NAR Strikes Partnerships to Help Families Keep Their Homes
Washington, DC, May 14, 2007 - The National Association of REALTORS®, in partnership with the Center for Responsible Lending and NeighborWorks America, introduced a new brochure today at NAR’s 2007 Midyear Legislative Meetings and Trade Expo. "Learn How to Avoid Foreclosure and Keep Your Home" is the fifth mortgage-related brochure in NAR’s consumer education series.
CRL estimates that 2.2 million American households have lost or will lose their homes as monthly payments rise on high-risk mortgages in the next few years. Nontraditional and other new types of mortgages that opened doors to homeownership or refinancing just a few years ago might soon be showing some borrowers the door, as interest rates reset, payments adjust and monthly payments become unaffordable for families at greatest risk.
"Foreclosures threaten the very communities that REALTOR® work to build," said NAR President Pat V. Combs, of Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt. "REALTORS® care as much about keeping families in their homes as we do about helping them find the home of their dreams, which is why NAR has partnered with the Center for Responsible Lending and NeighborWorks America to give our REALTOR® members tools to help clients and customers at risk and educate homeowners about their options if they’re facing foreclosure."
In recent years, people with imperfect credit or minimal cash reserves who may have previously been unable to qualify for a mortgage were able to become homeowners because lenders began offering new types of mortgage products in the subprime market. Many of these new mortgages kept initial payments down by offering a very low 'teaser rate,' interest-only period, or the option to pay varying amounts each month. When the initial period ends, the monthly payment increases, often by a significant amount. Compounding the problem, subprime borrowers are often the people least able to afford these large increases, given their limited cash flow and past credit problems.
"We estimate that families will lose as much as $164 billion in home equity due to foreclosures in the subprime mortgage market," said Mike Calhoun, president of the Center for Responsible Lending. "Government agencies, lenders, nonprofit organizations, Realtors® and homeowners must all work together to minimize foreclosures and foster responsible lending practices to help ensure the stability of these families, their communities, and the entire mortgage financing system."
The new brochure illustrates examples of mortgages that can put certain borrowers in danger, cautions consumers about predatory lending practices, identifies housing counseling organizations and other resources, and suggests steps homeowners should take as soon as they think they might not be able to make a monthly mortgage payment. Homeowners in this situation may have more options than they think they have, including:
Forbearance -- Lenders may let a borrower pay less than the full amount of the mortgage, or skip a few payments, if there is a reasonable plan to become current on the loan.
Reinstatement -- A homeowner may be able to make a payment that covers all of the previous late payments, usually at the end of a forbearance period.
Repayment plan -- Lenders may allow a borrower who has fallen behind to make additional payments each month until the amount past due is paid.
Loan modification- - Lenders will sometimes change the terms of a mortgage to help homeowners avoid foreclosure.
"This is an issue that affects individual families as well as entire communities," said NeighborWorks America CEO Ken Wade. "We share NAR’s concern and are committed to reaching out to consumers through our 50-state network of organizations, working one-on-one with borrowers, and continuing to develop long-term solutions that not only help people to become homeowners, but also ensure that they can afford to keep their homes."
"Learn How to Avoid Foreclosure and Keep Your Home" is being distributed during NAR’s 2007 Midyear Legislative Meetings & Trade Expo, May 14-19, in Washington, D.C., at the NAR booth (#1707) and NeighborWorks America booth (#1417) and is available for sale through the REALTOR® Store.
The National Assn. of Realtors®, "The Voice for Real Estate," is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.