According to a foreclosure monitoring company, only 0.42 percent of residential units in the Philadelphia metro area were in foreclosure in the July-September quarter, putting the Philadelphia, Camden and Wilmington metro area 110th in a ranking of 203 large metro areas based on foreclosure rates.

The Las Vegas metro area, which topped the list had a foreclosure rate of 5.13 percent, and the second, Merced in California, had a rate of 3.72 percent.

Among the foreclosure prevention initiatives in Philadelphia is its conciliation conference program. Under this program, no lender can foreclose on an owner-occupied house without first meeting the distressed homeowner in a meeting together with a certified counselor. The homeowner will also be provided with counseling and legal representation.

The Philadelphia model has been duplicated in other cities such as Pittsburgh, Chicago and Louisville and has helped hundreds of homeowners avoid foreclosure.

In Philadelphia, whenever homeowners receive delinquency notices from their lenders, the city court schedules a conciliation conference. Volunteers working for housing nonprofits visit delinquent homeowners, give them fliers about the conciliation and advise them to call a certain hotline that would link them to a free housing counselor. This process has been effective in communicating with troubled borrowers and containing the number of foreclosed homes.

Conciliation conferences are done every Thursday morning in the courtroom of the Philadelphia City Hall. Volunteer lawyers talk with homeowners and then negotiate with corporate lawyers while borrowers wait.

Some homeowners get modifications that enable them to make lower monthly payments and keep their homes while others who can no longer afford to pay are advised to pursue other options or to accept cash to move out of their homes.

The city conciliation program has been effective in helping implement the federal Home Affordable Modification Program, which is not mandatory for lenders to carry out. It has been common for lenders to reject or ignore loan modification applications without giving explanations.

In Philadelphia, lenders are forced to negotiate because their foreclosure filings will not proceed if they do not first meet with the troubled homeowners. According to the Philadelphia Volunteers for the Indigent Program, the conciliation scheme has helped resolve a lot of foreclosure cases.

The NSP was initiated to buy foreclosed houses in partnership with nonprofit housing groups in areas that will receive the federal funds. Under the program, the foreclosed properties will be rehabilitated to be sold or rented to eligible low-income and moderate-income families.

The program selects the communities that will receive the federal funds based on the area’s foreclosure rate, number of vacant properties and mortgage interest rate. In Tennessee, the distribution of funds to communities will be administered by the First Tennessee Development District. Federal funding for buying foreclosed homes will be distributed to communities in Johnson City, Bristol, East Tennessee, Greenville, Sneedville, Erwin and Kingsport.

Meanwhile, First Tennessee Development District director Sherry Trent said that among the communities chosen to receive the federal funds under the program, the town of Erwin is the least in need of the aid if foreclosure rate is the basis.

She said that about $100,000 is projected to be used in the town to buy and rehabilitate two houses. The renovated properties will then be converted into apartments to be rented or may be leased as a whole, depending on the type of property purchased. Erwin will use the federal funds more on buying properties that are in danger of ruination or facing value depreciation.

Trent explained that the program will save neighborhoods from deterioration. Industry experts said that a property in a state of deterioration can pull down the value of surrounding properties in a neighborhood. They added that the primary goal of the federal program is to help stabilize neighborhoods and prevent abandoned and foreclosed properties from getting demolished.

Meanwhile, industry experts said that many properties that have been repossessed are standing empty and deteriorating by the day as grasses kept growing up in lawns. Properties under these conditions are the target homes to purchase and rehabilitate under the buying foreclosed homes program. The First Tennessee Development District is hoping to renovate the properties and made them available for rent this year.

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Statewide, the number of foreclosure filings increased by 43 percent in August compared to the same month a year ago. Mecklenburg County foreclosure filings rose by 80 percent last month.

Industry experts said that the foreclosure problem, which triggered the nationwide recession, started with subprime loans that were issued to borrowers with questionable credit and payments that they could not afford.

They pointed out that the economic downturn has pushed the unemployment rate in the state to double digit high, placing more homeowners at risk of defaulting on their mortgage payments.

Compounding the recession and unemployment problems are the drastic decline in home values which make it difficult for homeowners to sell their properties they could no longer afford to pay.

Experts said that the increase in the number of Charlotte foreclosure homes does not only affect those who lost their homes but also more on people living near the foreclosed properties. Foreclosures forced prices of surrounding properties to dive below their market value. This leaves many homeowners with properties that are worth less than their mortgage.

