Detroit, nonprofits join forces to fight foreclosures

DETROIT -- There's HOPE for Detroit homeowners struggling to make their mortgage payments.

The city of Detroit has formed a partnership with nonprofit community groups and mortgage lenders to establish a toll-free help line to advise homeowners who have begun to, or are in danger of, defaulting on their mortgage.

The partnership, known as the Detroit-Home Ownership Preservation Enterprise, is available 24 hours a day to Detroit residents at (888) 995-4673.

When residents call the number, they will be patched through to counselors with the Credit Counseling Resource Center, an alliance of credit counseling agencies certified by the federal Department of Housing and Urban Development.

The counselors are trained to help homeowners set up a plan of action -- whether it's putting them in touch with their lenders or directing them to local support groups to find employment. "A critical component in improving our city's financial health is improving the financial health of Detroit's citizens. It is a part of our role as public servants to empower the citizens we serve, whenever and however we can," said Mayor Kwame Kilpatrick.

The partnership was started with a $50,000 donation from the Homeownership Preservation Fund, a Minneapolis-based nonprofit group that promotes homeownership.

The group started a similar program in Chicago and plans to take the initiative nationwide in June.

City workers are helping to coordinate the program, and banks, mortgage companies and law firms have pledged another $70,000.

"Because most homeowners don't have a relationship with their lender, they may be afraid or don't trust the lender or maybe they're embarrassed," said Walt Fricke, president and executive director of the preservation fund.

"By partnering with local nonprofits, cities and lenders, we can create awareness and give them a safe haven."

Fricke said half of all homeowners who are in the throes of foreclosure never bother to call their lenders. The foreclosures can then cost mortgage companies between $20,000 and $50,000, he said.

In Chicago, Fricke said a similar program resulted in more than 2,000 calls and 800 counseling sessions. Of those who received counseling, Fricke said 28 percent avoided foreclosure.

"We wanted to bring in other lenders in the area to create a program to lessen foreclosures in the Detroit area," said Ben Bowden of Homecomings Financial, a mortgage lender that is a subsidiary of GMAC-Financial Services and a partner in Detroit-HOPE.

"Foreclosure is very detrimental and costly for mortgage companies as well. Anything that can be started is a win-win for the residents and companies."

Detroit-HOPE has a goal to assist 500 homeowners in the first year, and Bowden said 50 people have already called the help line.

In addition to the help line, private donations will go to neighborhood groups like U-SNAP-BAC and Motor City Blight Busters that offer financing workshops for residents.

Alan Levy, from the mayor's office of neighborhood commercial revitalization, said there's no way to tell how many of the city's abandoned homes were caused by foreclosures. However, the problem has been on the rise nationally.

If the city can reduce foreclosures in any way, Levy said that should help keep a neighborhood stable.

"It's in the interest of the people to go through a prevention program, and it's certainly in the city's interest to be proactive," Levy said.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.