February 14 is the day for pink teddy bears, roses, and chocolate hearts. But for some homeowners and tenants in Emeryville and the East Bay, “there’s not a lot of heart out there right now.”

That’s the message expressed by Wanda Remmers, the executive director and fair housing specialist at Housing Rights Inc., at a recent foreclosure intervention workshop held in the Emeryville Senior Center. The workshop, sponsored by the Emeryville Redevelopment Agency, was one in a series meant to educate homeowners and tenants about their rights in the case of foreclosure.

With about a dozen attendees, various housing advocates provided information and counseling to those facing possible mortgage payment default or foreclosure.

On the top of the list was the issue of  “loan rescue” scams targeting afflicted homeowners throughout the area. These scams include agencies or individuals who claim they can “modify” a mortgage and bring down the payments, who say they can fix a defaulter’s credit, who convince homeowners to file for bankruptcy, and, in some cases, who convince homeowners to turn the title over, essentially giving the house away with the idea that someday they will be able to buy it back.

In most cases, the advocates said, these agencies do nothing for the people who fork over the cash. Often a “modified” mortgage is simply yet another bad loan. In some cases the payments under these modified loans are even higher than the original ones.

Many of these “loan rescue” agents, said Maria Benjamin of the Community Housing Development Corporation, are former mortgage brokers or real estate agents who no longer have work and simply “turn their hats around” to become mortgage modifiers and credit wizards.

Lisa Sitkin, a staff attorney for Housing and Economic Rights Advocates, an Oakland-based organization that takes on foreclosure cases, recalled the case of a woman with a mortgage she could not possibly pay back. The woman went into default and then paid $995 to an agency that claimed they could help her keep her house. Yet when HERA called the bank, they had no record of the “rescuer” even calling.

According to Sitkin, it is illegal to charge an advance fee for these “loan rescue” services. In rare cases, if the homeowner has not yet defaulted, these agencies or individuals may charge a fee up front, but must first register with the Department of Real Estate of California. So it is wise for those seeking help to ask if the agency is DRE certified.

A timeline of the California foreclosure process was also outlined, including day limits and legally required notices. In a worst case scenario, said Sitkin, it may take as little as five months from the time a notice of default is recorded with the county to the time a foreclosed property is sold.

Tenants
While much attention is given to homeowners affected by the mortgage crisis, tenants living in foreclosed properties are likewise feeling the brunt. In her presentation, Remmers outlined the rights of tenants in these situations.

In San Francisco, Oakland and Berkeley (not, however, in Emeryville) there are “just cause” laws in which a tenant can only be evicted for reasons such as not paying rent or damaging property. Section 8 and other subsidized housing tenants are also protected by these laws. In other words, they cannot be forcefully evicted from their homes even if the property is foreclosed. In these cases, Remmers said, tenants may be in a position to negotiate “cash for keys,” or a compensation for leaving the property. If a tenant is not protected by “just cause” laws (as is the case in Emeryville), then the bank or new owner must give the tenant 60 days notice to leave the property.

Counseling
Five people received foreclosure intervention counseling during the workshop. One had received a notice of default, and others were borrowers whose interest rates had or were about to spike up, or were simply in danger of defaulting on their mortgage payments.

This was the case for Ruth, an Emeryville resident who requested that her last name be withheld.  Holding a stuffed manila envelope close to her chest, Ruth explained that she had taken out an “interest only” loan that was set to “balloon” in March. She estimated her new payments would increase by about $500 a month. Though her credit union had initially agreed to lower her interest rate, they later reneged on the offer, she said. The counseling was “very helpful,” she said, and she said she was hopeful that one of the advocacy agencies would be able to negotiate with the credit union on her behalf.

Unlike agencies that charge for mortgage help, HERA and CHDC, the organizations that did the free counseling, are foreclosure counseling agencies approved by the U.S. Department of Housing and Urban Development. Both organizations are overwhelmed with cases. Benjamin, from the CHDC, said that it currently takes an average of 10 days to set a counseling appointment after receiving all the necessary documentation.

And there doesn’t seem to be an end in sight. In fact, the flow of homeowners seeking help is growing. At the HERA offices, a new population has only recently begun to walk through the doors: furloughed state employees. Sitkin recently counseled a woman who worked at the Department of Education, and was afraid she would be unable to make her mortgage payments now that her work hours had been cut.

“It’s rippling,” said Sitkin of the housing crisis. Beyond victims of subprime mortgages, the recession seems to be catching up with others who only months ago were in the clear.

In the face of the deepening recession, the agencies are — like most of the country — holding their breath that the benefits of a federal stimulus package will trickle down to their neck of the woods. Somewhere in the “tax cuts versus public spending” debate that grips Capitol Hill is the proposal that a portion of stimulus money go to HUD-approved foreclosure counseling programs such as these.

Whether that money will make its way to Emeryville is yet to be seen.

Photo by Ariel Luckey.

BY KATE KILPATRICK // Residents worried about foreclosure on their homes can attend a free educational workshop this weekend at the Emeryville Senior Center.

A panel of housing advisers will discuss the foreclosure crisis—the scope of the problem and pending litigation—as well as warn against predatory lending and foreclosure rescue scams. HUD-certified counselors will also be on hand for individual guidance.

The workshop, sponsored by the Emeryville Redevelopment Agency, is part of the city’s eight-point strategy adopted in January to address the financial industry’s credit crunch and the rising number of homes being foreclosed.

A report released recently shows U.S. foreclosure filings soared 71 percent in the third quarter of 2008 (July through September) compared to the same period last year. RealtyTrac, a foreclosure-tracking service, predicts that by the end of the year one-third of all homes for sale nationwide will be foreclosed, bank-owned properties.

California alone makes up more than a quarter of all foreclosure filings nationwide. According to a 2007 article in Realty Times, high home prices in California can force buyers into loans they can’t afford. The article also cites California as third in the nation for mortgage fraud, behind Utah and Florida.

Emeryville’s HomeBuyers Program coordinator Janet Anderson has been tracking foreclosures locally. She’s found 94 properties in Emeryville that have entered some stage of foreclosure since December. Of those, 20 have been foreclosed.

“Most of them are condos because most of the housing stock in Emeryville is condos,” said Anderson.

Recent studies suggest a rise in foreclosures in a neighborhood can decrease property values, reduce city revenues, displace communities and increase crime.

“The city’s trying to be proactive and let people know there are resources out there,” said Anderson.

Katrina Vizinau, senior housing counselor at the Community Housing Development Corporation (CHDC), and a guest at Saturday’s panel, warns at-risk homeowners against wasting their limited funds on foreclosure rescue scams.

“There are a number of HUD–approved counseling agencies homeowners can get counseling from. And most of these agencies offer the service for free. So why pay when you’re already struggling? You may need that money to actually get into some form of agreement with your lender,” said Vizinau.

Vizinau also encourages home buyers, owners and renters to get educated on the issues.

“A lot of the legislation coming out is very vague,” said Vizinau. “It’s only going to help a handful of individuals, and in order for more assistance to come to them, [people] need to understand what exactly is being voted on and really advocate for themselves. Because nobody else is going to do it for them—not to the degree they can do it.”

Predatory Lending Prevention and Foreclosure Intervention Workshop
Sat., Oct. 25, 1-4pm. Emeryville Senior Center, 4321 Salem St. Free. Guests are encouraged to pre-register to speak with a housing counselor. For more information contact Janet Anderson at janderson@emeryville.org