage servicing industry. Now, we finally have a tangible financial tool that allows homeowners the time and breathing room to re-employ, evaluate their financial picture, and create a plan for their family. Instead of reacting to an immediate foreclosure crisis, we can help them pro-actively plan for their future.”

The Hunt family is one that will benefit from Oregon’s Hardest Hit Fund program. In the wake of the recession, Rodney Hunt took a $5/hour pay cut, which was a devastating blow to his family. Soon after, his wife Kathy underwent a costly – and painful – back surgery. The Hunts tried to work with their servicer to obtain a forbearance agreement, and believed they had completed the required paperwork, only to find out that the servicer had not completed the request. With Kathy out of work and Rodney sustaining a more than $10,000 annual pay reduction, they found themselves facing months of arrears, due in full, and the looming threat of foreclosure. The Hunts applied for the Mortgage Payment Assistance program and are relieved to have found some breathing room to help them get back on their feet. NEDCO plans to help them apply for a mortgage modification after their time in the Mortgage Payment Assistance program is over. In the meantime, the Hunt family has worked with NEDCO to develop a monthly budget and savings plan that will enable them to pay off the arrears they owe so they will be able to keep their home.

Currently, OHCS and NEDCO are processing applications for more than 1,000 families like the Hunts. To reach as many families as quickly as possible, NEDCO hosts group document signing sessions; a recent event included 120 households coming together in a middle school gymnasium for an information and document signing session. With the help of 15 volunteer notaries, 10 staff, 2 representatives from OHCS, a little patience and a lot of celebrating, all 120 families are now one step closer to financial recovery. A note from one homeowner summed up the evening: “Thanks to you and all of your VERY hard-working staff! You have made me feel like a special part of your NEDCO family.”

While there is no easy solution for homeowners struggling with their mortgage payments, particularly those who are struggling with a reduction of wages through no fault of their own, partnerships like those between OHCS and NEDCO, through the Hardest Hit Fund, are working to get help out to those communities who can benefit the most.

Mark McArdle is Director of the Hardest Hit Fund.

Posted in:  Making Home Affordable
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