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Foreclosures down, but pleas for help up

Assistance hotline sees 28% increase in calls in past year

By John Rebchook, Rocky Mountain News (Contact)

Published December 17, 2008 at 12:05 a.m.

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Virginia Battaglia, a foreclosure counselor for Brothers Redevelopment Inc. in Edgewater, works with a client Tuesday. Brothers is providing help through the Colorado Foreclosure Hotline.

Photo by Brian Lehmann / The Rocky

Virginia Battaglia, a foreclosure counselor for Brothers Redevelopment Inc. in Edgewater, works with a client Tuesday. Brothers is providing help through the Colorado Foreclosure Hotline.

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At 2 p.m. on Tuesday, Rogelio Rodriguez, a foreclosure prevention counselor at Brothers Redevelopment Inc., picked up his phone.

It was Susan, who was scheduled to meet him Thursday to talk about her home, which was headed for a foreclosure sale in March. All Rodriguez knew was that the lender had not responded to her request to modify her loan, so she called for help from Brothers, which manages the Colorado Foreclosure Hotline (1-877-601-HOPE).

The hotline receives an average of 75 calls a day, and Brothers has more counselors than any of the 26 nonprofit agencies that provide the network of help for the hotline.

Susan will meet Rodriguez in Brother's Edgewater office, a garden-level suite of offices.

One wall is covered with signs from groups that charge as much as $3,000 for "loan modification" help that HUD-approved counselors, such as those at Brothers, will do for free, said Shannon Peers, Brothers' housing counselor manager.

Rodriguez will suggest that the client cut her expenses, increase her income and prepare a "hardship" letter to the lender to convince it to work with her on modifying her loan.

"We try to have our clients do as much of the work as possible," Rodriguez said. "We want them to have ownership in the process."

Since the hotline was launched in October 2006 through this November, it has received 52,340 calls. From November 2007 to November 2008, calls are up 28 percent, according to a report released Tuesday by Brothers and the Colorado Division of Housing.

The increase comes even as foreclosures in Colorado are down 14 percent compared with 2007.

Experts say the drop in foreclosure activity in the first nine months is due to changes in state laws, a moratorium on foreclosures by some lenders and their willingness to modify loans - not because the housing market is bouncing back.

"We think the next wave of foreclosures may be out there, as more people start losing their jobs and get behind on their debts," said Stephanie Riggi, manager of the foreclosure hotline.

The hotline costs about $200,000 a year to operate and another $10,000 per month for public service announcements, said Ryan McMaken, spokesman for the Colorado Division of Housing. That does not include the salaries at the agencies that provide the help.

Most of the funding has come from banks, which hold the mortgages of many of the people who call the hotline.

Wells Fargo, GMAC Homecoming, Countrywide, Citigroup and JPMorgan Chase hold the majority of the mortgages from callers.

Rodriguez said he has seen clients from across the spectrum. Some are in tears, while others take it in stride as just another setback that needs to be dealt with.

"In some cases, their minds are so clouded that they are just in denial," he said.