Homeowners seek a miracle to stave off foreclosure

About 200 North Coast homeowners, many of them facing the threat of foreclosure, sought help — and in some cases a miracle — on Saturday during a workshop in Santa Rosa.

“The mortgage crisis is a community problem that affects us all,” said Rep. Lynn Woolsey, D-Petaluma, who participated in a panel discussion on alternatives to foreclosure.

More than 100 people signed up for counseling services at the event, which featured bilingual workshops on budgeting and how to prepare a home for a short sale, which occurs when a home is sold for less than the amount owed on the mortgage.

One by one, people seeking help were called out of the main auditorium where the discussion was taking place, their number held up by a volunteer in a scene that resembled the break between rounds in a boxing match.

Sonoma County District Attorney Stephan Passalacqua and other panelists warned homeowners to be wary of scam artists. In other communities, homeowners facing foreclosure have fallen victim to rings that have illegally taken titles of homes, refinanced them and pocketed thousands of dollars.

Jeffrey Hoffman, directing attorney for California Rural Legal Assistance in Santa Rosa, explained recent legislative changes to the foreclosure process. The changes, which take effect Sept. 6, require lenders to give struggling homeowners a 30-day warning before filing a default notice, the first step in a foreclosure.

Some homeowners at the event said they were seeking a lower mortgage payment, which had skyrocketed beyond their ability to pay after their interest rates readjusted.

One Santa Rosa man, who did not want to be identified because he did not want everyone to know about his financial troubles, said he called his lender one month before his interest rate was set to increase.

A home he purchased in late 2005 for $422,000 was now worth $220,000, while his monthly mortgage payment rose from about $2,600 to $3,200.

“You feel a lot of frustration because your dream is out of reach,” he said, as a counselor from California Rural Legal Assistance reviewed his paperwork.

Michael Conway, senior vice president of mortgage lending for Redwood Credit Union, said homeowners can often reduce their payments with the help of a counselor by modifying their loans.

“More than 50 percent of people who go into foreclosure never talked to their lenders,” said Conway.

Saturday’s event was organized by the Federal Home Loan Bank of San Francisco, with help from Redwood Credit Union, housing advocates ACORN, California Rural Legal Assistance, and professionals in the real estate and lending business.

Although a palpable sense of gloom hung over the event, organizers did their best to encourage homeowners to seek help to keep their homes.

“It’s a bleak forecast,” said Dwight Alexander, vice president of Federal Home Loan Bank of San Francisco.

But he encouraged people not to “sit idly by and let this happen to you.”