Economists said that many homeowners have sold their houses at depressed prices in order to avoid foreclosure. Majority of homeowners who were forced to sell their properties at depressed prices are those who have had their houses for a long time and accumulated more equity.

When they defaulted on their mortgage payments, they tried to refinance to reduce their mortgage payments. However, with the current market condition, most of them failed to refinance and they have no choice left but to allow the banks to foreclosed on the property or lower the price to sell for an amount just enough to pay off their debts.

It can be recalled that President Barack Obama got the U.S. Congress to pass the TARP to purchase bad loans from banks to help them recover and boost their lending business. But since the inception of the program, foreclosure slowed a little but picked up again with a vengeance. Industry experts are quick to point out that TARP is not doing well in helping distressed homeowners in North Carolina avoid foreclosure.

Under the program, the foreclosure properties will be repaired and sold to families who have low or moderate income or to nonprofit organizations. The initiative is funded by the Neighborhood Stabilization Program (NSP) which was launched under the Housing and Economic Recovery Act of 2008.

The NSP is part of the Obama Administration’s initiative to stabilize and strengthen neighborhoods that are severely devastated by foreclosures and abandonment. Additionally, the program provides grants to state and local governments.

The grant money will be used by the Neighborhood Housing Services to buy about 45 foreclosure houses within the city limits. The first foreclosed home to be tackled under the program features three bedroom and two bathrooms in a 2,000-square-foot property.

Neighborhood Housing Services Oklahoma City housing development director David Ash said that under the plan, the mechanical system of the house will be upgraded to meet the current codes and standards. This will ensure that the house will be structurally sound. Additionally, the aesthetic features of the house will be enhanced to make it attractive and family friendly.

The city plans to equip all renovated houses with energy efficient appliances. It will also update the design of the property’s landscape. Depending on the area and shape of the foreclosure house, it would take at least 2 to 3 months for the renovation to be completed.

Meanwhile, Neighborhood Housing Services executive director Roland Chupik said that the program will benefit the city as it will help stabilize property values and neighborhoods. He added that the federal effort will help fix communities devastated by vacant and foreclosure properties as well as boost the number of affordable houses.

More than half of the total grant money will be used on buying and renovating foreclosure homes to be sold to families earning equal to or less than 50 percent of the median household income in Oklahoma City. This means $20,500 income for individuals and $29,250 for a four-member family.

For those who qualify, they will be provided with a maximum of $6,000 down payment assistance. The Neighborhood Housing Services is given until August 31 next year to use the funds. Proceeds from the sale will be returned and reused by the city.

However, the programs are facing some difficulties such as limited budgets and lack of financial incentives to lenders and developers. Added to these hurdles is the challenge of selling low-priced apartments which could result to complications for buyers whose loans depend on the financial status of the building.

Industry experts said that empty buildings are not good for the market and the economy. But they said that turning these empty buildings into affordable housing for moderate-income families brings a lot of problems.

They pointed out that there could be a negative effect on property values, apart and separate from changes in market conditions.

Meanwhile, New York State Housing Finance Agency Chief Executive Officer Priscilla Almodovar said that an affordable housing plan would likely include providing state-financed mortgages to help potential buyers purchase units in condominium buildings where market-rate buyers have already made some acquisition. This means that developers should reduce the market price of the condominium units.

Another state and city program involves allocating $5 million as grants. Under the program, about 125 homebuyers will each receive $40,000. For example, a three-member family earning $107,520 is eligible to purchase an apartment worth $411,000 using the $40,000 funding that the state will provide to the developer.

Similarly, a couple or single person earning not more than $92,160 is eligible to purchase an apartment worth $380,000 using the grant. Almodovar said that the program would take a lot of fine-tuning because the state has no experience with converting unfinished and vacant buildings into housing units that are moderately priced.

On the other hand, Assemblyman Hakeem Jeffries has introduced a legislation that aims to help developers refinance distressed loans, with a maximum worth of $150 million. This proposal is aimed at making it easy to convert troubled condominiums and rental projects into apartments for rent to moderate-income families.

To become eligible for the program, a loan should have been taken out between 2004 and 2008. The refinanced loans would require a developer to add housing units that are moderately priced, which Jeffries hope would account for 50 percent of the building units.

In Brooklyn, there are 66 condominium projects in some phase of development and foreclosure.

The refinancing program is geared towards borrowers who have little or no home equity. It is part of the Making Home Affordable housing program and aims to help about 5 million troubled homeowners within three years.

