Personal tales: Saved from foreclosure

A Kansas City, Mo., couple were on the brink of losing their home when a nonprofit helped them renegotiate their mortgage. They're among many strapped homeowners turning to public and private groups for help.

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By David Koeppel, MSN Money

Garry and Jackie Buycks were about to lose their home in the summer of 2008. The Kansas City, Mo., couple were $6,000 behind on their mortgage payments. They had tried many things to catch up: consulting a lawyer, cashing in an annuity, even borrowing money from their church. But they were still days away from foreclosure. Listen to the Buyckses' story

Then a lawyer referred the Buyckses, both 50, to Elizabeth Phillips, a housing counselor with Catholic Charities of Kansas City-St. Joseph. She saved them just in time

"Elizabeth would stay late after work until she got through to Countrywide," Jackie Buycks says of Phillips' calls to their lender. "She was determined to save our house. It was a blessing for us to encounter her. We didn't know where we going to go or what we were going to do."

Phillips negotiated a loan modification that reduced the Buyckses' monthly interest to 5.5% from 10.85%.

The couple are among the fortunate nationwide who have narrowly avoided losing their homes through the help of local financial institutions, community organizations or religious groups.

Recent foreclosure statistics remain particularly grim. Foreclosure activity reached a record level in March, a 48% increase from March 2008, according to RealtyTrac, an online data tracker. Nationwide, foreclosure filings reached 341,180, a 17% increase from the month before, and first-quarter 2009 foreclosure activity was up 23.6% compared with a year earlier.

Nevada continued to have the highest foreclosure rate in the nation, with one in every 27 housing units receiving a foreclosure filing in the first quarter.

A church to the rescue

The First Baptist Church of Lincoln Gardens in Somerset, N.J., started -- with funding from local financial institutions -- a program to save Somerset County homeowners from foreclosure. The Home Assistance and Recovery Program, or HARP, buys homes from distressed homeowners but allows them to continue living in the homes as renters. HARP's goal is for the former homeowners to be able to repurchase their houses in two to three years. Distressed homeowner: 'I was so fearful'

Since the program's start last May, HARP has expanded to several other New Jersey counties. In January, Gov. Jon Corzine allocated $15 million in state funds to the program, giving it a government seal of approval. The organization has already closed on nine homes and is in the process of closing on about 40 others, says HARP's founder, the Rev. DeForest "Buster" Soaries of the First Baptist Church. He says buying a home is a last resort for HARP, after court mediation, loan modification and other options have failed.

"Fifty percent of the people are in trouble because of loss of job or health care incidents," he says. "Those are the two main triggers, not irresponsibility or even a bad loan."

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Soaries says HARP has also spoken to homeowners who couldn't afford their homes in the first place and now are struggling to stay afloat. 'We are not a charity'

"If you have a $3,200 monthly income and $3,100 in monthly home payments, you have to sell," he says. "Many people were convinced to take out these kind of loans thinking the value of their homes would go up and that they could always refinance. They were irresponsible, but they had rational reasons to be irresponsible."

One homeowner helped by HARP was 83-year-old Annie Anderson of Irvington, N.J. Soaries says an unscrupulous lender took advantage of Anderson by concealing the fact that her home-refinance loan would adjust in two years to a much higher interest rate.

Anderson has lived in her six-bedroom home since 1979 and raised two of her six children there. In 2005, Anderson refinanced her home to help pay for a granddaughter's college tuition and to help a daughter who was struggling financially after a divorce. Within two years, the adjustable-rate mortgage reset, and Anderson's monthly payments went from $1,200 a month to $2,200. After months of foreclosure notices in 2007 and 2008, she applied for a reverse mortgage but was rejected. She then had to go to court to postpone losing her home, where she was living with -- and supporting -- two of her great-grandchildren.

"The Rev. Soaries walked into my house last year, two days before the sheriff was coming to lock me out, and called the mayor to come to my home," Anderson says. "He told me: 'Mother, you won't lose your home. Don't worry.'"

HARP recently closed on her home and charges Anderson -- who brings in about $3,000 in monthly income from Social Security, welfare and a small day-care business -- $1,500 a month in rent. Anderson is cautiously optimistic that in two years she'll be able to buy the house back for $176,000 and leave it to her two great-grandchildren.

Federal government assistance

The Obama administration's Making Home Affordable Program, announced in February, has also given hope to many facing potential foreclosure. It gives about 9 million homeowners the chance to refinance mortgages that were made through Freddie Mac or Fannie Mae.

More help has come from Hope Now, a private alliance of counselors, mortgage companies and investors approved by the Department of Housing and Urban Development.

Hope Now provides free foreclosure-prevention assistance. It helped 244,000 borrowers avoid foreclosure in February through workouts with lenders, including loan modifications and repayment plans. Many groups in the alliance, such as counselors at Catholic Charities, also advise clients on budgeting so they can make regular monthly mortgage payments. Counselors often recommend that clients search for additional sources of income, such as taking second jobs or renting out rooms.

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Phillips, who helped the Buyckses, says she has found that such negotiations with lenders can be time-consuming and frustrating. Many families' calls to lenders are ignored, she says, or customers are shuffled to multiple representatives, making resolution difficult. And even when loan modifications are arranged, many borrowers end up defaulting again.

Saving homes from the unexpected

Health problems, job loss and divorce are three of the most common problems that Phillips sees when dealing with homeowners facing foreclosure or on the verge of it.

It was chronic poor health and spiraling medical bills that submerged Garry and Jackie Buycks.

Garry, a former machinist of construction equipment, was seriously injured in a 2004 forklift accident. He needed a double knee replacement and could not return to work in the industry. He started a career as a bail bondsman but had five heart attacks within three years. After his most recent heart attack, in December 2007, doctors told him that he was no longer fit to work at all.

At the time, Jackie was still struggling to get her fledgling bakery business off the ground. Once Garry could no longer work, the couple began falling behind on their $1,100 monthly mortgage payments. They had no health insurance, and Garry's prescription costs were $350 per month. Jackie took a second job last year as a restaurant hostess to help make ends meet, but it wasn't enough.

The intervention from Catholic Charities bought the Buyckses time to stabilize. They are still struggling to make their monthly payment. As of April, they are a month behind. But they say they feel a little bit more secure these days.

In March, Garry began receiving a monthly disability pension of $1,600 and has relied on Medicaid to help pay his hospital and prescription expenses. Jackie is earning $1,200 a month at the bakery and hopes that will increase to $2,000 when the store moves to a better location this coming summer.

For some homeowners, it's easier to avoid foreclosure by facilitating a so-called short sale of their home, according to Brandon Pratt, the vice president of loss mitigation for the Mortgage Network, a private mortgage banking company in Danvers, Mass. In a short sale, a lender allows the homeowner sell the property at a price that's less than what the owner still owes, and the rest of the debt typically is forgiven. For some lenders, a short sale is preferable to the costs of foreclosure.

But many homeowners, like the Buyckses and Anderson, will do almost anything to avoid leaving.

"I love this home," Anderson says. "I feel like the Lord gave it to me in 1979, and this is where I want to live. I enjoy my life here, and it's here I want to stay."

Produced by Anh Ly

Published April 17, 2009