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Resources for Responding to the Home Mortgage Crisis
Mortgage Financing and Foreclosure Resources from NLC
NLC has published two City Practice Briefs that provide examples of city programs to respond to home mortgage financing and foreclosure issues. Each City Practice Brief provides a summary of several city programs along with contact information.
- City Practice Brief: Foreclosure Prevention Practices (download pdf) provides examples of three strategies in stemming the foreclosure tide and helping cities regain financial stability: Neighborhood Coalition or Partnership programs, Loan Counseling programs or Emergency Fund Programs.
- City Practice Brief: Anti-Predatory Lending Ordinances (download pdf) provides examples of how cities are defining predatory loans, and the measures they are actively taking to discourage predatory lenders from entrapping low income families and wreaking havoc in working class neighborhoods.
Talking with Public Employees about the Home Mortgage Crisis
National League of Cities and ICMA Retirement Corporation have joined together to offer both cities and city employees a variety of resources to help city employess find ways to address their increasing mortgage payments that do not involve taking loans from their retirement plans.
City officials can help city employees cope with rising mortgage payments by encouraging them to explore all alternatives and by sharing the following advice with employees:
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Communicate with your lender. Contact your lender before mortgage debt overwhelms you. The sooner your lender knows about your problem, the more help the lender will be able to provide. Lenders want to avoid foreclosures as much as you do — they want to continue receiving your payment and the accompanying interest.
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Look at refinancing options. If you have an adjustable-rate mortgage, monitor what may happen to your rate at the next adjustment and compare it to current fixed rates. If you have good credit, you have a good chance of refinancing easily into a fixed-rate mortgage.
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Discuss a repayment plan or loan modification. If your mortgage payments are falling behind because of an unforeseen financial difficulty, your lender may agree to let you pay in installments for a short period of time.
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Tapping Your Retirement Plan: A case of borrowing trouble.
Borrowing from your employer-sponsored defined contribution retirement plan can be an expensive idea and one that should be far down your list of options. Before you make the decision to borrow from yourself, consider how these 457 and 401(a) loan plans work.
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You’re borrowing potentially expensive money. It’s easy to think that because the loan is coming from you, it’s free. But you’re forfeiting whatever the loan balance would have earned while you’re paying off the loan.
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You’re also losing future compounding on the money you borrowed. As a result, the final cost of the loan could have a significant impact on your savings at retirement and make successful retirement planning more difficult.
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You’ve added additional risk when you borrow from your plan because the loan may be due immediately if you quit or lose your job, possibly at a time when you may not be able to pay it back or arrange new financing.
You may also qualify for a hardship distribution if your plan offers one. Rules vary by plan, and federal regulations are specific on how these withdrawals can be used. The withdrawals do not have to be repaid, but you must pay taxes and any applicable penalties on the hardship distribution. The impact on your retirement savings can be substantial in the long run.
(See below for more mortgage finance resources and retirement resources from ICMA-RC and other national organizations and federal agencies.)
Retirement Resources from ICMA-RC
ICMA-RC encourages public employees to find ways to cope with increasing mortgage payments that do not involve borrowing from retirement funds and offers numerous articles and resources to assist employees with retirement planning.
Resources to Help Cities and Public Employees with Mortgage Financing and Foreclosures
- HOPE NOW
www.hopenow.com
Hope Now is a voluntary alliance of housing counselors, mortgage lenders, investors and other mortgage market participants who are coordinating efforts to reach out and assist homeowners in distress. The alliance includes such large lenders as Wells Fargo Home Mortgage, as well as Fannie Mae and Freddie Mac. HOPE NOW operates the 888-995-HOPE hotline to help homeowners find qualified housing counselors.
- Homeownership Preservation Foundation
www.995hope.org
The Homeownership Preservation Foundation is a nonprofit participant in the HOPE NOW alliance that partners with local governments, nonprofit organizations, borrowers and lenders to help families overcome obstacles that can result in the loss of their homes. Their website enables homeowners to partake of free online housing counseling sessions.
- NeighborWorks America
www.nw.org/network/foreclosure
NeighborWorks America and its network of 240 local organizations have been at the forefront of efforts to preserve home ownership and sustain communities in the face of rising foreclosures. In December 2007, NeighborWorks launched a $180 million program with funds appropriated by Congress to increase the availability of foreclosure counseling services across the country. In addition, NeighborWorks has partnered with the Ad Council to create a national public service awareness campaign that is available to any community.
- Department of Housing and Urban Development
www.hud.gov/foreclosure
The HUD website offers a number of foreclosure resources, including tips for avoiding foreclosure and links to HUD-approved housing counselors.
- The Federal Reserve
www.federalreserve.gov/pubs/foreclosure
The Federal Reserve offers a list of foreclosure resources from several government agencies. In addition, it offers a Consumer Handbook on Adjustable Rate Mortgages.
- ACORN Housing
www.acornhousing.org
The national nonprofit ACORN Housing provides free housing counseling, offers advice for avoiding predatory lenders and helps clients obtain affordable mortgages through their unique lending partnerships. The website also offers a a checklist of good loan practices and warning signs of a predatory loan.
- National Community Reinvestment Coalition
www.fairlending.com
A NCRC program that member organizations and communities can utilize is the National Anti-Predatory Lending Consumer Rescue Fund (CRF). Through the CRF, NCRC works with community based organizations, corporations, and responsible lenders to remediate troubled loans and offer consumers a fresh start. The CRF assists and educates consumers who feel that they have been victimized by their mortgage lender.
- Americans for Fairness in Lending
www.affil.org/consumer_rsc
Americans for Fairness in Lending (AFFIL) raises awareness of abusive credit and lending practices. It is the collaborative effort of numerous organizations, each contributing their expertise to the public through the AFFIL website. AFFIL maintains a Consumer Resource Center on the web for those seeking mortgage loans or those suspecting they may have a predatory loan.
- National Vacant Properies Campaign
www.vacantproperties.org
The National Vacant Properties Campaign provides individuals, advocates, agencies developers, nonprofits and others with information resources to support their vacant property revitalization efforts. It offers various resources to homeowners struggling to prevent foreclosure.
For more information on home mortgage financing, including legislative updates, surveys and related news, visit the NLC Home Mortgage Crisis page. For more information on retirement planning, visit the ICMA-RC Building Retirement Security page.
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