The program is intended for homeowners who will find it difficult to qualify for a traditional refinancing initiative because their home equity is less than 20 percent. Home equities are dropping precipitously as a result of plummeting home prices across the country.

According to a market report, nearly one-third of homeowners are at risk of foreclosure because their properties are valued less than the total outstanding mortgage they owed. Since April, 60,484 homeowners were able to refinance and save their properties from foreclosures. About 30,192 or 50 percent of the refinancing deals were completed last month.

In a statement, Federal Housing Finance Agency director James B Lockhart III said that there were significant results from the federal programs, but admitted that more work are still required.

The refinancing program is intended for borrowers with loans guaranteed by government-sponsored mortgage companies, Federal National Mortgage Association and Federal Home Loan Mortgage Corp.

The initial program covers only homeowners whose outstanding loans were not more than 105 percent of the fair market value of their properties. In July, the federal government decided to expand the refinancing program to homeowners whose loans were not over 125 percent their current property values.

Meanwhile, the refinancing program is different from the other federal initiative, the loan modification which is aimed at troubled homeowners who are at risk of foreclosure and want to reduce their mortgage payments to affordable rates.

The refinancing program is for homeowners who are still current on their loans but are struggling to make payments and would greatly benefit from cheaper mortgages.

According to industry and government officials, the refinancing initiative was facing challenges such as difficulty in determining eligible borrowers and the lengthy process of appraising the right value of a property. Furthermore, many borrowers were concerned over the gradual rise in historically low interest rates.

According to data, the 5.29 interest rate of the 30-year fixed-rate loan represented a 5.22 percent rise from previous weeks but still lower compared with last year’s average rate of 6.52.

The two men said that they have found their destiny by purchasing foreclosure properties, renovating them and selling them at affordable prices to disabled veterans. Smith said that disabled veterans deserve to have their own homes, adding that the project is an opportunity for them to do something better and positive.

The 47-year-old Smith developed the Project Compassion last February. He recruited 49-year-old Helsel to the cause. Both of them plan to use their experience and connections in the housing market to make the nonprofit organization successful.

They applied for the nonprofit status of the organization which is expected to be approved soon. Once the project is underway, Helsel and Smith aims to have a nationwide operation, purchasing and renovating one foreclosed home every week across the country.

With their project, both men aim to turn the negative effects of foreclosure into something positive. Under the program, disabled veterans can apply for homeownership online. Basic qualification requirements include, having been injured following the September 11 terrorist attacks, assets of equal to but not less than $24,000 and do not have their own homes. Smith said that about 10,000 disabled veterans across the nation meet the requirements.

Employees involved in the project would search for foreclosure houses that fit the requirements and needs of eligible disabled veterans. They will then convince banks to sell the foreclosed properties to the project for $1. By allowing this tax-deductible donation, banks would be able to rebuild its image and change public perception after the bailout issue.

Helsel said that banks are not equipped to handle many foreclosed houses because they have a glut of these properties on their inventory.

Helsel and Smith will use volunteer labor and donated materials to rehabilitate the foreclosed home. Eligible veterans are required to give a monthly payment of $500 which goes to cover the cost of utility, electricity, water and other services.

The title to the property will be awarded to the veteran after five years of consecutive payments.

Director of sales Roy Arnold said that the deal with BB&T represented a big opportunity for the hotel to continue its operation in a way that Hagerstown is accustomed to.

Hagerstown-Washington County Convention and Visitors Bureau Chief Executive Officer and President Tom Riford said that the survival of the Hagerstown Hotel, which sits on a 6.1-acre property, is vital to the tourism sector in the area.

He explained that the hotel is one of the four full-service facilities in the area that attract small-size to medium-size conventions. Hagerstown Hotel features meeting facilities, lodging and a restaurant.
Hagerstown Hotel was purchased by Watchwood LLC in November 2006 for around $7.4 million. Currently, the hotel’s ownership is under Bahman Inc. Before it was sold to Watchwood, the hotel was owned by businessman Nick Giannaris who opened it in 1970 and operated it for 10 years.

Arnold recalls that the troubles of the property started last year when recession spread across the country, affecting consumer spending and the business travel sector. He also cited the popularity of Internet which gives businesses a chance to hold cyberspace meetings instead of booking them at hotels.

The result of these turn of events was reduced room occupancy rates at Hagerstown Hotel, with sometimes just 28 percent of rooms were occupied.

