Beth Winegarner's news articles

San Francisco Bay Area community news

Man attempts to sandbag ‘foreclosure tsunami’

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Beth Winegarner
Examiner Staff Writer
March 14, 2007

One local businessman is kicking off an effort to rescue locals from losing their homes to foreclosure.

Walter Moeller, a San Carlos resident and businessman, took action after seeing the number of foreclosure warnings rise nearly 400 percent. Statewide, notices of default — those stern letters people receive from their mortgage lenders when they stop making their mortgage payments — rose 37 percent between the third and fourth quarters of 2006, according to DataQuick, and continue to rise, Moeller said.

In response, Moeller founded the Home Preservation Institute, whose mission is to identify homeowners who are behind on their payments and recruit local nonprofit organizations, grant funds and other resources to keep people from losing their homes.

In cases in which people can’t recover, the institute will make sure those homes wind up in the hands of nonprofits so that they can be renovated and sold to low- and moderate-income locals.

“I think many buyers were misled, and they went in with a half-percent of interest, and they’re shocked when it goes up,” Moeller said. “Now, the market has slowed down and the value of the home is less than what their loans are. People are under water.”

The increase in foreclosure rates is something local agencies, such as the Housing Leadership Council, are monitoring, according to Director Chris Mohr. People buying entry-level homes, or homes on the edge of their income level, are at the highest risk.

“Their ability to make the monthly payments may be conditioned on a low introductory rate and their ability to refinance later,” Mohr said. “That works well when the market is trending upward, but if appreciation falls it may be more than the household can afford.”

One problem may be that borrowers often see mortgage brokers as the badguy once they become unable to meet their payments. To that end, lenders are beginning to reach out more to homeowners and attempt to resolve payment problems before foreclosure happens, according to Dustin Hobbs, spokesman for the California Mortgage Bankers Association.

Despite those efforts, borrowers refuse to respond 60 percent of the time, according to Hobbs. Not only does that hurt homeowners, but it leaves lenders stuck with properties — not their area of expertise.

“We have lenders who say, ‘Let’s talk, let’s work something out.’ They’ve got an interest in making sure the borrower stays in the home,” Hobbs said. “No one wins in a foreclosure situation.”

This article originally appeared in the San Francisco Examiner.

Written by Beth Winegarner

March 14, 2007 at 10:41 PM

Posted in Housing, San Carlos

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