Foreclosure Prevention and Intervention

REACH Foreclosure Intervention

Foreclosure Prevention Fund Program

Leelanau REACH (Resources for Economical and Accessible Community Housing) is pleased to announce the development of the Foreclosure Prevention Program which is designed to help families at risk of losing their homes through foreclosure. A grant was awarded from the Grand Traverse Band of Ottawa & Chippewa Indians for the program.

If you are at risk of Foreclosure, please contact REACH c/o 231-256-9812 (Ron Crummel, Housing Coordinator) and ask for information and an application for the program.

The goal of the Foreclosure Prevention REACH program is to help families who are
facing foreclosure stay in their homes, and provide financial counseling. REACH
has developed an agreement with Northwest Michigan Human Services Agency to coordinate the program with their Financial Counseling program and the statewide Homelinks program funded by the Michigan State Housing Development Authority (MSHDA)

Homeowners about to loose their home due to default in mortgage payments and /or
unpaid property taxes, are eligible to apply if they live in Leelanau County.
The financial assistance can be a loan or grant, depending on individual circumstances.
The plan is to being a family up to date in house payments and/or taxes to prevent
foreclosure.

According to Bob Schlueter, Chairperson of REACH, "There are several programs
these days to help families buy a home but there is not much help when a family
is about to lose their home". John Visser, Treasurer of REACH and a local
banker says, "Foreclosures are at an all time high for a number of reasons,
and it's not all Michigan's sagging economy".

Some families end up in a situation that is more than they can afford and even a
small financial setback can send them into foreclosure. Also, uninformed home buyers
or those trying to re-finance to improve their situation, may find themselves entering
into a mortgage with a high interest rate, and large fees and closing costs that
benefit the lender - but make their predicament even worse.

Homeowners and home buyers need to be aware of the dangers of what is called "Predatory
Lending".
Predatory lending strips borrowers of home equity and threatens families with foreclosure. Often, borrowers are tricked into accepting unfair loan terms, usually through aggressive sales tactics. Often they are taken advantage of because of their lack of understanding of terms and involvement in complicated transactions. Even more informed consumers are occasionally fooled. Signals of predatory lending practices include, but are not limited to:

" Aggressive and deceptive marketing
" Making loans without ample consideration to the borrower's ability to pay
" Financing excessive fees into loans
" Charging higher interest rates than a borrower's credit allows
" Home improvement scams
Source: U.S. Department of Housing and Urban Development.

Predatory lending return to top

Predatory lending is any practice in which lenders ( Mortgage companies and banks ) may try to fool or intimidate consumers into agreeing to assume loans that may end up being unaffordable for them or do not meet industry standards. Predatory lending is illegal. Predatory lending practices involve some or all of the following:

Offering only loans with higher interest rates than the borrower can afford
Adding unnecessary fees to the cost of the mortgage
Including "balloon payments" - a large one-time payment -- at the end of a payment schedule that disguises the true, higher-than-expected, cost of the loan
Moving a borrower from one loan to another near the end of the payment schedule to extend interest payments and add to the overall cost of the loan

Forcing borrowers to purchase more insurance than the law requires, and more than the borrower needs return to top

Be informed…

It takes an educated consumer to identify and avoid a predatory lender. Learn how to:
Know and manage your payment patterns and overall credit rating
Understand the home financing process
Ask questions about all the fees being charged
Be familiar with the terms of the loan including closing costs, loan rates ( percent interest, (APR), length and type ( 30 years fix rate)
Avoid adjustable rates for long term mortgages
Understand the number of payments, amount of each payment, ( does it include taxes and insurance)…. how long payments will continue
Be able to make those payments. Payments should be about 25-33 % of your monthly income.
Have an appropriate amount of property and mortgage insurance - no more, no less

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A Growing problem…

In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

Sell properties for much more than they are worth using false appraisals.
Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.
Knowingly lend more money than a borrower can afford to repay.
Charge high interest rates to borrowers based on their race or national origin and not on their credit history.
Charge fees for unnecessary or nonexistent products and services.
Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.
Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.
"Strip" homeowners' equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.
Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.

What Tactics Do Predators Use?

A lender or investor tells you that they are your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses.
The house you are buying costs a lot more than other homes in the neighborhood, but isn't any bigger or better.
You are asked to sign a sales contract or loan documents that are blank or that contain information which is not true.
You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud - it does not.
The cost or loan terms at closing are not what you agreed to.
You are told that refinancing can solve your credit or money problems.
You are told that you can only get a good deal on a home improvement if you finance it with a particular lender.

Remember: If a deal to buy, repair or refinance a house sounds too good to be true, it usually is! To talk to a housing counselor that serves Leelanau County call Northwest Michigan Human Services Agency at 231-947-3780