Ann Lockwood will get to keep her East Hillside home, thanks in part to a grass-roots effort by a new Twin Ports group aimed at preventing foreclosures.
The newly formed Project Save Our Homes intervened to stop the foreclosure by State Farm Bank, including a petition drive, awareness walk and media publicity.
Lockwood, a 55-year-old mother of three, has lived in the house for 18 years. But she became sick, lost her job after losing her leg to an infection and spent nearly two years in and out of the hospital. While she was recovering, State Farm sent her a notice that a balloon payment was due on her mortgage. She had nowhere near enough money to pay it, and State Farm was about to foreclose.
“I don’t remember anything when I refinanced that mentioned a balloon payment. But they didn’t want to listen to me,” she said.
After intervention by Project Save Our Home and LSS Financial Counseling, State Farm reconsidered. They offered Lockwood a new 30-year mortgage at a lower interest rate, lower monthly payment and no balloon payment.
“I’m so excited that State Farm has proven to be a good neighbor in this case,” Lockwood said, adding that public protest seemed to get the company’s attention. “I’m convinced that helped.”
Ann Avery, a State Farm spokeswoman, said she couldn’t discuss details of Lockwood’s case but that the company “looked at the options we had available and we found a way to keep this customer in her house. We try to help all of our customers stay in their homes.”
Project Save Our Homes formed last fall, an outgrowth of the Occupy Duluth movement. It’s a coalition of community, labor and faith-based activists in the Twin Ports working to “address the home foreclosure crisis and defend housing rights.”
“Ann gave us the first chance to show what a group of concerned citizens can do,” said Donna Howard, who heads the effort.
Dan Williams, foreclosure program director for LSS Financial Counseling Service, said Project Save Our Homes offers a new community outreach dimension to foreclosure prevention efforts focused on drawing attention to the larger issue of foreclosures and deeper problems in the nation’s lending system.
But Williams said that traditional foreclosure assistance programs might still be the best first call for help for most people.
“People facing foreclosure really should still give us a call as soon as they know there’s a problem,” Williams said. “That’s not to say there isn’t a place for groups that are trying to raise awareness for the larger problem. What they’re doing is great. But our goal is to help the individual homeowner’s immediate problem.”
Minnesota foreclosures are starting to slow after reaching all-time highs in recent years, said Ed Nelson, spokesman for the Minnesota Homeownership Center, a nonprofit group of banks and nonprofits that oversees statewide efforts to prevent foreclosures. The number of foreclosure notices mailed to homeowners was down 25 percent in the fourth quarter of 2011 compared to 2010. Still, some 54,000 foreclosure notices were sent to Minnesotans last year.
Foreclosures in St. Louis County dropped from 577 in 2010 to 487 in 2011, a 16 percent reduction.
“We’ve made it over the mountain; we’re past the peak,” Williams said. “But the bad news is that we’ve settled into a number (of foreclosures) in Minnesota that’s still five times higher than it was in 2005.”
LSS Financial Counseling Service, based in Duluth, is the largest foreclosure-prevention assistance program in Minnesota. It offers free services, and Williams said homeowners need to be wary of unscrupulous “foreclosure rescue” companies that charge for their services. One of the biggest problems is letting homeowners know they have rights and that free help is available.
“Anyone who is getting close to (foreclosure) is going to get calls from companies that want to make money off their situation,” Williams said. “We have law firms in Minnesota right now charging $600 to get a foreclosure postponement. That’s something our counselors can walk people through in 15 minutes and the only cost is the $55 fee to file it in the court.”
William said by far the largest problem homeowners face is the loss of employment by one or more breadwinners in the family.
“We’ve really seen the end of the big subprime mortgage crisis. What we are seeing mostly now is employment-related. People who lost one of their two jobs or were laid off … or their spouse had their hours reduced, and all of a sudden they can’t pay the mortgage,” he said.
LSS often works with clients to reduce credit card debt to free up money to pay their mortgage, find a second job or other source of income, and renegotiate their mortgage with the lender.
“If they had a $1,000-a-month mortgage and just can’t make that, we can probably get it down to maybe $850 or $800,” he said. “But if all they can afford is $300, we can help them know their rights and guide them through the frustrating and often scary (foreclosure) road. The reality is that some people just don’t have the family income any more to pay any mortgage.”
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