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FORECLOSURE: Many teetering on the edge of disaster

by: FILE PHOTO - Notices, such as the one seen here, are sometimes the only outward indication that a property has been foreclosed upon. The Oregon Department of Justice reports more than 4,000 foreclosures or notices of default have occurred in the last three months.Foreclosures can come with a certain sort of stigma.

But now, as they become more and more common — over 4,000 foreclosures and notices of default occurred in Oregon in the last three months, according to the Oregon Department of Justice — attitudes are changing.

“I don’t care if it’s Medford, Bend, down in Southern Oregon. The conversation is the same,” said Angela Martin, executive director of the consumer advocacy group Economic Fairness Oregon who spoke recently at a series of town hall meetings across Columbia County organized by State Rep. Brad Witt.

With an average of 50 foreclosures a day, Martin said, foreclosure, like the common cold, is beginning to feel like it could happen to anyone.

In Columbia County, the Department of Justice found 71 default notices from December 2011 to February 2012. But while many people have entered the foreclosure process, even more are teetering on the edge.

“We’ve never let a bill go unpaid. Ever,” said Susan, a homeowner in Columbia County. Her real name has been changed for privacy reasons.

“We don’t want to start now,” she added.

‘One accident away’ from foreclosure

But her family, in Susan’s words, is only “one accident away” from going under, missing a payment and potentially facing foreclosure.

Medical emergencies, a major surgery and accidents plagued the family and quickly drained their reserve funds not long after they purchased property in Columbia County.

Around the same time, one of her children bought more property, intending to set up her own home.

Realizing how difficult it might be to continue paying off their loan, Susan and her husband decided to look at reducing their monthly payments or negotiating a loan modification. And that’s when their troubles with the bank began.

They talked to a different representative nearly every time they called the bank. They couldn’t seem to get a straight answer to their questions and rarely received information promised to them by bank representatives.

They were told that to qualify for loan modification programs, they would have to miss some payments.

That’s not an option, Susan said.

But it wasn’t clear if there were any other choices.

“We don’t have any idea,” she said. “No one will give us any plan.”

County faces unique problem

Martin and Witt said Columbia County in particular faces some unique problems where, in a number of cases, the home threatened with foreclosure is also the family farm.

The decision becomes more than just whether or not to negotiate a way to hold onto the house, Martin said. Now it’s an issue of whether or not to continue investing in the farm if the ability to hold onto the house is also in question.

Can the homeowner get a loan modification or make partial payments for a period of time? If the answer is yes, a homeowner can make a decision on what is in his or her best interest, Martin said. If the answer is no, it’s time to develop a plan B.

The bottom line is people need to know what their options are, whether the answer is yes or no.

“And that’s what they’re not getting information on, or they’re getting bad information,” Martin said.

DOJ goes after mortage servicers

The Department of Justice went after the five mortgage servicers for this very reason, citing loan servicing and foreclosure abuses at Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc.

The $25 billion settlement reached earlier this year outlined new protections for homeowners. Under the terms of the agreement, the banks had to provide billions of dollars in financial relief to borrowers.

The settlement went hand-in-hand with a new Oregon foreclosure mediation program, although private Oregon mortgage services have so far refused to participate.

The program is another option for “at risk” borrowers - people like Susan who are current on their payments but could easily go under.

Witt organized the town hall meetings in his district in order the give Susan, and others in her situation, options, bringing them in touch with people like Martin and local Community Action Team members who know the laws, know the rules and know how to fight banks on every clause.

“What lenders are doing is playing bluff,” Martin said. They’re counting on homeowners not fighting back, she added.

But the tide seems to be turning, Martin said. “People are tired. They’re frustrated. They’re angry that they’re being treated this way.”