Impact of Michigan's foreclosure crisis visible at lender's level; servicers encourage open communication
Editor's note: This is the final story in a three-part series examining the prevalence of foreclosure in mid-Michigan.
There’s often more than two sides in every crisis — even foreclosure.
On a regular basis, local housing counselor Teagen Lefere works with mortgage lenders — largely banks — to work out plans for clients who fear they may lose their home.
But in a recent interview, she said even the individuals working on the opposite end can understand the financial struggle.
“I don’t see (the crisis) coming to a close,” said Lefere, a state-certified counselor at Listening Ear Crisis Center in Mount Pleasant. “And from any of the lenders I’ve talked to, they don’t see it getting much better this year either.”
One mid-Michigan home loan servicer saw $583 million in residential mortgages by the end of 2011, according to an email from a representative.
The servicer being Isabella Bank, Erika Ross, vice president of Marketing, wrote one of the biggest challenges facing the industry is learning about financial hardships early.
“In some cases, individuals may feel their situation is temporary and not worth a discussion,” Ross said in the email. “However, even if it is temporary, the lender can provide educational resources and options in the event the customer needs further assistance.”
Isabella Bank offers nearly identical tips to homeowners struggling with mortgage payments as Lefere does — like how to communicate losses of income or utilize resources through the Michigan State Housing Development Authority.
However, some homeowners may struggle communicating with their banks for months. Take Bill and Pam Phillips, recent Listening Ear clients who said through Lefere they were able to negotiate paying their mortgage bill at $930 a month, which was up from their original $889 rate, to make up for the months they fell behind.
On Tuesday, Pam said she was hoping to get in contact with Lefere again, as recent interactions with her lender left her wondering if their Barryton home was again in jeopardy.
The Phillips’ lender is Bank of America, which as of Thursday afternoon did not acquiesce to Central Michigan Life's request for a phone interview with a representative.
“You know we made a deal on our foreclosure, and they’re kind of reneging on it,” Pam said of the agreement that allowed them to keep their home. “They said they were going to involve our house payment and our insurance and our taxes all in one payment. Then I just got a paper that they want me to pay the insurance, almost all of it in one month.”
Bank of America, along with four other of the country’s largest loan servicers, was subject to a recent settlement involving 49 U.S. states, including Michigan, that came after a national investigation into rampant mortgage fraud.
According to news releases earlier this year, the final settlement between the five servicers and the nations's state attorneys general was $25 billion.
The damage done on from all angles can be seen especially in the “hardest hit” states such as Michigan, said Mary Townley, director of MSHDA’s homeownership division.
She quoted a report from Grand Valley State University’s Community Research Institute that between 2006 and 2010, there was a $63-billion loss in property value because of the state’s foreclosure crisis.
“Let us help you,” Townley said. “Don’t wait until you’re so far behind that your options are limited.”
