By Rowena Vergara
February 8, 2010

Foreclosures are still hitting communities hard, but now it’s not because lenders are unresponsive or uncooperative.

Experts say foreclosure filings in Kane and Kendall counties are still climbing because more people continue to lose their jobs. It’s a trend happening nationwide.

According to year-end foreclosure data released by online industry tracker RealtyTrac, foreclosures soared 54 percent in Kane County and 87 percent in Kendall County from 2008 to 2009.

As the 11 percent December unemployment rate for Kane and Kendall counties takes center stage, there is actually one overlooked bright spot in the foreclosure crisis: federal programs are allowing more homeowners to receive loan modifications, temporarily at first, then permanently.

One local agency, Consumer Credit Counseling of Aurora, has helped 2,000 homeowners receive loan modifications, which account for about 40 percent of their clientele seeking foreclosure help.

Nationwide, about 1.1 million homeowners have been offered trial loan modifications since the start of the federal Making Home Affordable program. About 854,000 have been able to keep their homes with a reduced mortgage payment, according to Consumer Credit Counseling. Homeowners have been able to cut at least $500 off their mortgage payment through the program.

In 2009, Aurora’s Consumer Credit Counseling helped 5,000 people from Kane, Kendall, DuPage, DeKalb, and parts of Will and Cook with foreclosure prevention and mitigation.

“In late 2007, it was tough to get lenders to modify,” Executive Director Bettye DeRamus said.

But after the program kicked in, “we’ve found that most lenders are open to working with us,” she said.

The agency was so inundated with clients they opened another office. Early last month, Consumer Credit Counseling opened a site in Yorkville.

Saved from foreclosure

One homeowner who averted foreclosure thanks to the program is Ana, 25, of Aurora. (She did not wish to share her last name.)

Ana said she was unaware that she signed up for a risky subprime loan in 2005. Within six months, she saw her monthly payment surge from $1,200 to about $2,200. She continued to make payments, and so did her brother, who moved in to assist with the mortgage.

In late 2008, her brother lost his job. Ana immediately contacted her lender to work out a lower payment. She was denied.

She sought help from what she believed to be a trustworthy business offering foreclosure prevention services and paid $1,500 up front. She thought her problems were solved.

A few months later, her lender threatened to foreclose.

“I was waiting and waiting. I even called (the company) and they told me they were taking care of everything,” she said.

Finally, last summer, she heard about Making Home Affordable through Spanish television network Univision. Counselors answering the 800 number put her in contact with local Consumer Credit Counseling.

By October, Ana began making mortgage payments of $1,700. She is now on permanent modification.

“I worried every day that I’d come home to see my stuff outside and my kids out, too,” she said. “Somebody serious helped me finally.”

Program not for everybody

There is some skepticism about the government intervention programs.

A report published by Chicago-based Woodstock Institute argues that government interventions have done little to curb foreclosures, since by the end of 2009 the Chicago area saw filings escalate to their highest numbers since 2005.

Smith added, “It’s not that the program hasn’t done anything, but it hasn’t been as big of an impact that folks would’ve hoped,” said Geoff Smith, vice president of Woodstock Institute.

The Make Home Affordable program is not designed for everybody, Smith said. Residents owing more than what their homes are worth, or homeowners with zero income (due to exhausted unemployment benefits or other reasons) are generally not eligible.

However, a new federal program rolling out in April will give this latter segment of foreclosed residents the opportunity to enter short sales of their properties, Smith said.

As for DeRamus, she said job creation will be the key to closing the gap on foreclosures.

“We thought by now we’d see a decrease in foreclosures, but that hasn’t happened. The same people who are unemployed also have homes,” she said.

DeRamus encourages anyone in need of help to seek an accredited agency and beware of businesses claiming to solve your problems with hefty fees up front.

“There are so many places that are trying to help and they’re charging fees. But you can get those services done without any out-of-pocket cost to the client,” DeRamus said.

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