Two out of three struggling homeowners who ask Family Services Inc. in North Charleston for help are able to avoid foreclosure and stay in their homes.
The group's default counselors, who currently are trying to save more than 1,300 local houses, usually are able to work out solutions for delinquent payers after only a few phone calls to lenders. And more than once a week, they save a homeowner whose house is scheduled to be auctioned on the courthouse steps.
Yet, when typical homeowners try to work out deals with their lenders themselves, they often fail, said Executive Director Debbie Kidd. How exactly is this nonprofit, with a staff of only 17 local counselors and a $1.5 million annual budget, able to save homes?
"The typical homeowner doesn't know the rules. They don't know how to play the game," Kidd said. "When they don't know what to ask for, the lender has the upper hand."
Representatives at Family Services, which has been approved by the U.S. Department of Housing and Urban Development, have several advantages when trying to negotiate payments with lenders:
• Counselors use special contact numbers for bank representatives that aren't available to the public. Some bank representatives, over time, have even learned counselors' names.
• Once they have a lender on the phone, Family Services representatives have the paperwork at hand to get a modification under way. When homeowners approach the nonprofit for help, they have to fill out budgets that detail their projected expenses, showing lenders that they're financially capable of making the new, lowered payments.
• Family Service counselors also collect documents that lenders need to finalize the modification, such as bank statements, pay stubs and tax returns. Homeowners have to sign release forms that allow Family Services to work with the lender on their behalf.
• Another key to getting loans modified is hardship letters written by homeowners that demonstrate they're committed to keeping the property.
In the weeks it takes for counselors to work out a plan, home-owners often take budgeting classes, and some manage to save several thousand dollars to put toward their mounting mortgage debt. Saving money, Kidd said, gives a homeowner leverage.
"We're using that time to work with the homeowner on the budget, redirect funds, save money and even find another job," she said. "We're using that time wisely."
The most common fix for homeowners behind in their mortgage payments is loan modification, which means a lender either changes the interest rate, forgives a portion of the debt or tacks missed payments onto the end of the 30-year payment period.
Those who don't qualify for loan modification may be able to work out forbearance agreements, under which lenders allow partial payments for a short period that sometimes ends with a big payment. That strategy could work for homeowners who expect big bonuses or hefty tax returns.
Other homeowners might be able to afford paying a bit extra each month to get their balances current.
BY THE NUMBERS
• 6 million — The number of households nationally facing foreclosure
• $75 billion — The value of the housing stability initiative proposed Wednesday
• 7-9 million — The number of homeowners able to refinance or restructure their loans through the proposed initiative
• 406 — The number of foreclosures filed in Berkeley County between Sept. 1 and Dec. 31
• 722 — The number of foreclosures filed in Charleston County between Sept. 1 and Dec. 31
• 316 — The number of foreclosures filed in Dorchester County between Sept. 1 and Dec. 31