The foreclosure story is far more complicated than what gets reported. There are plots and subplots that include international intrigue, Wall Street, instant gratification, automation, fraud, unscrupulous professionals, predatory practices, ignorance, stagnant wages, rising interest rates and personal crisis.
There is plenty of blame to go around.
Virtually every neighborhood in Gwinnett County has been affected by foreclosures. From high-end gated communities to starter home neighborhoods, foreclosures are everywhere.
While finger-pointing makes some feel better for the moment, the local community is left to deal with the aftermath. Foreclosures and homes on the verge of foreclosure have a huge negative ripple effect. A family who loses their home suffers the emotional, physical and financial strains that accompany this major crisis. Property values of other homes in the neighborhood decrease measurably when a home is sold in a "short sale" or after foreclosure. Property tax collections slow down, which impacts local services.
When investors purchase homes and turn them into a rental property, the challenges are multiplied for the neighborhood. Investor-owned properties rarely demonstrate the pride in ownership that owner-occupied homes have. And we've seen renters get evicted because the investor/landlord accepted the rent payments but failed to pay their lender.
How does this happen? The most common reasons homeowners fell behind on their mortgages (and other bills) used to be a major life event that impacted family income such as job loss, divorce, a major medical issue or the death of a spouse. Since more than 60 percent of households live paycheck to paycheck, this could happen to anyone.
Today, these issues are compounded with crazy mortgage products that have surfaced over the past 7 years, which focused on the monthly payment (interest-only loans, negative amortization, loans that don't escrow taxes and insurance) and focused on "qualifying" rather than what the borrower could truly afford.
Encourage people to seek guidance early. More than 60 percent of delinquent homeowners are unaware of workout options offered by their lenders. Half of homeowners who go to foreclosure don't contact their mortgage company or a housing counseling agency like The Impact Group for help.
There will be more foreclosures, not fewer, in the coming two years in Gwinnett County as more adjustable interest rate loans are subject to interest rate hikes. It is difficult to refinance a mortgage if you are already behind with the current loan.
Homeowners seeking to get ahead of the crisis and refinance out of their mortgage before they fall behind may be surprised to learn that their homes don't hold the same value as when they last financed it.
So, what are we doing about this? Nov. 4 will be Gwinnett's first Foreclosure Prevention Sunday. We are asking the faith community to share a message of awareness and hope to people on that Sunday and encourage people to reach out for help before it's too late.
The Impact Group's Home Ownership Center has provided Foreclosure counseling to more than 2,300 homeowners over the years, but it clearly is not enough. In addition to our local services, we recently joined forces with a coordinated effort called "HOPE for Homeowners" at www.995hope.org and 888-995-HOPE to promote a free 24/7 foreclosure counseling service. With one phone call, a homeowner can talk with a HUD-certified housing counselor day or night and get on the path to solve their housing problem.
We've added two new classes to our Home Investment Academy to respond to the financial challenges facing our community:
n "Keeping Your Home Through Challenging Times" is great for those who want to be prepared and learn their options and recognize the countless consumer scams posing as easy ways out of financial problems.
n "After the Storm: Financial Recovery Program" guides singles and couples to develop sound strategies to recover financially after divorce, bankruptcy or foreclosure. Starting over can be scary, and this course builds confidence through practical information and knowledge.
Call, stop in or check out the tools on our Web site to get more information: www.theimpactgroup.org or 678-808-4477
Marina Sampanes Peed is president/executive director of The Impact Group.