However, Arnold pointed out that owners of the Hagerstown Hotel were determined to continue the business which currently has 90 employees. The hotel is also bent on promotion such as radio advertisements, pool parties and buffets.

On the other hand, Riford said that the hotel’s problems are rooted more on delays in its 2006 acquisition which cost the owners revenues that they would have earned from busy summer operations.

The hotel’s sales deal was made in the spring of 2006 but the property was transferred only in November.

He also pointed out that the hotel suffered a setback when it broke its ties with the Four Points by Sheraton chain, resulting to Hagerstown Hotel’s lost of the latter’s national reservation system.

Nationwide, the recession has caused foreclosures on some hotels but generally, banks take control of them to protect their investments and put in place a management company.

So far, the program has failed to make a dent on the spreading foreclosure problem in the country. Industry experts pointed out that the impact of HAMP is far behind the original projections of the Obama Administration to modify 4 million troubled loans and refinance 5 million mortgages.

Counties in North Florida can attest to the slow progress of the HAMP as the number of bank foreclosed homes greatly outnumbered loan modification figures. Early data on the HAMP status showed that the first batch of homeowners who applied for the loan modification program on April 1, 2009 has yet to complete the process. Local bankers believed that the number of loan modifications will increase after borrowers finish the probation period.

According to court records, nearly 1,063 loans were modified in the counties of Clay, Duval, St, Johns and Nassau as of July 21. The figures included completed and filed loan modification documents.
Vystar Credit Union leads the most number of loans modified with 8 percent out of the over 1,000 mortgage modifications. VyStar President Terry West said that a mortgage modification is handled on a case-by-case basis. He added that when credit union members are having difficulty paying their mortgages, VyStar examines the causes of their financial problem and tries to determine if the situation is temporary or not.

He pointed out that even if the troubled loans are modified, homeowners still need money to ensure that they remain in their homes.

But some distressed homeowners are complaining on the difficulty of getting help from lenders despite the voluntary compliance of banks with HAMP. Many large banks such as JPMorgan Chase have worked with the U.S. Department of Treasury since the program’s inception. Some of these banks have even established their in-house initiatives to boost their loan modification efforts.

However, some homeowners are facing difficulties of obtaining the funds despite meeting the requirements because banks are swamped with the large volume of people who want to save their properties from foreclosures.

To avail of HAMP, borrowers are required to have mortgage payments not more than 31 percent of their total gross income, must be owner-occupant of the distressed properties and have an outstanding loan balance of not more than $729,500.

The one-year Homeownership Stabilization Campaign aims to help neighborhoods in Boston severely affected by high foreclosed homes listings.

The two-part initiative will give equity to distressed homeowners, help stabilize home prices and strengthen the housing market in neighborhoods with high repossession rates. The program will give assistance to new buyers in acquiring properties.

Out of the $18 million funding, $10 million was provided by the U.S. Department of Housing and Urban Development (HUD), $4 million from the Massachusetts Department of Housing and Community Development and the remaining $4 million from the city government.

The funds are 200 percent larger compared with the 2008 homeownership budget. The additional amount for this year is made possible by the $8.2 million funds provided under the Neighborhood Stabilization Program that the city received to help stem the tide of properties on foreclosed homes listings.

Additionally, the city is also lining up for a $39 million federal grant from the HUD as part of the Neighborhood Stabilization Program 2.

Mayor Thomas M. Menino announced that the city has nearly 928 foreclosed properties in Dorchester, East Boston, Roxbury, Mattapan and Hyde Park. He explained that the goal of the initiative is to make sure that distressed properties are redeveloped. So far, the city has acquired 12 foreclosed homes and is planning to buy 90 additional bank-owned properties.

Out of the $18 million funds, $11.6 million are allocated for the renovation of repossessed properties bought by the city of Boston, provide funding to new homeowners for rehabilitation of foreclosed properties and down payment assistance for buyers of foreclosed homes.

The funds will also provide subsidies for nonprofit and private developers to rehabilitate foreclosed properties and will offer home equity mortgages to homeowners.

Furthermore, the program will provide about $6 million for current homeownership initiatives that offer repair assistance to older homeowners, lead paint abatement and home buying education.

Meanwhile, properties on foreclosed homes listings accounted for 6.5 percent of the total sales of single-family homes in Massachusetts in the first half of this year. In Boston, property prices dropped by 19 percent since the housing market boom in September 2005.