Foreclosure crisis straining housing counselors

Housing counselors can significantly reduce a family's chance of losing a home to the recent spate of mortgage foreclosures, but a high demand for the service in Maryland is straining some nonprofit agencies.

Clients, who often receive counseling for free, are facing longer waits and some organizations are considering charging for some services. The General Assembly is also considering a bill to require counseling for subprime loan buyers, which could add more clients to a growing caseload.

Despite those challenges, counselors are still urging people to call immediately before their problems worsen and require several extra hours to work through.

Carol Anne Gilbert, assistant secretary for neighborhood revitalization at the state Department of Housing and Community Development, said nonprofit counseling gives homebuyers neutral, nonjudgmental advice about what to expect from any kind of loan package.

"(Counseling) really is the best way in for the consumer for a safe and sustainable situation," she said.

Counselors can help refinance loans, identify predatory lending and advise potential homebuyers before they set up mortgages. The U.S. Department of Housing and Urban Development approves different agencies for specific services, which can range from pre-purchase counseling to loss mitigation to debt management.

But qualified counselors can be hard to find. Funding for salaries can be tenuous, and night and weekend hours are often required.

The Department of Housing and Community Development said there are 20 agencies in Maryland that receive partial funding from the department and specific training in its loan programs.

HUD lists more than 40 certified agencies in Maryland on its Web site, although many are part of larger organizations that have multiple offices in the state or nationwide.

Certain agencies are certified for different services and programs, so clients are encouraged to consult the state or federal government to find an appropriate agency for their needs.

Lisa Evans, deputy director of the St. Ambrose Housing Aid Center in Baltimore, said foreclosure counselors are a challenge to recruit due to the narrowness of the field and difficulty in determining who, exactly, is qualified.

The U.S. Department of Housing and Urban Development only certifies counseling organizations as a whole. Some nonprofit agencies like NeighborWorks America, a national nonprofit created by Congress, run training and certification programs in specific topics like foreclosure, but no license for individual counselors exists.

A background in underwriting is ideal, Ms. Evans said, but most of the training is done on the job.

"We need them to walk in the door and start seeing clients (immediately)," she said.

Counseling for future homebuyers is strongly recommended by most lenders and housing officials, but the surge in foreclosures is creating a demand for counselors to assist in their prevention.

The state saw 9,722 foreclosures in the fourth quarter of 2007, a jump of nearly 40 percent from the third quarter, according to the Department of Housing and Community Development. Faulty loans are one cause, as customers unqualified for regular loans get trapped into exotic mortgages they eventually can't afford.

Raymond Skinner, Maryland's secretary of housing and community development, said the state deployed $1 million last year to 17 counseling agencies to help hire staff and pay for foreclosure prevention training.

"Before, most counseling agencies focused on helping people buy their first homes," he said. "But they've had to shift what they're doing and really focus on sustainability, homeownership preservation and helping people stay in their homes."

He acknowledged that demand is high and counselors are "working harder and getting many more calls," but is confident existing agencies can handle the demand.

Ms. Evans, from St. Ambrose, said the stress of dealing with clients in crisis and a sometimes-unpredictable work schedule can easily lead to burnout.

"Over 30 years, we haven't done this kind of volume before," she said.

Amelia Young, a housing counselor with the national nonprofit ACORN Housing Corporation, said smaller community-based counseling agencies are more likely than national organizations to be overwhelmed by recent foreclosures.

Ms. Young works in ACORN's Prince George's County office, which has two counselors. They can get assistance from other ACORN offices if demand soars, she said.

Joe Baldi, a housing counselor with the Frederick Community Action Agency, said dealing with problems earlier can save time for everybody involved because it allows counselors to help more clients and better negotiate with lenders. Preventing a foreclosure is far more effective than trying to stop one already in progress, he said.

"It's easier to deal with the lender than it is to deal with the attorneys," he said.