Faith groups fighting banks on foreclosures

More people are turning to community groups for help with mortgage problems before they result in foreclosures. (David McNew/Getty Images)

SAN FRANCISCO - For almost a year, Luis Flores has been lobbying mortgage lender IndyMac Federal Bank FSB to cut his house payments. They have doubled since he refinanced his home loan in 2005 and he can't afford them, Flores says.

"Every time I call them they say they can't help," said Flores, 31, a graphic designer and bartender in Contra Costa County, Calif., where one in every 146 homes is in foreclosure. "They tell you the solution is that they take Visa or MasterCard."

Now Flores has a new ally: the Antioch, Calif., Contra Costa Interfaith Supporting Community Organization, one of a growing number of religious groups pushing lenders to renegotiate troubled loans so owners can stay in their homes.

Some in Congress have called for measures to slow the foreclosure process and force banks to renegotiate mortgage terms with borrowers, and states such as California and North Carolina have passed their own laws.

But more homeowners are turning to groups such as the Contra Costa organization for help in the early stages of mortgage problems, before they result in foreclosures. An affiliated group called the PICO National Network, based in Oakland, Calif., says it is working with hundreds of families in Contra Costa County and plans to help as many as a million homeowners nationwide.

PICO, short for People Improving Their Communities Through Organizing, kicked off a national tour last week in Flores's hometown of Antioch, where clergy and community leaders met with representatives from Bank of America Corp. and the Federal Deposit Insurance Corp.

"It's a local issue in terms of impact on families and communities but this needs a national response," said Tim Lilienthal, PICO's communications coordinator. "We need to move from a case-by-case way of doing things to a more systematic approach."

Other faith-based groups like the Gold Cross of America in Deltona, Fla., are offering assistance to homeowners as they negotiate with banks.

US foreclosure filings surged 71 percent in the third quarter from a year earlier, to the highest on record, according to an Oct. 23 report from RealtyTrac. California accounted for 210,845 of the filings, or 27 percent, with one in every 189 properties in foreclosure, said RealtyTrac.

As part of an October settlement with attorneys general in 11 states, Charlotte, N.C.-based Bank of America agreed to work with about 395,000 customers to rework loans.

The accord resulted from loans issued by Countrywide Financial Corp., the lender that Bank of America bought in July. Bauwens said the bank attended over two dozen events in October similar to PICO's.

"Whenever we deem it as an event that can help our borrowers, we go out there with teams of people," Bauwens said.

Wells Fargo & Co., the second-biggest US mortgage lender, is acquiring Wachovia, which was the leading seller of option-ARMs, some of the riskiest mortgages issued during the housing boom. Spokesman Kevin Waetke said the bank participated in an event staged by the Contra Costa group on Oct. 18 and will participate in others.

Flores refinanced his mortgage through IndyMac, which was seized by the FDIC in July. Two months after his loan was issued near the end of 2005, it adjusted from 1.5 percent interest to about 9 percent, he said. That lifted his monthly payment to $3,700 from $1,700 and covered only the interest. He said his home is worth $255,000 today and he owes about $480,000. He's told the bank in e-mails and phone calls that he can pay $2,300 to $2,500 a month, he said.

"I want a payment that I can afford, and I want to feel like I'm making payments toward the house," said Flores.