Foreclosure is Not an Option

Eight years ago, Paul and Nancy Kuiper had good jobs, a new home on Grand Rapids’ West Side and were looking ahead to retirement. Then Nancy got sick. Degenerative disk disease caused too much pain for her to continue her desk job at a local nursing home, and suddenly the Kuipers were down to one income.

They dipped into their savings. Then Paul, a tool and die maker, lost his job. He landed another one for less pay. But that job eventually went to Mexico.

A year ago, after Paul got yet another job, the couple once again had an income. That’s when they suffered another hit: a $1,200 emergency dental bill (payment required in advance) and a $1,000 auto repair. Before they knew it, they were three months behind on the house payment and the mortgage company threatened to foreclose.

“We didn’t know anyone who could help us,” Nancy says. “I called the city. They gave us the number to Home Repair Services and said there was a gal over there who could help us.”

Turns out the nonprofit organization – whose mission is to build value and dignity by equipping lower income homeowners and their families for successful, sustained homeownership – runs the state’s largest foreclosure intervention program. And they specialize in assisting Kent County homeowners of all income levels.

Proactive Property Protection
Home Repair Services (HRS) started 30 years ago, an outgrowth of the Catholic Human Development Outreach. The organization’s first mission, helping lower-income homeowners in Kent County repair and maintain their homes, still applies. But since 2001, the organization has found itself helping homeowners get out from under foreclosures that threaten to make them homeless.

Kent County alone experienced 3,344 foreclosures in 2007, according to the Registrar of Deeds Office, meaning 3,344 families had to find another place to live or be out on the street. That’s a 35 percent increase from 2006 data and a shocking 109 percent increase from 2005.

“Almost half of the foreclosures are in central Grand Rapids,” says Dave Jacobs, HRS executive director. “The headlines blame subprime and adjustable rate mortgages for the foreclosure crisis. But the bigger problem is that 60 percent of our community’s foreclosures are related to job loss.”

Last year, HRS’s four financial counselors opened 1,000 new cases and prevented 300 foreclosures. Already this year, they’ve opened over 330 new cases. If the trend continues, they’ll open some 1,320 new cases in 2008, a conservative estimate considering that first quarter numbers are usually low – people pay lagging house payments with tax refunds rather than call for help.

Another factor guaranteed to elevate case numbers is that a newly formed coalition of local housing organizations, the Community Collaboration to Address Foreclosures, selected HRS as the central point of intake for Kent County homeowners seeking foreclosure assistance.

To help with the influx, the Grand Rapids Community Foundation (GRCF) awarded HRS a $50,000 grant to hire a fifth financial counselor for the Foreclosure Intervention Program.

“Over the last year or so, pretty much every time there was something on the news about foreclosures I’d call Dave Jacobs and ask ‘Are you at the point where you need to take this to the next level?’” says Laurie Craft, GRCF program director.

And, unlike Paul and Nancy Kuiper didn’t know who to call, residents who need help this year will. Another $50,000 GRCF grant will fund a community foreclosure coordinator at the Fair Housing Center to educate homeowners on where to retain the help they need.

“There’s going to be a big impact on property values in some neighborhoods” Craft says, “and we need to figure out how we can be more proactive to help these neighborhoods.”

The City of Grand Rapids recently announced a plan to buy HUD-foreclosed homes for $1 each and sell them to nonprofit housing developers for renovation. And while that’s a necessary step to avoid plummeting property values, the key for struggling families who may soon be homeless is to stop the foreclosure.

Foreclosure stays on a homeowner’s credit record for seven years. Recovery can take longer depending on the person’s job history and other credit problems. That means they have no chance to purchase another home for years. Sometimes never.

“Our goal is to maintain homeownership, but if we can’t do that, to at least prevent foreclosure so the client can own a home again sooner,” says Tracie Coffman, senior homeownership counselor, who holds a master's in social work from Grand Valley State University. She and the other four counselors are also HUD- and MSHDA-certified.

But if the homeowner can’t replace the lost income, they can’t sustain a mortgage payment. That’s when the counselors recommend selling the house, arranging for the lender to accept a ‘short sale’ for the appraised value of the home, or negotiating a ‘deed in lieu,’ where the lender takes back the house and doesn’t charge it against the borrowers’ credit or pursue them for payment.

“We want them to have some kind of control,” Coffman says “and not let the house go without having input over how it’s done.”

Blowing Away the Stress
A single foreclosure costs an average of $50,000 in lost tax revenue, losses to lenders, costs associated with homelessness, and decreases in property values due to deteriorating property, according to a recent study by Trott & Trott, a Farmington Hills-based real estate law firm.

If that’s accurate, the 300 foreclosures averted by HRS in 2007 saved $15 million. And if past trends continue, 73 percent of the homeowners they helped will still be current on their house payment two years from now.

For the Kuipers the outcome was the best it could be. They worked with counselor Chantil Skinner who negotiated with their mortgage company to defer some payments, drop their interest rate three percent and pay the couple’s taxes.

“One day we got a notice in the mail that said instead of a $1,300 house payment it was under $800,” says Nancy Kuiper. “We were just blown away.”

Nancy is still unable to work. But Paul maintains both a full- and a part-time job. They’ve paid off one vehicle, their credit cards, and by this time next year will be debt-free except for their house.

“We never thought we’d get out from under this. You feel like such a failure,” Nancy says. “We’ve really been through it and we’ve come out on top. Everything now is better than we could have imagined.”