August 14, 2008
Today’s visit was to the offices of Catholic Charities at 800 North Tucker to meet with Karen Wallensak, director of Catholic Charities’ Housing Resource Center. She was a panelist on our July 22nd Facing the Mortgage Crisis live show. Here’s a picture of her taken during the broadcast, and you can even see me working away on the laptop:
I wanted to find out about Catholic Charities’ services, but after my meeting last week at Urban League I also hoped to understand more about foreclosure counseling and how negotiating with a lender works.
A little background: Catholic Charities boasts a housing resource staff of 34. Ten are nationally certified HUD housing counselors who serve as advocates, counselors and mentors for homeowners, while the other 24 specialize in areas like finding affordable places for people to live.
Their foreclosure counseling process is similar to Urban League’s in that it’s free and open to people in all stages of the mortgage crisis. And no, you don’t have to be Catholic to qualify for help (I always assumed you had to be).
Wallensak’s first bit of advice to homeowners facing foreclosure is that “nothing is worse than doing nothing.” The longer the homeowner waits to contact the lender, the more the lender assumes there’s no interest in working something out and it can become more difficult to make arrangements. Though the bank loses an average of $50,000 on each foreclosed home, that won’t stop them from taking it to satisfy the debts they owe their own investors.
So how willing are lenders to work with the borrower? “The hard truth is that lenders want to be repaid, and changing terms of a home loan’s not at the top of their list right now,” says Wallensak. But with a housing counselor, there’s a better chance of getting around these road blocks.
If Catholic Charities can’t work out a permanent loan modification, they try to get interest rates lowered or frozen temporarily. “If a lender wants to freeze rates for six months, that doesn’t give the homeowner a lot of time to get back on their feet,” says Wallensak. “But in cases where they’ll freeze for years at a time, that’s long enough to restore credit, save money and build equity in the home.”
For Wallensak, the best way to work out a long term solution is to be realistic. If money’s not as good as it was in the past or some crisis has surfaced since buying the house, lifestyle changes must be made. Make a crisis budget. Negotiate as many other debts as possible. Communicate even if it isn’t always pleasant.
“Sometimes there’s no choice but to accept foreclosure if the situation can’t improve,” she admits. Catholic Charities offers many services for those unable to save their homes including help with moving expenses, relocation assistance and mental health counseling. Wallensak and her staff provide resources for up to a year after families relocate, and have seen many of their clients rebuild their lives with great success.
If she could tell homeowners any one thing, it would be that losing a house is devastating, but you do survive. Life does go on. “Remember not to become so emotionally invested in your house that you can’t make the best decisions for your family.”
To make an appointment with Catholic Charities’ Housing Resource Center, call (314) 241-5600 x7129 or read more about them on the Web at www.ccstl.org.