Advice may help

Published 5:55 am Wednesday, February 13, 2008

By Staff
troubled borrowers
How far should the government go to help people who face losing their homes because of rising interest rates?
It’s a serious question.
As it is, foreclosures rose 9.4 percent in North Carolina last year as the economy slowed and monthly payments skyrocketed on popular adjustable-rate mortgages entered into two or three years ago by people with spotty credit.
Regulators and borrowers probably realize now that it was a mistake. The question is what to do about it.
Some homeowners bought houses that were far beyond their means in the hopes that home prices would continue to rise and they’d be able to sell for more than they paid. That didn’t happen. Housing prices in some markets fell, mortgage rates climbed and the house of cards began falling.
So far, North Carolina has stepped up and offered counseling, not buyouts.
Two state agencies will pay reputable nonprofit counselors to help North Carolina residents keep from having their homes taken away.
The state attorney general’s office and commissioner of banks pledged $300,000 for the counselors at a news conference where they also raised awareness of a toll-free phone number for people seeking advice on how to modify their loans when they get behind on payments.
The commissioner’s office projects foreclosures could rise another 20 percent this year, reaching 60,000.
State and federal taxpayers should not be in the business of bailing out people who bought on speculation.
The property owners are adults who took a gamble, and they should be held accountable. But some advice now could help stem the flow of defaulted mortgages and help us all.
A foreclosure hurts the state economy by lowering value of surrounding properties and costs lenders as much as $50,000 on the typical loan, Attorney General Roy Cooper’s office said.
More than half of foreclosed homeowners nationwide never contact their mortgage firm to seek an alternative, according to Freddie Mac, the government-sponsored mortgage company. And when they do seek outside help they show up too late to save their homes, said Louise Mack, who provides free housing counseling through a nonprofit group in Cabarrus County.
The HOPE Hotline, 1-888-995-4673, provides free 24-hour-a-day counseling nationwide for consumers on foreclosure alternatives and for help contacting their lenders.
More than 20 nonprofit counseling groups have agreed to participate in the program, in which $1,000 will go to the group for each homeowner whose home that group helps save, Deputy Banking Commissioner Mark Pearce said.
Cooper and Smith said they will investigate when a counselor believes the delinquent loan was issued with high fees or other terms deemed unlawful.
If that’s the case, the state should punish the firms responsible. You shouldn’t kick a man when he’s down, and the state response to the mortgage problem seems a responsible one.