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Lending a hand in loan crunch

Group tries to aid local homeowners

Email|Print| Text size + By Brenda J. Buote
Globe Staff / February 7, 2008

For months, Lowell’s leaders have been fielding calls from worried homeowners in this former mill city who have been struggling to make heir monthly mortgage payments and living with the looming threat of foreclosure.

In an effort to help homeowners avert financial disaster, the Lowell Foreclosure Prevention Task Force, a little-known group formed 18 months ago to combat the soaring foreclosure rate in the city, has established an intervention program.

The initiative, which provides free counseling and helps eligible homeowners with risky loans to refinance through reputable lenders, will celebrate its public debut with a brief ceremony today at City Hall.

It is supported by bankers, community activists, and city leaders who have come together to educate Lowell homeowners about the resources available to borrowers who are having trouble paying their mortgage because of an increase or readjustment of their interest rates.

‘‘We’re reaching out to homeowners who have adjustable-rate mortgages that are about to reset, but we’re also here for people who may just be having trouble keeping up with their payments,’’ said Frank Carvalho, a vice president at Enterprise Bank and cochairman of the task force.

‘‘We want homeowners to know they are not alone. They have options,’’ Carvalho said, noting that three homeowners already have been helped through the foreclosure-intervention program. ‘‘The sooner they call for help, the more we can do for them.’’

Lenders foreclosed on 270 homes in Lowell last year, triple the number of foreclosures in 2006, when 89 homeowners lost their properties, according to Banker & Tradesman, a Warren Group publication that tracks housing market data.

‘‘We’ve been getting calls for quite some time,’’ said Lowell City Councilor James L. Milinazzo, Carvalho’s cochairman on the task force. ‘‘Most of the people we’re hearing from are stuck with adjustable-rate mortgages that keep adjusting upward, pushing their monthly payments higher and higher. Many of them got in trouble when the market caught up to them; they now owe more than the house is worth. They can’t make their mortgage payments and can’t refinance.’’

In the 28 Massachusetts suburbs northwest of Boston that reported data for both 2006 and 2007, a total of 839 foreclosures were recorded last year, up from 264 in 2006. Lowell saw the largest number of foreclosures in 2007, followed closely by Lawrence, where there were 216, the Banker & Tradesman data showed.

No data were reported for Andover, Bedford, Boxborough, Carlisle, or Shirley for 2006; the number of foreclosures in Dunstable in 2007 also was missing from the Banker & Tradesman data.

The soaring foreclosure rates in the suburbs are part of a national maelstrom that is expected to gain momentum in the coming months as hundreds of thousands of homeowners across the country face scheduled rate increases on their mortgages.

The Lowell initiative is but one of many such programs that have been launched in hopes of assisting borrowers who cannot afford an increase in their mortgage payments. The state of Massachusetts and the city of Boston run similar refinancing programs; so far, those programs have enjoyed little success, partly because they have attracted few applicants who qualify for assistance.

Early on, the Lowell task force hit a similar roadblock. Last spring, the group mailed brochures to hundreds of homeowners, offering help in four languages: English, Spanish, Khmer, and Portuguese. About 50 people responded, but they were too far along in the foreclosure process to qualify for refinancing, Carvalho said. That experience prompted the task force to adopt another approach.

Now the task force — through a national, toll-free hot line — pairs homeowners with a counselor at either the Coalition for a Better Acre, a neighborhood development group that advocates for affordable housing in Lowell, or the local nonprofit Community Teamwork Inc. The counselor will work with homeowners to find programs that meet their needs.

Callers from other places need to tell the hot-line operator where they live, and the operator will try to match them with a counselor. In this area, help is available for Lawrence homeowners through Lawrence CommunityWorks.

For some homeowners, the process will be as simple as applying for refinancing with the MassHousing Home Saver program, a $250 million program that was unveiled in July and is a key component of Governor Deval L. Patrick’s effort to limit foreclosures in Massachusetts. The self-funded, quasi-state agency provides help to borrowers who have a credit score of 560 or higher, earn $108,675 or less, and can show they can’t afford their loan.

Those who fail to qualify will be referred to a local triage committee, which will try to match him or her with a mortgage program at a Lowell bank. If necessary, the committee will also refer the homeowner to the Lowell Development Financing Corp., which is offering loans of up to $10,000 to help income-eligible borrowers refinance out of bad loans and into good ones. The funds may be used to cover closing costs, pay prepayment penalties, or build equity, and can be paid back over 10 years.

Applicants must agree to participate in a financial counseling program to receive a financing corporation loan, which carries a 5 percent interest rate.

‘‘Unfortunately, we won’t be able to help everyone,’’ said Jim Cook, executive director of the financing corporation. ‘‘There are those homeowners who were really never in position to finance a home and got taken advantage of. But those who have just hit a hump, those are the folks we’re hoping to connect with.’’

When refinancing is not an option, the counselor will explore alternatives. If there is evidence of predatory lending, the case could be referred to the attorney general’s office or the commissioner of banks. Other options include renegotiating terms with the existing mortgagor or discussing legal remedies with an attorney.

If the homeowner exhausts all options and is unable to keep the house, Community Teamwork may be able to provide rental assistance to ease the transition to an apartment.

‘‘It’s important for the community to reach out to people who are having trouble holding on to their homes because of the impact that foreclosures can have on neighborhoods,’’ Milinazzo said. ‘‘Vacant homes can lead to an increase in crime and cause the value of the surrounding homes to plummet. The quality of life in a neighborhood can really go down when homes become vacant.’’

Lowell homeowners seeking help with their mortgage payments may call 888-995-HOPE, a 24-hour hot line, and state that their local Neighbor Works organization is the Coalition for a Better Acre.

Globe staff reporter Matt Carroll contributed to this report. Brenda J. Buote can be reached at bbuote@globe.com.


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