Programs Seek to Help Bad Credit Florida Mortgage Holders

Tens of thousands of homeowners looking to get out from under the crumbling walls of the bad credit Florida mortgage collapse have found refuge in a variety of programs.
When Senate Banking Committee Chairman Christopher Dodd mentioned the national Homeowner’s HOPE Hotline in comments Tuesday, it triggered around 3,000 calls.

An announcement in April that the Neighborhood Assistance Corporation of America would be offering $1 billion in rescue money to national and Florida mortgage borrowers has prompted more than 50,000 inquiries, according to the organization.

“It’s exceeded our expectations,” said Diane Gray, director of counseling and education at Novadebt, one of the nonprofit organizations that helps the Homeownership Preservation Foundation administer the HOPE line. “We’ve had to revise our forecast for 2007 several times. There’s a great need for counseling.”

Still, despite the availability of money and good intentions, it has proved difficult to get help to troubled borrowers.

Gray said that in the year or so since the 888-995-HOPE line has been in existence about 30,000 people across the country have called looking for help. Novadebt and the other organizations that help run the hotline provide financial counseling for owners then work with banks to try either to rewrite Florida mortgages or determine whether the loans are no longer affordable and the properties need to be sold.

Getting lenders to work with borrowers is the key for many programs out there. Most nonprofits and government-run programs are not offering bailouts as much as they are looking to get borrowers who obtained their mortgages under terms they couldn’t meet into more affordable situations.

In the case of the Neighborhood Assistance Corporation, the $1 billion program has run into situations where lenders seem to be cooperating but then are charging high fees to close the loans.

That’s unacceptable to NACA CEO Bruce Marks, who sharply criticized many of the lenders his group has tried working with.

“We will not do a loan if we’re going to basically be financing on predatory terms,” Marks said. “These are adjustable-rate mortgages that will result in the strangulation of the homebuyers.”

Still, NACA’s program, which offers no-money-down, no-points, no-fee loans at 5.75 percent interest to borrowers with credit scores often below 600, has been wildly popular.

Marks said about half those who have contacted the line - roughly 25,000 - are going through the approval process now.

“I am hiring a ton of staff and we’re growing,” he said. “It just goes to show if you provide a prime mortgage that’s affordable over the long term to what the industry considers a subprime borrower they become a prime borrower.”

SOURCE: CNN Money