Funding Cuts Force ESOP to Turn Away Homeowners

CLEVELAND, OH - Empowering and Strengthening Ohio’s People, one of Ohio’s most successful foreclosure prevention counseling agencies, is a non-profit organization dedicated to helping homeowners and commits a significant amount of its resources to this effort.  However a failure by the Ohio Housing Finance Agency to distribute funding effectively along with looming federal budget cuts means turning away some homeowners. 

“This is the last thing we want to do”, said ESOP Executive Director Mark Seifert.  “Our staff of foreclosure prevention counselors is truly dedicated to helping people stay in their homes.” 

In 2010 OHFA funded ESOP to help 820 homeowners.  However the volume of people who needed help was so great that ESOP actually helped 4,073.  That’s not even counting homeowners helped so far this year.  Meanwhile federal funding for programs designed to help homeowners avoid foreclosure are slated to be cut in congressional budget meetings this week.  (See WSJ Market Watch Report) That means ESOP’s funding through OHFA has run out and there is no more money to compensate counselors for work already done to keep Ohio families in their homes or to assist any new ones. 

 As a result, starting Tuesday, March 1, 2011 ESOP will stop taking homeowners referred from the National Foreclosure Mitigation Counseling program. 

“We really want to help people,” says Seifert, “but I can’t ask staff to work for free.” 

ESOP counselors will still make every effort to help homeowners through other programs.  “We have some partnerships that we can still use to help people save their homes.  But those resources are limited too”, Seifert said. 

Foreclosure prevention counseling is known to be the most effective way to help homeowners navigate the maze of government programs and lender requirements in order to save their homes.  According to Urban Institute for NeighborWorks America, homeowners who have the help of foreclosure prevention counselors are 1.7 times more likely to receive a mortgage modification and save their homes compared to those who go it alone.  

 

Take a look at the savings for homeowners who used the National Foreclosure Mitigation Counseling Program for 2008 and 2009.

 

With Counseling

Without Counseling

Monthly Savings

$555

$288

Yearly Savings

$6660

$3456

 

 

 

Source: NeighborWorks America NFMC Program Evaluation Preliminary Analysis of Program Effects: Sept. 2010 Update

 

ESOP in particular has a solid track record of helping families stay in their homes.  In 2010 alone ESOP counselors saved more than 3,200 homes from foreclosure.  That represents an approximate 75 percent success rate of helping homeowners who followed through the entire foreclosure prevention process.  

In a letter to Congressman Dennis Kucinich in December 2009, the President of Ocwen Financial Corporation, Ronald M. Faris wrote:

“Another equally important component to our and any successful foreclosure prevention program is local homeowner outreach and counseling – the kind provided by effective, well-run, HUD-approved non-profit organizations such as ESOP.  For over 5 years, Ocwen has partnered with ESOP in various homeownership preservation initiatives … Grass roots counseling agencies like ESOP play an important intermediary role in establishing communications links with distressed borrowers…  Housing counselors allay borrower fear, show them how to regain control over their finances and help them through the technicalities of the loan modification application process…. “

Federal funding for NFMC makes it possible for non-profit groups to assist homeowners who want to meet their obligations, pay their mortgage and keep their family’s home.  Homeowners like Jose Figueroa who had little hope of saving his home until getting help from ESOP. 

“My lender led me through an emotional gauntlet of bureaucracy that felt as if I was in a legal maze with the only outcome being foreclosure.  I spent three years in an emotional and financial wasteland of certified documents, letters from attorney’s soliciting their services, foreclosure rescue groups offering a quick fix for a price.  At one point I gave up on my home thinking that there was no hope, no future for a home that I had owned for almost ten years before the loss of a partner placed me in the situation that I was in.  Robert did a fantastic job at handling the

lender’s requests for this document and that form and this request and I could go on and on.  ESOP every morning when I climb out of bed or turn on a light in a room, I am thankful for your assistance.  ESOP I do not know what I would have done without you.  Thank you for assisting me in restoring my pride and feeling of empowerment.” 

“That’s what’s at stake here,” says Seifert.  “It boils down to putting our money where we know it works to help people keep their homes.” 

ESOP is a HUD-certified foreclosure prevention counseling agency. We have 10 offices across the state and a nearly 75 percent success rate. We have been on the frontlines of the predatory lending and foreclosure epidemic since 1999. In the last six years more than 16,500 families have come to ESOP seeking assistance. In 2010 ESOP helped save more than 3,200 homes from foreclosure.