Banks, programs help families stay in houses
Debra and David Hubai’s marathon effort to stay in their Stratford home appeared to be over in September 2008, when their lender started a foreclosure proceeding against the family.
“We thought we would have to get out of the house,” Debra Hubai said in an interview last week.
In 2007, the Hubais were one of several families featured in a series of Connecticut Post articles about the foreclosure crisis sweeping across the state. The Hubais were not yet in foreclosure then, but they knew it was only a matter of time because of a drop of income and continuing medical bills. Of four families the Post followed, two were in foreclosure and two, including the Hubais, were looking to modify loans to avoid having payments outstrip their ability to pay.
Joshua Barnett, a Bridgeport homeowner who had an adjustable rate mortgage, was looking to modify his loan back then. A busy man with two jobs, Barnett was unavailable for comment, but no foreclosure filings had been filed against him as of Jan. 9 and he still owns the property. He was working on the modification by himself.
On the foreclosure front, both families were able to keep their homes. Glenda Hamilton, who with her children worked to get the family out of public housing and into their own home on Elmwood Avenue had the case dismissed almost a year after the article was written. They were helped by ACORN Housing to modify an adjustable rate loan.
Maria Leone, another Bridgeport homeowner, got the bank to give her home back after it had already foreclosed in February 2008 after a minister and volunteers from Milford and Fairfield helped her. She remains current on the mortgage and has not reentered foreclosure as of Jan. 9 of this year, according to court records.
Much has changed since these families told their stories. Federal, state and local governments have unveiled programs to try to help people. Banks themselves, faced with a glut of property from foreclosures and falling home prices have become more amenable to modifying loans and have instituted programs to try to keep people in their homes.
But a joint report issued in December by the U.S. Office of Thrift Supervision and Office of the Comptroller of Currency indicated many borrowers who were able to modify their mortgages wound up facing foreclosure, sometimes just a few months after the modification. These two bureaus of the U.S. Treasury Department regulate national banks and savings institutions.
The OCC and OTS found that 37.44 percent of mortgages modified in the first quarter of 2008 were 30 or more days delinquent or in foreclosure after three months. After six months, the re-default rate was more than 55 percent. The analysis did not go into depth about the reasons for the re-defaults and called for caution in interpreting the data.
And the process continues to take time and those trying to help people who could be thrown out on the street are getting swamped with even more requests these days.
In the Hubai case, the family actually just won a modification from HSBC Inc. in December of 2008. They came closest of the four families to being out on the street.
After being rejected in the spring of 2008, the family continued to look for help and they were told about a Methodist pastor in Bridgeport who was also helping people modify loans.
Summerfield United Methodist Church Senior Pastor Marjorie Nunes said she was surprised when the Hubai’s came to her. Nunes had read their story in November 2007 and decided as a church leader in a city where foreclosures were decimating neighborhoods, she needed to get involved. She helped Maria Leone save her home.
Bridgeport has continued to have a steady stream of foreclosures in the state. In November 2008, according to RealtyTrac.com, a California-based company that tracks foreclosure activity, 168 Bridgeport addresses went into foreclosure. That was more than double the next most active foreclosure market, Danbury, which had 60 foreclosure cases filed in November. New Haven had 157 and Hartford 83, according to RealtyTrac.
For the next several months, Nunes and the Hubais worked to get HSBC to modify the loan on the family’s General Street home. And it wasn’t a simple case either.
The family had rescued the home out of foreclosure in 2003 by filing for bankruptcy. David Hubai lost his job in the first recession of the 21st century and Debra Hubai was diagnosed with cancer, which hurt her ability to work and left the family with bills. They refinanced their home, but got high interest rates due to their situation. In 2002, HSBC gave the family a permanent reduction in rates, but they were still paying more than $1,300 a month on two loans carrying interest rates of more than 8 percent each. So the bank, having already reduced the loan once, appeared cautious about doing it again, but eventually agreed to a temporary reduction in rate for six months.
“To preserve our customers’ privacy, HSBC does not comment on individual customer matters,” Kate Durham, vice president of public affairs for the bank, wrote in an e-mail. “HSBC is strongly committed to home ownership preservation, and we offer a range of solutions including temporary and permanent relief. Every customer who receives temporary relief through our Foreclosure Avoidance Program can seek long term help, if his or her financial difficulties persist beyond the initial assistance period.”
And HSBC is moving to modify more loans, according to Durham.
“Under our foreclosure avoidance and account modification programs, in 2008, through September 2008, we modified more than 61,000 accounts with a dollar value of approximately $8.6 billion year to date. In Q3 [third quarter] 2008 we increased use of our programs to qualify more customers with longer term assistance due to the weak housing market and U.S. economy, for payment relief mods with potentially lower interest rates. By offering a variety of programs, HSBC is able to make a broad set of solutions available to customers.”
David Hubai said he’s hopeful the family will now be able keep up with payments and earn the right to keep their rate at the 5.25 percent.
“It wasn’t ACORN’s fault,” Nunes said of the first attempt at the modification. Nunes said times have changed dramatically in just a year and banks that were wary of making adjustments are more open to them. She also said you don’t win every time and sometimes you just can’t get the bank to reduce the loan to an affordable amount.
That’s exactly what Doris Latorre, ACORN Housing’s national deputy director of mortgage services, said. She said try as they might, some people just don’t have the income to pay a mortgage, “even if you have the modification set to zero.” In those cases, ACORN will try to get the bank to agree to forbearance, which means the bank basically suspends the mortgage for a set period of time to give the homeowner a chance to get some income.
Nunes and Latorre said there has been progress in the last year, mostly with the banks willingness to negotiate. But Latorre said it’s a legitimate concern that at some point the banks, tired of the continuing defaults, might not continue to modify loans and instead just take the property and sit on it.
Both women said they have not had any of the people they’ve helped slip back into foreclosure and both were concerned about the deterioration in the housing market and economy.
Latorre said the problem now is the programs in place are set up for people who have adjustable or high interest rates and those who are in default. But ACORN said they’re seeing people with low interest rates coming in and people who are current, but who lost a job, looking for help.
“What do we do with those people without jobs?” Latorre said.
Nunes summed up both women’s positions for the future, “The fight goes on.”
