HOUSING COUNSELING PROGRAM

Comprehensive Housing Counseling

Our program has been serving the needs of Lake County since 1946, and offers a full range of services, advice and information that families can utilize to solve their housing problems.  Both rental and ownership situations can be addressed with this program.  Some of the services we offer include workshops for first time home buyers for special underwriting guidelines, mortgage default, pre-rental, and home improvement-rehabilitation.  

There are multiple means through which the Housing Counseling Program provides benefits to our clientele. These include Predatory Lending, First Time Homebuyer Counseling, Mortgage Default Counseling/Foreclosure Intervention, and Home Equity Conversion Mortgages.

PREDATORY LENDING

Certain mortgage defaults can be attributed to the practices of unscrupulous sub prime lenders. While, as an industry, their role in underwriting mortgages for low and moderate-income buyers or owners unable to obtain financing elsewhere has been positive, some have contributed to an increase in foreclosures. Clearly not all foreclosures are caused by predatory lending schemes. However, characteristics of predatory lending can be found in all phases of the lending process. In marketing, completing the loan application, drafting the terms of the loan, at the closing and after the closing unethical practices have arisen. Examples may include paying off low rate mortgages or loans in excess of 100% loan to value. It might involve falsifying loan application documents especially with respect to income. Higher fees, closing costs and interest rates or balloon payments and negative amortization can help identify the predatory loan. Terms at closing different that what borrowers were previously told, abusive collection practices and multiple refinancing can also be signs. In short, predatory lending can take many forms yet not all traits result in a predatory loan.

Many of these practices have been identified in the Chicago Metropolitan area and in northern Cook, McHenry and Lake County. The tri-county partners have formed to address the issue on an individual and immediate financial basis and in the courts. It is a coalition that has involved Fannie Mae, HUD, attorneys, housing and financial counselors, lending institutions and fair housing advocacy groups. Together thay have developed materials to better educate the public on what to expect from the legitimate lending process and a loan product to assit victims retain homeownership.

A number of special lending programs have evolved over the last several years in response to the national initiative to increase homeownership. Some of these involve local public/private partnerships and others have been the result of the private sector developing special mortgage lending programs for various income groups. These are all based on the offer of favorable financing packages that assist low and moderate income households purchase their first homes and typically involve the requirement for a housing counseling component. The LCHA has worked directly with lending institutions having special mortgage financing packages and public/private partnerships involving the use of public funds for down payment and closing cost assistance for the benefit of qualified buyers.

Generally, this counseling occurs in a one-on-one setting and begins with an evaluation of the client’s credit history, a discussion of how to develop and maintain a good credit record and the ratios that lenders examine in the underwriting process so they better understand the amount of mortgage for which they qualify. The client is also exposed to real estate terminology, how to shop for a home, why the mortgage application process works as it does, understanding the role of an appraisal and how a loan closing proceeds. For clients not referred by another entity, the LCHA notifies them of the range of assistance that may be available to meet their particular need and how various programs function. Sessions utilize written materials and a videotape/workbook presentation provided by the Fannie Mae Foundation. Upon completion of counseling, clients are awarded a Housing Counseling Certificate to present to the lender/program of their choice demonstrating their successful participation. 

Several times each year the Counselor joins with representatives of the housing industry and local social service agencies serving low and moderate income populations to offer presentations promoting the benefits of homeownership. An example of this activity is an annual seminar hosted by Catholic Charities of Lake County for its Family Self Sufficiency Program participants (administered under contract with the County for Section 8 households). These sessions provide an abbreviated version of the one-on-one counseling in which all players in the home purchasing process present their roles and discuss how the necessary interaction works.

MORTGAGE DEFAULT COUNSELING/FORECLOSURE INTERVENTION

The first task in mortgage default counseling is to identify the cause of the delinquency and likelihood the arrearage can be cured. It is also critical to clearly understand the client’s resources, resolve and ability to address the problem within a reasonably acceptable period of time. Once the latter is satisfactorily established the Counselor will contact the client’s lender to begin to explore workout plans agreeable to both parties. Depending upon circumstances there are a number of possible resolutions. Lenders might be willing to adopt special forbearance plans with or without the acceptance of partial payments, or the lender may be willing to reinstate the mortgage through modification or refinance. Again depending on circumstances, the lender may accept a deed in lieu of foreclosure or postpone legal action pending the sale of the property. Retaining affordable homeownership is critical in Lake County and the Housing Counselor will exhaust all loss mitigation strategies available to assist homeowners in default that have the means and desire to preserve their property interest. 

HOME EQUITY CONVERSION MORTGAGES

Many older homeowners have chosen to explore ways to convert the equity in their homes into cash to pay for needed repairs or simply have additional cash available for everyday expenses. HUD’s HECM product may not be for every older homeowner and the Housing Counselor helps him or her to understand the program and make that determination. The Counselor also refers the client interested in the loan to lending institutions participating in underwriting the product. During the discussions clients also learn of State of Illinois initiatives designed to provide relief to it’s aging citizens. These include tax deferral opportunities, an energy assistance program and a program that results in the reduced costs of prescriptions.