Thousands Flock for a Chance at Loan Relief

By Renae Merle and Jordan Weissmann
Washington Post Staff Writers
Thursday, July 24, 2008

The homeowners started lining up at 4 a.m. yesterday, some, like Patricia Ephraim, coming for a second or third day.

Ephraim, who lives in Silver Spring, was among the thousands of distressed borrowers drawn to downtown Washington yesterday by a promise of help from the Neighborhood Assistance Corporation of America. The Boston housing advocacy group set up tables and offices staffed with about 300 housing counselors at the Capitol Hilton. They worked with the homeowners to prepare budgets and submit proposals to their lenders for lower mortgage payments. A line of people clutching folders of their financial documents snaked around the outside of the hotel.

After attending Monday and working with a housing counselor until 11 p.m. Tuesday, Ephraim learned yesterday afternoon that her mortgage payments would be cut by more than $500 a month. Still, the 25-year-old remained perched by the side of her counselor, waiting for confirmation in "black and white."

"This is going to let me go back to school, get my master's degree," she said. "I can definitely save some money. It opens up a lot for me."

After contacting more than 1 million homeowners in the Northeast who have subprime or adjustable-rate mortgages, NACA estimated that it attracted 20,000 people from as far away as Boston and Miami. Counselors submitted workout plans for 10,000 homeowners during the five-day event and by yesterday had secured 700 loan modifications that lowered interest rates and monthly payments, said Bruce Marks, the group's chief executive. Those figures could not be independently verified. Lenders agree to such modifications because they can be less expensive than foreclosure.

During the week, NACA volunteers in bright yellow T-shirts fanned out with homeowners across the city to promote the event and to meet with members of Congress.

Group officials said attendance climbed throughout the event and peaked yesterday. Because of the crowds, they moved an orientation class for more than 1,000 people to the nearby National City Christian Church.

Shenita Fauntleroy puffed her way up the dozens of stone steps leading to the church, saying her house in Brandywine was about to be foreclosed on. She is three years into an adjustable-rate mortgage that has jumped to a 10.3 percent interest rate.

The 45-year-old came Tuesday night and returned at 7 a.m. yesterday. This was her last-ditch effort to keep the home, where she lives with her husband, three children and grandchild. She said she would stay as long as it took.

Jerome Fields, an ATM repairman, showed up at 9 a.m. Saturday after hearing about the event on a public radio station. Fields did not leave until 7 p.m. that day, but he exited with an interest rate of about 4 percent, down from more than 7 percent. His lender had previously refused to adjust the loan on his Woodbridge house but accepted a modification presented by a NACA counselor that will cut his $4,200 mortgage payments almost in half.

"This was like a miracle today," he said. "It means a lot. It means that prayers are being answered."

NACA is among a number of nonprofit counseling agencies that have pushed lenders to do more to help homeowners. The group's efforts come as Congress nears passage of a housing bill aimed at halting the worst slide in the home market in a generation. The House yesterday approved that bill, and President Bush said he has dropped his opposition.

Marks led a group of hundreds of homeowners to Capitol Hill on Tuesday to meet with members of Congress, including Sen. Christopher J. Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), who have led efforts on behalf of the bill.

The event at the Hilton was attended by two top regulators: John C. Dugan, the comptroller of the currency, who stopped by Monday, and Sheila C. Bair, chair of the Federal Deposit Insurance Corporation, who came Saturday. Bair met with homeowners who hold mortgages with IndyMac, the failed California bank. Bair reassured them about plans to halt foreclosures on IndyMac-owned mortgages and help as many homeowners as possible, said agency spokesman Andrew Gray. Bair has been critical of the pace of lender efforts.

Some homeowners at the NACA event received answers from their lenders within two hours, while it took two days for others and some lenders have not responded at all. Among those still waiting for an answer is Anthony Escobedo, a fifth-grade teacher, who flew in Tuesday evening from Miami after hearing about the event on television.

Escobedo said he tried to refinance the adjustable-rate mortgage on his Miami home earlier this year, but the property had dropped in value -- from $328,000 to about $205,000 -- making it impossible. "The bank said no, unless I came to closing with $100,000," to make up the difference between the loan and the home's value, he said.

He is waiting to hear whether his lender will accept a proposal generated by a NACA counselor that would lower his interest rate from about 7 percent to 4.5 percent, saving him about $900 a month. "I am hoping I will get some good news next week," he said.

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