An unprecedented economy in the 1990s led to a booming housing market that helped many people to achieve their home-ownership dreams.
A darker side has emerged from this story however, as unwise lending and borrowing has led to foreclosures in record-setting numbers. More than a million homeowners in the U.S. are in foreclosure [edit, 6/11], and people struggle everyday to make mortgage payments and avoid the same fate.
Acorn Housing, a branch of the activist organization Acorn, is helping to combat this crisis in a number of ways. The group employs loan counselors that will aid people in avoiding foreclosure and offers education classes for people that are looking to buy a new home.
“Acorn Housing has a working relationship with over
40 mortgage lenders and
services across the country,” said Michelle McClenan,
Acorn Housing uses these connections to help adjust people's mortgages so that they are more manageable. McClenan said that while individuals who tried to deal with lenders by themselves would not make much progress in adjusting their mortgage, those who came to Acorn and had the benefit of its connections and knowledge typically were able to find relief from their mortgage problems.
A major problem that loan counselors see is people who get behind in their mortgage payments because of an emergency, such as necessary medical expenses. To make homeowners current, where they are no longer behind in their payments, Acorn will use its connections to convince a lender to let the homeowner shift the debt to the final payments. While homeowners will pay for a slightly longer period of time, returning to the “current” status helps them to avoid foreclosure.
Lowering monthly payments is also a big part of what acorn does. According to McClelen, Acorn works under the assumption that lenders would much rather adjust rates and be able to collect monthly payments consistently than go through the process of foreclosure.
Loan Consoler Vivian Torres said Acorn's pre-loan education tries to ensure that no one ever needs to use these methods of foreclosure avoidance by teaching responsible borrowing. They also stress that it is important not to accrue large amounts of debts related to the house outside of the mortgage, such as buying new furniture and appliances.
“Don't go buy more things, stay in the same budget you were in before you bought the house,” Torres said.
Participants who complete this education course are also privilege to special offers from Bank of America, Chase Bank and Citi Bank. Borrowers that use these institutions are guaranteed that their loans will never be sold to another bank, that they will receive a fixed rate (where the amount that is paid every month will be the same throughout the time of the loan), and other special incentives.
Acorn offers these services free of charge, asking only that people call before coming so that they can be sure to bring the necessary paperwork and records.
Acorn can be reached at 210-226-2584 or by going to their Stop Foreclosure website.