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Monday, August 20, 2012

Help for Distressed Homeowners

LUIS CEREZO’s eyes welled up as he awaited the outcome of his latest attempt to resolve the 18-month backlog of mortgage payments he owes on the town house in Elizabeth where he and his wife and son have lived for the last 16 years.

“I couldn’t sleep last night knowing that today we’ve got to make the decision, do we stay in the house or not,” said Mr. Cerezo, holding hands with his wife, Marjorie, after the two met with a Bank of America mortgage specialist to plead their case for a loan modification.

The Cerezos were among the hundreds of people who filtered through a three-day homeowner assistance program held by Bank of America at the Hilton Hotel here in early August. A second Bank of America event was scheduled for the following week at the Atlantic City Convention Center, and several more will be held throughout the country this year. Wells Fargo held a similar public workshop at the Meadowlands Exposition Center in Secaucus this month. The goal of these sessions is to use in-person meetings to help underwater or delinquent homeowners find a solution short of foreclosure.

“We’re a bank,” said Tamika Eubanks, a vice president of Bank of America in charge of the recent New Jersey events. “We’re not in the business and have no desire to foreclose on anyone’s home. We want to do everything we can to keep you in that house.”

1180 Raymond Blvd., Newark, NJ - homeowner assistance program held by Bank of America
(Photo credit: SheepGuardingLlama)
Preparing for the Newark session, the bank contacted 6,000 customers who lived within a 30-mile radius of the city and were more than 60 days in arrears on their mortgage payments, urging them to attend. By the start of the event, 375 people had registered for meetings with one of 50 bank officers on site. The workshops also involve independent financial counselors, so participants can get help with other money issues. The process takes three to four hours, with about 40 percent of cases being resolved on the spot, Ms. Eubanks said.

Options include an interest-rate reduction, an extension of the terms of the loan, and a temporary suspension of mortgage payments. Those who can’t work out a solution may be directed to consider a short sale of their property, or to begin the foreclosure process.

Mr. Cerezo, 58, a native of Ecuador, was hoping his case didn’t fall into the latter category, though the numbers were not in his favor on his three-bedroom town house. He bought it in 1996 for $82,500, but now, after twice refinancing the loan, owes $320,000. The house is in Elizabeth City Gardens; it was once assessed at $470,000, which the couple borrowed against to remodel, according to their son, Favio.

In the last 18 months, Mrs. Cerezo lost her job as a medical assistant and Mr. Cerezo, who has worked in ramp services for American Airlines for 26 years, lost his second job as a truck driver. Mr. Cerezo said they had come to the workshop after several frustrating phone attempts at resolution with the bank.

“Many times we’d send them lots of papers, spending lots of money to make copies,” Mr. Cerezo recalled. “Then they wouldn’t get back to us for a month, and they’d say, ‘Those papers are old, we need new copies.’ ”

Although Nair Corbo’s situation is not as dire as the Cerezos’, she, too, came to the Newark workshop after becoming frustrated by her previous dealings with the bank. Ms. Corbo, 38, a paralegal, said she was up to date on the $1,193 monthly mortgage payments on her Roselle condominium, but was carrying close to $50,000 in credit card debt to cover those payments. Ms. Corbo bought her condo five years ago for $148,000. She still owes $139,000, though she said the home was now valued at $80,000. With her hours at her law firm having been cut back, she was hoping to reduce her monthly payments to Bank of America.

“I’m not looking for a freebie,” Ms. Corbo said. “I’m looking for something I can be comfortable with, being able to pay my bills and not have to use the credit cards.”

At the end of June, New Jersey had 33,576 houses either in the foreclosure process or already owned by the banks, according to Daren Blomquist, a vice president of RealtyTrac, an online home foreclosure database. New Jersey has the 15th-highest rate of foreclosure in the country, with one in every 106 housing units facing this fate, Mr. Blomquist said. The state also has the second-longest time frame, behind New York, for completing the foreclosure process, taking an average of 940 days, versus a national average of 378 days, according to RealtyTrac.

With the persistently high foreclosure rates, and the recent $25 billion paid by the nation’s five largest banks to settle federal charges of fraudulent mortgage practices, bank-run workout sessions like the one in Newark — which have been ongoing since 2009 — have become more frequent and are attended by more people. In addition to Bank of America, the banks that settled are Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial.

Wells Fargo will hold 33 “home preservation” workshops around the country this year. For its program at the Meadowlands on Aug. 8 and 9, the bank contacted 38,000 customers, 760 of whom registered to attend. The bank’s last New Jersey workshop, in Newark in January 2011, drew 542 customers. Marie Day, a regional service director for Wells Fargo Home Mortgage, said that two-thirds of those who attend these events “will find an option that doesn’t include foreclosure.”

The Cerezos had been hoping to get an answer before leaving the Bank of America workshop in Newark, but were told the wait would be a bit longer, because the Federal Housing Administration holds their mortgage. Even so, Favio Cerezo said, the session provided the family with some relief.

“They gave him a lot of hope that there’s not just one way out,” he said, speaking of his father. “It looks like it’s going to be accepted.Now we just have to wait.”

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